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Petition Nos. 3846/81, 6454 55/80, 230 249, 502 510, 524, 726 27, 777 96, 803, 1069, 1207 09,1326,439 40,1607,1691 93,1702,1703 7,1734.36, 1737 40, 1759 72, 1789 90, 1879, 1946 47, 1948, 1959, 1972 97, 2012 17, 2027 39, 2076, 2077 78, 2125 83, 2194 95, 2204 11, 2284 2326, 2361 62,2363 64, 2365 2404,2405 26, 2444 58, 2459 88,2497 2501, 2503 05,2513 19, 2520 25,2542 73, 2597, 2616 41,2642 48, 2661 63, 2665 66,2698 2700, 2702 21, 2723 26, 2730 44 2756 62, 2766 76, 2779 2802,2803 15, 2818 26, 2847 55, 2856 67, 2885 96, 2897 98, 2912 15,2917 26, 2968 76, 2980 3001, 3002 46, 3047 52, 3070 87, 3088 3102, 3165 3205, 3210 17, 3259 64, 3268 77, 3286, 3305 11, 3312 22,3325,3346, 3355,3357 70, 3371 91, 3403, 3477 82,3484 88, 3492 3504,3505 15, 3516,3517 34,3560, 3572 79, 3637, 3693 3730, 3732 36, 3757 75, 3899 3912,4053 69,4192 4229, 4261,4329, 4495, 4496 4508,4606 09, 4617 21,4622 69, 4846 75, 4978 86, 5218,5349, 5533 43, 5597 5609, 5623, 5626 42, 5728, 5746, 6577 81, 6814, 6934 42,7203, ,217 20,7409,7454 56,7484, 7641,7659,7773,7943, 7944, 8084,8089, 8090, 8192,8195, 8201, 8431, 8436, 8834, 8862, 8878 81, 8924 & 8979 of 1981. (Under Article 32 of the Constitution) Shanti Bhushan, V.M. Tarkunde, P.A. Francis and G.N. Dikshit. R.K. Jain, P.B. Jain, Pankaj Kaira, section Mittar, M.G. Gupta, J B.R. Kapoor, Miss, Bhajan Ram Rakhyani, S.R. Srivastava, B.V. Tawakley, Shobha Dikshit, B. Dutta, B.D. Sharma, Miss A. Subhashini, 513 N.N. Sharma, T.C Sharma, A. Ghosh, S.V. Tambwekar and Girish Chandra for the appearing parties. A The Judgment of the Court was delivered by MISRA J. In exercise of powers conferred by section 3 of the , Sugar Control order 1966 was issued by the Government of India, Ministry of Agriculture. Clause S of that order empowered the Central Government to issue directions, inner alia, to recognised dealers regarding production, maintenance of stock, storage, sale, grading, packing, making weighment, disposal, delivery and distribution of sugar. By Order No. GSR 410 E/Ess. Com./Sugar dated the 14th of July, 1980 the Central Government issued the following directions: "In exercise of the powers conferred by clause 5 of the Sugar (Control) order, 1966, and in supersession of the order of the Government of India in the Ministry of 'Agriculture (Department of Food) No. GSR 60 (e)/Ess. Com./Sugar, dated the 26th February, 1980, the Central Government hereby directs that no recognised dealer shall keep in stock at any time (1) Vacuum pan sugar, in the places mentioned below, in excess of the quantities mentioned against each (i) in Calcutta and extended area (a) recognised dealers who import sugar from outside West Bengal 3,500 quintals, (b) other recognised dealers 250 quintals; (ii) in other places (a) in cities and towns with a population of one lakh or more 250 quintals; (b) in other towns with a population of less than one lakh 100 quintals. 514 (2) Khandsari (open pan sugar) in excess of 250 quintals. Provided that no recognised dealer shall hold any stock of Vacuum pan sugar or Khandsari (open pan sugar) for a period exceeding ten days from the date of receipt by him of such stock of sugar or Khandsari. Provided further that nothing in this order shall apply to the holding of stocks of sugar (i) on Government account; or (ii) by the recognised dealers nominated by a State Government or an officer authorised by it to hold such stock for distribution through fair price shops; or (iii) by the Food Corporation of India. Explanation: For the purpose of this order, "Calcutta and extended area" means the areas specified in the Schedule to the notification of the Government of West Bengal No. 7752 F.S./14 R 92/61, dated the 16th December, 1964. " The petitioners in this groups of petitions, who are dealers in sugar, seek to challenge the constitutional validity of the said order on three grounds; (I) the impugned order is not covered by section 3 of the and is Ultra vires; (2) the impugned order imposes unreasonable restrictions on the right of the petitioners to carry on their trade and so it is violative of Article 19(2)(g) of the Constitution; (3) the impugned order is also violative of Article 14 of the Constitution for two reasons: (as the petitioners have been singled out for hostile treatment from other dealers of sugar at Calcutta, (b) the impugned order is unreasonable and impracticable. Shri Shanti Bhushan, senior counsel appearing in one of the petitions viz., Writ Petition No. 3846 of 1981, took up the first point. and urged that the impugned order is not covered by any of the clauses of section 3 of the . Section 3 of the , insofar as it is material for the purposes of this case, reads: 515 "3. (1) If the Central Government is of opinion that it is necessary or expedient so to do for maintaining or increasing supplies of any essential commodity or for securing their equitable distribution and availability at fair prices, or for securing any essential commodity for the defence of India or the efficient conduct of military operations it may, by order, provide for regulating or prohibition the production, supply and distribution thereof and trade and commerce therein (2) With prejudice to the generality of the powers conferred by sub section (1), an order made thereunder may provide (a) . . (b) . . (c). . (d) for regulating by licences, permits or otherwise the storage, transport, distribution, disposal, acquisition, use of consumption of, any essential commodity. " The language of section 3 (1) coupled with clause (d) of subsection (2) of section 3 is wide enough to cover the impugned order. Section 3 (1) authorises the Central Government to pass an order for regulating or prohibiting the production, supply and distribution of an essential commodity and trade and commerce therein if it is of opinion that it is necessary or expedient to do so for securing the equitable distribution and availability. at a fair price of the essential commodity. The same power has been made more specific by clause (d) of sub section (2) of section 3, which provides for regulating by licences. permits or otherwise, the storage, transport, distribution, disposal, acquisition, use or consumption of, any essential commodity. Sugar, which term includes khandsari, is an essential commodity and over the years it has become a scarce commodity. In the public interest it became essential to pass the impugned order to secure its equitable distribution and availability at fair prices. To that end it became necessary to prevent hoarding and black marketing. The expression "to secure their equitable distribution and availability at fair prices" is wide enough to cover the impugned order. Likewise, the expression "storage and distribution" used in clause (d) of sub section (2) of section 3 should be given a liberal construction to give effect to the legislative intent of public welfare. So construed, the impugned order is fully pro 516 tected and is not ultra vires section 3 of the , 195 5. This leads us to the second contention, namely, the impugned order being violative of Article 19 (1) (g) of The Constitution inasmuch as it imposed unreasonable restriction on the right of the petitioners to carry on trade or business. A person has a right to carry on any occupation, trade or business and only restriction on this unfettered right is the authority of the State to make a law imposing reasonable restrictions under clause (6). The expression 'reasonable restrictions ' signifies that the limitation imposed on a person in enjoyment of that right should not be arbitrary or of an excessive nature beyond what is required in the interest of the public. No cut and dry test can be applied to each individual statute impugned, nor an abstract standard or general pattern of reasonableness can be laid down as applicable in all cases. The Court in each case has to strike a proper balance between the freedom guaranteed by Article 19 (1) (g) and the social control permitted by clause (6) of Article 19. By the impugned order the Central Government has only put an embargo on the dealers on keeping sugar in excess of the quantity specified. It was passed only with a view to prevent hoarding and black marketing, and to ensure equitable distribution and availability of sugar at fair prices in the open market. Reliance was placed by Shri Shanti Bhushan on State of Mysore vs H. sanjeeviah.(J) In that Case the State Government of Mysore had framed rules to regulate the transit of timber, firewood, charcoal and bamboos from all lands in exercise of powers conferred by section 37 of the Mysore Forest Act 11 of 1900. By rule 2 framed on October 13, 1952, it was provided that no person shall import forest produce into, export forest produce from, or move forest produce within, any of the areas specified in Schedule A unless such forest produce is accompanied by permit prescribed in rule 3. On April 15, 1959 the State of Mysore issued a notification adding a proviso to rule 2 which read as follows: 517 "Provided that no such permit shall authorise any person to transport forest produce between SUN set and sun rise in any of the areas specified in Schedule A." By another notification dated September 14, 1960 the State Government introduced the second proviso to rule 2 which read: "provided further that permission may be granted to timber merchants on their request to transport timber upto 10 p.m. (22 hrs) under the following conditions: (i) the party who wishes to avail of the concession should pay a cash deposit of Rs. 1000 as security for the compliance with the timber transit rules as in force; (ii) that the deposit may be forfeited to government for breach of any of the conditions of the timber transit rules. " The dealers in timber challenged the two provisos on the grounds inner alia that they were beyond the rule making authority conferred upon the State Government by section 37 of the Mysore Forest Act 11 of 1900 and in any event the provisos imposed unauthorized restrictions on the freedom of trade, commerce and intercourse. The High Court held that the State Government while seeking to regulate the transport of timber stopped transport altogether. This Court upholding the order of the High Court observed: "Power to impose restrictions of the nature contemplated by the two provisos to r. 2 is not to be found in any of the clauses of sub section (2) of section 37. By sub section (I) the State Government is invested with the power to regulate trans port of forest produce "in transit by land or water. " The power which the Stale Government may exercise is however power to regulate transport of forest produce, and not the power to prohibit or restrict transport. Prima facie, a rule which totally prohibits the movement of forest produce during the period between sun set and sun rise is prohibitory or restrictive of the right to transport forest produce. A rule regulating transport in its essence permits transport, subject to certain conditions devised to promote trans port. " 518 This Court further observed: "If the provisos are in truth restrictive of the right to transport the forest produce, however, good the grounds apparently may be for restricting the transport of forest produce, they cannot on that account transform the power conferred by the provisos into a power merely regulatory." The facts of the present cases are materially different from the facts of H. Sanjeeviah 's case (supra). In that case the impugned provisos to rule 2 completely prohibited the transport of the forest produce between sun set and sun rise. But in the cases in hand the direction enjoined a recognised dealer not to keep sugar in stock at any time in excess of the quantity specified therein. It only seeks to regulate the limit of storage of sugar and does not prohibit its storage. The case of H. Sanjeeviah, therefore, is not of much help to the petitioners herein. In M/s. Laxmi Khandsari & Ors. vs State of U.P. & ors.(l) this Court made the following observations about reasonable restrictions on the right conferred by Article 19 (1) (g) of the Constitution in the following terms: "As to what are reasonable restrictions would naturally depend on the nature and circumstances of the case, the character of the statute, the object which it seeks to serve, the existing circumstances, the extent of the evil sought to be remedied as also the nature of restraint or restriction placed on the rights of the citizen. It is difficult to lay down any hard and fast rule of universal application but in imposing such restrictions the State must adopt an objective standard amounting to a social control by restricting the right of the citizens where the necessities of the situation demand. The restrictions must be in public interest and are imposed by striking a just balance between the deprivation of right and the danager or evil sought to be avoided. If the restrictions imposed appear to be consistent with the directive principles of State policy they would have to be upheld as the same would be in public 519 interest and manifestly reasonable. Further, restrictions may be partial, complete, permanent or temporary but they must bear a close nexus with the object in the interest of which they are imposed. Another important test is that restriction should not be excessive or arbitrary. The court must examine the direct and immediate import of the restrictions on the rights of the citizens and determine if the restrictions are in larger public interest while deciding the question that they contain the quality of reasonableness. In such cases a doctrinaire approach should not be made but care should be taken to see that the real purpose which is sought to be achieved by restricting the rights of the citizens is sub served. At the same time, the possibility of an alternative scheme which might have been but has not been enforced would not expose the restrictions to challenge on the ground that they are not reasonable. " Judged in that light and on an overall consideration of the various aspects of the matter, restrictions put by the impugned order can by no means be said to be unreasonable. It is only regulatory and not prohibitory. We now take up the last contention, namely, the impugned order being violative of Article 14 of the Constitution. The learned counsel seeks to invoke Article 14 on two grounds: (1) the impugned order applies two standards, one for the dealers, at Calcutta, who had been authorised to keep 3,500 quintals at one time, while the dealers at other places have been authorised to keep only 250 quintals in cities with a population of one lakh or more, and only 100 quintals in other towns with a population of less than one lakh. F The fixation of limits for storing sugar in Calcutta and other places is not arbitrary but is based on reasonable classification. The government is the best judge of the situation in a particular State and that quantity of sugar will meet the exigencies of the situation at a particular place is purely a governmental function. For one, Calcutta serves as a feeder line to meet the requirements of sugar to the eastern part of the country, and therefore, the stocks of sugar to be held by the dealers in Calcutta are not required for consumption in Calcutta alone Besides, Calcutta being far away from the sugar manufacturing units in Bihar and Uttar Pradesh, from where bulk of supplies are obtained, sugar is transported by the wholesale 520 dealers in railway wagons which take sometime unusually longer time in transit. These and various other factors have been taken into consideration by the Government while fixing the storage limits of sugar for the dealers in Calcutta. His second ground for invoking Article 14 of the Constitution is that the impugned order is unreasonable and impracticable in that no dealer can be sure of the sale of sugar on any particular day. If per chance a dealer is not able to dispose of the excess sugar on a particular. day he would expose himself to punishment under the Act. No provision has been made in the order or in the rules for the purchase by the Government of the excess sugar. For the State it was contended that similar orders with regard to wheat came up for consideration in this Court in Suraj Mal Kailash Chand Ors. vs Union of India & Anr. and Bishambhar Dayal Chandra Mohan Ors. vs State of Uttar Pradesh & ors. etc.(2) when this Court upheld the validity of these orders. In view of the decision of this Court in those cases it is not open to Shri Shanti Bhushan to challenge the constitutional validity of the impugned order. Shri Shanti Bhushan, however, refutes the argument and says that those decisions do not stand in the way of the petitioners. The situation with regard to wheat was quite different inasmuch . s clause 25 of the impugned order in Sutlaj Mal 's case (supra) provided that the State Government or the Collector or the Licensing Authority may issue directions to any dealer with regard to purchase, sale, disposal, storage or exhibition of the price and stock list of all or any of the trade articles. But there is no such provision in the impugned order in the instant case and, therefore, the dealers can expose themselves to punishment merely because at any particular point of time the stock was in excess of the prescribed limits. Bishambhar Dayal 's case (supra) also related to wheat. There was a scheme for the procurement of wheat by the State Government but there is no such scheme in respect of sugar. This fact distinguishes the present case for the facts of the aforesaid decision. The argument though attractive cannot be accepted. Over the years sugar has become a scare commodity and people have to 521 purchase it even at a prohibitive price. In the circumstances it A cannot be expected that the dealers would not be able to sell the sugar in their stock. There is absolutely no difficulty in selling the sugar at any time at the prevalent market price. If in a rare case there is difficulty on that score we hope and trust that the concerned Government would allow a reasonable time within which the petitioners are permitted to dispose of the excess quantity of sugar, if any. In any case, in some given case there may be some hardship but it cannot be said on that account that the impugned order is violative of Article 14 of the Constitution. For the foregoing discussion the writ petitions must fail. They are accordingly dismissed. In the circumstances of the case there shall, however, be no order as to costs. S.R. Petitions dismissed.

In exercise of powers conferred by section 3 of the , Sugar Control order 1966 was issued by the Government of India, Ministry of Agriculture Clause 5 of that order empowered the Central Government to issue directions, inter alia, to recognised dealers regarding production, maintenance of stock, storage, sale, grading, packing, making weighment, disposal, delivery and distribution of sugar. By order No. GSR 410 E/Ess. Com/Sugar dated 14 7 1980, the Central Government issued directions to the effect that no recognised dealer shall keep in stock at any time (a) Vacuum pan sugar in excess of, (i) in Calcutta and other extended area recognised dealers who import sugar from outside West Bengal, 3500 quintals; other recognised dealers 250 quintals; (ii) in other places in cities and towns with a population of one lakh or more 250 quintals and with a population of less than one lakh 100 quintal and (b) Khandsari (open pan sugar) 250 quintals. Further no recognised dealer shall hold any stock of vacuum pan sugar or khandsari (open pan sugar) for a period exceeding 10 days from the date of receipt by him of such stock of sugar or khandsari. The recognised dealers, there fore, assailed the constitutional validity of the said order on three grounds: (I) the impugned order is not covered by section 3 of the and is ultra vires (2) the impugned order imposes unreasonable restrictions on the right of the petitioners to carry on their trade and so it is violative of Article 19 (1) (g) of the Constitution: (3) the impugned order is also violative of Article 14 of the Constitution for two reasons: (a) the petitioners have been singled out for hostile treatment from other dealers of sugar at Calcutta: (b) the impugned order is unreasonable and impracticable. Dismissing the petitions, the Court ^ HELD: 1, The order dated 14 7 1980 is not ultra vires section 3 of the . The expression "to secure their equitable 511 distribution and availability at fair prices", is wide enough to cover the impugned order Likewise, the expression "storage and distribution" used in clause (d) of sub section (2) of section 3 of the essential Commodities Act, 1955 should be given a liberal construction to give effect to the legislative intent of public welfare. Sugar, which term includes khandsari, is an essential commodity and over the years it has become a scarce commodity. In the public interest it became essential to pass the order to secure its equitable distribution and availability at fair prices. To that end it became 'necessary to prevent hoarding and black marketing. [515 F H, 516 A E] 2. Restrictions put by the impugned order can by no means be said to be unreasonable. It is only regulatory and not prohibitory. The direction enjoined recognized dealer not to keep sugar in stock at any time in excess of the quantity specified therein. It only seeks to regulate the limit of storage of sugar and does not prohibit its storage. By the Impugned order the Central Government sought to prevent hoarding and black marketing, and to ensure equitable distribution and availability of sugar at fair prices in the open market.[516 E, 519 D] A person has a right to carry on any occupation, trade or business and the only restriction on this unfettered right is the authority of tho State to make a law imposing reasonable restrictions under clause (6). The expression reasonable restrictions ' signifies that the limitation imposed on a person in eojoyment of that right should not be arbitrary or of an excessive nature beyond what is required in the interest of the public. No cut and dry test can be applied to each individual statute impugned, nor an abstract standard or general pattern of reasonableness can be laid down as applicable in all cases. The Supreme Court in each case has to strike a proper balance between the freedom guaranteed by Article 19 (1) (g) and the social control permitted by clause (6) of Article 19. [516 B D] State of Mysore vs H. Sanjeeviah, , explained and distinguished. M/s. Laxmi Khandsari & Ors. vs State of U.P. & Ors., , followed. The order is not violative of Article 14 of the constitution. The fixation of limits for storing sugar in Calcutta and other places is not arbitrary but is based on reasonable classification. The government is the best judge of the situation in a particular State and what quantity of sugar will meet the exigencies of the situation at a particular place is purely a governmental function. For one, Calcutta serves as a feeder line to meet the requirements of sugar to the eastern part of the country, and therefore, the stocks of sugar to be held by the dealers in Calcutta are not required for consumption in Calcutta alone. Besides, Calcutta being far away from the sugar manufacturing units in Bihar and Uttar Pradesh, from where bulk of supplies are obtained, sugar is transported by the wholesale dealers in railway wagons which take sometime unusually longer time in transit. These and various other factors have been taken into consideration by the Government while fixing the storage limits of sugar for the dealers in Calcutta. [519 F H, 520 A] 512 The fact that over the years sugar has become a scarce commodity and people have to purchase it even at a prohibitive price, the dealers would be able to sell the sugar in their stock without difficulty at any time at the prevalent market price. In a rare exceptional case there may be some hardship on that score but it cannot be said, on that account, that the order is violative of Article 14 of the Constitution. In such cases, we hope and trust that the concern ed Government would allow a reasonable time within which the dealers could dispose of the excess quantity of sugar, if any. [520 G, 5 21 A C] Suraj Mal Kailash Chand & Ors. vs Union of India & Anr., Writ Petitions Nos. 8334 48 of 1981 decided on September 25, 1981 (unreported case): Bishambhar Dayal Chandra Moharl & ors, etc. vs State of Uttar Pradesh & Ors. etc. Writ Petitions Nos. 2907 2908 of 1981 and connected writ petitions (a group of SOS writ petitions) decided on November S, 1981, followed.

le 2B clearly provides that where the market value of an asset exceeds its written down value or book value by more than 20 percent, the value of that asset for the purposes of Rule 2A shall be taken to be its market value. [49 B] In the instant case, the Wealth tax Officer was of the view that the book values of specific house properties as indicated in the returns filed by the appellant No. 2 were far below their market values. He was therefore justified in making a reference to the Valuation Officers under section 16A and the notices issued by the Valuation Officers were valid. [49 E] & CIVIL APPELLATE JURISDICTION: Civil Appeal No. 816 of 1978. From the Judgment and Order dated the 4th October, 1977 of the High Court of Judicature at Allahabad in Writ Petition No. 88 (Tax) of 1975. 38 V.S. Desai, Ravindra Narain, Harish Salve, Miss Rainu Walia and P.K. Ram, for the Appellants. B.B. Ahuja for the Respondents. The Judgment of the Court was delivered by TULZAPURKAR, J. This appeal by certificate is directed against the judgment and order dated 4th October, 1977. of the Allahabad High Court whereby the High Court upheld the reference made by the Wealth Tax Officer (Respondent No. 1) to the Valuation Officers (Respondents Nos. 2 and 3) for valuing certain buildings belonging to the appellant No. 1 firm as well as the notices issued by the Valuation Officers to appellant No.2 in furtherance of the Reference. The appellants had by means of a writ petition challenged the reference as well as the notices on certain grounds and had prayed for a mandamus restraining respondents Nos. 2 and 3 from valuing the buildings. The writ petition having been dismissed, the appellants have come up in appeal to this Court. Most of the material facts giving rise to this appeal are not in dispute and may briefly be stated as follows: Appellant No. 1 (M/s. Juggi Lal Kamlapat, Bankers) is a partnership firm. Appellant No. 2 (Padampat Singhania) was one of the partners in the firm in his capacity as a 'Karta ' of a Hindu Undivided Family upto 15 3 1972. He was being assessed to wealth tax in the status of H.U.F. and the assets so assessed for wealth tax included the interest of the family in appellant No. 1 firm. For the assessment years 1967 68 to 1972 73 wealth tax returns were submitted by appellant No. 2 in the status of H.U.F. and therein the family 's interest in appellant No. 1 firm was included. Since appellant No. 1 firm owned a number of buildings in Kanpur in the returns so submitted the book value of those buildings had been adopted by appellant No.2 for valuing the interest of the family in appellant No. 1 firm. Respondent No. 1 felt that the market value of those buildings was much more than such book value. He, therefore, referred the question of valuation of those buildings to respondents Nos. 2 and 3 (the concerned Valuation Officers) under s.16A of the Wealth Tax Act 1957 (hereinafter referred to as 'the Act '). Respondents Nos. 2 and 3 issued notices under section 38A (1) (b) of the Act to appellant No. 2 intimating that they would inspect the buildings for determining the fair market value thereof and requested him to afford necessary facilities for such inspection and to produce certain records connected with those build 39 ings. On receiving the notices appellant No. 2 realised that respondent No.1 had referred the question of valuation of the concerned buildings to respondents Nos. 2 and 3 under section 16A of the Act and that the notices issued by respondents Nos. 2 and 3 were in furtherance of such reference. On 9th of September, 1974 appellant No.2 addressed a letter to respondent No. 1 contending that none of the properties referred to the Valuation Officers belonged to him and that the reference to them was unauthorised and the same should be with drawn. He also addressed letters to respondents Nos. 2 and 3 in which he contended that reference made to them by respondent No.1 was invalid and requested each one of them to return the reference back to the Wealth Tax Officer. Since these contentions were not accepted by the respondents, the appellants filed a writ petition in the High Court challenging the reference made by respondent No.1 as well as the notices issued by respondents Nos. 2 and 3. On behalf of the appellants the following contentions were urged in support of the writ petition: (1) For the assessment of appellant No. 2, respondent No. 1 could not refer to respondents nos. 2 and 3 the valuation of building which did not belong to him but belonged to appellant No. 1 firm: (2) the interest of a H.U.F. in a partnership firm was not exigible to wealth tax; (3) the interest of appellant No. 2 in appellant No. 1 firm had to be valued in accordance with Rule 2 of Wealth Tax Rules 1957 and hence section 16A of the Act had no application; (4) the valuation of the concerned buildings forming part of the assets of the business of appellant No. 1 firm had to be determined in accordance with the commercial principles under s.7 (2) (a) and not under s.7 (1) of the Act and (5) the respondents nos. 2 and 3 could not issue the notices to appellant No.2 as he was neither the owner of the buildings nor was in occupation thereof. In regard to the first contention the High Court took the view that though it was true that a partner of a firm could not claim ownership in specific properties belonging to the partnership firm either during the continuance of the partnership or even on its dissolution but was entitled to get a share in the profits during its continuance and was further entitled, upon its dissolution or his retirement there from, to the value of his share in the surplus of the partnership assets left after a deduction of liabilities and prior charges on the date of dissolution or retirement, it was clear that having regard to section 29 of the Partnership Act (which enables a partner to transfer his interest in the partnership firm) and s.2 (e) and 4 (1) (b) of the Act the interest of a partner in the partnership firm will have to be regarded as a part 40 of his net wealth under the Act. As regards the second contention which was elaborated to the effect that even if the interest of an individual in a partnership firm could be regarded as an asset within the meaning of s.2(e) of the Act, the interest of a H.U.F. in the partnership firm could not be regarded as such asset and was not, therefore, exigible to wealth tax (for which reliance was placed on the circumstances that under s.4 (1) (b) of the Act provision has been made for determining the value of an individual 's interest in a partnership firm but no corresponding provision obtains in the Act for inclusion of the interest of H.U.F. in a partnership firm for purposes of assessment), the High Court took the view that from the said circumstances relied upon it did not follow that the interest of a H.U.F. in a partnership firm could not be regarded as a part of net wealth of such family or was not liable to wealth tax, especially when the charging provision namely, s.3 of the Act expressly levied wealth tax on the net wealth of every Hindu undivided family and there was no reason why its interest in a partnership firm, which was property, could not be regarded as a part of its assets liable to the charge under the section. With regard to the third and fourth contentions the High Court held that Rule 2, sec. 7 and sec. 16A (1) (4) (ii) had to be read harmoniously and Rule 2 did not exclude the application of secs. 7 and 16A for valuing an asset of a partner in a partnership firm and that notwithstanding the non obstante clause contained in sec. 7 (2) it was an enabling provision giving a discretion to the Wealth Tax Officer either to value the assets of a business as a whole or valuing each asset thereof separately and in that behalf the Wealth Tax Officer had the power to refer such valuation to the Valuation Officer under sec. As regards the last contention the High Court negatived the same by observing that appellant No. 2 as a partner could be regarded as an agent of appellant No. 1 firm and the Valuation Officers could issue Notices to him requiring him to afford facilities for inspection of the concerned buildings and to produce books, documents and records relevant for the valuation of those buildings. In this view of the matter the High Court dismissed the writ petition but its decision is challenged in this appeal. Counsel for the appellants raised substantially two contentions in support of the appeal. In the first place counsel has contended that there is no provision for the inclusion of a Karta 's interest in a partnership firm in the H.U.F. 's net wealth for wealth tax purposes under the Act and this would be clear from sec. 4 of the Act. Elaborating this contention counsel has pointed out that sec. 4 (1) is applicable to the computation of the net wealth of an individual and 41 that the said provision is a deeming provision whereunder certain tassets though held in reality by some others are to be treated as belonging to that individual and included in his net wealth for purposes of his wealth tax assessment and one such deeming provision is to be found in cl. (b) thereof which provides that where the assessee is a partner in a firm the value of his interest in a firm determined in the prescribed manner shall be included in computing the net wealth of such individual and what is urged is that there is no provision to be found in the Act which provides for the inclusion of Karta 's interest in a firm in the H.U.F. 'section net wealth. Counsel strenuously urged that but for the deeming provision which is to be found in cl. (b) even the interest of partner (in his individual capacity) would not have become includible in his net wealth. In otherwise, according to counsel, there is a lacuna in the Act as regards the inclusion of a Karta 's interest in the partnership firm in his H.U.F. 'section net wealth and, therefore, the Department 's attempt to include the interest of appellant No.2 (as a Karta) in appellant No. I 's firm in the net wealth of his H.U.F. is not warranted by any of the provisions of the Act. Secondly, counsel has urged that assuming that appellant No.2 's interest (as a Karta of his H.U.F.) in appellant No. 1 's firm is exigible to the wealth tax under the Act, the valuation of such interest being governed by sec. 7 (2) (a) of the Act read with Rule 2A of the wealth Tax Rules, 1957 it is not open to the Wealth Tax officer to refer the valuation of specific house properties belonging to the firm to the Valuation officers under section 16A of the Act; in fact; according to him, the valuation of the assets of the partnership business of appellant No.1 as a whole having regard to its balance sheets for the concerned years ought to have been undertaken by the Wealth Tax officer and as such the book values of the house properties as appearing in the Balance Sheets ought to have been accepted by him and, therefore, the reference made by the Wealth Tax officer to Valuation officers as well as the notices issued by the latter being incompetent and unjustified in law, are liable to be quashed. For the reasons which we shall presently indicate neither of the contentions has any substance and both are liable to be rejected. In order to deal with the first contention mentioned above it will be necessary to set out the material provisions of s.4 of the Act Clauses (a) (b) of sub section (1) of sec. 4 run as follows: "Net wealth to include certain assets: 4.(1) In computing the net wealth of an individual, there shall be included, as belonging to that individual 42 (a) the value of assets which on the valuation date are held (i) by the spouse of such individual to whom such assets have been transferred by the individual, directly or indirectly, otherwise than for adequate consideration or in connection with an agreement to live apart, or (ii) by a minor child, not being a married daughter, of such individual, to whom such assets have been transferred by the individual, directly or indirectly, otherwise than for adequate consideration, or (iii) by a person or association of persons to whom such assets have been transferred by the individual directly or indirectly otherwise than for adequate consideration for the immediate or deferred benefit of the individual, his or her spouse or minor child (not being a married daughter) or both, or (iv) by a person or association of persons to whom such assets have been transferred by the individual otherwise than under an irrevocable transfer, or (v) by the son 's wife, or the son 's minor child, of such individual, to whom such assets have been transferred by the individual, directly or indirectly, on or after the 1st day of June, 1973, otherwise than for adequate consideration, whether the assets referred to in any of the sub clauses aforesaid are held in the form in which they were transferred or otherwise: Provided that where the transfer of such assets or any part thereof is either chargeable to gift tax under the Gift tax Act, 1958(18 of 1958), or is not chargeable under section 5 of that Act, for any assessment 43 year commencing after the 31st day of March, 1964 but before the 1st day of April, 1972, the value of such assets or part thereof, as the case may be, shall not be included in computing the net wealth of the individual; (b) where the assessee is a partner in a firm or a member of an association of persons not being a co operative housing society, the value of his interest in the firm or association determined in the prescribed manner". It is true that sec. 4 (1) deals with the computation of the net wealth of an individual and it is also true that same enacts a deeming provision in the sense that certain assets which do not in fact or in reality belong to that individual (the assessee) but to some one else are to be treated as belonging to that individual and are to be included in his net wealth. But, in our view, a careful reading and analysis of cls. (a) and (b) thereof will make it clear that there is a great difference between the cases covered by sub cls. (i) to (v) of cl. (a) and the case covered by cl. (a) refers to five situations in all of which the asset is held by some one other than the individual concerned (the assessee) (e.g. held by the spouse or minor child of such individual to whom such asset has been transferred by such individual directly or indirectly otherwise than for adequate consideration, etc.) and it is provided that such asset held by that some one else shall be treated as belonging to the assessee a deeming provision in the real sense of creating a legal fiction, while under cl. (b) it is provided that where the individual assessee is a partner in a firm it is the value of his interest in the firm determined in the prescribed manner that is to be treated as belonging to him and is includible in his net wealth. In other words cl. (b) is not a deeming provision in the sense in which a deeming provision is made in cl. It cannot be said that the interest of a partner in a firm does not belong to him; it in fact belongs to him and no legal fiction is required for treating it as belonging to him and the proper way to interpret cl. (b) would be that the deeming part of it relates to the quantum of his interest in the firm determined in the prescribed manner which is to be treated as belonging to him and includible in his net wealth. It is impossible to accept the contention that but for cl. (b) of s.4 (1) the interest of a partner (where he happens to be an individual assessee) in a firm would not have been exigible to wealth tax under the Act. As we shall presently point out a partner 's interest in a firm either in his individual capacity or in his capacity as a Karta of H.U.F is otherwise exigible 44 to wealth tax under the other provisions of the Act and the deeming provision contained in s.4 (1) (b) properly understood must be held to be referable to the quantification of his interest in the firm determined in the prescribed manner that is made includible in his net wealth. Section 3 of the Act read with the definitions of "net wealth" as given in sec. 2 (m) and "assets" given in sec. 2 (e) clearly brings out the exigibility of a partner 's interest in a firm either in his individual capacity or his capacity as a Karta of a H.U.F. to wealth tax under the Act. Section 3 which is a charging provision runs thus: "Charge of wealth tax. Subject to the other provisions contained in this Act, there shall be charged for every assessment year commencing on and from the first day of April, 1957, a tax (hereinafter referred to as wealth tax) in respect of the net wealth on the corresponding valuation date of every individual, Hindu undivided family and company at the rate or rates specified in Schedule I." Section 2 (m) defines "net wealth" thus: "net wealth" means the amount by which the aggregate value computed in accordance with the provisions of this Act of all the assets, wherever, located, belonging to the assessee on the valuation date, including assets required to be included in his net wealth as on that date under this Act, is in excess of the aggregate value of all the debts owed by the assessee on the valuation date other than (here follow three types of debts which are not to be reckoned with which we are not concerned). " Section 2 (e) defines "assets" thus: "assets" includes property of every description, movable or immovable, but does not include (here follow certain specified properties with which we are not concerned.)" On reading the aforesaid provisions together it will appear clear that wealth tax has been levied on the net wealth of an individual 45 or a H.U.F. meaning thereby the aggregate value of all the assets belonging to such assessee minus all the debts owed by him. Under the definition of 'assets" property of every description, movable or immovable is included, and since it cannot be disputed and was not disputed before us that a partner 's interest in a firm either in his individual capacity or in his capacity as a Karta of a H.U.F. is property. the same would be includible in the expression "assets" which will have to be taken into account while computing the net wealth of such individual or H.U.F. and on such net wealth the charge of wealth tax has been imposed under sec. It is thus clear that there is no lacuna in the Act as regards the making of a Karta 's interest (representing his H.U.F.) in the partnership firm exigible to wealth tax. The first contention, therefore, must fail. The second contention of counsel for the appellant has been that even if it be held that appellant No. 2 's interest (as a Karta of his H.U.F.) in the appellant No. 1 's firm is exigible to the tax under the Act the valuation of such interest would be governed by sec. 7 (2) (a) of the Act read with Rule 2A of the Wealth Tax Rules 1957 and since it is a case of valuing such interest in the partnership business of appellant No. 1 firm the Wealth Tax Officer while first valuing the assets of the business should have, having regard to the balance sheets of the said business as on the valuation dates, accepted the book values of the specific house properties as appearing in the balance sheets and could not refer the valuation thereof to the Valuation officers under sec. 16A of the Act which being inapplicable could not be resorted to; in this connection reference was also made by counsel to sub s (2) of sec. 4 whereunder it is provided that in making any rules with reference to the valuation of the interest referred to in cl. (b) of sub section (1) (being a partner 's interest in a firm) the Board shall have regard to the law for the time being in force relating to the manner in which accounts are to be settled between partners of a firm on the dissolution of a firm. The substance of the argument, in brief, has been that sec. 7 (1) which enables the Wealth tax officer to determine the value of any asset, other than cash, at the market price thereof on the valuation date for the purposes of the Act is inapplicable to the instant case and, therefore, sec. 16A is not attracted and hence the valuation reference made by the Wealth tax officer to the Valuation officers regarding specific house properties is liable to be set aside. As we shall demonstrate presently, the contention proceeds on an entire misconception of the relevant provisions of the Act and the Rules. We have already indicated above that a partner 's interest in a 46 firm, either in his individual capacity or as a Karta of a H.U.F., is property or asset liable to be included in the net wealth of the concerned assessee and is exigible to wealth tax under the Act. Once that position is accepted it is clear that such asset will have to be valued for the purposes of the Act and in this behalf Rule 2 (1) of the Wealth tax Rules, 1957 prescribes the manner of valuing such interest, It runs thus: "Valuation of interest in partnership or association of persons. (1) The value of the interest of a person in a firm of which he is a partner or in an association of persons of which he is a member, shall be determined in the manner provided herein. The net wealth of the firm or the association on the valuation date shall first be determined. That portion of the net wealth of the firm or association as is equal to the amount of its capital shall be allocated among the partners or members in the proportion in which capital has been contributed by them. The residue of the net wealth of the firm or association shall be allocated among the partners or members in accordance with the agreement of partnership or association for the distribution of the assets in the event of dissolution of the firm or association, or, in the absence of such agreement, in the proportion in which the partners or members are entitled to share profits. The sum total of the amounts to so allocated to a partner or member shall be treated as the value of the interest of that partner or member in the firm or association. " The aforesaid rule clearly says that in order to determine valuation of a partner 's interest in the firm, first the net wealth of the firm has to be determined, which determination, of course, is governed by sec. 7 of the Act and the rule goes on to provide as to how the net wealth of the firm so determined shall be allocated among the partners of the firm, which allocated amount will be regarded as the value of the interest of each partner in the firm. Coming to the precise contention raised by counsel, the material provisions of the Act and the Rules having a bearing thereon would be sec. 7 (1), 7 (2) (a), 7 (3) and Rules 2A and 2B and these are as under: "Value of assests, how to be determined. (1) Subject to any rules made in this behalf the value 47 of any asset, other than cash, for the purposes of this Act, shall be estimated to the price which in the opinion of the Wealth tax Officer it would fetch if sold in the open market on the valuation date. (Explanation. . . . . . . ) (2) Notwithstanding any thing contained in sub section (1), (a) where the assessee is carrying on a business for which accounts are maintained by him regularly, the Wealth tax officer may, instead of determining separately the value of each asset held by the assessee in such business, determine the net value of the assets of the business as a whole having regard to the balance sheet of such business as on the valuation date and making such adjustments therein as may be prescribed. (3) Notwithstanding any thing contained in sub section (1), where the valuation of any asset is referred by the Wealth tax officer to the Valuation officer under section 16A, the value of such asset shall be estimated to be the price which, in the opinion of the Valuation Officer, it would fetch if sold in the open market on the valuation date, or, in the case of an asset being a house referred to in sub section (4), the valuation date referred to in that sub section. " Rules 2A and 2B run thus: "Determination of the net value of assets of business as a whole. Where the Wealth tax officer determines under clause (a) of sub section (2) of section 7 the net value of the assets of the business as a whole having regard to the balance sheet of such business, he shall make the adjustments specified in rules 2B, 2C, 2D, 2E, 2F and 2G." "Adjustments in the value of an asset disclosed in the balance sheet. 2B. (1) The value of an asset disclosed in the Balance sheet shall be taken to be 48 (a) in the case of an asset on which depreciation is admissible, its written down value; (b) in the case of an asset on which no depreciation is admissible, its book value; (c) in the case of closing stock, its value adopted for the purposes of assessment under the Income tax Act, Act, 1961, for the previous year relevant to the corresponding assessment year. (2) Not withstanding any thing containing in sub rule (1) where the market value of an asset exceeds its written down value or its book value or the value adopted for purposes of assessment under the Income tax Act, 1961, as the case may be, by more than 20 per cent, the value of that asset shall, for the purposes of rule 2A, be taken to be its market value. " On a fair reading of the aforesaid provisions it will appear clear that the primary method of determining the value of assets for the purposes of the Act is the one indicated in sec. 7 (1), inasmuch as it provides that the value of any assets, other than cash, for the purposes of this Act shall be estimated to be its market price on the valuation date. Then comes sub sec. (2) which provides that in the case of a business for which accounts are maintained by the assessee regularly the Wealth tax officer may instead of determining separately the valuation of each asset held by the assessee in such business, determine the net value of the business as a whole having regard to the balance sheet of such business as on the valuation date and making such adjustments therein as may be prescribed. It is true that sub sec. (2) commences with a non obstante clause, but even so, the provision itself is an enabling one conferring discretion on the Wealth tax officer to determine the net value of the assets of the business as a whole having regard to its balance sheets as on the valuation date, instead of proceeding under sub sec. In other words, it is optional for the Wealth tax officer to resort to either of the methods even in the case where the net value of a business carried on by the assessee is to be determined. Thirdly, even when he proceeds under sub sec. (2) he has to determine the net value of the business as a whole having regard to the balance sheet of such business as on the valuation date; the phrase "having regard to the balance sheet of such business" as judicially interpreted means that the Wealth tax officer has to take into consideration or account the balance 49 sheet of such business for such valuation and not that such balance sheet is conclusive or binding or decisive of the values of assets appearing therein. Fourthly, the said sub section also says that the Wealth tax officer has to "make such adjustments therein as may be prescribed" and in this behalf Rule 2A and 2B already quoted above indicate what adjustments the Wealth tax officer has to make while determining the net value of the business as a whole. Particularly sub rule (2) of Rule 2B clearly provides that where the market value of an asset exceeds its written down value or book value by more than 20 per cent, the value of that asset for the purposes of Rule 2A shall be taken to be its market value. In other words, it is clear that even where the Wealth tax officer has resorted to sec. 7 (2) for determining the value of assets of a business as a whole the written down values or book values of specific assets as appearing in the balance sheet are not sacrosanct and when the market value exceeds the written down value or book value by more than 20 per cent, the Wealth tax officer has to adopt the market value of such assets for the purposes of this Act. This is apart from the position that the resort to sec. 7 (2) itself is discretionary and optional, the provision being an enabling one. Since in the instant case the Wealth tax officer was of the view that the book values of specific house properties as indicated in the returns filed by appellant No. 2 were far far below their market values, he was justified in making a reference to the Valuation officers under sec. 16A of the Act and the notices issued by the Valuation officers in pursuance of such reference were also valid. In the result the appeal fails and is dismissed with costs.

The assessee (Appellant No. 2) who was Karta of a Hindu Undivided Family was a partner of the family firm (Appellant No. 1) and was being assessed to wealth tax as a HUF. For the purpose of evaluating the interest of the family 's interest in the firm, the assessee adopted the book value of buildings owned by the firm. On the view that the market value of the buildings was much more than their book value, the Wealth Tax Officer (Respondent No. 1) referred, under section 16A on the Wealth Tax Act, 1957, to the Valuation Officers (Respondent Nos. 2 Valuation Officers issued notices under section 38A(1) (b) for inspection of buildings and records relating to them, and the assessees objections to such procedure were overruled. The High Court dismissed the assessee 's writ petition holding: (1) having regard to section 29 of the Partnership Act which enables a partner to transfer his interest in the partnership firm and Section 2(e) and Section 4(1) (b) of the Act the interest of a partner in the partnership firm will have to be regarded as a part of his net wealth under the Act. (2) Section 3 the charging provision expressly levied wealth tax on the net wealth of every Hindu undivided family, and consequently the interest of a H.U.F. in a partnership firm, which is property, could be regarded as a part of its assets liable to be charged under this Section. (3) Rule 2, section 7 and section 16A (1) (i) (ii) had 36 to be read harmoniously and Rule 2 did not exclude the application of sections 7 and 16A for valuing an asset of a partner in a partnership firm. (4) Section 7(2) was an enabling provision giving a discretion to the Wealth tax Officer either to value the assets of a business as a whole or valuing each asset thereof separately and in that behalf he had the power to refer such valuation to the Valuation Officer under Section 16A. (5) Appellant No. 2 as a partner could be regarded as an agent of appellant No. 1 firm and the Valuation Officers could issue notices requiring affording of facilities for inspection of buildings and production of books, documents and records. In the Appeal to this Court it was contended that: (1) there was no provision for inclusion of a 'Karta 's interest in a partnership firm in the H.U.F. 's net wealth for wealth tax purposes under the Act, and (2) even assuming that appellant No.2 's interest (as a Karta of his H.U.F.) in the appellant No.1 's firm is eligible to tax under the Act, the valuation of such interest would be governed by section 7(2) (a) of the Act read with rule 2A of the Wealth Tax Rules 1957 and it was not open to the Wealth Tax Officer to refer the valuation to the valuation Officer under section 16A. Dismissing the Appeal, ^ HELD: 1(i) Section 3 of the Act read with the definitions of "net wealth" as given in Section 2(m) and "assets" given in section 2(e) clearly brings out the exigibility of a partner 's interest in a firm either in his individual capacity or his capacity as Karta of a H.U.F. to wealth tax under the Act. [44 B C] (ii) There is no lacuna in the Act as regards the making of a Karta 's interest (representing his H.U.F.) in the partnership firm exigible to wealth tax. [45 C] (iii) Section 4 (1) deals with the computation of the net wealth of an individual. It enacts a deeming provision. Certain assets which do not in fact or in reality belong to the individual (the assessee) but some one else are to be treated as belonging to that individual and are to be included in his net wealth. Analysis of Clauses (a) and (b) of section 4(1) make it clear that there is a great difference between the cases covered by clause (b). Clause (a) refers to five situations in all of which the asset is held by some one other than the individual concerned (the assessee). It is provided that such asset held by that some one else shall be treated as belonging to the assessee. Clause (b) provides that where the individual assessee is a partner in a firm it is the value of his interest in the firm determined in the prescribed manner that is to be treated as belonging to him and is includible in his net wealth. [43 C F] (iv) It cannot be said that the interest of the partner in a firm does not belong to him. The proper way to interpret clause (b) would be that the deeming part of it relates to the quantum of his interest in the firm determined in the prescribed manner which is to be treated as belonging to him and includible in his net wealth. [43 F G] (v) A partner 's interest in a firm, either in his individual capacity or in his capacity as a Karta of a HUF, is property and is otherwise exigible to wealth tax under the other provisions of the Act. [43 H] 37 2(i) Even where the Wealth tax Officer has resorted to section 7(2) for determining the value of assets of a business as a whole the written down values or book values of specific assets as appearing in the balance sheet are not sacrosanct and when the market value exceeds the written down value or book value by more than 20 per cent, the Wealth tax Officer has to adopt the market value of such assets for the purposes of the Act. [49 C D] (ii) In order to determine the valuation of a partner 's interest in the firm, first the net wealth of the firm has to be determined under section 7 of the Act and Rule 2 provides that the net wealth of the firm so determined shall be allocated among the partners of the firm, which allocated amount will be the value of the interest of each partner in the firm. [46 F G] (iii) The primary method of determining the value of the assets for the purposes of the Act is the on indicated in section 7(1), which provides that value of any assets, other than cash, shall be estimated to be its market price on the valuation date. Sub section (2) provides that in the case of a business for which accounts are maintained by the assessee regularly the Wealth tax Officer may instead of determining separately the valuation of each asset held by the assessee in such business, determine the net value of the business as a whole having regard to the balance sheet of such business as on the valuation date and making such adjustment to therein as may be prescribed. [48 D F] (iv) It is optional for the Wealth tax Officer to resort to either of the methods even in the case where the net value of a business carried on by the assessee is to be determined. Even when he proceeds under sub section (2) he has to determine the net value of the business as a whole having regard to the balance sheet of such business as on the valuation date. [48 G H] (v) The phrase "having regard to the balance sheet of such business" as judicially interpreted means that the Wealth tax Officer has to take into consideration or account the balance sheet of such business for such valuation and not that such balance sheet is conclusive or binding or decisive of the values of assets appearing therein. [48 H;

Civil Appeal No. 724 of 1975. (Appeal by Special Leave from the judgment and order dated the 12th September, 1974 of the Andhra Pradesh High Court at Hyderabad in Writ Appeal No. 626. of 1974) A. Subba Rao for the appellant. G. C. Sharma and S.P. Nayar for the respondents. The Judgment of the Court was delivered by GOSWAMI, J. The appellant No. 1 is a registered firm and appellants 2 and 3 are the only two partners of that firm. They are assessees under the Income tax Act. Their assessments have been made for a number of years in Nellare District in the usual course. On January 23, 1973, the Central Board) sent a notice to the appellants under section 127 of the Income tax Act, 1961 brietly the Act) proposing to transfer their case files "for facility of investigation" from the respective Income tax Officer at Nellore to the Income tax Officer, B Ward Special Circle Ii, Hyaderabad, By this notice they were also asked to submit in writing if they had any objection to the proposed transfer within 15 days of receipt of the notice. The appellants made their representation objecting to the transfer and on July 26, 1973, the Central Board passed the impugned order transferring the cases from Nellore to Hyderabad. There is no provison of appeal or revision under the Act against such orders of transfer. The appellants, therefore, preferred an application under article 226 of the Constitution before the High Court of 886 Andhra Pradesh questioning the validity of the order chiefly on the ground of violation of the principles of natural justice inasmuch as no reasons were given nor communicated in the said order. The learned single Judge after having called for the relevant file found that certain reasons were recorded by the Central Board prior to the passing of the impugned order and held that mere failure to communicate the reasons to the appellants was not fatal to the order. The writ petition was, therefore, dismissed. The appellants ' Letters Patent Appeal before the Division Bench of the High Court also met with the same fate. Hence this appeal by special leave. The short question that arises for consideration is whether failure to record the reasons in the order which was communicated to the appellants is violative of the principles of natural justice for which the order should be held to be invalid. Section 5(7A) was the corresponding section in the Income tax Act, 1922 (briefly the old Act). The section may be set out: "The Commissioner of Income tax may transfer any case from one Income tax Officer subordinate to him to another, and the Central Board of Revenue may transfer any case from any one Income tax Officer to another. Such transfer may be made at any stage of the proceedings, and shall not render necessary the re issue of any notice already issued by the Income tax Officer from whom the case is transferred". The successor section under the Income tax Act, 1961 is section 127 and the same may be set out: "Transfer of cases from one Income tax Officer to another: (1) The Commissioner may, after giving the assessee a reasonable opportunity of being heard in the matter, wherever it is possible to do so, and after recording his reasons for doing so, transfer any case from one In come tax Officer subordinate to him to another also subordinate to him, and the Board may similarly transfer any case from one Income tax Officer to another. Provided that nothing in this sub section shall be deemed to require any such opportunity to be given where the transfer is from one Income tax Officer to another whose offices are situated in the same city, locality or place. (2) The transfer of a case under sub section (1) may be made at any stage of the proceedings, and shall not render necessary the re issue of any notice already issue by the Income tax Officer from whom the case is transferred. 887 Explanation: In this section and in sections 121 and 125, the word 'case ' in relation to any person whose name is specified in any order or direction issued thereunder, means all proceedings under this Act in respect of any year which may be pending on the date of such order or direction or which may have been completed on or before such date, and includes also all proceedings under this Act which may be commenced after the date of such order or direction in respect of any year". The section was amended by section 27 of Finance (No. , and section 127 since then stands as under: (1) "The Commissioner may, after giving the assessee a reasonable opportunity of being heard in the matter, where ever it is possible to do so, and after recording his reasons for doing so, transfer any case from any Income tax Officer or officers also subordinate to him and the Board may similarly transfer any case from any Income tax Officer or Income tax Officers to any other Income tax Officer or Income tax Officers. Provided that nothing in this subsection shall be deemed to require any such opportunity to be given where the transfer is from any Income tax Officer or Income tax Officers to any other Income tax Officer or Income tax Officers and the offices of all such Income tax Officers are situated in the same city, locality or place: Provided further that where any case has been transferred from any Income tax officer or Income tax Officers to two or more Income tax Officers, the Income taxers to whom the case is so transferred shall have concurrent jurisdiction over the case and shall perform such functions in relation to the said case as the Board or the Com missioner (or any Inspecting Assistant Commissioner authorised by the Commissioner in this behalf) may, by general or special order in writing, specify for the distribution and allocation of the work to be performed". (2) The transfer of a case under subsection (1) may be made at any stage of the proceedings, and shall not render necessary the reissue of any notice already issued by the Income tax Officer or Income tax Officers from whom the case is transferred. Explanation: In this section and in sections 121, 123, 124 and 125, the word 'case ' in relation to any person whose name is specified in any order or direction issued thereunder means all proceedings under this Act in respect of any year which may be pending on the date of such order or direction or which may have been completed on or before such date, and includes also all proceedings under this 888 Act which may be commenced, after the date of such order or direction in respect of any year. " Unlike section 5(7A) section 127(1) requires reasons to be recorded prior to the passing of an order of transfer. The impugned order does not state any reasons whatsoever for making the order of transfer. It is submitted on behalf of the Revenue by Mr. Sharma that reasons were communicated to the assessees in the notice calling for objection against the proposed transfer. It is, therefore, manifest that the reasons given in that show cause notice, namely, "facility of investigation" can be read as a part of the impugned order although there is no mention of any reasons therein as such. We are unable to accede to this submission. It appears section 5(7A) of the old Act came for consideration in Pannalal Binjraj and Another vs The Union of India and others and this Court observed at page 589 as follows: ". it would be prudent if the principles of natural justice are followed, where circumstances permit, before any order of transfer under section 5(7A) of the Act is made by the Commissioner of Income tax or the Central Board of Revenue, as the case may be, and notice is given to the party affected and he is afforded a reasonable opportunity of representing his views on the question and the reasons of the order are reduced however briefly to writing. There is no presumption against the bona fide or the honesty of an assessee and normally the Income tax authorities would not be justified in refusing to an assessee a reasonable opportunity of representing his views when any order to the prejudice of the normal procedure laid down in Section 64(1) and (2) of the Act is sought to be made against him, be it a transfer from one Income tax Officer to another within their State or from an Income tax officer with in the State to an Income tax Officer without it, except of course where the very object of the transfer would be frustrated if notice was given to the party affected. If the reasons for making the order reduced however briefly to writing it will also help the assessee in appreciating the circumstances which make it necessary or desirable for the Commissioner of Income tax or the Central Board of Revenue, as the case may be, to transfer his case under section 5(7A) of the Act and it will also help the Court in deter mining the bona fides of the order as passed if and when the same is challenged in Court as mala fide or discriminatory. It is to be hoped that the Income tax authorities will observe the above procedure wherever feasible". This judgment was rendered by this Court on December 21, 1956, and we find that in the 1961 Act section 127 replaced section 5(7A) 889 where the legislature has introduced, inter alia, the requirement of recording reasons in making the order of transfer. It is manifest that once an order is passed transferring the case file of an assessee to another area the order has to be communicated. Communication of the order is an absolutely essential requirement since the assessee is then immediately made are of the reasons which impelled the authorities to pass the order transfer. It is apparent that if a case file is transferred from the usual place of residence or office where ordinarily assessments are made to a distant area, a great deal of inconvenience and even monetary loss is involved, That is the reason why before making an order of transfer the legislature has ordinarily imposed the requirement of a show cause notice and also recording of reasons. The question then arises whether the reasons are at all required to be communicated to the assessee. It is submitted, on behalf of the Revenue, that the very fact that reasons are recorded in the file, although these are not communicated to the assessee, fully meets the requirement section 127(1). We are unable to accept this submission. The reason for recording of reasons in the order and making these reasons known to the assessee is to enable an opportunity to the assessee to approach the High Court under its writ jurisdiction under article 226 of the Constitution or even this Court under Article 136 of the Constitution in an appropriate case for challenging the order, inter alia, either on the ground that it is based on irrelevant and extraneous condonations Whether such a writ or special leave application ultimately fails is not relevant for a decision of the question We are clearly of opinion that the requirement of recording reasons under section 127(1) is a mandatory direction under the law and non communication thereof is not saved by showing that the reasons exist in the file although not communicated to the assessee. Mr. Sharma drew our attention to a decision of the Delhi High Court in Sunanda Rani Jain vs Union of India and others, where the learned single Judge has taken a contrary view. For the reasons, which we have given above, we have to hold that the said decision is not correct. The appellant drew our attention to a decision of this Court in Shri Pragdas Umar Vaishya vs Union of India and Other where rule 55 of the Mineral Concession Rules, 1960, providing for exercise of reversional power by the Central Government was noticed. It was held that under rule 55 the Central Government in disposing of the revision application must record its reasons and communicate these reasons to the parties affected thereby. It was further held that the reasons could not be gathered from the nothings in the files of the Central Government. Recording of reasons and disclosure thereof is not a mere formality. 890 Mr. Sharma drew our attention to a decision of this Court in Kashiran Aggarwalalla vs Union of India and other. It is submitted that this Court took the view that orders under section 127(1) are held in that decision to be purely administrative in nature" passed for consideration of convenience and no possible prejudice could be involved in the transfer. It was also held therein that under the proviso to section 127(1) it was not necessary to give the appellant an opportunity to be heard and there was consequently no need to record reasons for the transfer. This decision is not of any assistance to the Revenue in the present case since that was a transfer from one Income tax Officer to another Income tax Officer in the same city, or, as stated in the judgment itself, in the same locality" and the proviso to section 127(1), therefore, applied. When law requires reasons to be recorded in a particular order affecting prejudicially the interests of any person, who can challenge the order in court, it ceases to be a mere administrative order and the vice of violation of the principles of natural justice on account of omission to communicate the reasons is not expiated Mr. Sharma also drew our attention to a decision of this Court in S Narayanappa and Others vs Commissioner of Income tax, Bangalore where this Court was dealing with section 34 of the old Act. It is clear that there is no requirement in any of the provisions of the Act or any section laying down as a condition for the initiation of the proceedings that the reasons which induced the Commissioner to accord sanction to proceed under section 34 must also be communicated to the assessee. The Income tax Officer need not communicate to the assessee the reasons which led him to initiate the proceedings under section 34. The case under section 34 is clearly distinguishable from that of a transfer order under section 127(1) of the Act. When an order under section 34 is made the aggrieved assessee can agitate the matter in appeal against the assessment order, but an assessee against whom an order of transfer is made has no such remedy under the Act to question the order of transfer. Besides, the aggrieved assessee on receipt of the notice under section 34 may even satisfy the Income tax Officer that there were no reasons for reopening the assessment. Such an opportunity is not available to an assesse under section 127(1) of the Act. The above decision is, therefore, clearly distinguishable. We are, therefore, clearly of opinion that non communication of the reasons in the order passed under section 127(1) is a serious infirmity in the order for which the same is invalid. The judgment of the High Court is set aside. The appeal is allowed and the orders of transfer are quashed. No costs. S.R. Appeal allowed.

The appellants were assessees under the Income Tax Act under the jurisdiction of the Income Tax officer, Nellore since a number of years on 23 1 1973, the Central Board of Direct Taxes sent a notice to the appellants under section 127(1) of the Income Tax Act proposing to transfer their case files for facility of investigations" from the respective Income. Tax Officer Nellore to the Income Tax Officer 'B ' Ward, Special Circle. II, Hyderabad and called for objections, if any, to the proposed transfer within fifteen days of the receipt of the notice. Despite their representations objecting to the transfer, the Central Board ordered the transfer on 26 7 1973. The validity of the order was questioned before the Andhra Pradesh High Court by an application under Article 226 of the Constitution on the ground of violation of principles of natural justice inasmuch as neither the reasons were given. nor communicated in the said order. The writ petition was dismissed by a single Judge holding that mere failure to communicate the reasons which were found by him to have been recorded in the files, to the appellants was not fatal. The Letters Patent Appeal before the Division Bench failed. Allowing the appeal by special leave and rejecting the contentions of the Revenue. namely. (a) that the reasons given in the notice under section 127(1) calling for objections, namely, "facility for investigations can be read a part of the impugn ed order. (b) that recording of the reasons in the file, although not communicated to the assessee, fully meets the requirements of section 127(1) and (c) that the orders under section 127 (1) being "purely administrative in nature, it was not necessary to give the assessee, an opportunity to be heard and there was consequently no need to record reasons for the transfer, the Court ^ HELD:(1) Unlike section 5(7A) of the 1922 Act, section 127(1) of the Income Tax Act, 1961, requires reasons to be recorded prior to the passing of an order of transfer. Once an order is passed transferring the case file of an assessee to another area, the order has to be communicated. Communication of the order is an absolutely essential requirement since the assessee is then immediately made aware of the reasons which impelled the, authorities to pass the order of transfer. The Legislature has imposed the requirements of show cause notice and also recording of reasons to avoid a great deal of inconvenience and the monetary loss if a case file is transferred from the usual place of residence or office where originally assessments are made to a distant place. [888A, 889A B] (2) The reason for recording of reasons in the order and making these reasons known is to enable an opportunity to the assessee to approach the High Court under its writ jurisdiction under Article 226 of the Constitution or even the Supreme Court under Article 136 of the Constitution in an appropriate case for challenging the order, inter alia, either on the ground it is mala fide or arbitrary or that it is based on irrelevant and extraneous considerations, irrespective of the result of such a writ or special leave application. [889C D] 885 (3) Recording of reasons and disclosure thereof is not a mere formality. The requirement of recording reasons under section 127 (1) of the Income Tax Act is a mandatory direction under the law and non communication thereof is not saved by showing that the reasons exist in the files although not communicated to the assessee. [889 E] Pannalal Binjraj and Another vs The Union of India and Others, , applied. Sunanda Rani Jain vs Union of India and Others, , overruled. Shri Pragdas Umar Vaishya vs Union of India and others, [1967] 12 Madhya Pradesh Journal 868, discussed. (4) When law requires reasons to be recorded in a particular order affecting prejudicially the interest of any person, who can challenges the order in Court, it ceases to be a mere administrative order and the vice of violation of the principles of natural justice on account of omission to communicate the reasons is not expiated. [890 C] Kashiram Aggarwalla vs Union of India and others, , not applicable. section Narayanappa and others vs Commissioner of Income tax, Bangalore, , distinguished. (5) In the insant case, non communication of the reasons in the order passed under section 127(1) of the Income Tax Act, 1961 is a serious infirmity in the order and it is invalid. [890 G]

ivil Appeal No. 3091 of 1985. From the Judgment and Order dated 30.11.84 of the Alla habad High Court in S.A. No. 1137 of 1984. Kapil Sibal, (N.P.), Mr. Rajiv Dhawan, R.K. Gupta, H. Sharma and Ms. Indu Sharma for the Appellant. Satish Chandra, M.C. Goel, K.P. Singh and N.N. Sharma for the Respondents. The Judgment of the Court was delivered by SHARMA, J. The main question before us is whether a Regional Rural Bank established by a notification under section 3 of the is "State" for the purposes of of the Constitution of India. This appeal by special leave arises out of a suit by the respond ent No. 1, an employee of the appellant Bank, challenging the validity of a disciplinary proceeding against him and order of his dismissal from service passed therein. The trial court decreed the suit and the decree was confirmed by the Additional District Judge in appeal and by the High Court in second appeal. The facts briefly stated, omitting the details which are not relevant for the purpose of this judgment, are in a short compass. The respondent No. 1 was, in 1981, served with a lengthy charge sheet containing many accusations, some of them being serious, and he was called upon to file his show cause. A large number of documents were mentioned in the charge sheet and the respondent demanded copies thereof for the purpose of filing his reply. According to the appellant several opportunities were given to the re spondent to inspect the documents (excepting a few in re spect of which privilege was claimed), but the respondent did not avail of them with the object of protracting and 938 frustrating the inquiry. According to the High Court, the opportunity given by the appellant was not adequate. Due to certain circumstances the inquiry could not make any progress for sometime. A new inquiry officer entrusted with the proceeding took up the matter on 5.7. 1983, when the respondent No. 1 contended that he must be given an adequate opportunity of examining the relevant documents for facili tating him to file his written statement. There is serious controversy between the parties as to the interpretation of the conduct of the delinquent servant and the approach adopted by the inquiry officer on the 5th of July and the subsequent dates, but we do not consider it necessary to deal with this aspect in detail as we agree with the view of the High Court that as the respondent was not given adequate opportunity to examine the documents, he was handicapped in filing his show cause and defending himself effectively. The suit was filed by the respondent immediately after the order dated 5th July, 1983 was passed. The disci plinary proceeding, however, proceeded ex parte and ulti mately the respondent was dismissed from service. By an amendment of the plaint, the respondent was allowed to challenge the dismissal order also. The respondent has asserted that it was the vindic tive attitude of the Bank authorities which led to the initiation of the disciplinary proceeding against him and the order of his suspension, and the inquiry have been vitiated by serious violation of principles of natural justice. Besides denying these allegations, the appellant Bank contended that having regard to the nature of relation ship of master and servant between the parties, the decree for re instatement of the respondent was illegal and the suit as framed was not maintainable. Even assuming that the respondent proves his case on merits, his remedy would be a suit for damages. Alternatively, if the respondent is held to be a public servant so as to enable him to ask for re instatement in the service, the suit must be dismissed as not maintainable in view of the provisions of the U.P. Public Services (Tribunal) Act, 1976. There has also been a stout denial of the allegations relating to violation of principles of natural justice. Both the learned advocates representing the parties invited us to go deeply into the facts, but we have declined to do so, as all the three courts below have considered the matter in great detail and we agree with the High Court that the inquiry officer should have given adequate opportunity to the respondent to examine the relevant documents for the purpose of preparing his reply. Not having done so, the 939 further orders in the proceeding must be held to be vitiat ed. We, however, do not agree with the contention of Mr. Satish Chandra, the learned counsel for the respondent, that the entire proceeding from its very inception is fit to be quashed as illegal. Now remains the issue relating to the maintainability of the suit. So far the provisions of the U.P. Public Serv ices (Tribunal) Act, 1976 are concerned, they are wholly in applicable. Section 6 of the Act bars the jurisdiction of the civil court to entertain a suit against the State of Uttar Pradesh and certain other authorities by a person who is or has been a "public servant" as defined in section 2(b) of the Act in the following words: "2. Definitions. In this Act (a) . . . (b) "public servant" means every person in the service or pay of (i) the State Government; or (ii) a local authority not being a Cantonment Board; or (iii) any other corporation owned or controlled by the State Government (including any company as defined in Section 3 of the in which not less than fifty per cent of paid up share capital is held by the State Government) but does not include (1) a person in the pay or service of any other company; or (2) (a) a member of the All India Services or other Central Services;" The appellant Prathama Bank is not covered by the above definition. It was constituted in exercise of power con ferred by section 3 of the . It has been sponsored by the Syndicate Bank, a nationalised bank. Although fifteen per cent of the total capital of the Bank has been contributed by the State of Uttar Pradesh, it has no controlling power, and none of the conditions mentioned in section 2(b) of the U.P. Act is satisfied. The plaintiff respondent is, therefore, not a "public servant" within the limited meaning of the expression 940 used in the U.P. Act and the courts below are right in overruling the defence plea of the bar by the U.P. Act. The main point pressed on behalf of the appellant is that the Bank cannot be deemed to be 'State ' for the pur poses of Part III of the Constitution, and so the decree for re instatement of the respondent is illegal. The learned counsel cited several decisions in support of his argument, but we do not consider it necessary to refer to all of them in view of the authoritative pronouncements of this Court on this aspect. In Ajay Hasia and others vs Khalid Mujib Shera vardi and others; , , it was held by a Consti tution Bench that the test for determining if an authority falls within the definition of State in Article 12 of the Constitution is whether it is an instrumentality or agency of the Government. The enquiry has to be not as to how the juristic person is born but why it has been brought into existence. It is, therefore, immaterial whether the authori ty is created by a statute or under a statute. The Court after examining the Memorandum of Association and the Rules in that case held the Society which was registered under the Jammu & Kashmir Registration of Societies Act to be an 'authority ' within the meaning of Article 12. It was pointed out that the composition of the Society was dominated by the representatives appointed by the Central Government and the Governments of several States with the approval of the Central Government; the cost of meeting the expenses came from the Central Government and the Government of Jammu & Kashmir; the rules to be made by the Society were required to have the prior approval of the two Governments; the accounts had to be submitted to the two Governments for their scrutiny; the Society was to comply with the direc tions of the State Government with the approval of the Central Government; and the control of the State and the Central Government was thus deep and pervasive. Reference was also made to the provisions in regard to the appointment and removal of the members of the Society and to the consti tution and powers of the Board of Governors. An examination of the relevant circumstances in regard to the appellant Bank in the light of this decision leads to the irresistible conclusion that it is an instrumentality of the Central Government. As has been stated earlier, the Bank was estab lished under the provisions of the Regional Rural Banks act, 1976. The preamble of the Act which is mentioned below clearly indicates that the Regional Rural Banks are estab lished to discharge the duties which are basically the responsibility of a welfare State. "An Act to provide for the incorporation, regulation and 941 winding up of Regional Rural Banks with a view to developing the rural economy by providing, for the purpose of development of agriculture, trade, commerce, industry and other productive activities in the rural areas, credit and other facilities, particularly to the small and marginal farmers, agricultural labourers, artisans and small enterpreneurs, and for matters connected therewith and incidental thereto. " Section 3 says that if requested by a Sponsor Bank, the Central Government may establish a Regional Rural Bank in the manner provided therein. The Sponsor Bank in the present case was a nationalised bank, which has been held to be under the control of the Central Government and, therefore, covered by the definition in Article 12 of the Constitution. The share capital of a Rural Bank is to be subscribed by the Sponsor Bank which has the further duty of training the personnel of the Rural Bank and providing managerial and financial assistance during the initial stage. The duration of such period can be extended by the Central Government. The Central Government is also vested with power to increase or reduce the authorised capital in consultation with the Reserve Bank and the Sponsor Bank. The burden to subscribe to the capital issued by the Rural Bank is divided amongst the Central Government, Sponsor Bank and the State Govern ment, their respective shares being fifty per cent, thirty five per cent and fifteen percent. The general superintend ence, direction and management of the affairs of the Rural Bank vest in a Board of Directors which is constituted of two Directions to be nominated by the Central Government, one Director to be nominated by the Reserve Bank from amongst one of its Officers, one Director to be nominated by the National Bank from amongst one of its Officers, two Directors to be nominated by the Sponsor Bank from amongst its Officers and the remaining two Directors to be nominated by the State Government from its Officers. In view of the relationship with and control of the Central Government on the Reserve Bank, National Bank and the Sponsor Bank, the Central Government gets an effective control over the Rural Bank. The head office of the Rural Bank is to be located according to the directions of the Central Government. The remunerations of the Officers and other employees of the Rural Bank are to be fixed by the Central Government as indicated in section 17. Without attempting to exhaustively deal with the functions of a Rural Bank, section 18(2) mentions the following types of business within its duty: "18.(1). . (2). . 942 (a) the granting of loans and ad vances, particularly to small and marginal farmers and agricultural labourers, whether individually or in groups, and to co operative societies, including agricultural marketing societies, agricultural processing societies, co operative farming societies, primary agri cultural credit societies or farmers ' service societies, for agricultural purposes or agri cultural operations or for other purposes connected therewith; (b) the granting of loans and ad vances, particularly to artisans, small enter preneurs and persons of small means engaged in trade, commerce or industry or other produc tive activities, within the notified area in relation to the Regional Rural Bank. " It is manifest that by establishing the Rural Banks the Central Government acts in discharge of its obligations under Articles 38 and 48 of Part IV of the Constitution through them. To ensure that the object of establishing Rural Banks is fully achieved, sub section (2) of section 20 of the Act has brought both the houses of the Parliament also in the picture in the following words: "(2) The Central Government shall cause every auditor 's report and report on the working and activities of each Regional Rural Bank to be laid, as soon as may be after they are re ceived, before each House of Parliament." By section 24 A the Sponsor Bank is required to periodically monitor the progress of the Rural Banks and to take connect ed steps, and to cause inspection, internal audit et cetra made. The rule making power dealt with in section 29 is vested in the Central Government and the power of the Central Govern ment to give directions is mentioned in section 24, quoted below: "24(1) A Regional Rural Bank shall, in the discharge of its functions, be guided by such directions in regard to matters of policy involving public interest as the Central Government may, after consultation with the Reserve Bank, give. (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. " 943 The provisions of the Act do not leave any room for doubt that the Regional Rural Banks are under deep and pervasive control of the Central Government and have been established as its instrumentality and, are, therefore, 'State ' within Article 12 of the Constitution. The learned counsel contended that even if the appel lant Bank is considered to be State, the courts cannot force the services of the respondent on it by passing a decree for his re instatement in service. All that can be done is to grant a relief of way of compensation in a properly consti tuted suit. We do not find any merit in the argument. The learned counsel relied on the following observations in paragraph 103 of the judgment in Central Inland Water Trans port Corporation Ltd. and another vs Brojo Nath Ganguly and another reported in, [1986] 3 SCC at page 156: "The contesting respondents could, therefore, have filed a civil suit for a declaration that the termination of their service was contrary to law on the ground that the said Rule 9(i) was void. In such a suit, however, they would have got a declaration and possibly damages for wrongful termination of service but the civil court could not have ordered reinstatement as it would have amount ed to granting specific performance of a contract of personal service. As the Corpora tion is "the State", they, therefore, adopted the far more efficacious remedy of filing a writ petition under Article 226 of the Consti tution". Far from helping the appellant, the observations clarify the correct position which is just contrary to the argument of the learned counsel. In the result, the departmental proceeding against the respondent from 5.7.1983 onwards is quashed and the decree for the plaintiffs reinstatement in service with consequential benefits is confirmed. If the Bank authorities be of the view that in spite of the delay of several years the inquiry ought to be completed, it will be open to them to proceed with it and to take further steps in the proceed ing from the stage where it stood on 5.7. 1983, but they should indicate their intention to do so to the respondent and also serve copies of the relevant document on him. If they are of the view that any particular document is confi dential in nature and a copy thereof cannot be handed over to the respondent they may so indicate in writing to the respondent and it will be open to the inquiry officer to examine whether the denial of such a copy would amount to violation of principles of 944 natural justice. The Bank shall also permit the respondent to join his post and receive his other benefits before he is called upon to file a show cause. Subject to the modifica tions as indicated the decree under appeal is affirmed. The parties are directed to bear their own costs of this Court.

The respondent who was an employee of the appellant bank was dismissed from service on the basis of disciplinary proceedings instituted against him. He filed a suit chal lenging the validity of the disciplinary proceedings on the ground that the inquiry was vitiated by serious violation of principles of natural justice. The trial court decreed the suit. The decree was confirmed by the Additional District Judge in appeal, and by the High Court in second appeal. Before this Court, the appellant contended that (i) having regard to the nature of relationship of master and servant between the parties, the decree of re instatement of the respondent was illegal, and the suit as framed was not maintainable because the respondent 's remedy was a suit for damages; (ii) alternatively, if the respondent was held to be a public servant so as to enable him to ask for re in statement in the service, the suit must be dismissed as not maintainable in view of the provisions of the U.P. Public Services (Tribunal) Act, 1976; and (iii) there was no viola tion of the principles of natural justice. While confirming the decree with modifications, this Court, HELD: (1) The High Court was right in holding that as the respondent was not given adequate opportunity to examine the documents, he was handicapped in filing his show cause and defending himself effectively. [938C] 936 (2) The appellant bank is not covered by the definition of 'public servant ' in section 2(b) of U.P. Public Services (Tribunal) Act, 1976. It has been constituted in exercise of the power conferred by section 3 of the , and has been sponsored by the Syndicate Bank, a natio nalised Bank. Although fifteen per cent of the total capital of the Bank has been contributed by the State of Uttar Pradesh, it has no controlling power, and none of the condi tions mentioned in section 2(b) of the U.P. Act is satisfied. [939G] (3) The plaintiff respondent is not a "public servant" within the limited meaning of the expression used in the U.P. Act and the courts below are right in overruling the defence plea of the bar by the U.P. Act on the jurisdiction of the civil court to entertain the suit. [939H 940A] The test for determining if an authority fails within the definition of State in Article 12 of the Constitution is whether it is an instrumentality or agency of the Govern ment. The enquiry has to be not as to how the juristic person is born but why it has been brought into existence. It is therefore, immaterial whether the authority is created by a statute or under a statute. [940C] Ajay Hasia & Ors. vs Khalid Mujib Sheravardi & Ors., ; , referred to. (5) An examination of the relevant circumstances in regard to the appellant Bank leads to the irresistible conclusion that it is an instrumentality of the Central Government. By establishing the Rural Banks the Central Government acts in discharge of its obligations under Arti cles 38 and 48 of Part IV of the Constitution through them. [940G, 942C] (6) The provisions of the do not leave any room for doubt that the Regional Rural Banks are under deep and pervasive control of the Central Government and have been established as its instrumentality and, are, therefore, 'State ' within Article 12 of the Con stitution. [943A] (7) There is no merit in the argument that the Courts cannot force the services of the respondent on the appellant bank by passing a decree for his re instatement in service and all that can be done is to grant a relief by way of compensation in a properly consti tuted suit. [943B] Central Inland Water Transport Corporation Ltd. vs Brojo Nath Ganguly, , referred to. 937 (8) In the instant case, the departmental proceeding against the respondent from 5.7.1983 onwards is quashed and the decree for the plaintiff 's re instatement in service with consequential benefits is confirmed, subject to the modification that if the Bank authorities be of the view that in spite of the delay of several years the inquiry ought to be completed, it will be open to them to proceed with it and to take further steps in the proceeding from the stage where it stood on 5.7.1983, in accordance with the directions of the Court in this judgment. [943F G]

Appeal No. 1016 of 1966. Appeal by Special 'leave from the order dated October 15, 1965 of the Board of Revenue, U.P. in Revision No. 2 E of 1964 Saharanpur. J.P. Goyal ' and S.M. Hanif, for the appellants. S.V. Gupte, G.D. Gupta and B. P. Maheshwari, for respondents Nos. 1 to. 3. delivered by Vaidialingam, J. The question that 'arises for consideration in this appeal, by special leave:, is as to whether the bhumidhari rights and trees belonging to the appellants can be proceeded against and sold for realisation of the: debts due to the respondents under the U.P. Encumbered Estates Act, 1934 (Act XXV of 1934) as amended (hereinafter referred to as the Encumbered Estates Act). The contention of the appellants iS that they cannot be sold, whereas, according to the respondents, they can be sold. The predecessors in interest of the appellants were Landlords owning immovable properties, including agricultural land, trees, groves and well, situate in the various villages in the District of Saharanpur. They were very heavily indebted, the debts being both secured and unsecured, payable by them to the creditors. The respondents were among the secured creditors to whom large amounts were due. On or about March 26, 1936 the appellants predecessors in interest filed an application under section 4 of the Encumbered Estates Act to the Collector for determination of their debts. As required by section 6 of the said Act, the Collector forwarded this application to the Special Judge, Saharanpur, appointed under s.3 of the said Act and the said application was registered as Suit No.23 of 1936. After complying with the other formalities under the Encumbered Estates Act, the Special Judge, on December .23, 1936 passed a decree under s.14(7). of the Encumbered Estates Act. The said decree was amended on 568 January 23, 1938. The Special Judge granted a decree in favour of respondents 1 ' to 3 for two sums= of Rs. 36,000/. and Rs. 25,000/ on loans secured over properties mentioned in Schedules A, B and C of the decree. They were also granted a decree for Rs. 9,000/ which was the decree debt for the payment of which the mother of the 'daughter had stood surety. Over and above these amounts, the respondents were given a decree for Rs. 3,500/ for an unsecured debt. The liquidation proceedings which were started under the Encumbered Estates Act and were pending before the Collector were stayed till 1954 in view of the contemplated legislation for abolition of zamindari, the Uttar Pradesh Zamindari Abolition and Land Reforms Act, 1950 (U.P. Act 1 of 1951) (hereinafter referred to as the Abolition Act), and the appellant 's estate vested on July 1, 19 '52 in the State by virtue of the notification issued under section 4( 1 ) of that Act. The liquidation proceedings pending before the Collector under the Encumbered Estates Act were reopened in the year 1955. On May 15, 1959 the respondents made an application to the ASsistant Collector of Saharanpur (to whom the powers of the Collector, for the purposes of section 24 of the Encumbered Estates Act had been delegated) to recover the amounts decreed to them by the Special Judge by proceeding against the bhumidhari rights, and trees belonging to the appellants and to auction the same under section 24 of the Encumbered Estates Act. The appellants filed objections, briefly, to the following effect. The decree holder iS not entitled to proceed against the bhumidhari rights or the trees in their possession. The decree holder 's debts are secured debts and they are entitled only to three fourths of the Zamindari Abolition and Rehabilitation Grants and that they are not entitled to 'get anything more under the decree. ' The list forwarded by the Special Judge does not refer to any of their rights now sought to be attached and therefore no execution can be levied against such properties. Bhumidhari rights accrued only after the 'abolition of the zamindari and, as such, they cannot be proceeded against for realisation of the decreed amounts. The Assistant Collector, by his order dated February 21, 1961 upheld the objections of the appellantsdebtors and ' dismissed the 'application of the decree holders res pondents for sale of bhumidhari and other rights in the properties mentioned by them. The basis. on which the Assistant Collector declined to allow execution to proceed was that bhumidhari rights represent the proprietary rights which the zamindars, on the abolition of the estate, were allowed to retain, by the Abolition Act. In substance, those rights were the original proprietary rights, though a new name of bhumidhari rights was given to them. The respondents challenged this order of the Assistant Collector in appeal, under section 45(3) of the Encumbered Estates Act, 569 before the Commissioner, Meerut Division, who by his order dated March 24, 1965 ' reversed the order of the ASSistant Collector and held that the trees and bhumindhari rights of the appellants could be sold in execution of the decree. The view of the Commissioner is that such rights are rights other than proprietary rights. The prOhibitiOn contained in the Encumbered Estates (Act is only 'regarding the sale of proprietary rights and bhumidhari fights not being proprietary rights could be proceeded with in execution. ' The appellants filed a revision, under section 46(2) of the Encumberedestates Act, before the Board of Revenue. The two contentions, that were raised by the appellants, before the Board of Revenue were: (i) bhumidhari rights are proprietary rights in land and as such, no execution can levy against such rights; (ii) the bhumidhari rights sought to be proceeded against have not been mentioned in the list of properties sent by the Special Judge to. the Collector under section 19 of the Encumbered Estates Act and therefore they cannot be sold in liquidation proceedings under Chapter V of the Encumbered Estates Act. Both these contentions were rejected by the Board of Revenue who, by their order dated October 15, 1965 confirmed the order of the Commissioner and dismissed the appellant 's revision petition. The Board of Revenue has held that bhumidhari rights are not proprietary rights and so long as there is no prohibition under the Abolition Act to proceed against them, the decree holder was entitled to attach and sell those rights. The Board further held that the properties have been mentioned in the list sent by the Special Judge and the nature of the rights, viz., bhumidhari rights, could not have been mentioned on the date when the list was sent because such rights were obtained by the appellants long thereafter. It is against this order of the Board that the appellants have come up to this Court in appeal. Mr. Goyal, learned counsel for the appellants, urged that the decree obtained by the respondents. under the Encumbered Estates Act, as provided under section 14(8) thereof, 'shall not be executable within U.P. except under the provisions of this Act ' Section 19 of the Encumbered Estates Act provides for the Special Judge informing the Collector of the nature and extent of the property mentioned in the notice under section 11, which he has found to be liable for attachment and sale in satisfaction of the debts of the applicant. Section 24 provides for the Collector realising the value of such of the debtor 's property other than the proprietary rights in land as shall have been reported by the Special Judge, under the provisions. of sub section (2) 'of section 19 to be liable to attachment or sale. Having due regard to these provisions, the counsel urged that the bhumidhari rights granted to the 570 appellants under the Abolition Act, having not been admittedly reported by the Special Judge, cannot be proceeded against in execution under the Encumbered Estates Act. The counsel further urged that bhumidhari rights are special and new rights given under the Abolition Act to the former proprietors of the estate: which vested in the State. Those rights cannot be proceeded against for realisation of the debts due to the respondents. Counsel referred us to the material provisions of the Encumbered Estates Act and the Abolition Act in support of the above contentions. Mr. Goyal also urged that the rights of the respondents, if any, are only to proceed against the compensation awarded under the Abolition Act. In support of his contention that the bhumidhari rights are new and special rights, Mr. Goyal referred us to two decisions of this Court in Rana Sheo Ambar Singh vs Allahabad Bank Ltd., Allahabad(1) and Krishna Prasad vs Guari Kumari Devi(2). On the other hand, Mr. Gupte, learned counsel for the respondents, urged that the respondents are executing the decree strictly in accordance with the provisions of the Encumbered Estates Act. In this connection, counsel pointed out that whatever rights of the respondents, as mortgagees, originally might " have been, the decree passed under the Encumbered Estates Act, under section 14(7)(b)(i), in favour of the respondents is only a simple: money decree. Therefore the provisions dealing with the rights of a mortgagee in respect of an estate under the Zamindari Abolition Act dO not have any material bearing. He also referred to section 18 of the Encumbered .Estates Act to show that the effect of a decree of a Special Judge under section 14(7) is to extinguish the 'previously existing. rights of mortgage or security. The properties which are: sought to be proceeded against are clearly referred to by the Special Judge in the decree sent to the Collector under section 19 of the Encumbered Estates Act. Under cl. (b) of section 19 (2) it was only necessary to state the nature and extent of the property and the Special Judge has informed the Collector of those particulars. SeCtion 24 gives power to the Collector to realise the value of such. of the debtors ' property as has been reported by the Special Judge under sub section (2) of section 19. It is against such property that the respondents are proceeding against for realisation of their dues. Mr. Gupte further urged that the fact that at the time when execution is levied, the right of the appellants is the bhumidhari rights in those identical properties is not of any consequence. The decisions. relied on by Mr. Goyal, the counsel points out, had no occasion to deal with the rights of a creditor under the Encumbered Estates Act. He further pointed out that there is nO provision in the Abolition Act. barring attachment and sale of bhumidhari rights. The counsel (1) [1962] 2S.C.R. 441. (2) [1962] Supp. 3 S.C.R. 571 finally urged that the main purpose of the Encumbered Estates Act was to help to preserve the proprietary rights of land owners in U.P. and at the same time to evolve a machinery to liquidate their rights. It could not be the intention of the Legislature on the one hand tO preserve property rights in land even though it is encumbered with heavy debts and on the other to provide the creditors no machinery for realisation of their dues. It will be seen from the rival contentions set out above that the main question that arises for consideration is as to whether the bhumidhari rights of the appellants obtained by them under the Abolition Act can be proceeded with for realisation of the decree obtained by the respondents under the provisions of the Encumbered Estates Act. This takes us to a consideration of the material provisions of the Encumbered Estates Act and the Abolition Act. The object of the Encumbered Estates Act is to provide for relief of encumbered estates in U.P. Section 2 defines among other expressions, 'debt ', 'land ' and 'landlord ' Section 3 deals with the appointment of a Special Judge. Section 4 provides for the landlord who is subject to or whose immovable property or any part thereof is encumbered with private debts,. for making an application within the time mentioned therein to the concerned Collector requesting that the provisions of the Encumbered Estates Act be applied to him. The landlord has to state in the application the amount of private debts as also his public debts, both decreed and undecreed. Section 6 deals with the transmission to the Special Judge of the application received by the Collector under section 4. The Collector has also to inform the Special Judge of any public debts outstanding against the landlord. Section 7 deals with the consequence of acceptance of an application by the Collector. In brief, all pending proceedings excepting proceedings by way of appeal or revision stand stayed and all attachments and other execution processes are declared null and void. No fresh suit or other proceeding excepting an appeal or revision against a decree or order can be instituted in any civil or revenue Court. Section 8 deals with the Special Judge who has received an application under section 6 calling upon the applicant landlord to submit a written statement containing full particulars regarding the public or private debts to which the landlord is subject or his immovable property is encumbered, the nature and extent of the landlord 's proprietary rights in land, the nature and extent of his property liable to attachment and sale under section 60, C.P.C., and the names and addresses of his creditors. Under section 9, the Special Judge has to publish in the Gazette a notice calling upon all persons having claims in respect of private debts, both decreed and undecreed, against the landlord or his property. Section 10 provides that every claim made under Sup. CI/70 6 572 section 9 should contain full particulars of the claim and also to the extent possible the nature and extent of the landlord 's propfietory rights in land as also the nature and extent of the landlord 's property other than proprietary rights. Section 11 requires the Special Judge to publish a notice specifying the property mentioned by the landlord under section 8 and by a claimant under section 10. It also provides for any person having any claim to the property mentioned in such notice of making an application to the Special Judge specifying his claim and for investigation by the Special Judge whether the property specified in the claim or any part thereof is liable to attachment, sale or mortgage in satisfaction of the applicant. Section 14 empowers the Special Judge, after giving the necessary notices in that behalf, to examine each claim and determine the amount, if any, due from the landlord to the claimant on the date of the application under section 4. Section 14 (7) (b) provides for the Special Judge, on finding that an amount is due to the claimant, to pass a simple money decree. Sub section (8) states that every decree passed under sub section (7) shall be deemed to be a decree of a Court of competent jurisdiction but shall not be executable within U.P. except under the provisions of the Encumbered Estates Act. Section 18, dealing with the effect of the finding of the Special Judge states that the existing relationship between the debt and the property which is charged or mortgaged for that debt are extinguished and the decree that is given by the Special Judge is stated to substitute for the previous rights a right to recover the amount of the decree in the manner and to the extent thereafter provided. It has already been noted that under section 14 it is only a simple money decree that is passed by the Special Judge. Section 19 provides for the transmission of the decrees passed by the Special Judge to the Collector for execution in accordance with the provisions of Chapter V. The Special Judge is also to inform the Collector of the nature and extent of the property mentioned in the notice under section 11 which he has found to be liable to attachment or sale in execution of the debts of the applicant. In the case before us there is no con troves that the Special Judge has complied with this provision. Chapter V deals with execution of decrees and liquidation of debts and section 24 provides for the Collector to whom the decree has been transmitted by the Special Judge under section 19 to proceed to realise the value of such of the debtor 's property other than proprietary rights in land as shall have been reported by the Special Judge under the provisions of section 19(2) to be liable to attachment and sale. In this connection, it may be stated that the question that will arise for consideration is whether bhumidhari rights are 'the debtor 's property other than proprietary rights in land '. If they are not proprietary rights in land then 573 under this section they are liable to be sold under auction because the nature and extent of the property has been mentioned by the Special Judge in his report under section 19(2) to be liable to attachment and sale. From the provisions referred to above, the Scheme of the Encumbered Estates Act appears to be as follows. Any landlord who is encumbered with private debts can make an application to the prescribed authority for applying the provisions of that Act. The Special Judge, after making the necessary publication, calls for claimants against the landlord and also ascertains the property of the debtor. He then examines the claimants and determines the amounts of debt due and passes a decree under section 7 of the Encumbered Estates Act if amounts are found to be due; but even though the amount may have been charged on the property, the Special Judge passes only a simple money decree. Under section 14(8) the decree so passed is deemed to be a decree of a Civil Court of competent jurisdiction and it shall not be executable except under the provisions of the Encumbered Estates Act. Once the matter goes within the jurisdiction of the Special Judge the existing relations between the debt and the property which is charged or mortgaged for that debt are extinguished and the decree is only a simple money decree and not a mortgage decree. The mode of execution is then described in section 19 under which the Special Judge transmits the decrees for execution to the Collector informing the latter among other matters of the nature and extent of the property which he has found to be liable to attachment or sale in satisfaction of the debts. The Collector, under section 24, has to realise the value of the debtor 's property other than proprietary rights in land. In the case before us we have already referred to the various stages leading up to the respondents obtaining a decree and the decree being transmitted for execution, as well as the final order of the Board of Revenue, accepting the right of the respondents to levy execution against the bhumidhari rights in the land. Under the Abolition Act, there is no controversy, that the estate of the appellants vested in the State on July 1, 1952 by virtue of the notification issued under section 4. Section 3 defines the various expressions. Section 4 deals with vesting of estates in the State on the issue of a notification thereunder. Section 6 deals with the various consequences of the vesting of an estate in the State. Clause (h) of section 6 provides that no claim or liability enforceable or incurred before the date of vesting by or against such intermediary for any money, which is charged on or is secured by a mortgage of such estate or part thereof, shall, except as provided in section 73 of the Transfer of Property, 1882, be enforceable against the interests of such third person. Section 574 18 deals with settlement of certain items with intermediaries of cultivators as bhumidhars. It is the claim of the appellants that under this section they have been given rights of a bhumidhar in respect of the properties which are now sought to be sold by the respondents in execution. Section 199 provides that no bhumidhar shall be liable to ejectment. We have not referred very elaborately to the provisions of the Abolition Act or its scheme, because these have been considered in the previous judgment of this Court in Rana Sheo Ambar Singh 's Case(1). It is enough to state that no provision in the Abolition Act prohibiting the attachment and sale of the bhumidhari rights have been brought to our notice by Mr. Goyal. In Rana Sheo Ambar Singh 's Case(1) the facts were briefly as follows. The proprietor of an estate had executed a simple mortgage of his proprietary interest in the estate consisting of 67 villages to the Allahabad Bank Ltd. The Bank obtained a decree and while execution proceedings were pending, the zamindan Abolition Act was passed by virtue of which the estate vested in the State and, consequently, the decree holder Bank could no longer sell the rights of the proprietor in the 67 villageS, mortgaged to it. The Bank made an application to the executing Court to realise the amounts due to it by proceeding against the rights of the judgment debtor as remained in him after the coming into force of the Abolition Act. One of the rights of the judgment debtor which were sought to be proceeded against was the bhumidhari rights created under section 18 of the Abolition Act. The case of the Bank was that the judgment debtor 's proprietary rights in grove land and sir and khudkast lands had been continued under section 18 of the Abolition Act and that, in any event, they constituted substituted security in place of the original proprietary rights mortgaged. The judgment debtor raised objections to execution being taken against his bhumidhari rights. The High Court upheld the view of the executing Court that execution could proceed against the bhumidhari rights. This Court reversed the judgment of the High Court and held that the proprietary rights in sir, khudkast lands and groves vested in the State on the issue of a notification under section 4. This conclusion was reached after rejecting the contention of the decree holder that the proprietary rights in sir, khudkast and grove lands did not vest in the State and that those rights were continued in the landlord under section 18. This Court further held that the Legislature was creating a new right under section 18 and the old proprietary right in sir, khudkast and intermediaries ' grove land had already vested in the State under section 6, and further observed, at p. 448: "We are of opinion that the proprietary rights in sir and khudkast land and in grove land have vested (1) [1962] 2 S.G.R. 441 575 in the State and what is conferred on the intermediary by s.18 is a new right altogether which he never had and which could not therefore have been mortgaged in 1914. " In the later part of the judgment it was further held that the bhumidhari rights created under section 18 are not compensation and that they are special rights conferred on the intermediary by virtue of his cultivatory possession of lands comprised therein and that the decree holder cannot enforce his rights under the mortgage by sale of the bhumidhari rights created in favour of the landlords under section 18, so far as sir, grove land and khudkast lands are concerned and that he can only follow the compensation money under section 6(h); The court finally rejected the contention that bhumidhari rights can be followed as substituted security. It will be seen that in the decision cited above this Court was considering the rights of a mortgagee as such to proceed against the bhumidhari rights and it was in that connection, in view of the specific provision under section 6(h) of the Act and the nature of the new rights created under section 18, that this Court held that the mortgagee was not entitled to levy execution against the bhumidhari rights. The said decision also lays down that the bhumidhari rights granted under s.18 were new rights created by the legislature and the old proprietary fight in the land had already vested under section 6 in the State. It is also clear from the said decision that bhumidhari rights created under s.18 are not compensation and that they are special rights conferred on the intermediary by virtue of his cultivatory possession of the lands comprised therein and bhumidhari rights cannot also be considered as substituted security. The point to be noted, and which has been emphasised in that decision, is that all proprietary rights in the land had vested in the State and that no part of the proprietary rights remained in the landlord after the vesting of the estate in the State. It is further to be seen from that decision that the bhumidhari rights are no part of proprietary rights which the landlord had, prior to vesting. In Krishna Prasad 's Case(1) the question that arose for consideration was whether under the Bihar Land Reforms Act, 1950 (hereinafter called the Bihar Act) it was open to a mortgagee decree holder of an estate which ' had vested in the State to levy execution personally against the mortgagor by attachment and sale of other properties of the mortgagor. It was held by this Court, after a review of the provisions of the Bihar Act which were more or less substantially the same as those of the Abolition Act, that the compensation payable on acquisition of (1) [1962] Supp. 3 S.C.R. 562. 576 a mortgaged estate had been made a kind of substituted security against which the mortgage claim could be enforced under the Bihar Act. It was further held that execution, by way of a personal decree, could only be done eventually if the realisation from the compensation amount was found insufficient to satisfy the decree. We may also refer to the decision of this Court in Shivashankar Prasad Sah vs Baikunth Nath Singh(1). That decision had, again, to deal with the rights of a mortgagee decree holder to proceed against the Bakasht land of the judgment debtors and that right had to be decided under the Bihar Act. Section 6 of tiffs Act, corresponds more or less to section 18 of the Abolition Act. In dealing with the scheme of the Bihar Act and in particular, the effect of section 6 this Court observed: "Reading sections 3, 4 and 6 together, it follows that all Estates notified under s.3 vest in the State free of all encumbrances. The quondum proprietors and tenureholders of those Estates lose all interests in those Estates. As proprietors they retain no interest in respect of them whatsoever. But in respect of the lands enumerated in section 6 the State settled on them the rights of raiyats. Though in fact the vesting of the Estates and the deemed settlement of raiyats in respect of certain classes of lands included in the Estates took place simultaneously, in law the two must be treated as different transactions; first there was a vesting of the Estates in the State absolutely, and free of all encumbranches. Then followed the deemed settlement by the State of raiyat 's rights on the quondum proprietors. Therefore in law it would not be correct to say that what vested in the State are only those interests not coming within section 6. " Finally this Court held that the mortgagee decree holder 's only remedy was to establish their claim under the Bihar Act and get compensation and that they cannot levy execution against the Bakasht land. In our opinion, none of the decisions referred to above, assists the appellants. Those decisions were directly concerned with the rights of the mortgagees as such to levy execution either as against the bhumidhari rights. or personally against the mortgagor or against his other properties. The right to levy execution was claimed by the decree holders as mortgagees after the estate mortgaged to them had vested in the State, under the relevant Acts. Under those circumstances, this Court held that the (1) Civil Appeal No. 368 of 1966 decided on 7. 3. 1969. 577 mortgagees ' remedy was only to proceed against the compensation money as provided under the material provisions of the statute governing the same. None of those decisions had occasion to consider the question that now arises for consideration before us, viz., the rights of a decree holder under the Encumbered Estates Act. We have already referred to the nature of the decree that has been obtained by the respondents. Though at an earlier stage they were mortgagees, it was a simple money decree that was granted to them under section 14(7) of the Encumbered Estates Act and their rights as against the mortgage securities had been extinguished under s.18 of the Encumbered Estates Act. In this view, s.6(h) of the Abolition Act, relied on by Mr. Goyal, does not assist him. It is no doubt true that the decree obtained by the respondents shall not be executable except under the provisions of the Encumbered Estates Act. The nature and the extent of the property liable to attachment and sale in satisfaction of the debts due to the respondent, as required under s.19(2)(b) of the Encumbered Estates Act have all been furnished in the decree granted under s.14(7) by the Special Judge and transmitted to the Collector under s.19. Therefore, when the respondents approached the Assistant Collector on May 15, 1959 with an application to recover their debts from the bhumidhari rights of the appellants, they were only in the position of holders of simple money decrees. If so, execution can be levied normally from any property or rights which are liable to be attached or sold unless there is any prohibition imposed by the statute. Section 18, after extinguishing the rights in the property that may have been held under a mortgage or security, specifically provides that ' where any decree is given by the Special Judge they are in substitution of the original rights of a mortgagee or security holder and the decree holder has got the right to recover the amount of the decree in the manner and to the extent prescribed. Section 24 gives a right to the decree holders to recover their dues from the property of a debtor other than proprietary rights in land. Therefore the question is whether the bhumidhari rights conferred on the appellants under section 18 of the Abolition Act are property other than proprietary rights in land. If they are rights other than proprietary rights, they can be proceeded against under section 24 read with section 18 of the Encumbered Estates Act. The decisions of this Court, referred to above, clearly lay down that the proprietary rights of the landlord in the land vest in the State on the passing of the relevant Abolition Acts. It has also been emphasised in Rana Sheo Ambar Singh 's Case(1) and as is also clear from section 6 of the Abolition Act that all rights, (1) ; 578 title and interest of all the intermediaries in every estate shall cease and be vested in the State, on the issue of a notification under section 4 of the Abolition Act. If so, it follows that after the estate vested in the State, the appellants had no proprietary rights left in them; and the bhumidhari rights, as held by this Court, being new rights created for the first time in favour of the appellants under section 18 of the Abolition Act and not proprietary rights, the respondents are entitled to proceed against those rights under section 24 of the Encumbered Estates Act. Mr. Goyal next urged that the bhumidhari rights have not been mentioned in the decree granted under section 14(7) nor have they been reported by the Special Judge under section 19(2) as being liable to attachment and sale as is necessary under section 24. True it is that these rights, as such, have not been mentioned. But a perusal of section 19(2)(b) clearly shows that it was not necessary that the interest or rights of the debtor should be mentioned in the decree, because the requirement is only regarding the nature and extent of the property and that has been mentioned in the decree granted in favour of the respondents by the Special Judge under section 14(7), and it has been reported to the Collector under section 19(2). If so, the requirements of sections 19 and 24 have been complied with. Hence it follows that this contention of Mr. Goyal cannot be accepted. There is also another reason for rejecting the said contention. Bhumidhari rights have been created in favour of the appellants only on July 1, 1952, the date of vesting, on the issue of a notification under section 4 of the Abolition Act, whereas the amended decree in favour of the respondents has been passed under s.14(7) as early as January 23, 1938. When the Encumbered Estates Act permits the respondents to levy execution against the property of the debtor other than proprietary rights in land and when there is no prohibition in the Abolition Act against execution of decrees obtained under the Encumbered Estates Act against such rights, it follows that the decree holder respondents are entitled to proceed against the bhumidhari rights and therefore the appellate order of the Additional Commissioner, dated March 24, 1965 and the revisional order of the Board of Revenue, dated October 15, 1965 upholding the right of the respondents in this regard, are correct. The further question that arises is whether the respondents are entitled to levy execution against the trees in the possession of the appellants in execution of their decree. No doubt, the general objection that was taken by the appellants before the Assistant Collector was that the groves formed part of the sir property and . therefore the question of their being auctioned does not arise and that the groves do not form part of the list mentioned in the decree passed by the Special Judge. On the other hand, according to. 579 the respondents, the trees never vested in the State under the Abolition Act and, as the appellants continued to be the owners of the same, execution can be levied against the trees. The contention of the appellants that the trees have not been mentioned in the list need not detain us because the amended decree passed by the Special Judge clearly refers to trees standing on the lands described in the Schedules. Then the question is whether the trees belong to the respondents. Section 3(26) of the Abolition Act states that the words and expressions, mentioned therein and which have not been defined in the Act but used in the U.P. Tenancy Act, 1939 shall have the meaning assigned to them in the latter Act. Two, among the various expressions referred to in section 3(26) are 'grove ' and 'grove holder '. Therefore we have to look into the U.P. Tenancy Act to find out the meaning of the expression 'grove ' Section 3(6) of the U.P. Tenancy Act, 1939 (U.P. Act XVII of 1939) defines the expression 'grove land ' as follows: "3(6). 'grove land ' means any specific piece of land in a mahal or mahals having trees planted thereon in such numbers that they preclude or when full grown will preclude, the land or any considerable portion thereof from being used primarily for any other purpose and the trees on such land constitute a grove. " From the above, it will be seen that 'grove ' is something different ' from 'grove land ' because the definition says that the trees on such land, viz., 'grove land ', constitute a 'grove '. Section 6 of the Abolition Act, dealing with the consequences of the vesting of an estate in the State, among other things, states in cl. (a): "6(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, ferries, pathways, abadi, sites, hats, bazars and melas (other than hats, bazars and melas held upon land to which clauses (a) to (c) of sub section (1) of Section 18 apply), and (ii) in all sub soil in such estates including rights, if any, in 1 mines and minerals, whether being worked or not, shall cease and be vested in the State of Uttar Pradesh free from all encumbrances. " 580 Clause (a), referred to above, deals with grove lands and trees, separately. The grove land referred to above, will be the grove land defined in section 3(6) of the U.P. Tenancy Act. Clause (a) also refers to the right, title and interest of intermediaries in trees ceasing and vesting in the State. From among the trees, such of the trees as constitute a grove have been excluded from the operation of cl. (a) of section 6. Therefore, the excluded category of trees forming the grove cannot be considered to have vested in the State on the abolition of the estates. Section 18, which creates bhumidhari rights deals, among other items, with "intermediary 's grove". The expression "intermediary 's grove" is defined in section 3 (13) of the Abolition Act as grove land held or occupied by an intermediary as such. We do not find any material on record to draw an inference that the appellant raised any contention that the trees constituted an 'intermediary 's grove '. From what is stated above, it will be seen that the trees constituting the grove, have not vested in the State and therefore they could not have formed the subject of creation of bhumidhari rights under section 18. Therefore the trees constituting the grove, being the debtor 's property, are liable to be proceeded with in execution under section 24 of the Encumbered Estates Act. Even if it is to be held that the appellants have got bhumidhari rights over the trees constituting the grove, as already held by us, these rights can be proceeded with under section 24 of the Encumbered Estates Act. Therefore, from either point of view, the trees constituting the grove are liable to be proceeded against, for realisation of the decree by the respondents. The result is the appeal fails, and is dismissed with costs. V.P.S. Appeal dismissed.

The predecessors in interest of the appellants were landlords owning an estate including agricultural land, trees, groves etc., in U.P., and were heavily indebted to the respondents. Most of the debts were secured. On the application of the landlords proceedings were taken under the U.P. Encumbered Estates Act, 1934, and a decree was passed under section 14(7) of the Act in favour of the respondents in 1938. The nature and extent of property liable to attachment and sale, as required by section 19(2)(b) of the Act, were furnished to the executing authority. By virtue of a notification under the U.P. Zamindari Abolition and Land Reforms Act. 1950, the estate vested in the State, and new rights, namely, bhumidhari rights in the lands in the estate, were created in 1952 in favour of the appellants who were the successors in interest of the landlords. In 1959. the respondents applied under section 24 of the Encumbered Estates Act to recover the amount decreed to them, by proceeding against the bhumidhari rights and trees belonging to the appellants. On the question whether: (1 ) the bhumidhari rights, and (2) the trees, could be proceeded against, HELD: (1) Though the respondents were mortgagees their rights as such were extinguished under the Encumbered Estates Act and the decree in theft favour under the Act was only a simple money decree which was not executable except under the provisions of the Act. Under section 24 execution can be levied from any property or rights, other than proprietary rights in land, which are reported under section 19 as liable to be attached and sold. On the passing of the U.P. Abolition Act the proprietary rights of the landlords in the land vested in the State and thereafter, the appellants had no proprietary rights left in them. The bhumidhari rights being new rights created for the first time in favour of the appellants under the Abolition Act, are not proprietary rights. In the present case, the requirements of sections 19 and 24 have been complied with, even though the bhumidhari rights were not mentioned as being liable to attachment and sale because. , (i) under section 19(2)(b) the requirement is only to report the nature and extent of the property liable to attachment and sale and not the interests or rights of the debtor in the property; and (ii) the decree under the Encumbered Estates Act was passed in 1938 while the bhumidhari rights were created only in 1952, and hence, could not be specifically mentioned in the decree. When the Encumbered Estates Act permits the respondents to levy execution against the property of the debtor other than the proprietary rights in land, and when there is no prohibition in the Abolition Act against execution of a, decree obtained under the Encumbered Estates Act, against the bhumidhari rights, the respondents were entitled to proceed against such rights. [575 A B; 577 B E; G; 578 A.F] 567 Rang Sheo Am,bar Singh vs Allahabad 'Bank Ltd. ; , followed. (2) Unders; 6(a) of the Abolition Act and section 3.(6)of the U.P. Tenancy Act, 1939. ',the right title and interest of intermediaries in trees and grove land, but not in trees constituting a grove, cease, and vest in the State. Since the trees constituting a grove have not vested in the State ,and could not have formed the subject of creation of bhumidhari rights they are the debtor 's property and, are liable to be proceeded against in execution under section 24 of the Encumbered Estates Act. Even if the appellants got bhumidhari rights over the trees constituting the grove, they could be proceeded against; because, bhumidhari rights could be proceeded against in execution. [580 B, C E]

Civil Appeal No. 996 of 1979 From the Judgment and Order dated 26.10.78 of the Madhya Pradesh High Court in Misc. Petition No. 176/74. S.N. Kacker, S.K. Ghambir and Ashok Mahajan for the appellant. T.U. Mehta, S.S. Khanduja, R.D. Jain, Mehfooz Khan and Yashpal Dhingra for the respondents. The Judgment of the Court was delivered by CHANDRACHUD, C.J. Respondent 1 was appointed as an Agent of the appellant Bank, which is a co operative society registered under and governed by the provisions of the Madhya Pradesh Co operative Societies Act. By an order dated June 5, 1968 passed by one S.P. Jain, the services of respondent 1 were terminated on the ground that he had over stayed the leave granted to him. Aggrieved by that order, respondent 1 raised a dispute under section SS(2) of the Act, before the Registrar of the Co operative Societies. The Registrar referred the matter to the Deputy Register, who by an order dated February 27, 1972, allowed the claim of respondent 1 on the ground that the order terminating the services was not in accordance with Rules 44 and 45 of Co operative Bank Employees Service Rules. He also ordered the reinstatement of respondent 1 with full back salary and allowances. In an appeal filed by the Bank, the Addl. Registrar took the view that the only remedy which was open to respondent 1 was to claim damages for wrongful termination of his services and that, therefore, he could not be reinstated in service Respondent 1 than filed an appeal before the Board of Revenue which held by an order dated August 28, 1974, that, S.P. Jain who held the enquiry against respondent 1 and passed the order terminating his services had no power to do so. The Board of Revenue set aside the order of termination and remanded the matter to the Bank for disposal in accordance with law. The writ petition filed by the Bank in the High Court of Madhya Pradesh was dismissed on October 26, 1973. According to the High Court, since section P. Jain had no authority to hold the enquiry or to pass the impugned order of dismissal, the said order had no existence in the eye of law and, 858 therefore, respondent 1 should be deemed to be in service and be reinstated. Aggrieved by the judgment of the High Court the Bank has filed this appeal. We are in agreement with the conclusion to which the High Court has come, though for somewhat different reasons which are as follows: "The Board of Directors of the appellant Bank was superseded by the Registrar of the Co operative Societies by an order dated July 25, 1967 and its powers were vested in Madhya Pradesh State Cooperative Bank, Jabalpur, which is an Apex Bank, as "officer in charge" of the superseded Bank. By Resolution No. 23 dated May 19, 1968, the Apex Bank confirmed the action of its Chairman/Vice Chairman in deputing, amongst others S.P. Jain as the Chief Executive officer of the superseded Bank. The Apex Bank had no authority or power so to appoint S.P. Jain for two reasons: In the first place, the Apex Bank, being an appointee of the Registrar, had no authority to divest itself of the power conferred upon it by the Registrar and to invest S.P. Jain with that power. The only authority which could have conferred the necessary power. On S.P. Jain was the Registrar. The Registrar did not confer that power upon S.P. Jain under Section 53(4) of the Act". In the result, this appeal is dismissed with costs. We would like to add that as long as 16 years have passed since the impugned order was passed and that too by a person who had no authority to pass it. Secondly, the consensus of opinion of the various authorities which have dealt with this matter is that, in overstaying the leave granted to him, respondent l was not guilty of "misconduct". It is desirable and prudent that no further proceedings be taken against respondent 1 for the alleged default on his part, which is the subject matter of the present proceedings. We modify the order of the High Court by directing that respondent l will be entitled to fifty per cent of the , back wages and i allowances only from June 5, 1968 until September 30, 1984. The appellant will back respondent 1 in its service with effect from October 1, 1984. M.L.A. Appeal dismissed.

The Board of Directors of the appellant bank was superseded by the Registrar of the Cooperative Societies and its powers were vested in the M.P. State Cooperative Bank which is an Apex Bank as "officer in charge" of the superseded bank. The Apex Bank appointed one S.P. Jain as the Chief Executive officer of the appellant bank. Respondent No. 1, an employee of the appellant bank, was dismissed from service by S.P. Jain on the ground that he had overstayed the leave granted to him. The Dy. Registrar of Cooperative Societies set aside the said order of dismissal and directed reinstatement of respondent No. 1, but it was reversed by the Addl. Registrar in appeal by the appellant Bank. In further appeal by Respondent No. 1 the Board of Revenue set aside the order of termination. The High Court in the Writ Petition filed by appellant Bank agreed with the Board of Revenue and also ordered reinstatement of Respondent No. 1. Dismissing the appeal by the appellant Bank and modifying the order of the High Court, ^ HELD: The Apex Bank had no authority or power so to appoint S.P. Jain for two reasons: In the first place, the Apex Bank, being an appointee of the Registrar, had no authority to divest itself of the power conferred upon it by the Registrar and to invest S.P. Jain with that power. The only authority which could have conferred the necessary power on S.P. Jain was the Registrar. The Registrar did not confer that power upon S.P. Jain under section 53 (4) of the Act. Therefore the said order had no existence in the eye of law. [858D E] 857

Civil Appeal No. 1402 of 1979. Appeal by Special Leave from the Judgment and Order dated 16 2 1979 of the Allahabad High Court in Second Appeal No. 430/70. P. C. Bhartari for the Appellant. L. M. Singhvi and Pramod Swarup for the Respondent. The Judgment of V. D. Tulzapurkar, J. and A. P. Sen, J. was delivered by Tulzapurkar, J. D. A. Desai, J. gave a dissenting Opinion. TULZAPURKAR, J. This is a tenant 's appeal by special leave directed against the judgment and decree passed by the Allahabad High Court on February 16, 1979 in Second Appeal No. 430 of 1970 whereby the High Court decreed the respondents ' (landlords) suit for ejectment against the appellant (tenant) and the only question of substance raised in the appeal is whether when the landlords ' notice demanding arrears and seeking eviction is sent by registered post and is refused by the tenant the latter could be imputed the knowledge of the contents thereof 60 that upon his failure to comply with the notice the tenant could be said to have committed willful default in payment of rent ? The question arises in these circumstances: The appellant occupied shop No. 5 in Ivanhoe Estate, situated at Landure Cantonment, Mussorie, originally owned by one Parvij Waris Rasool, on an yearly rental of Rs. 250 payable by December 31, every year. The property at all material times was admittedly governed by the U.P. Cantonment, (Control of Rent & Eviction) Act, X of 1952 a Central Act and, in my view, all the Courts below rightly dealt with the matter as being governed by that Act and not by U.P. (Temporary) Control of Rent and Eviction Act, 1947, much less by the later U.P. (Rent and Eviction) Act, 1972. The respondents purchased the aforesaid Estate form its previous owner on November 27, 1964 and the previous owner attorned the tenancy of the appellant to the respondents along with the rental due from him for the year 1964. The appellant continued to be the tenant of the shop during the years 1965 and 1966 as well but since he did not pay the rent the respondents on November 9, 1966 gave a combined notice demanding payment of arrears and seeking ejectment on termination of tenancy which was refused by him on November, 10, 1966. On his failure to comply with the requisitions contained in the notice the respondents filed a suit against the appellant seeking eviction as well as recovery of rents and mesne profits. 967 The suit was resisted by the appellant, inter alia, on the ground that the rent of the accommodation payable to the previous owner was Rs. 250 per annum less 10% rebate on account of repairs; that in 1964 at the intervention of some common friends he agreed to vacate and did surrender the residential portion of the shop comprising two rooms, one kitchen, one bath room and one varandah at the back of the shop in consideration of respondents relinquishing the rental of Rs. 250 due from him for the year 1964; that for the years 1965 and 1966 the rental for the remaining shop was reduced by agreement to Rs. 50 per annum less rebate for repairs and that he had sent a cheque for the amount due to the respondents. He denied that he has committed default in payment of rents and averred that no notice of demand and ejectment was served on him and consequently prayed for dismissal of the suit. On an appreciation of the evidence led by the parties before it the Trial Court came to the conclusion that initially the rent fixed was Rs. 250 per year but after the respondents ' purchase of the property the appellant vacated the residential portion of the shop under an agreement arrived at between the parties where under there was relinquishment of rent due for 1964 and that the rent for the main shop was fixed at Rs. 100 per annum and that no rebate of any kind had been agreed to at any time on account of repairs. Regarding the arrears of rent outstanding against the appellant the Trial Court held that rent for the years 1965 and 1966 had not been paid and was due from him but it held that the notice dated November 9, 1966 was not served on the appellant and hence he could not be held to have committed willful default in payment of arrears of rent. In this view of the matter the Trial Court dismissed the suit insofar as the relief of eviction was concerned but decreed it for arrears of rent at the rate of Rs. 100 per annum. Aggrieved by that judgment and decree the respondents filed an appeal to the District Court, Dehradun. The learned District Judge concurred with the findings of the Trial Court that the rental for the year 1964 had been relinquished and that the rental of the front portion of the shop had been fixed at Rs. 100 per annum. He further held that the notice was tendered to the appellant on November 10, 1966 but he declined to accept it and hence there was service by refusal, but in his opinion despite such service it could not be presumed that the appellant had knowledge about the contents of that notice and consequently he could not be said to have committed any willful default in the payment of rent. In the result the appeal was dismissed. The respondents preferred Second Appeal No. 430 of 1970 to the High Court. In that appeal the tenant sought to reagitate the question 968 whether or not the notice was tendered to him and was refused by him on the ground that the finding had been recorded by the District Court without application of mind to the statement on oath made by him to the effect that no postman had ever gone to him with a registered letter either on 9th or 10th November, 1966 and he had not declined to receive any registered letter but the High Court refused to entertain the contention inasmuch as it found that the learned District Judge had referred to this part of the appellant 's evidence as also the postman 's evidence on the point and that on an appreciation of such rival evidence on record he had recorded a finding that the notice was tendered to the appellant but it was refused by him; in other words in the absence of animus being attributed to the postman the District Judge had preferred the postman 's evidence to that of the appellant 'section The High Court, therefore, accepted the finding of fact recorded by the District Court that there was service of the notice on the appellant by refusal. On the further question as to whether when such refusal had been established, the appellant could be imputed with the knowledge of the contents of the notice, the High Court, following its two previous decisions in Shri Nath and another vs Smt. Saraswati Devi Jaswal and Fanni Lal vs Smt. Chironja, held that when notice was tendered to the tenant and when the latter refused to accept the same, knowledge of the contents of the notice must be imputed to him. The District Judge 's view in this behalf was thus reversed and since there was failure on the part of the appellant to pay the rent within one month of the service of notice upon him, the High Court held that he had committed willful default within the meaning of section 14(a) of the Act. Accordingly the High Court allowed the appeal and the respondents ' prayer for ejectment was granted but the appellant was given three months" time to vacate the accommodation. The tenant has come up in appeal to this Court. Counsel for the appellant vehemently contended before us that the High Court was in error in taking the view that when service by refusal had been effected the tenant must be deemed to have knowledge about the contents of the notice, for, no such presumption could be drawn especially when it was clear on evidence that neither the registered envelope was opened either by the tenant or by the postman nor the contents thereof read before the same was returned to the postman. He further urged that the envelope bore the seal of Shri section P. Singh, Advocate and the appellant could not, therefore, know that the notice was from his landlords; he also pointed out that the appellant was illiterate and did not know English and since the address on the envelope as 969 well as the seal of the lawyer were in English the appellant could not even know who the sender of the notice was. Counsel, therefore, urged that in the peculiar circumstances of the case the learned District Judge had rightly recorded a finding that the knowledge of the contents of the notice could not be imputed to the appellant and, therefore, the appellant could not be regarded as a willful defaulter in the matter of payment of rent. In support of this contention strong reliance was placed by him on the decision of the Bombay High Court in the case of Vaman Vithal Kulkarni and Ors. vs Khanderao Ram Rao Sholapurkar where the following observations of Beaumont, C. J., appear at page 251: "In case of defendants 4 and 5 a registered letter containing the notice was sent to them duly addressed, and service : is alleged to have been refused. In fact the refusal was not proved, as the postman who took the letter and brought it back was not called. But in any case, even if the refusal had been proved, I should not be prepared to hold that a register ed letter tendered to the addressee and refused and brought back unopened, was well served. There are, I know, some authorities in this Court to the contrary, but it seems to me impossible to say that a letter has been served so as to bring the contents to the notice of the person to whom the letter is addressed, if the agent for service states that in fact the notice was not served, although the reason may have been that the addressee declined to accept it. One cannot assume that because an addressee declines to accept a particular sealed envelope he has guessed correctly as to its contents " Counsel also referred to some other decisions including that of the Andhra Pradesh High Court in Mahboob Bi vs Alvala Lachmiah but these other decisions do not touch the aforesaid aspect of visiting the addressee with the knowledge of the contents. Of the refused notice but have expressed the view that refusal of registered notice without more may not amount to proper service and hence it is unnecessary to consider them. But placing strong reliance upon the observations of Chief Justice Beaumont quoted above counsel for the appellant urged that the High Court ought to have confirmed the finding of the learned District Judge that the appellant could not be presumed to have known the contents of the notice or that the notice was one demanding arrears of rent simply because he refused to accept the same. On the other hand, counsel for the respondents contended before us that both under section 27 of the General clauses Act, 1897 and section 114 of 970 the Indian Evidence Act presumption of due service could arise if the notice was sent to the tenant by properly addressing the same, prepaying and sending the same by registered post and it was pointed out that in the instant case as against the denial by the appellant there was positive oath of postman (Kund Ram P.W. 2) who was examined by the respondents to prove the fact that the registered letter containing the notice was tendered to the appellant and when he declined to accept it the postman had made endorsement in his hand on the envelope "Refused. Returned to the sender". Counsel, therefore, urged that in view of such positive evidence of postman led by the respondents which had been accepted by the learned District Judge, the High Court was justified in holding that the appellant must be imputed with the knowledge of the contents of the notice. In this behalf counsel for the respondents placed reliance on the Privy Council decision in Harihar Banerji and Ors. vs Ramshashi Roy and Ors and Madras decision in Kodali Bapayya and Ors. vs Yadavalli Venkataratnam and Ors and the two decisions of the Allahabad High Court relied upon by the High Court. Counsel pointed out that the Madras High Court in Kodali Bapayya 's case (supra) and the Allahabad High Court in its Full Bench decision in Ganga Ram vs Smt. Phulwati have dealt with the Bombay decision and have expressed their disagreement with the view expressed therein. Section 27 of the deals with the topic 'Meaning of service by post ' and says that where any Central Act or Regulation authorises or requires any document to be served by post, then unless a different intention appears, the service shall be deemed to be effected by properly addressing, pre paying and posting it by registered post, a letter containing the document, and unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post. The section thus arises a presumption of due service or proper service if the document sought to be served is sent by properly addressing, pre paying and posting by registered post to the addressee and such presumption is raised irrespective of whether any acknowledgement due is received from the addressee or not. It is obvious that when the section raises the presumption that the service shall be deemed to have been effected it means the addressee to whom the communication is sent must be taken to have known the contents of the document sought to be served upon him without any thing more. Similar presumption is raised under Illustration (f) to section 114 of the Indian Evidence Act whereunder it is stated that the Court 971 may presume that the common course of business has been followed in h a particular case, that is to say, when a letter is sent by post by pre paying and properly addressing it the same has been received by the addressee. Undoubtedly, the presumptions both under section 27 of the as well as under section 114 of the Evidence Act are rebuttable but in the absence of proof to the contrary the presumption of proper service or effective service on the addressee would arise. In the instant case, additionally, there was positive evidence of the postman to the effect that the registered envelope was actually tendered by him to the appellant on November 10, 1966 but the appellant refused to accept. In other words, there was due service effected upon the appellant by refusal. In such circumstances, we are clearly of the view, that the High Court was right in coming to the conclusion that the appellant must be imputed with the knowledge of the contents of the notice which he refused to accept. It is impossible to accept the contention that when factually there was refusal to accept the notice on the part of the appellant he could not be visited with the knowledge of the contents of the registered notice because, in our view, the presumption raised under section 27 of the as well as under section 114 of the Indian Evidence Act is one of proper or effective service which must mean service of everything that is contained in the notice. It is impossible to countenance the suggestion that before knowledge of the contents of the notice could be imputed the sealed envelope must be opened and read by the addressee or when the addressee happens to be an illiterate person the contents should be read over to him by the postman or someone else. Such things do not occur when the addressee is determined to decline to accept the sealed envelope. It would, therefore, be reasonable to hold that when service is effected by refusal of a postal communication the addressee must be imputed. with the knowledge of the contents thereof and in our view, this follows upon the presumptions that are raised under section 27 of the and section 114 of the Indian Evidence Act. Turning to the Bombay decision in Vaman Vithal 's case (supra), We would like to point out two aspects that emerge clearly from the very observations which have been strongly relied upon by counsel for the appellant. In the first place, the observations clearly show that the refusal to accept the notice was not satisfactorily proved in the case inasmuch as the postman who took the letter and brought it back had not been examined; consequently the further observations made by the leaned Chief Justice were unnecessary for decision on the point and as such will have to be regarded as obiter. 972 Secondly, while making those observations the learned Chief Justice WAS himself conscious of the fact that there were some authorities of that Court taking the contrary view. Having regard to these aspects it is difficult to hold that the concerned observations lay down the correct legal position in the matter. In any event we approve of the view taken by the Allahabad High Court in its three decisions, namely, Sri Nath 's case, Fanni Lal 's case and Ganga Ram 's case (supra) and would confirm the High Court 's finding on the point in favour of the respondents. Counsel for the appellant then faintly argued that the respondents suit was not maintainable under section 14(1) of the Act inasmuch as no permission of the District Magistrate had been obtained by the respondents before filing the suit as required by section 14 and in this behalf reliance was placed on section 14(a) of the Act which ran thus: "14. Restrictions on eviction. 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, namely: (a) that the tenant has willfully failed to make payment to the landlord of any arrears of rent within one month of the service upon him of a notice of demand from the landlord. " According to counsel for the appellant the aforesaid provision clearly shows that under the Act two safeguards were available to a tenant (i) eviction could not be had by any landlord except on one or more of the grounds specified in cls. (a) to (f) of section 14 and (ii) no suit for eviction even on those grounds specified in cls. (a) to (f) could be instituted without the permission of the District Magistrate, and admittedly the landlords in the instant case had filed the suit against the appellant without obtaining the permission of the District Magistrate. He, therefore, urged that the Civil Court had no jurisdiction to entertain the suit and the decree was without jurisdiction. It must be observed that no such contention was raised by the appellant in any of the Courts below presumably because the appellant as well as this lawyer knew how an identical provision contain ed in section 3(1) of the U.P. (Temporary) Control of Rent and Eviction Act, 1947, an allied enactment, had been judicially interpreted by in this Court in Bhagwan Dass vs Paras Nath Section 3 of the U.P. Act 3 of 1947 ran thus: 973 "3. 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: (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. " This Court in Bhagwan Dass case Asupra) has explained at page 305 of the report the legal position arising on a grammatical construction of section 3(1) thus: "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. " It would be conducive to judicial discipline to interpret an identical provision contained in section 14(1) of the U.P. Cantonment (Control of Rent & Eviction) Act, 1952 in a similar manner. In other words, under section 14(1) of the concerned Central Act permission of the District Magistrate was required if the landlord sought eviction of his tenant on any ground other than those specified in cls. (a) to (f) and not when it was sought on any of the grounds specified in cls. (a) to (f). (If may be stated that both the enactments have since been repealed). It is, therefore, not possible to accept the contention of the counsel for the appellant that the instant suit filed by the respondents against the appellant could not be entertained by the Civil Court. In the result the appeal fails and is dismissed. However, having regard to all the facts and circumstances of the case there will be no order as to costs and we grant the appellant six months time to vacate. DESAI, J. I have very carefully gone through the judgment prepared by my learned brother Mr. Justice V. D. Tuzapurkar, but I regret my inability to agree with the same. 974 The relevant facts leading to the appeal by special leave have been succinctly set out in the main judgment and therefore, I would straightway proceed to deal with the three important questions raised in this appeal. The first and the principal question which goes to the root of the matter is about the construction of section 20(2) (a) of the Uttar Pradesh Urban Buildings (Regulation of Letting, Rent & Eviction) Act, 1972 ( 'Rent Act ' for short). It reads as under: "20. Bar of suit for eviction of tenant except on specified grounds: (2) A suit for the eviction of a tenant from a building after the determination of his tenancy may be instituted on one or more of the following grounds namely: (a) that the tenant is in arrears of rent for not less than four months, and has failed to pay the same to the landlord within one month from the date of service upon him of a demand :" There is a proviso to this sub section which is not material for the purpose of this appeal. A brief resume of concurrently found facts which would high light the question of construction would be advantageous. Appellant was inducted as a tenant of the premises by its former owner on a rent of Rs. 250/ per annum in the year 1964, on a request by the then landlord, appellant tenant surrendered a portion of the premises, comprising two rooms, a kitchen, a bathroom and a verandah at the back of the shop, retaining only possession of the shop, consequently reducing the rent by agreement between the parties at the rate of Rs. 100/ per annum. It is thus an agreed and incontrovertible fact that the appellant tenant is a tenant of a shop on an yearly rent of Rs. 100/ , payable at the end of every year. The focus should immediately be turned to the provision of law under which the landlord seeks to evict this tenant. According to respondent landlord she served notice dated November 9, 1966, terminating the tenancy of the appellant as the appellant tenant was a defaulter within the meaning of section 20(2) (a) and, therefore, she all was entitled to a decree for eviction as she has satisfactorily proved all the requirements or ingredients of section 20(2) (a). Accepting the finding of fact that the appellant is a tenant liable to pay rent 975 @ Rs. 100/ per annum, the crux of the matter is whether his case is covered by section 20(2) (a). What does section 20(2) (a) postulate and what are its components which when satisfied, the landlord would be entitled to evict the tenant ? On analysis following ingredients of section 20(2) (a) would emerge each of which will have to be satisfied before the landlord 1 would be eligible to obtain a decree for eviction, viz: (i) Tenant must be a tenant of premises governed by the Rent Act; (ii) That the tenant is in arrears of rent for not less than four months; (iii) That such a tenant has to pay rent in arrears within a period of one month from the date of service upon him of a notice of demand. In this case, the tenant is a tenant of premises governed by tho Rent Act. The crucial question is whether the second ingredient, as extracted above, is satisfied by the landlord. The attention has to be focused on the expression 'in arrears of rent for not less than four months '. What does this expression signify ? As contended on behalf of the respondent that whatever be the default in payment of rent, the notice can be served after the default has continued for a period of four months, and failure to comply with the requisition in the notice would disentitle the tenant to the protection of Rent Act. Alternatively it was contended that the expression in arrears of rent for not less than four months ' on a literal grammatical construction would signify that rent is payable by the month and that the tenant has committed a default in payment of four months ' rent and further failed to comply with the requisition made in the notice within the stipulated period of one month and only then the protective umbrella of the Rent Act would be removed and the tenant would be exposed to a decree for eviction. The two rival constructions raised a question of construction of a sub section in a statute primarily enacted as can be culled out from the long and short title of the Rent Act, being regulation of letting and rent and arbitrary eviction of tenant from the premises to which the rent Act would apply. It is a socially beneficent statute and in construing such statute certain well recognised canons of construction have to be borne in mind. Undoubtedly, the dominant purpose in construing the statute is to ascertain the intention of the legisla 976 ture. This intention, and, therefore, the meaning of the statute, is primarily to be sought ill the words used in the statute itself, which must, if they are plan and unambiguous, be applied as they stand, however strongly it may be suspected that the result does not re present the real intention of legislature (see Inland Revenue Commissioner vs Hinchy). In approaching the matter from this angle, it is a duty of the Court to give fair and full effect to statute which is plain and unambiguous without regard to the particular consequence in a special case. Even while giving liberal construction to socially beneficent legislation, if the language is plain and simple the making of a law being a matter for the legislature and not courts, the Court must adopt the plain grammatical construction (see River Wear Commissioners vs Adamson) The Court must take the law as it is. And, accordingly, it is not entitled to pass judgment on the propriety or wisdom of making a law in the particular form and further the Court is not entitled to adopt the construction of a statute on its view of what Parliament ought to have done. However, when two constructions are possible and legitimate ambiguity arises from the language employed, it is a plain duty of the Court to prefer and adopt that which enlarges the protection of a socially beneficent statute rather than one which restricts it. In Mohd. Shafi vs Additional District & Sessions Judge (VII), Allahabad and Others, this Court while interpreting the explanation (iv) to section 21 of the Rent Act observed that where the language is susceptible of two interpretations, the Court would prefer that which on larges the protection of the tenants rather than one which restricts it. It was further observed that the construction that the Court adopted would be more consistent with the policy and attainment of the legislation which is to protect the possession of the tenant unless the landlord establishes a ground for eviction. Similarly in Gurucharan Singh vs Kamla Singh & Ors. while interpreting the provision of section 6 of the Bihar Land Reforms Act, 1950, this Court observed that the Court was called upon to interpret a land reforms law are not just an ordinary state and, therefore, the socioeconomic thrust of the law in these areas should not be retarded by judicial construction but filliped by the legal process without parting from the object of the Act. It must also be emphasised that where two constructions are possible, the one that must be preferred is one which would accord with reason and justice (see H. H. Maharaja 977 dhiraja Madhav Rao Jivaji Rao Scindia Bahadur of Gwalior & Ors. vs Union of India & Another. Bearing in mind this interpretative approach let us hark back to the expression used in s.20(2)(a) and ascertain whether the exception is susceptible of one construction only or more than one construction and whether there is ambiguity and if so, in which direction the interpretative jurisprudence must move. The expression "the tenant is in arrears of rent for not less than four months" may suggest that the tenant is in arrears of rent for one or any number of months and that the arrears have fallen due four months back meaning thereby that within four months there was no attempt on the part of the tenant to pay up the arrears and cure the default. This construction would imply that if the tenant is in arrears of rent for one month only, an action under the relevant clause can be commenced against him if this infault has continued for a period of four months even if the tenant has paid rent for subsequent months and on the expiry of the period of four months from the date on which the rent had become due and payable for one month a notice of demand can be served and on the failure of the tenant to comply with the requisition made in the notice he would be liable to be evicted. In other words, a period of four months must elapse between the date of default and the service of notice irrespective of the fact whether the default is in payment of one month 's rent or more than one month 's rent. In this constriction it is implicit that failure to pay rent for four different months is not a sine qua non for commencing action under section 20(2) (a). What is of the essence of matter is that a period of four months must elapse between the date of default complained of and service of notice under section 20(2) (a). It was said that the legislature has given locus poenitentiae to the tenant to repair the default within the period of four months. This approach overlooks the obvious that before action can be commenced under section 20(2) (a) a notice has to be served and tenant is given locus poenitentiae to repair the default within one month. It appears that by section 43 of the Rent Act the United Provinces (Temporary) Control of Rent and Eviction Act, 1947 ( 'Repealed Act ' for short) was repealed. Section 3 of the Repealed Act enumerated grounds on which a tenant could be evicted. Sub clause (a) of section 3 provided that the landlord would be entitled to eviction of a tenant if the tenant was 'in arrears of rent for more than three months ' and had failed to pay the same to the landlord within one month of the service upon him of the notice of demand. The language employed in the repealed provision led 978 the Court to hold that whatever be the default in payment of rent, a period of three months should have expired from the date of default whereafter alone the landlord would be entitled to serve a notice as provided in the relevant sub clause. It was so held by the Allahabad High Court in Ram Saran Das vs L. Bir Sain, but this decision was overruled in Jitendra Prasad vs Mathur Prasad. In order to avoid ally such controversy, in the Repealing statute the expression 'arrears of rent for more than three months ' has been substituted by the expression 'arrears of rent for not less than four months '. This is contemporaneous legislative exposition which clearly brings out the legislative intention that the landlord would be entitled to evict the tenant if the rent is in arrears for not legs than four months. Therefore, it would clearly imply that before the landlord can commence action under sub clause (a), the tenant must have committed default in payment of rent for a period of four months. Therefore, the first suggested construction is not borne out by the language employed in the section. The question still remains: what does the expression 'in arrears of rent for not less than four months ' signify ? It is implicit in the expression that the rent must be payable by month. Irrespective of the fact whether the tenancy is a yearly tenancy or a monthly tenancy, it is implicit in sub clause (a) that either by the contract of lease or by oral agreement or by long usage the tenant is liable to pay rent at the end of every month. In other words, the unit for computation of rent is one month, that is, rent becomes due and payable every month. It is only such a tenant who may fall in arrears for a period of four months. Every month the tenant would be liable to pay the rent in the absence of a contract to the contrary. Thus the rent becomes due and payable at the end of every month. As soon as the month is over the rent becomes due and payable and failure on the part of the tenant to pay the same would dub him as a tenant in arrear of rent for one month. If this process goes on meaning thereby that a period of four months having expired and for each of the four months the rent when It became due and payable was not paid, then alone the tenant could be said to be a tenant in arrears of rent for not less than four months. Two definite ingredients emerge from the expression 'the tenant is in arrears of rent for not less than four months ' (i) that the rent is payable by month; and (ii) the tenant has committed default in payment of rent for four different months and that this default subsists and continues on the date when the landlord invokes the 979 provision of clause (a) and proceeds to serve a notice of demand. Again, if within a period of one month from the date of receipt of the notice the tenant pays up the arrears of rent he does not lose the protection of the Rent Act. The legislature clearly intended to cover those cases of default in payment of rent under clause (a) where the contract of lease provided for payment of rent every month meaning thereby that the unit for liability to pay rent is one month and secondly the tenant has committed default on four different occasions of four different months or four different units agreed upon for payment of rent and that they differ the facility to pay the same has accrued. As stated earlier this is implied in the expression 'the tenant is, in arrears of rent for not less than four months. In this connection one can profitably refer to section 12(3) (a) of the Bombay Rents, Hotel & Lodging House Rates Control Act, 1947, which reads as under: "Where the rent is payable by the month and there is no dispute regarding the amount of standard rent or permitted increases, it such rent or increases are in arrears for a period of six months or more and the tenant neglects to make payment thereof until the expiration of the period of one month after notice referred to in sub section (2), the (2) (Court shall pass a decree) for eviction in any such suit for recovery of possession. " The expression used there is that the rent is payable by month and the tenant is in arrears for a period of six months. In the Rent Act under discussion, a conjoint expression is used that a tenant is in arrears of rent for a period of not less than four months. It only means that where the rent is payable by month and the tenant is in arrears of rent for not less than four months, and that is the clearest intention discernible from the language used in the relevant clause. It was, however, contended that this construction would give an undeserved advantage to the defaulting tenant where the rent is not payable by month. The contention is that a landlord who had agreed to accept rent on an yearly basis would be at the mercy of the tenant because even if the default is contumacious the landlord would not be entitled to evict the tenant and that such could not be the intention of the legislature. It was, therefore, said that the expression 'the tenant is in arrears of rent for not less than four 980 months ' is also susceptible of the meaning that where the rent is payable by year and after the year is over and the rent has become due and payable if the tenant has not paid the rent for four months his case would be covered by clause (a). If a tenant is under a contract with the landlord to pay rent at the end of a specific year agreed to between the parties, could he be said to be a tenant arrears for not less than four months even if he has defaulted in payment of rent at the end of one year l How can a tenant who is to pay rent on the expiry of a specified year be in arrears of rent for not less than four months ? And if that construction is adopted, a tenant who has committed default in payment of rent for one month and the default has continued without repair for a period of Four months even though he has paid rent for subsequent months he would be liable to be evicted, a construction which ought to be rejected on legislative exposition by change in expression adopted in the repealed Act and substituted in the present Act discussed herein above. If that construction is rejected it would be difficult to accept the construction that even of the rent is payable by year once the year is over and a period of four months has elapsed he could be said to be a tenant in arrears of rent for not less than four months. The language does not admit of this construction. Therefore, where the rent is payable by the year clause (a) is not attracted. Now the wild apprehension expressed on behalf of the landlord that such a construction would give an unfair advantage to a tenant who is liable to pay yearly rent need not detain us because the wisdom of enacting a law in a certain manner is for the legislature to decide and not for the court to impose. It may be that the legislature would have intended that such landlords who relied on the income from rent month after month must have a sanction which can be applied if the tenant commits default in payment of rent of four different months but a landlord who apparently does not depend upon the rental income by agreeing to accept yearly rent need not have that sanction and it would be still open to such a landlord to file a suit merely for recovery of rent and not for eviction. Such a thing is not unknown to law because in permanent tenancy and in tenancies of long duration the landlords can only sue for rent and not for eviction on the tenant committing default in payment of rent. Therefore, on examining both the rival constructions one which extends the protection deserves to be accepted in view of the fact that the legislature never intended to provide a ground for eviction for failure to pay rent in case of leases where yearly rent was reserved. Rent Act was enacted to fetter the right of re entry of landlord and this construction accords with the avowed object of the Rent Act. 981 In the instant case the parties are ad idem that the rent is payable by year at the rate of Rs. 100/ per annum. In such a case it could not be said that this tenant was in arrears of rent for not less than four months. His case would not be covered by section 20(2) (a) of the Rent Act and, therefore, the landlord would not be entitled to a decree for eviction on this ground and that was the sole ground on which eviction has been ordered. The second contention is that the High Court was in error in interfering with the concurrent finding of facts while hearing second appeal in February, 1979 and that too without framing the point of law which arose in the appeal. The disputed finding of fact is about the service of notice. If a landlord seeks eviction on the ground of tenant 's default in payment of rent under section 20(2) (a) it is obligatory upon him to serve a notice of demand of the rent in arrears On the tenant and can only seek eviction if the tenant fails to comply with the requisition made in the notice. The appellant tenant in terms contended that no notice was served upon him. On the assertion of the respondent landlord that notice dated November 9, 1966, was served upon the appellant tenant on November 10, 1966, but he refused to accept the same and the refutation thereof by the tenant that no notice was offered to him by the postman nor was any notice refused by him, a triable issue arose between the parties. The learned trial judge framed Issue No. 7 on the question of service of notice. He recorded a finding that the appellant tenant was not served a notice of demand and of ejectment and answered the issue in favour of the appellant tenant. On appeal by the respondent landlord the appellate court framed point No. 2 on the question of service of notice and answered it by observing that the defendant tenant refused to accept the registered notice but no knowledge can be attributed to him of the contents of the registered envelope and, therefore, the tenant could not be said to be guilty of wilful default on the expiry of one month after the service of notice. He accordingly confirmed the finding of the trial court that the plaintiff landlord is not liable to a decree of eviction on the ground mentioned in section 20(2)(a). The landlord approached the High Court in second appeal. When this appeal was heard, section 100 of the Civil Procedure Code after its amendment of 1976 was in force. It restricted the jurisdiction of the High Court to entertain a second appeal only if the High Court was satisfied that the case involved a substantial question of law. Sub section 4 cast a duty on the court to formulate such a substantial question of law and the appeal has to be heard on the question so formulated. It would also be open to the respondent 982 at the hearing of the appeal to contend that the case does not involve such a question. Even prior to the amendment of Section 100, the High Court ordinarily did not interfere with the concurrent findings of fact. This position has been repeatedly asserted and one need not go in search of precedent to support the proposition. However one can profitably refer to R. Ramachandran Ayyar vs Ramalingam Chettiar. After examining the earlier decisions and the decision of the Privy Council in Mst. Durga Chaudhrain vs Jawahar Choudhary Gajendragadkar J. speaking for this Court in terms spelt out the jurisdiction of the High Court in second appeal as under: "But the High Court cannot interfere with the conclusions of fact recorded by lower appellate Court however erroneous the same conclusions may appear to be to the High Court, because, as the Privy Council observed, how ever gross or in excusable the error may seem to be, there is no jurisdiction under section 100 to correct that error". This view was re affirmed in Goppulal vs Dwarkadhishji wherein after reproducing the concurrent finding of fact this Court observed that this concurrent finding of fact was binding on the High Court in second appeal and the High Court was in error in holding that there was one integrated tenancy of six shops. In the facts of this case, there was a concurrent finding that the statutory notice as required by section 20(2) (a) was not served upon the tenant and, therefore, the High Court was in error in interfering with this finding of fact. However, it is not necessary to base the judgment on this conclusion because it was rightly said on behalf of the respondent that whether the notice was offered to the petitioner tenant and he refused to accept the same the finding is not concurrent because the appellate court has held that the notice was offered but the tenant refused to accept the same and, therefore, on the refusal to accept the notice there was no concurrent finding. This contention is legitimate because the appellate court held that notice as required by law was not served because even if the tenant refused to accept the notice the knowledge of the contents of the registered envelope not opened by him cannot be imputed to him, and, therefore, there was no service of notice as required by section 20(2) (a). The first appellate court was of the view that in the absence of knowledge of the demand of rent in arrears as alleged in the notice the tenant cannot be said 983 to be guilty of wilful default so as to be denied the protection of the Rent Act. This accordingly takes me to the third contention in this appeal. The third contention is that even if this Court agrees with the High Court in holding that the notice in question was tendered by the postman to the appellant tenant and he refused to accept the same n: and, therefore, this refusal amounts to service within the meaning of section 20(2)(a), yet as the knowledge of the contents of the notice would reflect on subsequent conduct as wilful or contumacious, it is not sufficient that a notice is served or tendered and refused but it must further be shown that in the event of refusal the tenant did it with the knowledge of the contents of the registered envelope and his subsequent conduct is motivated. The question then is; What would be the effect of a notice sent by registered post and refused by a tenant on the question of his knowledge about the contents of the notice and his failure to act? Would it tantamount to an intentional conduct evidencing wilful default on his part? This aspect cannot be merely examined in the background of some precedents or general observations. One has to examine this aspect in the background of Indian conditions or in the words of Krishna Iyer, J., 'the legal literacy in rural areas and the third world jurisprudence. ' Before we blindly adhere to law bodily imported from western countries we must not be oblivious to the fact that the statutes operating in the western countries are meant for a society if not 100 per cent. , 99 per cent. literate. We must consciously bear in mind that our society especially in the semi urban and rural areas is entirely different and wholly uncomparable to the western society. A literate mind will react to a problem presented to him in a manner other than an illiterate mind because illiteracy breeds fear and fear oriented action cannot be rationally examined on the touchstone of legal presumptions. To articulate the point as it arises in this case, let one put his feet in the shoes of a rural illiterate person to whom a registered envelope by a postman is presented. Does it require too much of imagination to conclude that he will be gripped with fear and he may react in a manner which will be his undoing? He would believe that by refusing to accept the registered envelope he would put off the evil rather than accept the same and approach a person who can advise him and meet the situation. Can this action of fear gripped mind inflict upon the person an injury flowing from the assumption that he not only refused the registered envelope with the conscious knowledge of the fact that it contained a notice by a lawyer on behalf of his landlord and that it accused him of wilful 984 default in payment of rent and that if he would act rationally he would repair the default by tendering the rent within the period of one month granted by the statute? If he is deemed to have acted consciously is it conceivable that he would invite injury by sheer refusal to accept the registered envelope rather than know the con tents or make them knowable to him and meet the charge of wilful default. As was said, again by Krishna Iyer, J., which bears quotation: "The Indian Courts interpret laws the Anglo Indian way, the rules of the game having been so inherited. The basic principles of jurisprudence are borrowed from the sophisticated British system, with the result that there is an exotic touch about the adjectival law, the argumentative method and the adversary system, not to speak of the Evidence Act with all its technicalities". Lord Devlin recently said: "If our business methods were as antiquated as our legal methods, we would be a bankrupt country. There is need for a comprehensive enquiry into the rules of our procedure backed by a determination to adopt it to fit the functions of the welfare State". This is much more apposite in the conditions of our society and this was noticed by Beaumost, C. J. way back in fourth decade of this century in Waman Vithal Kulkarni & Others. vs Khanderao Ram Rao Sholapurkar. An exactly identical question arose before the Division Bench of the Bombay High Court. The facts found were that the registered letter containing the notice was sent to defendants 4 & 5 duly addressed and service was alleged to have been refused. The contention was two fold that the refusal was not proved but alternatively it was contended that even if it was proved, the addressee could not be imputed with the knowledge of the contents of the registered envelope. The pertinent observation is as under: "In the case of defendants 4 and 5 a registered letter containing the notice was sent to them duly addressed, and service is alleged to have been refused. In fact the refusal was not proved, as the postman who took the letter and brought it back was not called. But in any case, even if the refusal had been proved, I should not be prepared to hold 985 that a registered letter tendered to the addressee and refused and brought back unopened, was well served. There are, I know, some authorities in this Court to the contrary, but it seems to me impossible to say that a letter has been served so as to bring the contents to the notice of the person to whom the letter is addressed, it the agent for service states that in fact the notice was not served, although the reason may have been that the addressee declined to accept it. One cannot assume that because an addressee declines to accept a particular sealed envelope he has guessed correctly as to its contents. Many people in this country make a practice of always refusing to accept registered letters, a practice based, I presume, on their experience that such documents usually contain something unpleasant. To that, it is clear that this notice was not served on three of the defendants". Learned counsel for the respondent tried to distinguish this decision by observing that the court did hold that the refusal was not proved, therefore, the rest of the observation was obiter. It is not far a moment suggested that the decision of the Division Bench of the Bombay High Court is binding on this Court but the reasoning which appealed to the Division Bench in 1935 is all the more apposite at present. The Division Bench noticed that in the society from which the defendants came, there was a feeling that such registered letters usually contained something unpleasant. Is there anything to suggest that this feeling is today displaced or destroyed? The Division Bench further noticed that many people in India make a practice of always refusing to accept registered letters and the practice according to the Division Bench was based on their experience that such documents usually contained something unpleasant. The reaction is to put off the evil by not accepting the envelope. Could such ignorant illiterate persons be subjected to a legal inference that the refusal was conscious knowing the contents of the document contained in the registered envelope? To answer it in the affirmative is to wholly ignore the Indian society. And this concept that the registered envelope properly addressed and returned with an endorsement of refusal must permit a rebuttable presumption that the addressee refused it with the knowledge of the contents is wholly borrowed from the western jurisprudence. I believe it is time that we ignore the illusion and return to reality. Reference was also made to Appabhai Motibhai vs Laxmichand Zaverchand & Co., but that case does not touch the point. In Mahboob Bi vs Alvala 986 Lachmiah, an almost identical question figured before the Andhra Pradesh High Court. In that case the Rent Controller issued a notice in respect of the proceedings initiated before him by the landlord for the eviction of the tenant, to the tenant by registered post and the envelope was returned with the endorsement of refusal and the Rent Controller set down the proceedings for ex parte hearing and passed a decree for eviction. The tenant under the decree of eviction preferred an appeal in the City Small Causes Court. A preliminary objection was raised by the respondent landlord that the appeal was barred by limitation as it was filed six days after the time allowed for filing the appeal. The appellant tenant countered this by saying that he had no knowledge of the proceedings before the Rent Controller and that he was never served with the notice of proceedings before the Rent Controller. The relevant rule permitted service of notice by registered post. After examining the relevant rule the Court accepted the contention of the tenant observing as under: "Moreover nothing has been placed before me to show that there is any duty cast upon any person to receive every letter or notice sent by registered post, nor does the refusal to receive has been made the subject matter of any presumption which may arise under sec. 114 of the Evidence Act. Then again, there is the practical difficulty of having to import the knowledge of the date of hearing or the precise proceedings with which the registered notice is concerned in the case of a mere refusal to receive a registered notice". The Court thus was of the view that even if refusal amounted to service, yet it is not service as required by law to fasten a liability on the tenant because no presumption can be raised that the refusal war, with the conscious knowledge of the contents of the registered envelope. Undoubtedly, our attention was also drawn to a contrary view taken by a Division Bench of the Allahabad High Court in Fannilal vs Smt. Chironja. It was contended that even if the registered letter was refused no presumption of knowledge of the contents of the letter could in law the raised against the tenant. In support of the submission reliance was placed on Amarjit Singh Bedi vs Lachchman Das, an unreported decision of a single judge of the Allahabad High Court and the decision of Beaumont, C.J. in Waman Vithal Kulkarni 's case. The Division Bench of the Allahabad High Court did not accept the view of Beaumont, C.J. The Court was of the opinion that a presumption of fact would arise under 987 section 114 of the Evidence Act that the refusal was with the knowledge of the contents of the registered envelope. The Court has not considered the specific Indian conditions, the approach of rural Indians to registered letters and has merely gone by the technical rules of Evidence Act, which, as experience would show, could sometimes cause more harm and lead to injustice through law. The contrary Allahabad decision does not commend to me. On the contrary, the Bombay view is in accord with the conditions of society in rural India and I do not propose to make any distinction even with regard to urban areas where also there are a large number of illiterates Even in the case of a semi literate person who is in a position to read and write he could not be accused of legal literacy. Therefore, it is not possible to accept the submission that mere refusal would permit a presumption to be raised that not only the service was legal but the refusal was the conscious act flowing from the knowledge of the contents of the letter. How dangerous this presumption is can be easily demonstrated, and how it would lead to miscarriage of justice can be manifestly established. Once knowledge of the contents of the registered envelope is attributed to a person to whom a registered envelope is sent and who has refused to accept the same, that this was an act accompanied by the conscious knowledge of the contents of the letter he who may be an innocent defaulter or presumably no defaulter at all, would be charged with a contumacious conduct of being a wilful defaulter. The Rent Act does not seek to evict a mere defaulter That is why a provision for notice has been made. If even after notice the default continues, the tenant can be condemned as wilful defaulter. Could he be dubbed guilty of conscious, wilful, contumacious, intentional conduct even when he did not know what was in the registered envelope? In my opinion, it would be atrocious to impute any such knowledge to a person who has merely been guilty of refusing to accept the registered notice. Where service of notice is a condition precedent, a dubious service held established by examining the postman who must be delivering hundreds of postal envelopes and who is ready to go to the witness box after a long interval to say that the offered the envelope to the addressee and he refused to accept the same, would be travesty of justice. And if this condition precedent is not fully satisfied, the consequent conduct cannot be said to be wilful. In a slightly different context in Commissioner of Income tax, Kerala vs Thayaballi Mulla Jeevaji Rapasi (decd.), this Court held that service of the notice under 988 section 34(1)(a) of the Income tax Act, 1922, within the period of limitation being a condition precedent, to the exercise of jurisdiction, if no notice is issued or if the notice issued is shown to be invalid, then the proceedings taken by the Income tax Officer without a notice or in pursuance of an invalid notice would be illegal and void. It was, however, contended that if the Court accepts the legal contention as canvassed on behalf of the appellant it would be impossible tc serve the notice as statutorily prescribed. This wild apprehension is wholly unfounded. The notice is required to be served in the manner prescribed by section 106 of Transfer of Property Act which, inter alia, provides for affixing a copy of the notice on the premises in possession of tenant. Therefore, it cannot be said that the approach of the Court would render it impossible for the landlord to meet with the statutory requirement of service of notice before Commencing the action for eviction. Having, therefore, examined the three vital contentions, in my opinion the suit of the landlord must fail on the ground that the rent was not payable by month and, therefore, section 20(2) (a) is not attracted. And further, even if it is attracted, as the statutory notice as required by section 20(2) (a) was not served, a decree for eviction cannot be passed on the only ground of default in payment of rent. I would accordingly allow this appeal and dismiss the suit of the respondent for eviction but with no order as to costs in the circumstances of the case. S.R. Appeal dismissed.

The appellant was inducted in the year 1964 as a tenant of the suit premises on an yearly rental payable by December 31, every year. Since the appellant did not pay the rent for the years 1965, 1966 a combined notice dated November 9, 1966 demanding payment of arrears and seeking ejectment on termination of tenancy, was sent by registered post by the respondents. The appellant refused to receive the notice on November 10, 1966. On his failure to comply with the requisitions contained in the notice, the respondents filed a suit against the appellant seeking eviction as well as recovery of rents and mensne profits. Having lost before the trial court and the first appellate court, the respondents came up before the High Court in second appeal. The High Court accepted the finding of fact recorded by the first appellate court that there was service of the notice on the appellant by refusal and held that when notice was tendered to the tenant and when the latter refused to accept the same know ledge of the contents of the notice must be imputed to him. The High Court allowed the landlords ' appeal and granted three months time to the appellant to vacate the shop. Hence, the tenant 's appeal after obtaining special leave from this Court. Dismissing the appeal, the Court ^ HELD: (By majority) Per Tulzapurkar, J. (On behalf of A. P. Sen, J. and himself). The presumptions that are raised under section 27 of the and section 114 of the Indian Evidence Act, make it clear that, when service is effected by refusal of a postal communication, the addressee must be imputed with the knowledge of the contents thereof. [971 E F] 1:2. Before the knowledge of the contents of the notice could be imputed, it is not necessary that the sealed envelope must be opened and read by the addressee or when the addressee happens to be an illiterate person the contend should be read over to him by the post man or someone else. Such things do not occur when the addressee is determined to decline to accept the sealed envelope. [971 D E] 963 Vaman Vithal Kulkarni and Ors. vs Khanderao Ram Rao Sholapurkar, , explained and dissented from. Mahboob Bi vs Alvala Lachmiah, A.I.R. 1964 A.P. 324, held inapplicable. Shri Nath and another vs Smt. Saraswati Devi Jaiswal, A.I.R. 1964 All. 52; Fanni Lal vs Smt. Chironja, ; Ganga Ram vs Smt. Phulwati, ; Kodali Bapayya and Ors. vs Yadavalli Venkataratnam and Ors., A.I.R. 1953 Mad. 884, approved. Harihar Banerji and Ors. vs Ramshashi Roy and Ors., A.I.R. 1918 P.C. 102, referred to. The suit under section 14(1) of the U.P. Cantonment (Control of Rent & Eviction) Act (Central Act X of 1952), in the instant case was maintainable. Under section 14(1) of the Central Act, which in pari materia with section 3(1) of the U.P. (Temporary) Control of Rent and Eviction Act, 1947, permission of the District Magistrate was required if the landlord sought eviction of the tenant on any ground other than those specified in clauses (a) to (f) and not when it was sought on any of the grounds specified in clauses (a) to (f). [973 E P] Bhagwan Dass vs Paras Nath, ; , followed. All the courts rightly dealt with the matter as being governed by the U.P. Cantonments (Control of Rent & Eviction) Act, X of 1952 a Central Act and not by U.P. (Temporary) Control of Rent and Eviction Act, 1947 much less by the later U.P. (Rent & Eviction) Act, 1972. [966 E F] Per Desai. J. Contra. Uttar Pradesh Urban Buildings (Regulation of Letting, Rent & Eviction) Act, 1972 is a socially beneficient statute and should be construed according to well recognised canons of construction. The words used in the statute, if they are plain and unambiguous must be applied as they stand, however, strongly it may be suspected that the result does not represent the real intention of the legislature. However, if two constructions are possible and legitimate ambiguity arises from the language employed that which enlarges the protection of a socially beneficient statute rather than one which restricts it should be preferred and adopted. In other words the construction which would be more consistent with the policy and attainment of the legislation which is to protect the possession of the tenant unless the landlord establishes a ground for eviction should be preferred. Further where two constructions are possible the one which would accord with reason and justice must be preferred. [975 G H, 976 A, D, G] Inland Revenue Commissioners vs Hinchy, , H. L. at 767= (1960) 1 All India Reports 505 at 512; River Wear Commissioners vs Adamson, & 765, quoted with approval. Mohd. Shafi vs Additional District & Sessions Judge (VII), Allahabad and Others, ; Gurucharan Singh vs Kamla Singh & Ors. ; ; H. H. Maharajadhiraja Madhav Rao Jivaji Rao Scindia Bahadur of Gwalior & Ors. vs Union of India & Another, [1971] 1 S.C.C. 85, reiterated. 964 2:1. The substitution of the expression, "arrears of rent for not less than four months" in sub clause (a) of sub section (2) of section 20 of the Uttar Pradesh Urban Buildings (Regulation of Letting Rent & Eviction) Act, 1972 is a contemporaneous legislative exposition bringing out clearly the legislative intention that the landlord would be entitled to evict the tenant if the rent is in arrears for not less than four months. Before the landlord can commence action under sub clause (a): (i) the tenant must have committed default in Payment of rent for a period of four months, and (ii) a notice has to be served, giving the tenant locus poeniteniae to repair the default within month. [978 B C] 2:2. Two ingredients emerge from the expression "the tenant is in arrears of rent for not less than four months": (i) that the rent is payable by month and (ii) the tenant has committed default in payment of rent for four different months and that this default subsists and continues on the date when the land lord invokes the provision of clause (a) and proceeds to serve a notice of demand. Again, if within a period of one month from the date of receipt of notice, the tenant pays up the arrears of rent he does not lose the protection of the Rent Act. [978 G H 979] 2:3. It is implicit in the expression "the tenant is in arrears of rent for not less than four months" that the legislature clearly intended to cover those cases Of default in payment of rent under clause (a) where the contract of lease provided for payment of rent every month meaning thereby that the unit for liability to pay rent is one month and secondly the tenant has committed default on four different occasions of four different months or four different units agreed upon for payment of rent and that too after the liability to pay the same has accepted. [979 A C] 2:4. Section 20(2)(a) of the Rent Act, 1972 does not attract cases where the landlords accept rent on an yearly basis. The language of the section does not admit of a construction, namely, that even if the rent is payable by year, once the year is over and a period of four months has elapsed he could be said to be "a tenant in arrears, of rent for not less than four months". In the instant case, the parties are ad idem that the rent is payable by year at the rate of Rs. 100/ per annum. In such a case it could not be said that this tenant was in arrears of rent for not less than four months. His case would not be covered by section 20(2) of the Rent Act and, therefore, the landlord would not be entitled to a decree for eviction on this ground and that was the sole ground on which eviction has been ordered. [980 C D, 981 A B] 3. The amended section 100 of the Civil Procedure Code restricted the jurisdiction of the High Court to entertain a second appeal only if the High Court was satisfied that the case involved a substantial question of law. Sub section G(4) cast a duty on the court to formulate such substantial question of law and the appeal has to be heard on the question so formulated. It would also be open to the respondent at the hearing of he appeal to contend that the case does not involve such a question. Thus, the High Court ordinarily cannot and did not interfere with the concurrent findings of fact arrived at by the courts below. [981 G H, 982 A] In the facts of this case, there was a concurrent finding that the statutory notice as required by section 20(2)(a) was not served upon the tenant and, therefore, the High Court was in error in interfering with this finding of fact. [982 B C] 965 R. Ramachandran Ayyar vs Ramalingam Chettiar, ; Mst. Durga Chaudhrain vs Jawahar Choudhary, 1890 LR 17 IA, 122; Goppulal vs Dwarkadhishji, [1969] 3 S.C.R. 989, reiterated. Mere refusal of a registered letter would not permit a presumption to be raised that not only the service was legal, but the refusal was the conscious act flowing from the knowledge of the contents of the letter. [987 C] 4:2. This concept that the registered envelope properly addressed and returned with an endorsement of refusal must permit a rebuttable presumption that the addressee refused it with the knowledge of the contents is wholly borrowed from the western jurisprudence. Not considering the specific Indian conditions and the approach of rural Indian to registered letters, but merely going in with the technical rules of Evidence Act would cause more harm and lead to injustice through law. [985 G H, 986 A] 4:3. The Rent Act does not seek to evict a mere defaulter. That is why a provision for notice has been made. If even after notice the default continues, the tenant can be condemned as willful defaulter. He could not be dubbed guilty of conscious, willful, contumacious, intentional conduct even when he did not know what was in the registered env`elope. It would be atrocious to impute any such knowledge to a person who has merely been guilty of refusing to accept the registered notice. Where service of notice is a condition precedent, a dubious service held established by examining the postman who must be delivering hundreds of postal envelopes and who is ready to go to the witness box after a long interval to say that he offered the envelope to the addressee and he refused to accept the same, would be travesty of justice. And if this condition precedent is not fully satisfied, the subsequent conduct cannot be said to be willful. [987 E G] Fannilal vs Smt. Chironja, (1972) All. Law J. 499 (D.B.) dissented to. Appabhai Motibhai vs Laxmichand Zaverchand & Co., A.I.R. 1954 Bom. 159, held inapplicable. Mahboob Bi vs Alvala Lachmiah, A.I.R. 1964 A.P. 314; Amarjit Singh Bedi vs Lachman Das; Waman Vithal Kulkarni & Others vs Khandera Ram Rao Sholapurkar, A.I.R. 1935 Bom. 247, quoted with approval. The argument that it would be impossible to serve the notice as statutorily prescribed, once it is held that no knowledge of the contents of the refused letter could be imputed to the tenant, is incorrect. The notice is required to be served in the manner prescribed by section 106 of Transfer of Property Act which, inter alia, provides for affixing a copy of the notice on the premises in possession of the tenant. Therefore, it cannot be said that the approach of the Court would render it impossible for the landlord to meet with the statutory requirement of service of notice before commencing the action for eviction [1988 C] 966

Appeals Nos. 412 and 413 of 1956. Appeals by special leave from the judgment and order dated October 17, 1955, of the Patna High Court in M.J.C. No. 577 of 1953, made on reference by the Board of Revenue, Bihar in Appeals Nos. 495 and 496 of 1952. 1358 M. C. Setalvad, Attorney General, for India, Rajeshwari Prasad and section P. Varma, for the appellant. Mahabir Prasad, Advocate General for the State of Bihar and R. C. Prasad, for the respondent. February 19. The Judgment of Das, C.J. Venkatarama Aiyar, section K. Das and Sarkar, JJ. ",as delivered by Das C. J. Bose, J. delivered a separate judgment. DAS C. J. These two appeals, which have been filed with the special leave granted by an order made by this Court on April 3, 1956, and which have been consolidated together by the same order, are dire led against the judgment pronounced by the Patna high Court on October 17, 1955, in Miscellaneous Judicial Case No. 577 of 1953, deciding certain questions refer. red to it by the Board of Revenue, Bihar under section 25 of the Bihar Sales Tax Act, 1947 (No. XIX of 1947) hereinafter referred to as the 1947 Act. The said references arose out of two orders passed by the Board of Revenue in revision of two sales tax assessment orders made against the appellant company. The appellant company is a company incorporated under the Indian Companies Act. Its registered office is in Bombay; its factory and works are at Jamshedpur in the State of Bihar and its head sales ' office is in Calcutta in the State of West Bengal. It has store yards in the States of Madras, Bombay, West Bengal, Uttar Pradesh, Hyderabad, Madhya Pradesh, Punjab and Andhra. It carries on business as manufacturer of iron and steel and is a registered dealer under the 1947 Act, the registration No. being section C. 905. Its course of dealing is thus described in the judgment under appeal: " The intending purchaser has to apply for a permit to the Iron and Steel Controller at Calcutta, who forwards the requisition to the Chief Sales Officer of the assessee working in Calcutta. The Chief Sales Officer thereafter makes a "works order" and for. wards it to Jamshedpur. The " works order " mentions the complete specification of the goods required. 1359 After the receipt of the "works order" the Jamshedpur factory initiates a " rolling " or " manufacturing " programme. After the goods are manufactured, the Jamshedpur factory sends the invoice to the Controller of Accounts who prepares the forwarding notes, and on the basis of these forwarding notes, railway receipts are prepared. The goods are loaded in the wagons at Jamshedpur and despatched to various stations, but the consignee in the railway receipt is the assessee itself and the freight also is paid by the assessee. The railway receipts are sent either to the branch offices of the assessee or to its bankers, and after the purchaser pays the amount of consideration, the railway receipt is delivered to him. These facts are admitted and the correctness of these facts are not disputed by the State of Bihar. " The appellant company was separately assessed for two periods: (1) from July 1, 1947 to March 31, 1948, and (2) from April 1, 1948 to March 31, 1949. For the first period the appellant company filed a return under section 12(1) of the 1947 Act before the Sales Tax Officer showing a gross turnover of Rs. 12,80,15,327 8 5. From this gross turnover the appellant company claimed to deduct a sum of Rs. 2,88,60,787 13 0 being the amount of valuable consideration for the goods manufactured at Jamshedpur in the State of Bihar but sold, delivered and consumed outside that State on the ground that in none of the transactions in respect of the said sum did the property in the goods pass to the purchasers in the State of Bihar. The appellant company further claimed a deduction of Rs. 1,10,87,125 13 0 on account of railway freight, actually paid by it for the despatch of the goods. The Sales tax Officer, by his assessment order dated July 22, 1949, disallowed both the claims for deduction and, on the other hand added a sum of Rs. 13,66,496 11 0, being the amount of sales tax realised by the appellant company from its purchasers, to its taxable turnover and assessed the appellant company to sales tax amounting to Rs. 15,31,374 5 9. For the second period the appellant company filed a return showing a gross turnover of Rs. 21,64,45,450 0 0. 1360 From this gross turnover the appellant company claimed a deduction of Rs. 10,71,66,233 11 0 being the amount of valuable consideration for goods manufactured at Jamshedpur in the State of Bihar, but sold, delivered and consumed outside that State on the same ground as hereinbefore mentioned. The appellant company also claimed a deduction of Rs. 40,89,973 9 0 on account of railway freight actually paid by it for the despatch of the goods. The Sales Tax Officer by his assessment order dated September 24, 1949, disallowed both the claims and added the sum of Rs. 22,37,919 4 0, being the amount of sales tax realised by the appellant company from its purchasers, to its taxable turnover and assessed the appellant company to sales tax amounting to Rs. 28,30,458 6 0. Against these two assessment orders the appellant company preferred two appeals under section 24 of the 1947 Act to the Commissioner of Sales Tax of Chota Nagpur who, on April 29, 1950, dismissed both the appeals. The appellant company went up to the Board of Revenue on two revision applications against the two orders of the Commissioner. The Board of Revenue,by its order dated August 30, 1952, confirmed the orders of the Commissioner with certain modifications and remanded the cases to the Sales Tax Officer. The appellant company applied under section 25 of the 1947 Act to the Board of Revenue in Reference Cases Nos. 495 and 496 of 1952 for reference of certain questions of law to the High Court. By a common order dated October 5, 1953, made in the said two references the Board of Revenue referred the following questions of law to the High Court for its decision " (1) Is the Bihar Sales Tax Act, 1947, as amended in 1948, ultra vires the Provincial Legislature in view of the extended meaning of the expression taxes on sale of goods given in the Act in the light of the provisions of the Government of India Act, 1935 ? (2)Are the provisions of section 2(g) of the 1947 Act ultra vires the Provincial Legislature ? 1361 (3) Is it legal to include sales tax in the taxable turnover of an assessee like the petitioner ? (4) Was the Bihar Sales Tax (Amendment) Act of 1948 legally extended to Chotanagpur ? (5) Were the levy and collection of sales taxes for periods prior to the 26th January 1950, under the Sales Tax Act then in force rendered illegal by the provisions of the Constitution ? (6) Was the Commissioner, who passed orders, in appeal, after the Constitution came into force, bound to decide the appeal according to the provisions of the Constitution in respect of taxes levied or sought to be levied for periods prior to the 26th January, 1950, when the Constitution came into force ?" Out of these six questions, question No. 3 was decided in favour of the appellant company and the respondent State has not preferred any appeal against that decision or questioned its correctness. Question No. 4 was not pressed before the High Court and does not survive before us. Questions Nos. 1, 2, 5 and 6 were decided against the appellant company and the two consolidated appeals are directed against the High Court 's decision on these questions. It will be noticed that questions Nos. I and 2, in effect, raise the same problem, namely, as to the vires of the 1947 Act and questions Nos. 5 and 6 are concerned with the validity of the retrospective levy of sales tax by reason of the amendment of section 4 of the 1947 Act. The following points, as formulated by the learned Attorney General appearing for the appellant company, have been urged before us in support of these appeals: " (1) The tax levied under section 4(1) read with section 2(g), second proviso, cl. (ii), is not a tax on sale within the meaning of Entry 48 in List II of the Seventh Schedule to the Government of India Act, 1935. (2) The doctrine of nexus is not applicable to sales tax. (3) In any event the nexus in the present case is not real and sufficient but is illusory. 1362 (4)Having regard to the provisions of the law mentioned above, the tax levied is in the nature of duty of excise rather than a tax on sale. (5)The retrospective levy by reason of the amendment of section 4(1) destroys its character as a sales tax and makes it a direct tax on the dealer instead of an indirect tax to be passed on to the consumer. " In order to appreciate the arguments that have been advanced before us on the points noted above, it is necessary to refer to the relevant statutory provisions, which were in force at the material times. Section 99, of the Government of India Act, 1935, authorised a Provincial Legislature, subject to the provisions of that Act, to make laws for the Province or for any part thereof. Section 100(3) of that Act provided that, subject to the two preceding sub sections, the Provincial Legislature had, and the Federal Legislature had not, power to make laws for any Province or any part thereof with respect to any of the matters enumerated in List 11 of the Seventh Schedule to that Act. The matter enumerated in Entry 48 in List II was as follows: " Taxes on the sale of goods and on advertisements. " It is in exercise of this legislative power that the Provincial Legislature of Bihar passed the 1947 Act which received the assent of the Governor General on June 21, 1947, and came into force on July 1, 1947, by virtue of a notification made in the official gazette under section 1(3) of the said Act. The relevant portion of section 4(1) of the 1947 Act, which was the charging section, was, prior to its amendment hereinafter mentioned, expressed in the following terms: " Subject to the provisions of sections 5, 6, 7 and 8 and with effect from such date as the Provincial Government may, by notification in the official gazette, appoint, being not earlier than 30 days after the date of the said notification, every dealer whose gross turnover during the year immediately preceding the commencement of this Act on sales which had taken place both in and outside Bihar exceeded Rs. 10,000 shall be liable to pay tax under this Act 1363 on sales which have taken place in Bihar after the date was notified. " It should be noted that, although the 1947 Act came into force on July 1, 1947, by virtue of a notification published in the official gazette under section 1(3) thereof, the charging section quoted above did not come into operation because, by its own terms, it required a further notification in the official gazette to bring it into effect. For some reason, not apparent on the record, the Provincial Government did not issue any notification as contemplated by section 4(1). To cure this omission Ordinance III of 1948 was promulgated by the Governor amending section 4(1)(a) of the 1947 Act. Section 4(1), as amended, read as follows: " Subject to the provisions of sections 5, 6, 7 and 8 and with effect from the commencement of this Act, every dealer, whose turnover during the year immediately preceding the date of such commencement, on sales which have taken place both in and outside Bihar exceeded Rs. 10,000, shall be liable to pay tax under this Act on sales which have taken place in Bihar on and from the date of such commencement. " On March 22, 1949, Ordinance III of 1948 was replaced by Bihar Sales Tax (Amendment) Act, 1948 (VI of 1949) hereinafter referred to as the amending Act. Section 16 of this amending Act provided that the substituted section 4(1) should form part of the 1947 Act and should always be deemed to have formed part thereof with effect from its commencement, that is to say, from July 1, 1947, as hereinbefore mentioned. Two things should be noted, namely, (1) that the person sought to be charged was every dealer whose gross " turnover" during the specified period on " sales " which had taken place both in and outside Bihar exceeded Rs. 10,000 and (2) that the liability to pay tax was on " sales " which had taken place in Bihar on and from the date of such commencement. This takes us back to section 2(g) which defines " sale ". The material part of the definition of " sale ", previous to the amendment made by the amending Act, 173 1364 read as follows: " 'Sale ' means, with all its grammatical variations and cognate expressions, any transfer of property in goods for cash or deferred payment or other valuable consideration, including a transfer of property in goods involved in the execution of contract but does not include a mortgage, hypothecation, charge or pledge: Provided . . . . . . . . . Provided further that notwithstanding anything to the contrary in the Indian (III of 1930), the sale of any goods which are actually in Bihar at the time when, in respect thereof, the contract of sale as defined in section 4 of that Act is made, shall, wherever the said contract of sale is made be deemed for the purpose of this Act to have been made in Bihar. . . . . . . . . . . Section 2 of the amending Act amended section 2(g) of the 1947 Act by substituting a new proviso to cl. (g) for the original second proviso thereto. The material part of section 2(g), thus amended, read as follows: " 'Sale 'means, with all its grammatical variations and cognate expressions, any transfer of property in goods for cash or deferred payment or other valuable consideration, including a transfer of property in goods involved in the execution of contract but does not include a mortgage, hypothecation, charge, or pledge: Provided . . . . . . . . . Provided further that notwithstanding anything to the contrary in the Indian (111 of 1930), the sale of any goods (i) which are actually in Bihar at the time when, in respect thereof, the contract of sale as defined in section 4 of that Act is made, or (ii) which are produced or manufactured in Bihar by the producer or manufacturer thereof, shall, wherever the delivery or contract of sale is made, be 1365 deemed for the purposes of this Act to have taken place in Bihar. The amending Act by section 3 substituted for the old sub section (1) of section 4 of the 1947 Act the following sub ' section, namely: " (1) Subject to the provisions of sections 5, 6, 7 and 8 and with effect from the commencement of this Act, every dealer whose gross turnover during the year immediately preceding the date of such commencement, on sales which have taken place both in and outside Bihar exceeded Rs. 10,000 shall be liable to pay tax under this Act on sales which have taken place in Bihar on and from the date of such com mencement: Provided that the tax shall not be payable on sales involved in the execution of a contract which is shown to the satisfaction of the Commissioner to have been entered into by the dealer concerned on or before the 1st day of October, 1944. " Although the amending Act received the assent of the Governor General on March 15, 1949, it came into force on October 1, 1948, as provided in section 1(2) thereof. Section 16 of the amending Act, however, provided that the amendment made by section 3 should form part and should be deemed always to have formed part of the 1947 Act as if the said Act had been enacted as so amended from the commencement thereof, that is to say, from July 1, 1947. The 1947 Act was further amended in 1951 by Bihar Act VII of 1951 and again in 1953 by Bihar Act XIV of 1953, but we are not, in the present case, concerned with those amendments. Although the charging section, namely, section 4(1), as amended, operates from July 1, 1947, the definition of sale as amended, became operative only from October 1, 1948. Therefore, the definition of " sale ", as it stood prior to the amendment, was applicable to all sales made by the appellant throughout the first period hereinbefore mentioned, i.e., the period from July 1, 1947 to March 31, 1948 and also to those made during the period from April 1, 1948 to October 1, 1948, which was only a portion of the second 1366 period hereinbefore mentioned and the amended definition applied to all sales made by the appellant during the remaining portion of the second period, i.e., from October 1, 1948 to March 31, 1949. Bearing in mind the relevant provisions of the 1947 Act as they stood both before and after the amendment and the period of their applicability we now proceed to consider the points urged before us by the learned Attorney General appearing for the appellant company. Points Nos. 1 and 4: It will be convenient to take up those two points together for they have been dealt with together by the learned Attorney General. The validity of section 4(1) read with section 2(g), second proviso, is challenged in two ways. In the first place it is urged that section 100(3) of the Government of India Act, 1935 read with Entry 48 in List II of the Seventh Schedule thereto authorised the Legislature of Bihar to make a law with respect to tax on the sale of goods. " Sale of Goods ", as a legal topic, has well defined and well understood implications both in English and Indian Law. The English Common Law relating to sale of goods has been codified in the English Sale of Goods Act, 1893. In India the matter was originally governed by the provisions of Chapter VII of the . Those provisions have since been replaced by the Indian Sale of Goods Act, Act III of 1930. Our attention has been drawn to section 4 of the Indian Sale of Goods Act which clearly makes a distinction between a sale and an agreement for sale. It is pointed out that that section groups " sales " and " agreements to sell " under the single generic name of " contract of sale ", following in this respect the scheme of English Sale of Goods Act, 1893, and that it treats " sales " and "agreements to sell " as two separate categories, the vital point of distinction between them being that whereas in a sale there is a transfer of property in goods from the seller to the buyer, there is none in an agreement to sell. It is then urged, on the authority of a decision of this Court in the Sales Tax Officer, Pilibhit vs Messrs. Budh Prakash 1367 Jai Prakash (1) that there having thus existed at the time of the enactment of the Government of India Act, 1935, a well defined and well established distinction between a " sale " and an " agreement to sell " it would be proper to interpret the expression " sale of goods " in Entry 48 in the sense in which it was used in legislation both in England and in India and to hold that it authorised an imposition of a tax only when there was a completed sale involving the transfer of title in the goods sold. Reference is then made to the decision of the Federal Court in the case of Province of Madras vs Boddu Paidanna and Sons (2) where the Federal Court at page 101 observed that in the case of sales tax the liability to tax arose on the occasion of a sale " which Patanjali Sastri C. J. in his judgment in the State of Bombay vs United Motors (India) Ltd. (3) described as " the taxable event. " The argument is that the Bihar Legislature could only make a law imposing a tax on the sale of goods, that is to say, on a concluded sale involving the transfer of property in the goods sold from the seller to the buyer as contemplated by the Sale of Goods Act. The Bihar Legislature could not, by giving an extended definition to the word "sale", extend its legislative power under Entry 48 in List II of the Seventh Schedule to the Government of India Act, 1935, so as to impose a tax on anything which is short of a sale. For our present purpose no exception need be taken to the proposition thus formulated and indeed in Budh Prakash Jai Prakash 's case (1) this Court struck down that part of the definition of it sale " in section 2(h) of the Uttar Pradesh Sales Tax Act, 1948, which enlarged the definition of " sale " so as to include " forward contracts". But is the position the same here? We think not. It will be noticed that section 4(1) imposed on the dealer the liability to pay a tax on " sale " as defined in section 2(g). Both before and after the amendment of section 2(g) the principal part of the definition meant the transfer of the property in goods. All that the second proviso did was not to extend the (1) ; , 247. (2) (3) ; , 1088. definition of "" sale but only to locate the I" sale " in certain circumstances mentioned in that proviso in Bihar. The basis of liability under s 4(1) remained as before, namely, to pay tax on " sale . The fact of the goods being in Bihar at the time of the contract of sale or the production or manufacture of goods in Bihar did not by itself constitute a " sale " and did not by itself attract the tax. The taxable event still remained the " sale " resulting in the transfer of ownership in the thing sold from the seller to the buyer. No tax liability actually accrued until there was a concluded sale in the sense of transfer of title. It was only when the property passed and the " sale " took place that the liability for paying sales tax under the 1947 Act arose. There was no enlargement of the meaning of " sale " but the proviso only raised a fiction on the strength of the facts mentioned therein and deemed the " sale " to have taken place in Bihar. Those facts did not by themselves constitute a" sale " but those facts were used for locating the situs of the sale in Bihar. It follows, therefore, that the. provisions of section 4(1) read with section 2(g), second proviso, were well within the legislative competency of the Legislature of the Province of Bihar. The vires of section 4(1) read with section 2(g), second proviso, is also questioned on the ground that it is in reality not a tax on the sale of goods but is in substance a duty of excise within the meaning of Entry 45 in List I of the Seventh Schedule to the Government of India Act, 1935, with respect to which the Provincial Legislature could not, under section 100 of that Act, make any law. Our attention is drawn to cl. (ii) of the second proviso which contemplated a sale of the goods by the producer or manufacturer thereof. It is urged that, according to this clause, tax was not imposed on all sales of goods produced or manufactured in Bihar, but was imposed only on those goods produced or manufactured in Bihar which were sold by the producer or manufacturer. It is pointed out, as and by way of an illustration, that if the goods produced or manufactured in Bihar were taken out of the Province of Bihar and then gifted away by the producer or 1369 manufacturer to a person 'outside Bihar and that person sold the goods, he would not be liable under the proviso. This argument, however, overlooks the fact that under cl. (ii) the producer or manufacturer became liable to pay the tax not because he produced or manufactured the goods, but because he sold the goods. In other words the tax was laid on the producer or manufacturer only qua seller and not qua manufacturer or producer as pointed out in Boddu. Paidanna 's case (1). In the words of their Lordships of the Judicial Committee in Governor General vs Province of Madras (2), " a duty of excise is primarily a duty levied on a manufacturer or producer in respect of the commodity manufactured or produced. It is a tax on goods and not on sales or the proceeds of sale of goods. " If the goods produced or manufactured in Bihar were destroyed by fire before sale the manufacturer or producer would not have been liable to pay any tax under section 4 (1) read with section 2 (g), second proviso. As Gwyer C. J. said in Boddu Paidanna 's Case (1) at page 102 the manufacturer or producer would be "liable, if at all, to a sales tax because he sells and not because he manufactures or produces; and he would be free from liability if he chose to give away everything which came from his factory. " In our judgment both lines of the argument advanced by the learned Attorney General in support of points and 4 are untenable and cannot be accepted. Re. point No. 2: The theory of nexus has been applied in support of tax legislation in more cases than one, not only in this country but also in Australia and England. In Wanganui Rangitikei Electric Power Board vs Australian Mutual Provident Society (3) Dixon J. observed: " So long as the statute selected some fact or circumstance which provided some relation or connection with New South Wales, and adopted this as the ground of its interference, the validity of an enactment. . would not be open to challenge." The same learned Judge in Broken Hill South Ltd. vs (1) (3) ; , 600. (2) (1945) L.R. 721.A. 91, 103. 1370 Commissioner of Taxation (N. section W.)(1), said at page 375: " If a connection exists, it is for the legislature to decide how far it should go in the exercise of its ,powers. As in other matters of jurisdiction or authority courts must be exact in distinguishing between ascertaining that the circumstances over which the power extends exist and examining the mode in which the power has been exercised. No doubt there must be some relevance to the circumstance in the exercise of the power. But it is of no importance upon the question of validity that the liability imposed is, or may be, altogether disproportionate to the territorial connection. " Even the dissenting Judge Rich J. accepted the theory of nexus at page 361: " I do not deny that once any connection with New South Wales appears, the legislature of that State may make that connection the occasion or subject of the imposition of a liability. But the connection with New South Wales must be a real one and the liability sought to be imposed must be pertinent to that connection. " The Estate Duty Assessment Act 1914 1928 which charged estate duty on moveable properties situate abroad which had passed from a deceased person domiciled in Australia by gift intervivos made by him within a year of his death was not struck down for extra territoriality but was upheld as constitutional in The Trustees Executors and Agency Co. Ltd. vs The Federal Commissioner of Taxation (2). The nexus theory was applied in full force in Governor General vs Raleigh Investment Co. (3); Wallace Brothers and Co. Ltd. vs Commissioner of Income Tax, Bombay City (4) and A. H. Wadia vs Commissioner of Income Tax, Bombay (5). In Raleigh Investment Co. 's case(3) the assessee company was a company incorporated in England. Its registered office was in England. It held shares in nine Sterling Companies incorporated (1) ; (2) ; (3)[1944) F.C.R. 229. (4) (5) 1371 in England. Those nine Sterling Companies carried on business in British India and earned income, profits or gains in British India and declared and paid dividends in England to its shareholders including the assessee company. Tile assessee company was charged to income tax under section 4 (1) of the Indian Income tax Act. It should be noted that the assessee company was not resident in British India, carried on no business in British India and made no income, profits or gains out of any business carried on by it in British India. It invested its money and acquired shares in England in the nine Sterling Companies which were English Companies. It was only when those nine Companies declared and paid dividends in England that the assessee company really earned its income, profits or gains, out of its investments in England in shares of nine Sterling Companies. The circumstance that the nine Sterling Companies derived their income, profits or gains, out of business carried on by them in British India out of which they paid dividends to the assessee company was regarded as sufficient nexus so as to fasten the tax liability on the assessee company in respect of the income, profits or gains, it derived from the nine Sterling Companies. Even such a distantly derivative connection with the source of income was held as a sufficient nexus to enable the British Indian tax autho rities to charge the assessee company with income tax. The conclusions reached by Spens C. J. in Raleigh Investment Co. 's case, (1) are formulated thus at page 253: " If some connection exists, the legislature is not compelled to measure the taxation by the degree of benefit received in particular cases by the taxpayer. This affects the policy and not the validity of the legislation ". In Wallace Brothers case (2) the connection of the assessee company with British India was not so remote as in Raleigh Investment Co. 's case (1), for in the former case the assessee company was a partner in a (1) 174 (2) 1372 firm which carried on business in British India but that connection was held to be sufficient nexus to bring to British Indian tax not only the income, profits or gains made by the assessee as a partner in the firm but also its income, profits or gains which accrued without British India in the previous year. In Wadia 's case (1), also an income tax case, it was held that a law imposing a tax cannot be impugned on the ground that it is extra territorial, if there is a connection between a person who is subjected to a tax and the country which imposes that tax. The connection must, however, be a real one and the liability sought to be imposed must be pertinent to that connection. At page 140 Chief Justice Kania observed: " Generally, States can legislate effectively only for their own territories, but for purposes of taxation and similar matters, a State makes laws designed to operate beyond its territorial limits." The learned Attorney General points out that the three last mentioned cases in which the nexus theory was applied were income tax cases and submits that that principle cannot be extended to sales tax laws. He points out that in Bengal Immunity Co. Ltd. vs The State of Bihar (2) this Court expressly left open the question, whether the theory of nexus applied to legislation with respect to sales tax. The passage at page 639 relied upon by the learned Attorney General only refers to the fact that the different State Legislatures considered themselves free to make a law imposing tax on sales or purchases of goods provided the State concerned had some territorial nexus with such sales or purchases and went on to say that the question whether they were right or wrong in so doing had not been finally decided by the courts. That passage, properly understood, can hardly be said to indicate that the theory of nexus does not apply to sales tax legislation at all. The drift of the meaning of the passage was that the sufficiency of the different next relied on by the different States had not been tested by the courts. The passage strongly relied upon by the learned Attorney General is to be (1) (2) 1373 found at page 708 where Bhagwati J. after referring to the earlier cases, observed : " It is a moot point whether this theory of territorial connection or nexus which has been mainly applied in income tax cases, is also applicable to sales tax legislation, the sphere of income tax legislation and sales tax legislation being quite distinct. Whereas in the case of income tax legislation the tax is levied either on a person who is within the territory by exercising jurisdiction over him in personam or upon income which has accrued or arisen to him or is deemed to have or arisen to him or has been derived by him from sources within the territory and it is, therefore, germane to enquire whether any part of such income has accrued or arisen or has been derived from a source within the territory, in the case of sales tax legislation it is the sale or purchase of goods which is the subject matter of taxation and it cannot be predicated that the sale or purchase takes place at one or more places where the necessary ingredients of sale happen to be located. The theory of territorial connection or nexus was not put to the test at any time prior to the enactment of the Constitution and it is not necessary also for us to give a definite pronouncement on the subject. " Apart from the fact that the concluding words in the passage quoted above may be read as indicating that the observations were obiter, it appears to us to be too late in the day to contend that the theory of nexus does not apply to sales tax legislation at all. Indeed an examination of the decisions of this Court will clearly show that the applicability of the theory of nexus to sales tax legislation has been clearly recognised by this Court. In The State of Bombay vs The United Motors (India) Ltd. (1) this Court bad to interpret the true meaning of the explanation to article 286(1)(a) of the Constitution. That explanation created a fiction locating the situs of a sale or purchase in the State in which the goods had actually been delivered as a result of such sale or purchase for the purpose of consumption in that (1) ; , 1088. 1374 State notwithstanding the fact that, under the general law relating to sale of goods, the property in the goods had, by reason of such sale or purchase, passed in another State. This Court by a majority then held that in view of the fiction created by the explanation the sale which was in reality an inter State sale became an intrastate sale and consequently the delivery and consuming State had the, right to impose tax on that sale. It is true that that decision has been departed from in the Bengal Immunity Co. 's case (1) on the question of the interpretation of article 286 of the Constitution, but on the point we are now discussing that decision clearly implies a recognition of the applicability of the nexus theory to the imposition of sales tax. The observations of Patanjali Sastri C. J. on the question of nexus in that case cannot, therefore, be said to be unnecessary for the decision of that case. In Poppatlal Shah vs The State of Madras (2) Mukherjea J. delivering the unanimous judgment of the Constitution Bench of this Court definitely applied the theory of nexus to sales tax legislation. Support for that conclusion was found directly in the decision of the Judicial Committee in Wallace Brothers and Co. Ltd. vs Commissioner of Income Tax, Bombay City (3) which, it was said, had been applied by this Court to sales tax legislation in the United Motors ' case (4), but it is quite clear that the decision had, independently of the United Motors ' case (4), adopted the principle of Wallace Brothers and Co. 's case (3) to sales tax legisla tion. In a recent case, The State of Bombay vs R.M.D. Chamarbaugwala(5), which was concerned with tax on cross word competition, this Court applied the theory of nexus and upheld the legislative competency of the Bombay Legislature to impose tax on the gambling competitions. At page 901 this Court said: " The doctrine of territorial nexus is well established and there is no dispute as to the principles. As enunciated by learned counsel for the petitioners, if there is a territorial nexus between the person sought to be charged and the State seeking to tax him the (1) (3) (5) ; ,901. (2) ; (4) ; , 1088. 1375 taxing statute may be upheld. Sufficiency of the territorial connection involve a consideration of two elements, namely, (a) the connection must be real and not illusory and (b) the liability sought to be imposed must be pertinent to that connection. It is conceded that it is of no importance on the question of validity that the liability imposed is or may be altogether disproportionate to the territorial connection. In other words, if the connection is sufficient in the sense mentioned above, the extent of such connection affects merely the policy and not the validity of the legislation. " Applying these principles to the facts of that case this Court came to the conclusion that they constituted sufficient territorial nexus which entitled the State of Bombay to impose a tax on the gambling that took place within its boundaries and that the law could not be struck down on the ground of extra territoriality. It is not necessary for us on this occasion to lay down any broad proposition as to whether the theory of nexus, as a principle of legislation, is applicable to all kinds of legislation. It will be enough, for disposing of the point now under consideration, to say that this Court has found no apparent reason to confine its application to income tax legislation but has extended it to sales tax and to tax on gambling and that we see no cogent reason why the nexus theory should not be applied to sales tax legislation. The learned Attorney General submits that the theory of nexus cannot be applied to sales tax legislation because such legislation is concerned with a tax on the transaction of sale,, that is to say, a completed sale and to break up a sale into its component parts and to take one or more of such parts and to apply the theory to it will. mean that the State will be entitled to impose a tax on one or more of the ingredients or constituent elements of the transaction of sale which by itself or themselves will not amount to a sale. This argument overlooks the fact that the provisions of the sales tax legislation we are considering limit its charging section to " sale ". In order to attract the charging section there must be a completed 1376 sale involving the transfer of property in the goods sold from the seller to the buyer. The nexus theory does not impose the tax. It only indicates the circumstance in which a tax imposed by an act of the ,Legislature may be enforced in a particular case and unless eventually there is a concluded sale in the sense of passing of the property in the goods no tax liability attaches under the Act. One or more of the several ingredients constituting a sale only furnished the connection between the taxing State and the "sale". The learned Attorney General also said that one and the same transaction of sale may be taxed by different States by applying the nexus theory and there will be multiple taxation which will obstruct the free flow of inter State trade. There is no force in this argument, for article 286(2) of the Constitution, as it stood originally, was a complete safeguard against such eventuality and after the amendment of that Article and the relevant entries in the Legislative List such contingency will not arise. In our opinion the arguments advanced by the learned Attorney General on this point cannot be accepted. Re. point No. 3: The learned Attorney General next contends that in any case the nexus must be real and pertinent to the subject matter of taxation. He contends that the presence of the goods in Bihar referred to in the old second proviso, which is reproduced in el. (i) of the second proviso as amended, is of no consequence. The production or manufacture, according to him, has no connection with and never enters into the transactions of sale. He relies on the observations of Chief Justice Gwyer in Boddu Paidanna 's case (1), at page 102, namely, that " a sale bad no necessary connection with manufacture or production." That observation was made by the learned Chief Justice in order to emphasise the fact that the tax levied on the first sale by the manufacturer or producer was a tax imposed on him qua seller and not qua manufacturer or producer. The question whether the fact of production or manufacture of goods may legitimately form a nexus between the transaction of sale and the taxing (1) 1377 State was not in issue in that case at all. It is un necessary in this case to lay down any hard and fast test as to the sufficiency of nexus which will enable a State to impose a tax or to enumerate the instances of such connection. For the purpose of the present, case it is sufficient to state that in a sale of goods the goods must of necessity play an important part, for it is the goods in which, as a result of the sale, the property will pass. In our view the presence of the goods it the date of the agreement for sale in the taxing State or the production or manufacture in that State of goods the property wherein eventually passed as a result of the sale wherever that might have taken place, constituted a sufficient nexus between the taxing State and the sale. In the first case the goods are actually within the State at the date of the agreement for sale and the property in those goods will generally pass within the State when they are ascertained by appropriation by the seller with the assent of the purchaser and delivered to the purchaser or his agent. Even if the property in those goods passes outside the State the ultimate sale relates to those very goods. In the second case the goods, wherein the title passes eventually outside the State, are produced or manufactured in Bihar and the sale wherever that takes place is by the same person who produced or manufactured the same in Bihar. The producer or manufacturer gets his sale price in respect of goods which were in Bihar at the date when the important event of agreement for sale was made or which were produced or manufactured in Bihar. These are relevant facts on which the State could well fasten its tax. If the facts in the Raleigh Investment Co. 's case (1), were sufficient nexus there is no reason why the facts mentioned in the proviso should not also be sufficient. Whatever else may or may not constitute a sufficient nexus, we are of opinion that the two cases with which we are concerned in this case are sufficient to do so. Re. point No. 5: The argument on this point is that sales tax is an indirect tax on the consumer. The (1) [1044] F.C.R. 229. 1378 idea is that the seller will pass it on to his purchaser and collect it from them. If that is the nature of the sales tax then, urges the learned Attorney General, it cannot be imposed retrospectively after the, sale transaction has been concluded by the passing of title from the seller to the buyer, for it cannot, at that stage, be passed on to the purchaser. According to him the seller collects the sales tax from the purchaser on the occasion of the sale. On that time goes past, the seller loses the chance of realising it from the purchaser and if it cannot be realised from the purchaser, it cannot be called sales tax. In our judgment this argument is not sound. From the point of view of the economist and as an economic theory, sales tax may be an indirect tax on the consumers, but legally it need not be so. Under the 1947 Act the primary liability to pay the sales tax, so far as the State is concerned, is on the seller. Indeed before the amendment of tile 1947 Act by the amending Act the sellers had no authority to collect the sales tax as such from the purchaser. The seller could undoubtedly have put up the price so as to include the sales tax, which he would have to pay but he could not realise any sales tax as such from the purchaser. That circumstance could not prevent the sales tax imposed on the seller to be any the less sales tax on the sale of goods. The circumstance that the 1947 Act, after the amendment, permitted the seller who was a registered dealer to collect the sales tax as a tax from the purchaser does not do away with the primary liability of the seller to pay the sales tax. This is further made clear by the, fact that the registered dealer need not, if he so pleases or chooses, collect the tax from the purchaser and sometimes by reason of competition with other registered dealers he may find it profitable to sell his goods and to retain his old customers even at the sacrifice of the sales tax. This also makes it clear that the sales tax need not be passed on to the purchasers and this fact does not alter the real nature of the tax which, by the express provisions of the law, is cast upon the seller. The buyer is under no liability to pay sales tax in addition to the agreed sale price 1379 unless the contract specifically provides otherwise. See Love vs Norman Wright (Builders) Ltd. (1). If that be the true view of sales tax then the Bihar Legislature acting within its own legislative field had the powers of a sovereign legislature and could make its law prospectively as well as retrospectively. We do not think that there is any substance in this contention either. For reasons stated above none of the contentions urged by the learned Attorney General in support of these appeals can be sustained. The result, therefore, is that these appeals must be dismissed with costs. BOSE J. With great respect I cannot agree. It will not be necessary to elaborate my point of disagreement at length because this is pro Constitution legislation and much of what we decide in this case wilt not affect post Constitution Acts. Put very shortly, my view is this. First, a State can only impose a tax on the sale of goods. It has no power to tax extra territorially, therefore it can only tax sales that occur in the State itself. With great respect I feel it is fallacious to look to the goods, or to the elements that constitute a sale, because the power to tax is limited to the sale and the tax is not on the goods or on the agreement to sell or on the price as such but only on the sale. Therefore, unless the sale itself takes place in the State, the State cannot tax. That brings me to the next point, the situs of a sale. Now I know that this is a matter on which many different views are possible but what is clear to me is that a sale cannot have more than one situs. It is not a mystical entity that can be one in many and many in one at one and the same time, here, there and everywhere all at once nor is it a puckish elf that pops up now here, now there and next everywhere. It is a very mundane business transaction, of the earth. earthy. It can have only one existence and one situs. Opinions may differ on where that is and how it is to be determined, but it is our duty, as the supreme authority on the law of the land, to choose (1) I75 1380 one of those many views and say that that is the law of our land and that in India the situs is determined in this way or that and, having determined it, make it uniform for the whole country. I am conscious that the selection must be arbitrary, but for all that, it must be made. Left to myself, I would have preferred Chesbire 's view about the proper law of the contract set out by him in Chapter VIII of his book on Private International Law, 4th edition. I referred to this in The Delhi Cloth and General Mills Co. Ltd. vs Harnam Singh(1). I quote him again: "The proper law is the law of the country in which the contract is localised. Its localisation will be indicated by what may be called the grouping of its elements as reflected in its formation and in its terms. The country in which its elements are most densely grouped will represent its natural seat." He is not dealing with this question. He is dealing with International Law and the difficulties that arise in dealing with contracts whose elements are grouped in different States with different, and often conflicting, laws. He is developing the theme that for any one contract there should be but one law to govern it in all its stages and that the most logical conclusion is to select the law of the country in which the contract has its natural seat. But whether his view is accepted or any of the others that he discusses, he stresses the need for one objective rule and contends strongly that the choice should not be left to the parties to the deal, even as I say that it should not be left to the States. He quotes an American Judge, at page 203 of his book, who says that " Some law must impose the obligation, and the parties have nothing whatsoever to do with that, no more than with whether their acts are torts or crimes. " Now none of that is of immediate application here but it contains the germ of an idea and points to the embarrassment and folly of letting differing laws run amuck in governing a single transaction. Following up that thought I would say that we are dealing here with a Constitution Act that speaks with one voice (1) , 418. 1381 and authority throughout the land. It tells the various States, as one day some international voice that will rule the world will say to the peoples in it, " you may do this and may not do that " ; and " this " and " that " mean, but one thing everywhere. One writ runs throughout the land and it has but one meaning and one voice. " When I say that you may only legislate for your own territory and that you may tax certain sales, you must realise that the meaning that I give to I sale ' is the meaning that my Supreme Court shall give to it and that it cannot mean differing things in different areas ; and you must realise that the only sales that you may tax are the ones that lie in your own territory. My Supreme Court shall determine where a sale is situated and once that is determined it cannot be situated anywhere else. If it does not happen to be in your territory you cannot tax it. " Our present Constitution did not adopt Cheshire 's view. It made another choice. In the old Explanation to article 286 (now repealed) it selected the place where the goods are actually delivered, as a direct result of the sale or purchase, as the situs. Well, so be it. That is as good as any other and I would have been as happy to select that as any of the other possibilities. But what I do most strongly press is that a Constitution Act cannot be allowed to speak with different voices in different parts of the land and that a mundane business concept well known and well understood cannot be given an ethereal omnipresent quality that enables a horde of hungry hawks to swoop down and devour it simultaneously all over the land: " some sale; some hawks " as Winston Churchill would say. I would therefore reject the nexus theory in so far as it means that any one sale can have existence and entity simultaneously in many different places. The States may tax the sale but may not disintegrate it and, under the guise of taxing the sale in truth and in fact, tax its various elements, one its head and one its tail, one its entrails and one its limbs by a legislative fiction that deems that the whole is within its claws simply because, after tearing it apart, it finds a hand 1382 or a foot or a heart or a liver still quivering in its grasp. Nexus, of course, there must, be but nexus of the entire entity that is called a sale, wherever it is deemed to be situate. Fiction again. Of course, it is fiction, but it is a fiction as to situts imposed by the Constitution Act and by the Supreme Court that speaks for it in these matters and only one fiction, not, a dozen little ones. My point is simple. If you are allowed to tax a dog it must be within the territorial limits of your taxable, jurisdiction. You cannot tax it if it is born elsewhere and remains there simply because its mother was with you at some point of time during the period of gestation. Equally, after birth, you cannot tax it simply because its tail is cut off (as is often done in the case of certain breeds) and sent back to the fond owner, who lives in your jurisdiction, in a bottle of spirits, or clippings of its hair. There is a nexus of sorts in both cases but the fallacy lies in. thinking that the entity is with you just because a part that is quite different from the whole was once there. So with a sale of a motor car started and concluded wholly and exclusively in New York or London or Timbuctoo. You cannot tax that sale just because the vendor lives in Madras, even if the motor car is brought there and even assuming there is no bar on international sales, for the simple reason that what you are entitled to tax is the sale, and neither the owner nor the car, therefore unless the sale is situate in your territory, there is no real nexus. And once it is determined objectively by the Constitution Act or in Supreme Court how and where the sale is situate, its situs is fixed and cannot be changed thereafter by a succession of State legislatures each claiming a different situs by the convenient fiction of deeming. The only question is whether it is too late in the day to take this view because of our previous decisions and those of the Federal Court. I say not, for, though there is a consensus of opinion that there must be a territorial nexus and that it must not be illusory, no decision that I know of says that when you are given the right to tax a certain thing which is a composite 1383 entity, quite separate and distinct from the various elements of which it is composed, you may tear that whole apart and seize on some, element that is quite a different thing from that which you are entitled to tax and hold that the taxable entity is in your State simply because at some relevant point of time one of the ingredients that went to make up the whole but which is a separate and distinct thing from the whole, as different from it as chalk is from cheese, happened to be within your clutches. I do not intend to analyse the cases on this point because it is pointless to pursue a matter that will only be of academic interest. All I will do therefore is to say that the question of nexus has been referred to in the following cases and that none of them reaches a decision on this particular point. These cases are Governor General in Council vs Ratleigh Investment Co., Ltd. (1), A. H. Wadia vs Commissioner of Income tax, Bombay Poppatlal Shah vs The Slate of Madras (3), State of Travencore Cochin vs Shanmugha Vilas Cashew Nut Factory (4), and The Bengal Immunity Co., Ltd. vs The State of Bihar (5). I would allow the appeals. ORDER OF THE COURT. In view of the opinion of the majority, the appeals are dismissed with costs. Appeals dismissed. (1) [1944] 229, 247, 253. (2) [1048] F.C.R. 121, 153, 154, 165. (3) ; (4) [1954]S.C.R. 53, 101. (5) , 708, 768, 769.

The appellant company, carrying on business as manufacturer of iron and steel, with its factory and works at Jamshedpur in Bihar, was assessed to sales tax for two periods prior to the Constitution, under the Bihar Sales Tax Act, 1947 (No. XIX Of 1947), enacted by the Bihar Legislature in exercise of its exclusive power under the Government of India Act, 1935. The company used to send its goods from Jamshedpur to various parts of India. In the railway receipt the company itself figured as the consignee, it paid the freight and the receipt was sent either to its branch offices or bankers to be handed over to the purchaser when he paid the price. From the amounts shown as gross turn over in the two returns for the two periods, the company claimed deduction of certain amounts, being the valuable consideration for the goods manufactured in Bihar but sold, delivered and consumed outside, on the ground that in none of the transactions in respect of the said sums did property in the goods pass to the purchasers in Bihar. The appellant claimed further deductions on account of the railway freight paid by it. The Sales Tax Officer disallowed both the claims and added the amounts of sales tax realised by the appellant from its purchasers to the taxable turnover. The company appealed against the orders of assessment, but the Commissioner of Sales Tax dismissed its appeals. The Board of Revenue, in revision, confirmed the orders of the Commissioner with certain modifications and remanded the matters to the Sales Tax Officer. On the appellant 's application for reference of certain questions of law, the Board referred them to the High Court. One of them related to the legality of adding the Sales Tax to the turn over and was answered in favour of the appellant and the respondent did not appeal. The other questions decided by the High Court against the appellant related to the vires of the Act and the validity of retrospective levy of sales tax under section 4(1) of the Act. The appellant 's contentions in the appeals were that the tax levied under section 4(1) read with section 2(g) second proviso, cl. (II), of the Act, was not a sales tax within the meaning of Entry 48 in List II of the Seventh Schedule to the Govern ment of India Act, 1935, but was in the nature of excise duty 172 1356 which a provincial legislature had no power to impose, that the theory of territorial nexus was inapplicable to sales tax and, in any case, there was no real or sufficient nexus in the present cases and that retrospective levy of the sales tax under section 4(1) Of the Act destroyed the indirect nature of the tax, thus making it a direct tax on the dealer which could not be passed on to the consumer: Held, (per Das, C. J., Venkatarama Aiyar, section K. Das and A.K. Sarkar, jj., Bose, J. dissenting), that the contentions raised on behalf of the appellant must be negatived. The provisions of section 4(1) read with section 2(g), second proviso, of the Bihar Sales Tax Act, as amended by the Bihar Sales Tax (Amendment) Act, 1948, (VI Of 1949), were within the legislative competence of the Legislature of the Province of Bihar. Both before and after the amendment, the word 'sale ' as used in section 4(1) and as defined by section 2(g) of the Act, meant the transfer of property in the goods sold. The second proviso added by the amending Act did not extend that meaning so as to include a contract of sale. What it actually did was to lay down certain circumstances in which a sale, although completed elsewhere, was to be deemed to have taken place in Bihar. Those circumstances did not constitute the sale, but only located the situs of the sale. Sales Tax Officer, Pilibhit vs Messrs. Budh Prakash jai Prakash; , , distinguished. Nor was it correct to contend that the tax levied under section 4(1) read with section 2(g) Of the Act was in the nature of excise duty. Under cl. (ii) of the second proviso to section 2(g) of the Act the producer or manufacturer became liable to pay the tax not because he produced or manufactured the goods but because he sold them. Province of Madras vs Boddu Paidanna and Sons, [1942] F.C.R. go and Governor General vs Province of Madras, (1945) L.R. 72 I.A. 91, referred to. There can be no doubt that the theory of territorial nexus does apply to sales tax legislation. Although sales tax can be levied only on a completed sale, this theory has its use in indicating the circumstances in which the tax may be enforced in a particular case. One or more of the several ingredients of a sale may furnish the connection between the taxing State and the sale. State of Bombay vs United Motors (India) Ltd., [1953] S.C.R. 1069, Poppatlal Shah vs The State of Madras, [1953] S.C.R. 677 and The State of Bombay vs R.M.D. Chamarbaugwala, ; , relied on. Bengal Immunity Co. Ltd. vs The State of Bihar, , considered. Case law reviewed. 1357 As in a sale of goods, the goods must necessarily play an important part, the circumstances mentioned in the proviso to section 2(g) of the Act, namely, the presence of the goods in Bihar at the date of the agreement of sale or their production or manufacture there must be held to constitute a sufficient nexus between the taxing province and the sale wherever that might take place. Governor General vs Raleigh Investment, , relied on. Province of Madras vs Boddu Paidanna and Sons, [1942] F.C.R. go, distinguished. It would not be correct to contend that the theory of nexus might lead to multiple taxation or obstruct inter State trade. Article 286(2) of the Constitution and the relevant entries in the Legislative List are a complete safeguard to any such contingency. Although as a matter of economic theory, sales tax maybe an indirect tax realisable from the consumer, it need not be legally so and is not so under the Bihar Sales Tax Act, 1947, which imposes the primary liability on the seller. A buyer, moreover, is not bound to pay sales tax over and above the agreed sale price unless he is by contract bound to do so. There can, therefore, be no scope for the argument that the retrospective enforcement of the tax under section 4(1) of the Act could destroy the character of the tax or that it was beyond the legislative competence of the Bihar Legislature. Love vs Norman Wright (Builders) Ltd., L.R. (1944) 1 K.B. 484, referred to. Per Bose, J. Sales tax can be imposed only on the sale. It is, therefore, wrong to look to the goods or the agreement to sell or any other elements that constitute a sale in order to impose the tax. A State can tax a sale of goods that takes place within its boundary. It has no power to tax extra territorially, and since a completed sale can have only one situs no State Legislature can be allowed to break up a sale into its component parts, which are separate and distinct from the sale itself, and by an application of the theory of nexus claim that ,,he sale wholly took place within it. The nexus can only be in respect of the entire sale, wherever it may take place and not of its several parts.

ition (Civil) No. 107 of 1988. (Under Article 32 of the Constitution of India) Dr. Y.S. Chitale, Dr. N.M. Ghatate and S.V. Deshpande for the Petitioner. Kuldeep Singh, Additional Solicitor General, Soli J. Sorabjee, Parimal K. Shroff, P.H. Parekh, Sanjay Bhartari and Miss A. Subhashini for the Respondents. The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J. This writ petition was disposed of by our Order dated 1st of February, 1988, we indicated therein that we will give our reasons shortly. This we do by this judgment. The Writ Petition No. 107 of 1988 is a petition under Article 32 of the Constitution. The petitioner is a practising advocate of the Bombay High Court. He approached this Court by means of the petition under Article 32 of the Constitution for issue of a writ in the nature of Prohibition or any other appropriate order restraining the respondents, namely, the Union of India, the Director General of Doordarshan, New Delhi, Blaze Advertising Pvt. Ltd. and Govind Nehalani, being the producer from telecasting or screening the serial titled "Tamas" and to enforce petitioner 's fundamental rights under Articles 21 and 25 of the Constitution and declaring the screening or televising of "Tamas" as violative of section 5B of the . One Javed Ahmed Siddique filed a writ petition in the High Court of Bombay being Writ Petition No. 201 of 1988. The same came up before a learned single Judge of the High Court of Bombay who while admitting the same on 21st of January, 1988 had granted stay of further telecasting of the said serial on T.V. till further orders. The respondents herein challenged the said order before the Division Bench of the Bombay High Court. The two learned Judges, namely, 1015 Justice Lentin and Justice Mrs. Sujata Manohar saw the complete serial on 22nd of January, 1988 and vacated the stay by an order dated 23rd of January, 1988. The judgment is impugned in the special leave petition which is taken on board and is also disposed of by this common judgment. It may also be mentioned that four episodes of the said serial have already been telecast. The petitioner states that the exhibition of the said serial is against public order and is likely to incite the people to indulge in the commission of offences and it is therefore, violative of section 5B (1) of the (hereinafter called 'the Act ') and destructive of principle embodied under Article 25 of the Constitution. It is also contended that under section 153A of the Indian Penal Code, this presentation is likely to promote or attempts to promote, on grounds of religion, caste or community, disharmony or feelings of enmity, hatred or ill will among different religious, racial, language or regional groups or castes, or communities and is further prejudicial to the maintenance of harmony between different religious, racial, language or regional groups and incites people to participate or trains them to the use or criminal force or violence or participate in such criminal acts. So, therefore, it is an offence under section 153A of the Indian Penal Code. Our attention was drawn to section 153B of the Indian Penal Code and it was submitted that the serial is prejudicial to the national integration. Serial "Tamas" depicts the Hindu Muslim tension and sikhmuslim tension before the partition of India. It further shows how the killings and looting took place between these communities before the pre independence at Lahore. "Tamas" is based on a book written by Sree Bhisham Sahni. It depicts the period prior to partition and how communal violence was generated by fundamentalists and extremists in both communities and how innocent persons were duped into serving the ulterior purpose of fundamentalists and communities of both sides and how an innocent boy is seduced to violence resulting in his harming both communities. It further shows how extremist elements in both communities infused tension and hatred for their own ends. That is how the two learned Judges of the High Court of Bombay mentioned hereinbefore have viewed it. They have also seen that realisation ultimately dawns as to the futility of it all and finally how inherent goodness in human mind triumphs and both communities learn to live in amity. They saw that the people learnt this lesson in a hard way. This is the opinion expressed by two experienced Judges of the High Court after viewing the serial. 1016 The location of the story is Lahore. The period is just before independence. The very introductory part of the serial which was tele cast on 9th of January, 1988 displayed that the idea and message behind the serial is to keep people away from getting involved in such violence arising out of communal animosity. By telecasting it on Doordarshan, Dr. Chitale appearing for the petitioner said, now seen by vast majority of people, the said serial is exposed to person of all ages, who will fail to grasp the message if any behind the serial. The very first serial, according to the petitioner, depicts one person who is reported to be a member of Scheduled Caste from the Hindu community being asked by one Thekedar to get a pig killed and bring its dead body in order to serve the meal for an English man. The dead body is shown to be axed and collected by one person named 'Kalu ' who is represented to be a Christian. Kalu gets a dead pig from the said member of the Scheduled Caste Hindu who killed it. That dead pig is shown to be found at the door steps of a mosque. This, according to the petitioner, was provocative and was bound to result in instigation in Hindus against Muslims and consequently to rouse Muslim anger resulting in some reaction on the part of the Muslims, which in its own turn is bound to have reaction by way of some acts of violence on the part of Hindus. According to the petitioner, the total result would be that there is likelihood that members of both the communities will rise in passion and anger against each other and take to acts which would lead to communal violence and riots. The petitioner further states that in the first episode shown on 9th January, 1988 one elderly Hindu who is depicted as a 'Guru ', a preceptor, and is shown as giving inspiration/advice and instigation to a young boy to practise violence, to begin with, by asking the boy to cut the throat of the hen, and when the boy gets nervous and shows his unwillingness and unpreparedness, the Guru warns him that unless he showed his courage to kill a hen to begin with, how can he become bold and courageous to kill his enemy. The petitioner further alleges that in the background of this incident and in context of what precedes and succeeds this incident between the Guru and the boy, it is clear that Guru has instigated the boy to get into the trend of thought and feeling to be ready to commit violence against his enemies, in oreder to kill them, and on viewing the first part of the said serial as a whole this instigation is to Hindu young boys to take to violence against Muslims. This is nothing but promoting feelings of enmity and hatred between Hindus and Muslims. The petitioner further states that in the first serial the dialogue 1017 between the Hindu leaders and Muslim leaders is so arranged that Indian National Congress is suggested to be a Hindu Organisation. In the present background, therefore, the petitioner claims that the exhibition of said serial is likely to create communal disharmony. "Tamas" had been given 'U ' certificate by the Central Board of Film Censor. In this connection we may refer to the relevant provisions of the , which is an Act to make provision for the certification of cinematograph films for exhibition and for regulating exhibitions by means of cinematograph. Section 3 of the Act provides for Board of Film Censors. Section 4 of the Act provides for examination of films. A film is examined in the first instance by an Examining Committee under section 4A and, in certain circumstances, it is further examined by a Revising Committee under section 5. Members of both the Committees are expected to set out not only their recommendations but also the reasons therefore in cases where there is difference of opinion amongst the members of the Committee. Section 5A of the Act provides that if after examining a film or having it examined in the prescribed manner, the Board considers that the film is suitable for unrestricted public exhibition, such a certificate is given which is called 'U ' certificate. Section 5B of the Act provides for guidance in certifying films. The said section 5B provides as follows: "5 B. Principles for guidance in certifying films (1) A film shall not be entitled for public exhibition if, in the opinion of the authority competent to grant the certificate, the film or any part of it is against 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 involves defamation or contempt of Court or is likely to incite the commission of any offence. (2) Subject to the provisions contained in subsection (1) the Central Government may issue such directions as it may think fit setting out the principles which shall guide the authority competent to grant certificates under this Act in sanctioning films for public exhibition. " Section 5C of the provides for the constitution of Appellate Tribunals, consisting of persons who are familiar with the social, cultural or political institutions of India, have special knowledge of the various regions of India and also special knowledge of films and their impact on society, to hear appeals from the orders of 1018 the Censor Board. Under section 5D, as it stands at present, the Tribunal can hear appeals by persons who, having applied for a certificate in respect of a film, are aggrieved by an order of the Board refusing to grant a certificate or granting a restricted certificate or directing the appellant to carry out certain excisions or modifications in the film. In addition, there is also an overall revisional power in the Central Government to call for the record of any proceeding in relation to any film at any stage, where it is not made the subject matter of appeal to the Appellate Tribunal, to enquire into the matter and make such order in relation thereto as it thinks fit, including a direction that the exhibition of the film should be suspended for a period not exceeding two months. Under the newly added sub section 5 of section 6, the Central Government has also been given revisional power in respect of a film certificated by the Appellate Tribunal on the ground that it is necessary to pass an order in the interests of the sovereignty and integrity of India, the security of the State, friendly relations with foreign States or public order or decency or morality. Learned Additional Solicitor General, Shri Kuldeep Singh, for the Central Government, strongly urged before us that the film should be allowed to be exhibited. As a matter of fact in his enthusiasm, he submitted that there should be an order to the Government to exhibit the film again and again. He urged that all the appropriate authorities have considered the film and Doordarshan authorities have also independently examined this question. It has to be borne in mind that there is no allegation of any mala fide or bad motive on the part of the authorities concerned. The only question, therefore, is whether the film has been misjudged or wrongly judged and allowed to be exhibited or serialised in T.V. on a wrong approach. This film indubitably depicts violence. That violence between the communities took place before the pre partition days is a fact and it is the truth. Dr. Chitale, however, submits that truth in its naked form may not always and in all circumstances be desirable to be told or exhibited. During the course of the arguments before us on the 1st of February, 1988 our attention was drawn to an item in the Hindustan Times of that day which contained an interview with the author Sree Bhisham Sahni. Strictly speaking such evidence is not admissible but since it is a matter of public interest, we have looked into it. The author has received the Sahitya Akademi award for this novel. It was written in 1974. The book is being taught in various universities. There has been no adverse reaction to the novel during the past fourteen years. The author further said "certain nuances which were, however, 1019 clear in the book are not so in the serial". The author has drawn attention to the incident that the mischief of getting a pig slaughtered and having it placed outside a mosque, was done by a character referred to as "Chaudhuri" in the film. In the novel his full name is mentioned as Murad Ali, which is obviously not a Hindu name, according to the author. Vivian Bose, J. as he then was in the Nagpur High Court in the case of Bhagwati Charan Shukla vs Provincial Government, A.I.R. 1947 Nagpur 1 has indicated the yardstick by which this question has to be judged. There at page 18 of the report the Court observed that the effect of the words must be judged from the standards of reasonable, strong minded, firm and courageous men, and not those of weak and vacillating minds, nor of those who scent danger in every hostile point of view. This in our opinion, is the correct approach in judging the effect of exhibition of a film or of reading a book. It is the standard of ordinary reasonable man or as they say in English law "the man on the top of a clapham omnibus". This question came to be examined by this Court from a different angle in the case of K.A. Abbas vs The Union of India and another; , There K.A. Abbas the petitioner made a documentary film called "A Tale of Four Cities", which attempted to portray the contrast between the life of the rich and the poor in the four principal cities of the country. The film included certain shots of the red light district in Bombay. Although the petitioner applied to the Board of Film Censors for a "U" Certificate for unrestricted exhibition of the film, he was granted a certificate only for exhibition restricted to adults. The petitioner then filed the writ petition in this Court. At the hearing of the petition the Central Government indicated that it had decided to grant a 'U ' certificate to the petitioner 's film without the cuts previously ordered. Hidayatullah C.J. has exhaustively dealt with the question and noted the statutory requirements. In that film there was a scanning shot of a very short duration, much blurred by the movement of the photographer 's camera, in the words of Chief Justice, in which the red light district of Bombay was shown with the inmates of the brothels waiting at the doors or windows. Some of them wore abbreviated skirts showing bare legs up to the knees and sometimes a short above them. This was objected to. The film was shown to the learned Judges in the presence of the lawyers. The learned Chief Justice at page 468 of the report addressed himself to the question: "How far can these restrictions go and how are these to be imposed". The Court examined the provisions of Sec 1020 tion 5B(2) of the Act. After examining the relevant provisions and large number of authorities, the Chief Justice noted that the task of the censor was extremely delicate and its duties cannot be the subject of an exhaustive set of commands established by prior ratiocination. Chief Justice at page 474 of the report observed as follows: "Sex and obscenity are not always synonymous and it is wrong to classify sex as essentially obscene or even indecent or immoral. It should be our concern, however, to prevent the use of sex designed to play a commercial role by making its own appeal. This draws in the censors scissors. Thus audiences in India can be expected to view with equanimity the story of Oedipus son of Latius who committed patricide and incest with his mother. When the seer Tiresias exposed him, his sister Jocasta committed suicide by hanging herself and Oedipus put out his own eyes. No one after viewing these episodes would think that patricide or incest with one 's own mother is permissible or suicide in such circumstances or tearing out one 's own eyes is a natural consequence. And yet if one goes by the letter of the directions the film cannot be shown. Similarly, scenes depicting leprosy as a theme in a story or in a documentary are not necessarily outside the protection. If that were so Varrier Elwyn 's Phulmat of the Hills or the same episode in Henryson 's Testament of Cresseid (from where Verrier Elwyn borrowed the idea) would never see the light of the day. Again carnage and bloodshed may have historical value and the depiction of such scenes as the sack of Delhi by Nadirshah may be permissible, if handled delicately and as part of an artistic portrayal of the confrontation with Mohammad Shah Rangila. If Nadir Shah made golgothas of skulls, must we leave them out of the story because people must be made to view a historical theme without true history? Rape in all its nakedness may be objectionable but Voltaire 's Candide would be meaningless without Cunegonde 's episode with the soldier and the story of Lucrece could never be depicted on the screen." (emphasis supplied) Chief Justice observed that our standards must be so framed that we are not reduced to a level where the protection of the least capable and the most depraved amongst us determines what the morally healthy cannot view or read. The standards that we set for our censors must 1021 make a substantial allowance in favour of freedom thus leaving a vast area for creative art to interpret life and society with some of its foibles along with what is good. We must not look upon such human relationship as banned in toto and for ever from human thought and must give scope for talent to put them before society. In our scheme of things, the Chief Justice noted, ideas having redeeming social or artistic value must also have importance and protection for their growth. Our attention was also drawn by Dr. Chitale to the decision of this Court in Ebrahim Sulaiman Sait vs M.C. Muhammad and another; , , where Gupta, J. speaking for the Court observed that truth was not an answer to a charge of corrupt practice under section 123(3A) of the said Act; what was relevant was whether the speech promoted or sought to promote feelings of enmity or hatred as mentioned in that provision. But the likelihood must be judged from healthy and reasonable standards. The question was again considered by this Court in Rajkapoor vs Laxman, ; This Court reiterated that the Penal Code is general and the is special. The scheme of the is deliberately drawn up to meet the explosively expanding cinema menace if it were not strictly policed. No doubt, the cinema is a great instrument for public good if geared to social ends and can be a public curse if directed to anti social objectives. The decision reiterated that a balance has to be struck. On the evidence available before this Court it appears that a balance has been struck. Dr. Chitale emphasised that in an interview with the author, the author said that "Tamas" was not a historical novel. It merely takes into account certain events from history and builds upon them. He further said that life provided the raw material and a writer moulded it according to his imagination and perception of reality. We have given full thought to the contentions urged on behalf of the petitioner and come to the conclusion that these contentions cannot be accepted for two reasons. Firstly, as we have already pointed out, the itself contains several provisions to ensure the fulfilment of the conditions laid down in section 5B and to ensure that any film which is likely to offend the religious suspectibilities of the people are not screened for public exhibition. In the present case the Film Censor Board has approved the exhibition of the film. That apart we are informed that the Doordarshan authorities also 1022 scrutinise a film before it is exhibited on the television screen. Though we do not have the details of the authority or body which scrutinised the film for purposes of exhibition on the television, the procedure does involve further examination of the film from standards of public acceptability before it is shown on the television. It is true that the remedy of an approach to the Appellate Tribunal is available only to persons aggrieved by the refusal of the Board to grant a certificate or the cuts and modifications proposed by it. It is for the consideration of the Central Government whether the scope of this section should be expanded to permit appeals to the Tribunals even by persons who are aggrieved by the grant of certificate of exhibition to a film on the ground that the principles laid down for the grant of certificates in section 5B have not been fulfilled. But, even on the statute as it presently stands, the procedure for grant of certificate of exhibition to a film is quite elaborate and the unanimous approval by the examining Committee must be given full weight. As pointed out by Krishna Iyer, J. in the Rajkapoor case (supra), a Court would be slow to interfere with the conclusion of a body specially constituted for this purpose. Secondly, in this case we have the advantage of the views of two experienced Judges of one of the premier High Courts of this country. The learned Judges found that the message of the film was good. They have stated that the film shows how realisation ultimately dawns as to futlity of violence and hatred, and how the inherent goodness in human nature triumphs. Dr. Chitale submitted that the Judges have viewed the film from their point of view but the average persons in the country are not as sober and experienced as Judges of the High Court. But the Judges of the High Court of Bombay have viewed it, as they said, from the point of view of "how the average person for whom the film is intended will view it" and the learned Judges have come to the conclusion that the average person will learn from the mistakes of the past and realise the machinations of the fundamentalists and will not perhaps commit those mistakes again. The learned Judges further observed that illiterates are not devoid of common sense, or unable to grasp the calumny of the fundamentalists and extremists when it is brought home to them in action on the screen. This is how they have viewed it: those who forget history are condemned to repeat it. It is out of the tragic experience of the past that we can fashion our present in a rational and reasonable manner and view out future with wisdom and care. Awareness in proper light is a first step towards that realisation. It is true that in certain circumstances truth has to be avoided. Tamas takes us to a historical past unpleasant at times, but revealing and instructive. In those years which Tamas depicts a human tragedy 1023 of great diminsion took place in this sub continent though 40 years ago it has left a lasting damage to the Indian psyche. It has been said by Lord Morley in "On Compromise" that it makes all the difference in the world whether you put truth in the first place or in the second place. It is true that a writer or a preacher should cling to truth and right, if the very heavens fall. This is a universally accepted basis. Yet in practice, all schools alike are forced to admit the necessity of a measure or accommodation in the very interests of truth itself. Fanatic is a name of such ill repute, exactly because one who deserves to be so called injuries good causes by refusing timely and harmless concession; by irrigating projudices that a wiser way of urging his own opinion might have turned aside; by making no allowances, respecting no motives, and recognising none of those qualifying principles that are nothing less than necessary to make his own principles true and fitting in a given society. Judged by all standards of a common man 's point of view of presenting history with a lesson in this film, these boundaries appear to us could have been kept in mind. This is also the lesson of history that naked truth in all times will not be beneficial but truth in its proper light indicating the evils and the consequences of those evils is instructive and that message is there in "Tamas" according to the views expressed by the two learned Judges of the High Court. They viewed it from an average, healthy and commonsense point of view. That is the yardstick. There cannot be any apprehension that it is likely to affect public order or it is likely to incite into the commission of any offence. On the other hand, it is more likely that it will prevent incitement to such offences in future by extremists and fundamentalists. Dr. Chitale, relying strongly on certain observations in Abbas ' case (supra, at p. 459 of the reports) contended that there was real danger of the film in this case inciting people to violence and to commit other offences arising out of communal disharmony. It is no doubt true that the motion picture is a powerful instrument with a much stronger impact on the visual and aural senses of the spectators than any other medium of communications; likewise, it is also true that the television, the range of which has vastly developed in our country in the past few years, now reaches out to the remotest corners of the country catering to the not so sophisticated, literary or educated masses of people living in distant villages. But the argument overlooks that the potency of the motion picture is as much for good as for evil. If some scenes of violence, some nuances of expression or some events in the film can stir up certain feelings in the spectator, an equally deep strong, lasting and beneficial impression can be conveyed by scenes revealing the machinations of selfish interests, scenes depicting mutual 1024 respect and tolerance, scenes showing comradeship, help and kindness which transcend the barriers of religion. Unfortunately, modern development both in the field of cinema as well as in the field of national and international politics have rendered it inevitable for people to face the realities of internecine conflicts, inter alia, in the name of religion. Even contemporary news bulletins very often carry scenes of pitched battle or violence. What is necessary sometimes is to penetrate behind the scenes and analyse the causes of such conflicts. The attempt of the author in this film is to draw a lesson from our country 's past history, expose the motives of persons who operate behind the scenes to generate and foment conflicts and to emphasise the desire of persons to live in amity and the need for them to rise above religious barriers and treat one another with kindness, sympathy and affection. It is possible only for a motion picture to convey such a message in depth and if it is able to do this, it will be an achievement of great social value. In the present case the finding of the learned Judges of Bombay High Court is that the picture viewed in its entirety is capable of creating a lasting impression of this message of peace and co existence and that people are not likely to be obsessed, overwhelmed or carried away by the scenes of violence or fanaticism shown in the film. We see no reason to differ from this conclusion. Before we conclude we note that the petition was based on alleged violation of Articles 21 and 25 of the Constitution. We. are unable to see any alleged violation of those articles. We, however accept the position that the petitioner has a right to draw attention of this Court to ensure that the communal atmosphere is kept clean and unpolluted. He has done well to draw attention to this danger. We have examined and found that there is no such danger and the respondents have not acted improperly or imprudently. In the aforesaid view of the matter this petition under Article 32 of the Constitution fails and is accordingly dismissed. Similarly, on similar grounds the special leave petition arising out of the judgment and order of the Bombay High Court dated 23rd January, 1988 in Appeal No. 96/88 is also dismissed. In the facts and circumstances of the case, there will be no order as to costs. R.S.S. Petition dismissed.

% The Serial titled "Tamas", based on a book written by Sree Bhisham Sahni, was being screened on the T.V. Four of its episodes had already been shown when the petitioner moved this Court under Article 32 of the Constitution for a writ of prohibition and any other appropriate writ restraining its further screening and to enforce petitioner 's fundamental rights under Articles 21 and 25 and for declaring the screening or televising of "Tamas" as violative of section 5B of the . Earlier, a writ had been admitted in the High Court of Bombay and a single learned Judge granted interim stay. On appeal, the Division Bench, after seeing the complete serial, vacated the stay. Special leave petition has been filed against that judgment. Serial `Tamas ' takes us to a historical past unpleasant at times, but revealing and instructive. In those years which `Tamas ' depicts, a human tragedy of great dimension took place in this sub continent though 40 years ago which has left a lasting damage to the Indian psyche. `Tamas ' depicts the Hindu Muslim and Sikh Muslim tension before the partition of India and the killings and looting that took place. According to the Division Bench of the High Court, the serial inter alia depicts how communal violence was generated by fundamentalists and extremists in both communities, how innocent persons were duped into serving the ulterior purpose of fundamentalists, and how extremist ele 1012 ments infused tension and hatred for their own ends. The petitioner 's contentions are: (1) The exhibition of the serial is against public order and is likely to incite the people to indulge in the commission of offences and is therefore violative of section 5B(1) of the and destructive of principles embodied under Article 25; (2) Its presentation is likely to promote feelings of enmity, hatred or ill will among different religious groups and is prejudicial to communal harmony and national integration, and is therefore an offence under section 153A of the Indian Penal Code; (3) Events have been depicted and characters portrayed in a manner that would provoke and instigate people of all ages exposed to it, who will fail to grasp the message if any behind the serial; (4) Truth in its naked form may not always and in all circumstances be desirable to be told or exhibited, and (5) The Judges of the High Court have viewed the film from their own point of view but the average persons in the country are not as sober and experienced as the Judges of the High Court. The respondents on the other hand, urge that all the appropriate authorities have considered the film suitable for unrestricted public exhibition and the only question is whether the film has been misjudged or wrongly judged and allowed to be exhibited or serialised on a wrong approach. This film indubitably depicts violence. That violence between the communities took place before the pre partition days is a fact and it is the truth. Dismissing the petitions, this Court, ^ HELD: (1) The itself contains several provisions to ensure the fulfilment of the conditions laid down in section 5B, and also to ensure that any film which is likely to offend the religious susceptibilities of the people is not screened for public exhibition. [1021G H] (2) On the aforesaid statute, as it presently stands, the procedure for grant of certificate of exhibition to a film is quite elaborate, and the unanimous approval by the examining committee must be given full weight and the Court would be slow to interfere with the conclusion of a body specially constituted for this purpose. [1022C D] (3) The correct approach in judging the effect of exhibition of a film or of reading a book is to judge from the standards of ordinary reasonable man. [1019C D] 1013 (4) The two learned Judges viewed the film from the point of view of "how the average person for whom the film is intended will view it. " They have found that the message of the picture was good, and have come to the conclusion that the average person will learn from the mistakes of the past and realise the machination of the fundamentalists as the film itself shows how realisation ultimately dawns as to the futility of violence and hatred and how the inherent goodness in human nature triumphs. In their view, those who forget history are condemned to repeat it. It is out of tragic experience of the past that we can fashion our present in a rational and reasonable manner and view our future with wisdom and care. Awareness in proper light is a first step towards the realisation. [1022F H] (5) The finding of the Division Bench of the Bombay High Court is that the picture viewed in its entirely, is capable of creating a lasting impression of the message of peace and co existence, and that people are not likely to be obsessed, overwhelmed or carried away by the scenes of violence or fanaticism shown in the film. This Court sees no reason to differ from the conclusion. [1024D] (6) It is the lesson of history that naked truth in all times will not be beneficial but truth in its proper light indicating the evils and the consequences of those evils is instructive and that message is there in `Tamas '. [1023D] (7) It is true that a writer or a preacher should cling to truth and right, if the very heavens fall. This is a universally accepted basis. Yet in practice all schools alike are forced to admit the necessity of a measure of accommodation in the very interests of truth itself. [1023B] (8) Judged by all standards of a common man 's point of view of presenting history with a lesson in this film, these boundaries appear to have been kept in mind. [1023C D] (9) The Court is unable to see any alleged violation of Articles 21 and 25 of the Constitution. The position that the petitioner has a right to draw attention of this Court to ensure that the communal atmosphere is kept clean and unpolluted, is accepted. He has done well to draw attention to this danger. This Court has examined and found that there is no such danger and the respondents have not acted improperly or imprudently. [1024E F] Bhagwati Charan Shukla vs Provincial Government, A.I.R. 1947 1014 Nagpur 1; K.A. Abbas vs The Union of India and Another, ; ; Ebrahim Sulaiman Sait vs M.C. Muhammad and Anr., ; and Rajkapoor vs Laxman, ; , referred to.

Civil Appeal No. 2153 of 1969. Appeal by Special Leave from the Judgment and Decree dated 12 8 69 of the Punjab and Haryana High Court in R.F.A. No. 357 of 1963. Hardayal Hardy, P. H. Parekh, C. B. Singh and M. Mudgal for the Appellants. M. N. Phadke, Mohan Behari Lal for Respondent No. 1. The Judgment of the Court was delivered by CHINNAPPA REDDY, J. This appeal is directed against the judgment of the High Court of Punjab and Haryana confirming that of the Subordinate Judge 1st Class, Nabha. The respondent plaintiff filed a suit for a declaration that he was the Mahant of Dera Baba Khiali Das, Khansura, Tehsil Nabha, District Patiala, that he was entitled to manage the properties of the Dera and that the alienations made by Mahant Krishan Das and Amar Parkash were not 1014 binding on him. It was alleged by the plaintiff that Amar Parkash who held power of attorney from Mahant Krishan Das, the previous Mahant of the Dera, had mismanaged the properties and had granted leases of lands belonging to the Dera to his mistress and his brother in law. Mahant Krishan Das came to know about the mismanagement by Amar Parkash and cancelled the power of attorney which he had previously executed in favour of Amar Parkash. Mahant Krishan Das summoned the general assembly of the Udasi Ghekh and held a meeting, with the help of the Deputy Commissioner, Patiala and the Police, on 23rd July 1961. The meeting was attended by other Mahants of Udasi Bhekh. In the general assembly of the Udasi Bhekh, Mahant Krishan Das tendered resignation of office of Mahant on the ground of old age and ill health and appointed the plaintiff as his successor Mahant. This was accepted by all the Mahants of Udasi Bhekh. Mahant Krishan Das, treating the plaintiff as his Sadaq Chela, applied Tilak, performed Pagri ceremony with his own hand and duly installed the plaintiff as the Mahant. The visiting Mahants also performed the Pagri ceremony. Despite the installation of the plaintiff as Mahant of the Dera, Amar Parkash continued his activities and started obstructing the plaintiff from discharging his obligations as Mahant. The plaintiff, therefore, filed the suit for a declaration that he was the Mahant of the Dera and for other reliefs. The defendant Amar Parkash raised the plea that the was the chela of Mahant Krishan Das and that Mahant Krishan Das who died on 30th December, 1961, had executed two Wills on 17th July, 1955 and 24th September, 1961, appointing him as the Mahant to succeed him. It was alleged that the proceedings which took place on 23rd July 1961 were the result of fraud and undue influence exercised over Mahant Krishan Das. On the pleadings of the parties the primary question which arose for consideration was whether the plaintiff was validly appointed as Mahant of Dera Baba Khiali Das. The learned Subordinate Judge. Nabha framed two principal issues. Issue No. 1 was: "What was the particular custom or usage prevailing in the Dera in dispute for the appointment of a Mahant on the relevant date ?" Issue No. 1 A was: "whether the plaintiff was validly appointed the Mahant of the Dera in accordance with the prevalent custom ?" The learned Subordinate Judge noticed that neither party pleaded or referred to any particular usage or custom for appointing a Mahant 1015 for the disputed Dera. He also noticed that the documentary evidence showed that the final appointment of Mahants for Deras in the Nabha State was required to be approved by the Ruler of the State. Leaving the matter there, the learned Subordinate Judge found that the plaintiff was duly and validly installed as Mahant of the Dera by Mahant Krishan Das in the presence of and with the approval of Udasi Bhekh. He held that the plea of fraud and undue influence raised by the defendant was not established. On those findings the suit was decreed. The first defendant Amar Parkash preferred an appeal to the High Court of Punjab and Haryana. During the pendency of the appeal the plaintiff sought an amendment of the plaint in order to enable him to expressly plead the particular custom relating to succession to the office of the Mahant of Dera Baba Khiali Das. The amendment was allowed and the High Court directed the Subordinate Judge to record additional evidence and submit a report giving his finding on the question whether the custom pleaded by the plaintiff was established and if so, whether the plaintiff was appointed in accordance with such custom. After recording additional evidence the learned Subordinate Judge submitted a report to the effect that the custom alleged by the plaintiff was not established and that upto 1948 the practice was for the Ruler of Nabha State to appoint the Mahant. After receiving the report of the learned Subordinate Judge, the High Court heard the appeal. It was conceded by the learned Counsel for the appellant before the High Court that in view of the report of the learned Subordinate Judge, the appeal should be decided on the basis of the evidence adduced before the Trial Court prior to the order of the High Court calling for a report from the Trial Court. On that basis the learned Counsel for the appellant attacked the finding on issue No. 1 A only and did not assail the findings on the other issues. The High Court confirmed the finding of the Trial Court that there was no undue influence exercised over Mahant Krishan Das and that the plaintiff was validly appointed and installed as Mahant of the Dera. In the first instance Shri Hardayal Hardy, learned Counsel for the appellant invited us to explore the evidence and the case law to find out the custom relating to succession to the office of Mahant of Deras in Nabha State in general and Dera Baba Khiali Das in particular. Ultimately, however, he conceded that if the plaintiff was shown to have been validly appointed and installed as Mahant by late Mahant Krishan Das at the ceremony held on 23rd July 1961, the plaintiff was entitled to succeed. He argued that late Mahant Krishan Das was covered into appointing and installing the plaintiff 1016 as Mahant and therefore, the appointment of the plaintiff as Mahant of the Dera was invalid. He also argued that the plaintiff was not a chela of Mahant Krishan Das and, therefore, he could not have been validly appointed as Mahant of the Dera in question. As pointed out in Mukherjea 's Hindu Law of Religious and Charitable Trusts (Third Edition), succession to the office of Mahant is a matter of some complexity and the custom varies greatly from institution to institution. Generally speaking, it is pointed out, Mutts may be divided into three classes: Mourasi, Panchayati and Hakimi. "In the first, the office of the Mohunt is hereditary and devolves upon the chief disciple of the existing Mohunt who moreover usually nominates him as his successor; in the second, the office is dective, the presiding Mohunt being selected by an assembly of Mohunts. In the third, the appointment of the presiding Mohunt is vested in the ruling power or in the party who has endowed the temple". It is also said "In various institutions the custom is that in order to entitle a chela to succeed, he must be appointed or nominated by the reigning Mohunt during his life time or shortly before his death and this may be done either by a written declaration or some sort of testamentary document". It is further said "Even where the Mohunt has the power to appoint his successor, it is customary in various Mutts that such appointment should be confirmed or recognised by the members of the religious fraternity to which the deceased belonged". In Mahant Satnam Singh vs Bawan Bhagwan Singh(1), the Privy Council while noticing that succession to the office of Mahant was to be regulated by the particular custom of the Math, observed as follows: "In the normal case of the death of a Mahant, the members of the fraternity will be fully aware of the vacancy in the office, and the usual practice will be for the installation of his successor usually nominated by him, to take place on the seventeenth day after the death. On the other hand, when the Mahant resigns during his life and installs his successor on the gaddi, it is obvious that the fraternity should be made aware of the proposed vacancy in the office and should be given the opportunity of confirming or refusing to confirm the nominee". It is unnecessary for us to make any further investigation into the custom relating to the appointment of Mahant since, in the light of the submissions made before us, two questions alone arise for consideration namely whether Mahant Krishan Das was coerced into appointing the plaintiff as his successor Mahant and whether the appointment of the plaintiff was invalid on the ground of his not being a Chela of Mahant Krishan Das. 1017 On the question whether late Mahant Krishan Das was subjected to any pressure to appoint the plaintiff as Mahant, both the Courts below have concurrently found that he was subjected to no such pressure. The finding is one of fact and we are unable to see any ground justifying our interference with a concurrent finding of fact. Shri Hardyal Hardy submitted that the High Court failed to consider the complaint said to have been made by late Mahant Krishan Das a few days after the installation of the plaintiff as Mahant in which he stated that he had been coerced into appointing the plaintiff as Mahant. Shri Hardyal Hardy also submitted that the evidence showed that the services of the Police had been requisitioned to pressurise late Mahant Krishan Das. The submission that the High Court did not consider the complaint said to have been made by late Mahant Krishan Das is without basis since we find that the High Court did refer to the complaint. The High Court confirmed the finding of the Trial Court that late Mahant Krishan Das who was previously under the influence of Amar Parkash had again come under the influence of Amar Parkash when he made the complaint. With regard to the presence of the Police at the installation ceremony we are of the view that the presence of the police, at the ceremony, far from advancing the appellant 's case, destroys the case that Mahant Krishan Das acted under coercion. The question that remains for consideration is whether the plaintiff was the Chela of Mahant Krishan Das and whether he could be validly appointed, if he was not the Chela. In Exhibit P 7 dated 23rd July 1961 which was executed by Mahant Krishan Das and attested by all visiting Mahants the plaintiff Parkasha Nand was described as 'Sadaq Chela ' of Mahant Krishan Das. The ceremony which took place on 23rd July 1961 was described by Parkasha Nand in the following words: "The congregation sat on the durries on the first floor of the Dera. About 25 Mahants and about 30 villagers sat on those durries. Mahant Krishan Das offered a Tilak on my forehead. Mahant Bikram Dass collected turbans from the Mahants who were present there and tied five turbans on my head. Mahant Som Parkash offered me a Doshala and sugar cakes were distributed. All these proceedings were gone through with the free and voluntary consent of late Mahant Krishan Das and no pressure was brought to bear on him. Mahant Krishan Das was not confined. Exhibits P6 to P8 were written at that time and the people who 1018 were present had affixed their signatures and thumbimpressions thereon". We are satisfied that late Mahant Krishan Das accepted the plaintiff as his Chela and appointed him as his successor Mahant. We may also mention here that the learned Subordinate Judge in his report mentioned that Pandit Bhagtanand who was previously a Mahant of the Dera was not a Chela of his predecessor Mahant Sunder Das and that Mahant Krishan Das himself was not a Chela of his predecessor Mahant Bhagtanand. We are unable to see any ground for inteference and the appeal,is accordingly dismissed with costs. N.V.K. Appeal dismissed.

In his suit for declaration that he was the Mahant of a Ders, the plaintiff (respondent) claimed that the late Mahant who had previously executed the power of attorney in favour of the defendant (appellant) cancelled it and summoned the General Assembly of the Udasi Bhekh which was attended by other Mahants of the Udasi Bhekh and tendered his resignation on the ground of old age and ill health, that the late Mahant treated him as Sadaq Chela and that he made him a Mahant by applying Tilak and performing the Pagri ceremony at the Udasi Bhekh. The defendant on the other hand claimed that it was he who was the chela of the late Mahant who, before his passing away executed two wills appointing him as the successor to the gaddi and that the proceedings making the plaintiff as Mahant were the result of fraud and undue influence exercised by the plaintiff over the late Mahant. Decreeing the suit the Subordinate Judge held that neither party referred to any particular usage or custom of appointing a Mahant, that upto 1948 the practice was for the Ruler of the erstwhile State of Nabha to appoint a Mahant, but that in this case the plaintiff was duly and validly installed as the Mahant in the presence of and with the approval of the Udasi Bhekh and that no fraud or undue influence alleged by the defendant was established. The High Court confirmed all the findings of the trial court. On further appeal to this Court the defendant (appellant) contended that (1) the late Mahant was coerced into appointing the plaintiff as his successor and (2) the appointment of plaintiff was invalid in that he was not a chela of the late Mahant. Dismissing the appeal, ^ HELD: 1 (a) On the question whether the late Mahant was subjected to any pressure to appoint the plaintiff as Mahant, both the courts have concurrently found that he was subjected to no such pressure. There is no reason for interference with a concurrent finding of fact by the two courts below.[1017 A B] (b) The submission that the High Court did not consider the complaint said to have been made by the late Mahant that he had been coerced into appointing the plaintiff as Mahant is without basis. The High Court did refer to the complaint. It confirmed the finding of the trial court that the late Mahant who was previously under the influence of the appellant had again come under his influence when he made the complaint. The presence 1013 of the police at the installation ceremony far from advancing the appellant 's case, destroys the case that the Mahant acted under coercion. [1017 C D] 2(a) In the matter of succession to the office of Mahant the custom prevalent in various institutions is that in order to entitle a chela to succeed, he must be appointed or nominated by the reigning Mahant during his life time or shortly before his death and this may be done either by a written declaration or some sort of testamentary document. Even where a Mahant has the power to appoint his successor, it is customary in various Mutts that such appointment should be confirmed or recognised by the members of the religious fraternity to which the late Mahant belonged. When a Mahant resigns during his life time and installs his successor, on the gaddi the fraternity is made aware of the proposed vacancy in the office and is given an opportunity of confirming or refusing to confirm the nominee. [1016 D, E, G] In the instant case the document executed by the late Mahant on the date of the installation of the plaintiff as Mahant was attested by all the visiting Mahants of the Udasi Bhekh who assembled at the Dera. The plaintiff was described as Sedaq Chela of the late Mahant. This document showed that the late Mahant accepted the plaintiff as chela and appointed him as his successor. [1017 E 1018 A] (b) The Subordinate Judge found that none of the three earlier Mahants of the Dera who succeeded to the gaddi was a chela of each of his predecessors. [1018 B] Mahant Satnam Singh vs Bawan Bhagwan Singh, AIR 1938 PC 216; referred to. Mukherjea 's Hindu Law of Religious & Charitable Trusts (Third Edition) referred to.

Contempt Petition Nos.23640/91 & 263/91. IN Special Leave Petition Nos. 11699, 11700, 11098, 11654, 10190/90 and 429 of 1988. From the Judgment and Order dated 11.8.1989 of the Patna High Court in C.W.J.C.Nos. 1014, 1013,227,1365 ,red 1363 of 1988. Prashant Bhushan for the Petitioner, P.D. Sharma for the Respondent. The Judgment of the Court was delivered by A.S. ANAND, J. Shorn of details the circumstances giving rise to the filing of these petitions seeking certain direc tions and initiation of contempt proceedings against the respondents are as follows: The petitioners were at the relevant time working as primary school teachers in the State of Bihar. Services of some of the teachers were terminated. The orders of termina tion were ' questioned before the High Court of Patna and a Division Bench of that Court vide judgment dated 11.8.1989 accepted the position that the services of the teachers had been terminated on account of improper and illegal recruit ment by the State. The High Court was, however, of the opinion that the petitioners were not in any way responsible for the improper recruitment. The Division Bench 418 gave a direction to the State to screen appropriately the cases of the petitioners and to recruit those who satisfy the requirements. The Division Bench noticed as follows: "On the facts of this case, we observe that persons who are qualified for appointments deserve a consideration and appointment, accordingly on such posts for which they are qualified in preference to other candidates who may be qualified. We, accordingly, direct the respondents to proceed to take up the appointments of the teachers in the Elementary Schools of Santhal Pargana and Deoghar by inviting applications from the petitioners and other persons who have been removed because they were illegally recruited by the District Superintendent of education and selected if they satisfy the eligibility conditions and appoint them. In doing so the Respondent State must relax the age limit in case of any of the petitioners found to have become over age during the period of service on stipend and removal. The petitioners and/or any other candidate who may be appointed in the vacancy so created on account of removal of the peti tioners and other persons appointed by the District Superintendent of Education shall however not claim any benefit of the appoint ment illegally given to them by the District Superintendent of Education but shall receive emoluments and other benefits by dint of their selection and appointment in accordance with law. " The Court also found that the orders served on the petitioners were violative of principles of natural justice. However, the Court did not quash the orders of termination but directed that in future selections, preference would be given to the petitioners. The petitioners filed special leave petitions seeking quashing of the termination orders. In the special leave petitions certain directions came to be issued by this Court on 7.2.1991. The State of Bihar was directed that it should carry out the selection process for the retention of the services of those teachers who were qualified at the time of their appointment and that such of the teachers who were found qualified were to be taken back in the employment and were to be given full benefit of continued service irrespective of any break in service on account of the termination of the services. This court also noticed that the direction of the High Court to the State to hold fresh selections and the methodology to be adopted therefor had become final against the State in as much as the State had not called in question the order of the Divi sion Bench and those directions of the 419 High Court did not require interference. The Court gave three months to the State for completion of the selection process in accordance with the directions of the High Court. The outside limit during which the process was required to be completed was fixed as 30th June, 1991. The Court ob served: "In considering the suitability for selection the Rules which were in force at the time the Teachers were recruited should be taken into account and disqualification shall not be imposed on the basis of any altered Rule. It will also be open to the State to consider the claim of Teachers who came after the altered Rules in terms of the Rules in force. The bar of age, we reiterate the direction of the High Court, shall not be used against the Teachers for their selection. Those of the Teachers who have served in the past but there has been a break in service on account of termination shall have the credit of past service both in regard to the payment of salary as also seniority and other service benefits. " It transpires that consequent upon the order of this Court dated 7.2.1991, the Commissioner cum Secretary, Human Resources Department, Government of Bihar, made an order on 28.6.1991 determining the categories out of the dismissed teachers, who were eligible for reappointment. The Commis sioner took the view that under the executive directions/regulations only trained teachers were eligible for appointment in both the categories while the untrained teachers, in exceptional circumstances, could be appointed against the reserved categories of Scheduled Castes, Sched uled Tribes, Urdu and Sanskrit only. In other words, the Commissioner concluded that those untrained teachers who did not belong to any of the aforesaid four categories but belonged to the general category were not eligible for appointment. Thus, out of the untrained dismissed teachers numbering about two thousand, only about eighty one teach ers, it is alleged, were found to be qualified and their services were retained. The petitioners allege that the order of the Commissioner is completely contrary to the executive directions and is also in clear contravention of the order of this Court dated 7.2.1991. Shri Shanti Bhushan, learned Senior Advocate, appearing for the petitioners submitted that the Commissioner had given a completely wrong interpretation to the executive directions/regulations relating to the appointment of pri mary and middle school teachers in the State of Bihar and had deliberately contravened the orders of this Court dated 7.2.1991. 420 Shri B.B. Singh, learned counsel appearing for the State of Bihar, in reply submitted that there had been no contra vention of the order of this Court dated 7.2.1991 and that the Commissioner had placed a correct interpretation on the executive directions/regulations and had construed the judgment of this Court in the light of that interpretation and, therefore, he had committed no contempt. Learned coun sel submitted that the interpretation placed by the Commis sioner deserved acceptance. We have gone through the executive directions/regula tions issued in the form of office letters/orders etc. concerning the working of The Bihar Non Government Primary School (Taking over of control) Ordinance 1976 and, in particular, the directions relating to the "preparation of waitinglist and appointment of teachers" (para 1) and "the qualifications of candidate for appointment and waiting list" (para 2). The directions, inter alia, provide that while appointing the teachers I.Sc. trained will be appoint ed on the basis of I.Sc. trained and only matric with science trained will be appointed on the basis of matric trained. Where candidates of the aforesaid qualifications are not available in required number, the candidates having qualifications more than those stated above may also be appointed. The names of the candidates, in each category, will be written yearwise in the following manner: ". first of all matric trained, then I.A, 1. trained and thereafter graduate trained, on the basis of marks obtained in educational and training courses and their appointments will be made accordingly. " Sub clause (d) of Para 2, however, provides: "After the names of trained candidates the names of untrained candidates, of each catego ry will be written in sequence of marks ob tained and qualification." Sub Clause (f) of Para 2 reads thus: "Untrained candidates of different educational qualification may be appointed in reserved category under special circumstances when trained candidates are not available." Sub Clause (1) of Para 2 reads as follows: "Untrained candidates having the qualification of matric or more than it may be appointed in the preliminary pay scale Matric untrained (Middle Trained)." 421 A conjoint reading of the executive orders/directions shows that the untrained candidates are also capable of being appointed in each category but only when the trained teachers are not available in the particular category. The trained teachers in the order of sequence would indeed get preference over the untrained teachers. The interpretation placed by the Commissioner, there fore, is not correct and if that interpretation is accepted it would efface the very effect of the order of this Court dated 7.2.1991 and defeat the object of that order which was aimed at providing that all the schools must have teachers. The Court had taken note of the situation that there was an acute shortage of teachers in primary schools of Santhal Parganas of Bihar due to which most of the schools had been closed down and therefore to tide over the situation the directions extracted above, were given. The Court had reit erated the directions of the High Court that while making fresh selections the bar of age should not be used against the teachers. The order of the Court applied to untrained teachers for all the categories also. The Commissioner has made an order which, in our opinion, is not in conformity with the directions given by this Court and the Division Bench of the High Court. The directions of the Court, in the peculiar facts and circumstances of the case arising out of closure of a number of schools for want of teachers, provid ed inter alia that even the untrained teachers were entitled to be selected and appointed not only in the reserved cate gories but also in the other categories, provided trained teachers are not available and the untrained teachers are otherwise qualified, without putting the bar of age against them. From the material on record and after hearing learned counsel for the parties, we are not satisfied that it is a case in which it can conclusively be said that the respond ents have wilfully or deliberately or contemptuously flouted or disobeyed the orders of this Court dated 7.2.1991. It appears to us to be a case of misinterpretation of the executive directions and order of this Court dated 7.2.1991 and is, therefore, not a fit case in which contempt proceed ings need to proceed any further. We, accordingly, drop the contempt proceedings and discharge the Rule issued against the respondents. Since the Court has found entitlement of the untrained teachers in all the categories to appointment provided they are otherwise qualified and trained teachers are not avail able, we direct the respondents to properly comply with the orders of this Court dated 7.2.1991 and select and appoint untrained teachers who are otherwise qualified for appoint ment in all categories without putting the condition of training or age bar against 422 them where trained teachers are not available. The State must conclude the process of fresh selection in the light of the observations made in this order expeditiously and, in any case. not later than three months from today. The petitions are disposed of accordingly. R.P. Petitions dis posed of.

The Bihar Non Government Primary School (Taking over of Control) Ordinance, 1976 provided by Para 1 and Para 2 that while appointing teachers, I.Sc. trained will be appointed on the basis of I. Sc trained and only Matric with Science trained will be appointed on the basis of Matric trained, and where such candidates were not available the candidates having qualifications more than these would also be appoint ed. The petitioners were untrained primary school teachers in the State of Bihar. Later on their services were termi nated. They filed writ petitions before the High Court which held that their services had been terminated because of improper and illegal recruitment by the State for which they were not responsible, and that the termination orders were violative of principle of natural justice, but did not quash the orders of termination, and directed the State Government to recruit those dismissed teachers who satisfied the re quirements, and to relax the age limit in case of those who meanwhile became overage. On the special leave petitions filed by the petitioners this Court by its order dated 7.2.1991, directed the State Government to carry out the selection process to take back in the employment the teachers who were found qualified under the Rules in force at the time of 416 their initial appointment, and to give them full benefit of continued service irrespective of any break in service on account of the termination. In the special circumstances of the case arising out of closure of a number of schools for want of teachers, the Court held that in the event of non availability of trained candidates even untrained candidates could be appointed, and gave time till 30.6.1991 to complete the selection process in accordance with the directions of the High Court. Consequent there to the Commissioner cum Secretary, Human Resources Department, Government of Bihar made an order determining eligible categories for reappointment out of the dismissed teachers and hold that under the executive directions/regulations only trained teachers were eligible for appointment while untrained teachers, in exceptional circumstance could be appointed against the reserved catego ries of Scheduled Castes, Scheduled Tribes, Urdu and San skrit only, and held that those untrained teachers who did not belong to any of these categories were not eligible for appointment. The petitioners filed contempt petitions contending that the Commissioner gave a completely wrong interpretation to the relevant executive directions/regulations and had delib erately contravened this Court 's order dated 7.2.1991. On behalf of the respondents it was contended that the Commis sioner had correctly interpreted the executive orders/regu lations and did not contravenes this court 's order and, therefore, he committed no contempt. Disposing of the contempt petitions, this Court, HELD: 1. (1) The directions of the Court provided that even the untrained teachers were entitled to be selected and appointed not only in the reserved categories but also in the other categories, provided trained teachers were not available and the untrained teachers were otherwise quali fied without putting the bar of age against them. [p.421D E] 1.2 The interpretation placed by the Commissioner, was not correct and if that interpretation be accepted, it would efface the very effect of the order of this Court dated 7.2.1991 and defeat the object of that order which was aimed at providing that all the schools must have teachers. The Commissioner 's order was not in cOnformity with the direc tions given by this Court and the High Court. [p. 421 B D] 417 2. It appears to be a case of misinterpretation of the executive directions and order of this Court dated 7.2.1991 and was, therefore, not a fit case in which contempt pro ceedings need to proceed any further. It could not conclu sively be said that the respondents wilfully or deliberate ly or contemptuously flouted or disobeyed the orders of this Court dated 7.2.1991. [p 421 E F] 3. The respondents should properly comply with the orders of this Court dated 7.2.1991 and select and appoint untrained teachers who are otherwise qualified for appoint ment in all categories without putting the condition of training or age bar against them where trained teachers are not available. The process of fresh selection must be con cluded expeditiously and, in any case, not later than three months from the date of the order. [pp 421 G H; 422 A]

ivil Appeal No. 1995 of 1990. From the Judgment and Order dated 23.11.1988 of the Patna High Court in C.W.J.C. No. 8457 of 1988. A.K. Sen. Shankar Ghosh and M.P. Jha for the Appellant. G.S. Misra for the Respondents. The Judgment of the Court was delivered by J. This appeal on special leave is directed against the judgment and order dated November 23, 1988 passed in C.W.J.C. No. 8457 of 1988 by the High Court, Patna dismiss ing the writ petition moved by the appellant assailing the order of his compulsory retirement from service by notifica tion dated October 26, 1988 issued by the Government of Bihar compulsorily retiring him from service with effect from the date of issue of the notification. The salient facts giving rise to this appeal are that the appellant was initially appointed on December 9, 1957 to the post of Industrial Expansion Officer and he was con firmed to the said post on May 15, 682 1958. The appellant was promoted to the post of Planning cum Evaluation officer, a Gazetted post, on December 19, 1973 because of his excellent service career. The appellant was further promoted to the next higher post of Industrial Economist by notification dated September 24, 1983 with effect from December 19, 1978 in the scale of Rs.1350 2000. Because of excellent character role and merit of the appellant, he was promoted to the next higher post of Joint Director in his original scale of pay of Rs.1350 2000 with 20 per cent personal pay for holding such higher post which he held from September 24, 1983 to March 31, 1984. From April 1, 1984 the appellant was provided with the higher post of General Manager under the respondent State in its Industries Department. The respondent State issued a notification on September 16, 1988 promoting a large number of juniors to the higher scale of Rs.1575 2300 without considering the case of the appellant. Being aggrieved the appellant filed one representation against his supersession which was made without considering the case of the appellant. The representation was filed on October 7, 1988. In the said representation the appellant brought to the notice of the respondent State that the serv ice record of the appellant throughout remained excellent, integrity beyond doubt and the appellant was never communi cated with any punishment in his service career. While the appellant was awaiting for a decision, the respondent State issued the impugned notification dated October 26, 1988 compulsorily retiring the appellant from the post of General Manager, District Industries Centre, Deoghar under the provisions of Rule 74(b)(ii) of the Bihar Service Code. The appellant claimed that the aforesaid order of com pulsory retirement has been issued by the respondent State on the basis of a memorandum dated October 6, 1988 though in the garb of Rule 74(b)(ii) of the Bihar Service Code, but in fact this has been made as a measure of punishment. Being aggrieved and dissatisfied by the order of compul sory retirement passed against him by the respondents, the appellant preferred a writ petition being C.W.J.C. No. 8457 of 1988 before the High Court, Patna questioning the im pugned order on the grounds inter alia 683 that the appellant throughout his 30 years had an exemplary service career and his integrity remained unquestionable, that the appellant was never communicated with any adverse remarks nor any departmental proceeding was ever initiated against the appellant, nor any explanation was ever called for. The High Court without at all considering and appreci ating the contentions dismissed the writ application by a laconic order. Feeling aggrieved by the said order the instant appeal on special leave has been filed. The only crucial question that fails for consideration in this Court is whether the impugned order of compulsory retirement from service has been made by the Appointing Authority in public interest in accordance with Rule 74(b)(ii) of Bihar Service Code, 1979 or for any oblique motive as an extraneous consideration or by way of punish ment casting stigma on the service career of the appellant even though the impugned order was couched in innocuous language. The relevant Rule 74(b) reads as follows: "Rule 74(b)(i): Notwithstanding anything contained in the preceding subrule a Government Servant may, after giving at least three months ' previous notice, in writing, to the appointing authority concerned, retire from service on the date on which such a Government servant completes thirty years of qualifying service or attains fifty years of age or any date thereafter to be specified in the notice. Provided that no Government servant under suspension shall retire from service except with the specific approval of the State Government. Provided further that in case of officers and servants of the Patna High Court (including those of Circuit Bench at Ranchi), under the rule marking authority of the Chief Justice, no such officers and servants under suspension shall retire from service except with the specific approval of the Chief Justice. Rule 74(b)(ii): The appointing authority concerned may, after giving a Government servant at least three months ' previous 684 notice in writing, or an amount equal to three months ' pay and allowances in lieu of such notice, require him in public interest to retire from service on the date on which such a Government servant completes thirty years of qualifying service or attains fifty years of age or on any date there after to be specified in the notice. " On a plain reading of the said Rule it appears that the appointing authority has been conferred power to retire a government servant from service in public interest after giving three months ' prior notice in writing or an amount equal to three months ' pay and allowances in lieu of such notice on the date on which such government servant com pletes thirty years of qualifying service or attains fifty years of age or on any date thereafter to be specified in the notice. The impugned notification was made on October 26, 1988 by the Government of Bihar intimating the appellant that as he had completed the age of more than 50 years, and in the opinion of the Government of Bihar, in public inter est he is compulsorily retired from service with effect from the date of issue of this notification. He will be paid salary of three months with allowances in lieu of three months ' notice under Rule 74(b)(ii) of Bihar Service Code. It has been contended on behalf of the appellant that though the impugned order is couched in innocuous terms and it is made in compliance with the provisions of Rule 74(b)(ii) of Bihar Service Code on appellant 's reaching the age of more than 50 years and it does not prima facie appear to cast any stigma on the service career of the appellant yet it has been made by way of punishment casting stigma on the appellant 's service career and as such the impugned order is illegal, bad and the same has been made in viola tion of audi alterem partem rule as well as Article 311(2) of the Constitution. It has been further submitted in this connection that the power to retire the appellant compulso rily from service has not been made in public interest under Rule 74(b)(ii) of Bihar Service Code but on the basis of the fact finding report given by the Deputy Development Commis sioner, Dumka by his letter dated September 19, 1987 re garding grave financial irregularities committed by the appellant in consideration of which a memorandum was pre pared by the Additional Commissioner cum Special Secretary, Shri T. Nand Kumar on October 6, 1988 recommending to the respondent State to compulsorily retire the appellant from service under Rule 74(b)(ii) of Bihar Code. It has also been contended that the basis of the order was made with oblique purposes 685 in consideration of extraneous matter and the impugned order purports to removal from service on certain serious allega tions of misconduct and consequently it casts a stigma on the service career of the appellant. Such order of compulso ry retirement from service though appears to be innocuous, has been made by way of punishment and as such it is liable to be set aside and quashed. It has, on the other hand, been urged on behalf of the respondent State that the impugned order has been made under Rule 74(b)(ii) of Bihar Service Code in public interest and there is nothing to show from the order itself that it has been made by way of punishment and it casts a stigma on the service career of the appellant. The language of the order is innocuous. The appellant cannot delve into the secretari at files to find out the basis of the order. Some decisions have been cited at the bar in support of this submission. Rule 74(b)(ii) of the Bihar Service Code confers power on the Appointing Authority to compulsorily retire a govern ment servant on his attaining 50 years of age or after completing 30 years of qualifying service in public inter est. The object of this rule is to get rid of the government servant who has become dead wood. This order is made only to do away with service of only those employees who have lost their utility, become useless and whose further continuance in service is considered not to be in public interest. In the instant case the appellant has an unblemished career and undoubtedly by dint of his merit and flawless service career he had been promoted to the post of Joint Director in 1983 and subsequently on 1st April, 1984 he was promoted to the higher post of General Manager under the respondent State in its Industries Department. The appellant has specifically pleaded in paragraph K of this appeal that he came to know that the impugned order of compulsory retirement has been issued by the respondent State on the basis of a memorandum dated October 6, 1988. It has been further pleaded that the appellant came to know from the memorandum that the impugned order of compulsory retirement dated October 26, 1988 has been issued by the respondent State though in the garb of Rule 74(b)(ii) of the Bihar Service Code, but in fact the same has been issued as a measure of punishment. This fact will be evident from the memorandum dated 6th October, 1988 wherein the State has alleged that six items of charges have been proved against the petitioner (appellant). The State Government has also accepted that there is no question of going into the formality of departmental proceeding but has decided to retire the petitioner compulsorily under Rules 74(b)(ii) of the Bihar Service Code. Paragraphs 686 2 to 4 of the Memorandum dated 6th October, 1988 make it clear that the impugned order dated October 26, 1988 of compulsory retirement, has been issued as a measure ' of punishment. It is further submitted that the order passed on October 26, 1988 was without giving any notice or any show cause to the petitioner. It has been stated in para 4 to 7 of the counter affidavit as under: (4) That it is not at all necessary to draw departmental proceeding against the petitioner (appellant) before effect ing his compulsory retirement from government service. Since his retirement under Rule 74(b)(ii) of the Bihar Service Code does not amount to dismissal or removal from government service within the meaning of clause (2) of Article 311 of the Constitution, it is, therefore, not necessary to obtain the advice of the Bihar Public Service Commission (Limita tion of Functions) Regulation, 1956. (5) That it is relevant to state that while the petitioner (appellant) was General Manager, District Industries Centre, Dumka and Deoghar during the year 1985 onwards till his compulsory retirement, an enquiry into the serious charges of corruption, omission and commission of financial and administrative lapses and foul play against him had been conducted respectively by Deputy Development Commissioner, Dumka, Deputy Commissioner, Dumka and Additional Director of Industries, Bihar, Patna. The above charges were proved such as: (i) The charge of registration of bogus unit had clearly been established; (ii) Allegations of recommendations and sanction of capital subsidy on D.G. sets to bogus units have been proved; (iii) Where there were no D.G. sets and the unit was bogus, subsidy had been sanctioned against the departmental in structions; (iv) Seed money had been sanctioned to non existent units and payments made in violation of Government orders; 687 (v) Registration had been done for restricted items; (vi) Subsidy on D.G. sets had been sanctioned and payments made to units located outside his jurisdiction; and (vii) Appointment of persons had been made on ad hoc basis beyond his delegated powers in gross violation of Government rules. (6) That in the above mentioned cases registration; recom mendations and payments had been made by the petitioner (appellant) after making personal inspections of the units which facts are sufficient to prove that he had commited the said irregularities knowingly for his personal gains and thereby the State Government had suffered a heavy loss. This misconduct on his part had tarnished the image of the Gov ernment in the public. It is, therefore, his so called exemplary service record which has no co relation with his compulsory retirement as stated in the aforesaid paragraph. (7) That contention of the petitioner (appellant) as stated in para (viii) of the special leave petition that the memo randum which have formed the basis of causing the compulsory retirement of the petitioner (appellant), is absolutely wrong and without any substance. It is relevant to state that the memorandum being confidential papers of the re spondent State Government cannot be termed as the Order of compulsory retirement and which order does not contain any word from which a stigma may be inferred. " It has been further averred in para 8 of the said affi davit that on a perusal of the order of compulsory retire ment of the petitioner (appellant), it is sufficiently clear that no stigma has been attached to the petitioner nor there is any word in the said Order from which a stigma may be inferred. The Supreme Court has held in the case of I.N. Saxsena vs The State of Madhya Pradesh, [967] 2 SCR 496 that where an order requiting a Government servant to retire compulsorily contains express words from which a stigma can be inferred that order will amount to removal within the meaning of Article 311. But where there are no express words in the order itself which would throw any stigma on the Government order, we cannot delve into Secretariat files to discover whether some kind of stigma can be inferred on such research. 688 In para 9 it has been stated that it is, therefore, as per the decision of the Supreme Court in the said case, the Court cannot look into the background resulting in the passing of the order of compulsory retirement in order to discover whether some kind of stigma can be inferred and accordingly in the instant case the memorandum is totally irrelevant for the consideration by the Court and in view of the same the appeal of the appellant can be dismissed. A supplementary affidavit has been filed on behalf of the appellant sworn by Suhird Kumar, son of the appellant. In para 3 of the said affidavit it has been submitted that the memorandum is prepared on the basis of two enquiry reports done by the different officers without there being any notice or getting any other version and this sort of memorandum cannot be said to be a fair memorandum in the eyes of law and so any action taken by the State Government on the basis of the said Memorandum is bad and violative of Article 14 and 16 of the Constitution of India. It is thus, clear and evident from the counter affidavit filed on behalf of the State Government referred to herein before that the basis of the impugned order of compulsory retirement from service of the appellant is not in public interest as stated in the order of compulsory retirement dated October 26, 1988. The impugned order, in fact, has been passed on the basis of the memorandum dated October 6, 1988 which is also based on the Report given by the Deputy Development Commissioner, Dumka by his letter dated Septem ber 19, 1987 without asking any explanation from the appel lant and without giving him any opportunity to defend his case before the Deputy Development Commissioner. It is, therefore, wrong to say that the basis of the order is not the said memorandum as well as the report of the Deputy Development Commissioner which clearly evinces that the impugned order of compulsory retirement is a mere camouflage being couched in innocuous terms and in fact the same has been made by way of punishment. In support of the impugned order it has been vehemently urged on behalf of the respondent State that the order of compulsory retirement dated October 26, 1988 does not show prima facie that it has been made by way of punishment. The Order as it is, speaks of compulsory retirement of the appellant from service in accordance with the provisions of Rule 74(b)(ii) of the Bihar Service Code. It has been con tended further ' that this order being couched in innocuous terms cannot be questioned and the appellant cannot delve into the secre 689 tariat filed to find out the basis of the order and to challenge the same on that basis. Reference has been made in this connection to the case of 1. N. Saksena vs The State of Madhya Pradesh, (supra). In that case, the State of Madhya Pradesh issued a memorandum on February 28, 1963 raising the age of retirement of its employees from 55 to 58 years. Clause 5 of the memorandum, however, said that the appoint ing Authority may require a Government servant to retire after he attained the age of 55 years on three months ' notice without giving any reasons. The clause further said that this power was normally to be used to weed out unsuit able employees. The appellant who was a District and Ses sions Judge in the service of the State Government would normally have retired at the age of 55 years in August, 1963. In September, 1963, however, Government communicated to. him an order that he was to retire on December 31, 1963 under Rule 56 of the Fundamental Rules applicable to the State of Madhya Pradesh. This order was challenged by the appellant by writ petition before the High Court of Madhya Pradesh. It was rejected. Thereafter, the appellant came with a certificate, to this court. It has been held by this Court in that case that: "Where there are no express words in the order of compulsory retirement itself which would throw a stigma on the Govern ment servant, the Court would not delve into Secretariat files to discover whether some kind of stigma could be inferred on such research. Since in the present case there are no words of stigma in the order compulsorily retiring the appellant, there was no removal requiring action under article 311 of the Constitution. " This decision does not, in any way, apply to this case for the simple reason that in the affidavit in counter filed by the respondent State it has been categorically stated that while passing the impugned order of compulsory retirement the officers concerned were guided by the report dated September 19, 1987 submitted by the Deputy Development Commissioner, Dumka who stated in his report that the appel lant was responsible for the grave and serious financial irregularities resulting in financial loss to the State Government, without giving any opportunity of hearing and without intimating the allegations to the appellant before forming his opinion. The said report was taken into consid eration and memorandum in question was issued on October 26, 1988 by the Additional Secretary, Industries Department, Government of Bihar wherein it has been clearly stated that the impugned order of compulsory retirement was made as the said mis 690 conduct on the part of the appellant tarnished the image of the Government in the public. This categorical statement made in the affidavit in counter clearly proves that the basis of making the order of compulsory retirement of the appellant from the service is the aforesaid report of the Deputy Development Commissioner, Dumka referred to hereinbe fore. In such circumstances, it is futile to argue that the order of compulsory retirement being couched in an innocuous language without causing any stigma is unassailable. It is pertinent to mention in this connection the case of Shyam Lal vs The State of U.P. & Anr., ; wherein it has been held by the Constitution Bench that: "A compulsory retirement under the Civil Services (Classifi cation, Control and Appeal) Rules, does not amount to dis missal or removal within the meaning of Article 311 of the Constitution and therefore, does not fall within the provi sions of the said Article. " "There is no such element of charge or imputation in the case of compulsory retirement. The two requirements for compulsory retirement are that the officer has completed 25 years ' service and that it is in the public interest to dispense with his further services. It is true that this power of compulsory retirement may be used when the authori ty exercising this power cannot substantiate the misconduct which may be the real cause for taking the action but what is important to note is that the directions in the last sentence in Note 1 to Article 465 A make it abundantly clear that an imputation or charge is not in terms made a condi tion for the exercise of the power. In other words, a com pulsory retirement has no stigma or implication of misbeha viour or incapacity. " It has been further held that: "A compulsory retirement does not amount to dismissal or removal and, therefore, does not attract the provisions of Article 311 of the Constitution. In Baldev Raj Chadha vs Union of India and Ors., 1 it was held that: 691 "The whole purpose of Fundamental Rule 56(j) is to weed out the worthless without the punitive extremes covered by Article 311 of the Constitution. But under the guise of 'public interest ' if unlimited direction is regarded accept able for making an order of premature retirement, it will be the surest menace to public interest and must fail for unreasonableness, arbitrariness and disguised dismissal. The exercise of power must be bona fide and promote public interest. " It has also been observed that: "An officer in continuous service for 14 years crossing the efficiency bar and reaching the maximum salary in the scale and with no adverse entries at least for five years immedi ately before the compulsory retirement cannot be compulsori ly retired on the score that long years ago, his performance had been poor, although his superiors had allowed him to cross the efficiency bar without qualms. " In the case of Union of India vs Col. J.N. Sinha and Anr., [1971] 1 SCR 791 it has been observed by this Court that: "Fundamental Rule 56(i) does not in terms require that any opportunity should be given to the concerned Government servant to show cause against his compulsory retirement. It says that the appropriate authority has the absolute right to retire a government servant if it is of the opinion that it is in the public interest to do so. If that authority bona fide forms that opinion the correctness of that opinion cannot be challenged before courts, though it is open to an aggrieved party to contend that the requisite opinion has not been formed or the decision is based on collateral grounds or that it is an arbitrary decision. " In Shamsher Singh & Anr. vs State of Punjab, ; the appellant Shamsher Singh was a Subordinate Judge on probation. His services were terminated by the Government of Punjab in the name of Governor of Punjab by an order which did not give any reasons for the termination. It has been held that: "No abstract proposition can be laid down that where the services of probationer are terminated without saying any 692 thing more in the order of termination that it can never amount to a punishment in the facts and circumstances of the case. If a probationer is discharged on the ground of mis conduct or inefficiency or for similar reason without a proper enquiry and without his getting a reasonable opportu nity of showing cause against his discharge it may in a given case amount to removal from service within the meaning of Article 311(2) of the Constitution. " In that case the appellant was asked to show cause why his services should not be terminated and there were four grounds. One was that the appellant 's behaviour towards the Bar and the litigant public was highly objectionable, de rogatory, non cooperative and unbecoming of a judicial officer. The second was that the appellant would leave his office early. The third was the complaint of Om Prakash, Agriculture Inspector that the appellant abused his position by proclaiming that he would get Om Prakash involved in a case if he did not cooperate with Mangal Singh, a friend of the appellant and Block Development officer, Sultanpur. The fourth was the complaint of Prem Sagar that the appellant did not give full opportunity to Prem Sagar to lead evi dence. Prem Sagar also complained that the decreeholder made an application for execution of the decree against Prem Sagar and the appellant without obtaining office report incorporated some additions in the original judgment and warrant of possession. The appellant showed cause stating that he was not provided with an opportunity to work under the same superior officer for at least six months so that independent opinion could k., formed about his knowledge, work and conduct. Thereafter, the appellant received a letter from the Deputy Secretary to the Government addressed to the Registrar, Punjab and Haryana High Court that the services of the appellant had been terminated. It has been held that in the facts and circumstances of the case it is clear that the order of the termination of the appellant, Shamsher Singh was one of punishment. The authorities were to find out the suitability of the appellant. The order of termination is in infraction of Rule 9 which makes it incum bent upon the authority that the services of a probationer can be terminated on specific fault or on account of unsat isfactory record implying unsuitability. The order of termi nation was, therefore, set aside. This judgment has been followed in the case of Anoop Jaiswal vs Government of India and Anr., ; It has been observed that: 693 "It is, therefore, now well settled that where the form of the order is merely a camouflage for an order of dismissal for misconduct it is always open to the Court before which the order is challenged to go behind the form and ascertain the true character of the order. If the Court holds that the order though in the form is merely a determination of em ployment is in reality a cloak for an order of punishment, the Court would not be debarred, merely because of the form of the order, in giving effect to the fights conferred by law upon the employee. " It has also been observed that: "Even though the order of discharge may be non committal, it cannot stand alone. Though the noting in the file of the Government may be irrelevant, the cause for the order cannot be ignored. The recommendation of the Director which is the basis or foundation for the order should be read along with the order for the purpose of determining its true character. If on reading the two together the Court reaches the conclu sion that the alleged act of misconduct was the cause of the order and that but for that incident it would not have been passed then it is inevitable that the order of discharge should fall to the ground as the appellant has not been afforded a reasonable opportunity to defend himself as provided in article 3 11(2) of the Constitution. " On a consideration of the above decisions the legal position that now emerges is that even though the order of compulsory retirement is couched in innocuous language without making any imputations against the government serv ant who is directed to be compulsorily retired from service, the Court, if challenged, in appropriate cases can lift the veil to find out whether the order is based on any miscon duct of the government servant concerned or the order has been made bona fide and not with any oblique or extraneous purposes. Mere form of the order in such cases cannot deter the Court from delving into the basis of the order if the order in question is challenged by the concerned government servant as has been held by this Court in Anoop Jaiswal 's case. This being the position the respondent State cannot defend the order of compulsory retirement of the appellant in the instant case on the mere plea that the order has been made in accordance with the provisions of Rule 74(b)(ii) of the Bihar Service Code 694 which prima facie does not make any imputation or does not cast any stigma on the service career of the appellant. But in view of the clear and specific averments made by the respondent State that the impugned order has been made to compulsorily retire the appellant from service under the aforesaid Rule as the appellant was found to have committed grave financial irregularities leading to financial loss to the State, the impugned order cannot but be said to have been made by way of punishment. As such, such an order is in contravention of Article 311 of the Constitution of India as well as it is arbitrary as it violates principles of natural justice and the same has not been made bona fide. In the premises aforesaid we hold that the impugned order has not been made bona fide but for collateral pur poses and on extraneous consideration by way of punishment. The impugned order is, therefore, illegal and unwanted and so it is liable to be quashed and set aside. We, therefore, allow the appeal and set aside the impugned order. We fur ther direct the respondents to reinstate the appellant in service forthwith with full back wages. The respondents will pay costs to the appellant. N.P.V. Appeal allowed.

The appellant, an officer of Bihar State, filed a writ petition before the High Court, challenging the order of compulsory retirement passed by the respondent State, under Rule 74(b)(ii) of Bihar Service Code, 1979, contending that throughout his service of 30 years he had an exemplary service career and his integrity remained unquestionable and that neither any adverse remarks were communicated to him nor any departmental proceedings were initiated against him, nor any explanation called for from him. The High Court dismissed the writ petition by a laconic order. In the appeal, by special leave, the appellant contended that though the order was couched in innocuous terms and made in compliance with the provisions of Rule 74(b)(ii) of Bihar Service Code on appellant 's reaching the age of more than 50 years, and prima facie not appearing to cast any stigma, it was not made in public interest, but made by way of punishment for oblique purposes, in consideration of extraneous matter and purporting to removal from service on certain serious allegations of misconduct, casting a stigma, and hence the order was illegal, bad and in violation of audi alterem partem rule and Article 311(2) of the Constitu tion and was liable to be quashed. On behalf of the respondent State it was contended that the order had been made in public interest under Rule 74(b)(ii) and there was nothing to show from the order itself that it had been made by way of punishment, casting a stigma, the language of the order was innocuous, and the appellant could not delve into the secretariat files, to find out the basis of the order. 680 Allowing the appeal, this Court, HELD: 1.1 Even though the order of compulsory retirement is couched in innocuous language without making imputations against the government servant, who is directed to be com pulsorily retired from service, the Court, if challenged, in appropriate cases can lift the veil to find out whether the order is based on any misconduct of the government servant concerned or the order has been made bona fide and not with any oblique or extraneous purposes. Mere form of the order in such cases cannot deter the Court from delving into the basis of the order if the order in question is challenged by the concerned government servant. [693F G] Shamsher Singh & Anr. vs State of Punjab, and Anoop Jaiswal vs Government of India and Am '. , ; , relied on. Shyam Lalv. The State of U. P. & Anr., ; ; Baldev Raj Chadha vs Union of India and Ors., ; and Union of India vs Col. J.N. Sinha and Anr., [1971] 1 SCR 791, referred to. I.N. Saxsena vs The State of Madhya Pradesh, ; , distinguished. 1.2 The object of Rule 74(b)(ii) of the Bihar Service Code is to get rid of the government servant who has become dead wood. This order is made only to do away with service of only those employees who have lost their utility, become useless and whose further continuance in service is consid ered not to be in public interest. [655D] 1.3 In the instant case, the appellant had an unblem ished career, and undoubtedly by dint of merit and flawless service career, had been promoted to the post of Joint Director and ultimately to the post of General Manager. The counter affidavit filed on behalf of the respondent State has categorically stated that while passing the order of compulsory retirement the officers concerned were guided by the report dated September 19, 1987 which stated that the appellant was responsible for grave and serious financial irregularities resulting in financial loss to the State Government, without giving any opportunity of hearing and without intimating allegations to the appellant before forming the opinion. The memorandum in question has clearly stated that the order of compulsory retirement was made as the appellant 's misconduct tarnished the image of the Gov ernment in the public. This categorical 681 statement clearly proves that the basis of making the order is the report dated September 19, 1987. Therefore, the order of compulsory retirement cannot be defended on the mere plea that it has been made in accordance with the provisions of Rule 74(b)(ii) which prima facie does not make any imputa tion or does not cast any stigma on the career of the appel lant. [657E, 689F H, 690A, 693H, 694A] In view of the clear and specific averments made by the respondent State that the order has been made under Rule 74(b)(ii) as the appellant was found to have committed grave financial irregularities leading to financial loss to the State, the order cannot but be said to have been made by way of punishment. Such an order is in contravention of Article 311 of the Constitution and arbitrary as it violates princi ples of natural justice. It has not been made bona fide, but for collateral purposes and for extraneous consideration by way of punishment and is, therefore, illegal, unwarranted and liable to be quashed. [694A B, C] Accordingly the order of compulsory retirement is set aside and the respondents are directed to reinstate the appellant with full back wages. [694D]

tition (Crl.) No. 724 of 1980. Under Article 32 of the Constitution Ram Jethmalani and Miss Rani Jethmalani for the petitioner. M. N. Phadke and M. N. Shroff for the Respondent. The Judgment of the Court was delivered by SEN J. This petition for the grant of writ of Habeas Corpus is for the release of one Bhalabhai Motiram Patel, who has been detained by an order of the State Government of Maharashtra dated February 12, 1980 under sub section (1) of section 3 of the (hereinafter referred to as 'the Act ') on being satisfied that it was necessary to detain him 'with a view to preventing him from abetting the smuggling of goods and engaging in transport of smuggled goods '. At the conclusion of the hearing on July 30, 1980 we made an order for the release of the detenu since we were of the view that his 'continued detention ' was invalid. We now proceed to give reasons therefor. The facts emerging from the grounds of detention are that the detenu was acting as a 'courier ' between Messrs S.K. Malhotra Imports & Exports, Brussels having a widespread network abroad and Messrs Apex Distributors, Bombay who were engaged in a criminal conspiracy to smuggle contraband goods on a wide scale. It was conceded at the Bar that the grounds for detention set out the facts with sufficient degree of particularity and they did furnish sufficient nexus for forming subjective satisfaction of the detaining authority. The order of detention was, therefore, not challenged on the ground that the grounds furnished were not adequate or sufficient for the satisfaction of the detaining authority, or for making of an effective representation. 854 In support of the petition, two points are raised challenging the validity of the 'continued detention ' of the detenu both on procedural grounds, namely (1) there was undue delay in furnishing the documents, statements and writings referred to and relied upon in the order of detention to enable the detenu to prepare or cause to be prepared his representation against the said order of detention and (2) there was a failure on the part of the Central Government within a reasonable time to consider and deal with his application for revocation of the detention order under sub s.(1) of s.11 of the Act. On February 12, 1980 the State Government of Maharashtra served the detenu with an order of detention issued under sub s.(1) of s.3 of the Act and directed that he shall be detained in the Central Jail, Nagpur. Along with the order of detention, he was served with the grounds for detention. The detenu through his solicitors ' letter dated March 8, 1980, addressed to the Under Secretary to the Government of Maharashtra, Home Department, Bombay made a request that 'all the documents, statements, and writings ' referred to and relied upon in the detention order, be furnished to him, to enable him to prepare or cause to be prepared his representation against such detention. It was received in the Home Department, Mantralaya, Bombay on March 10, 1980. On March 13, 1980, the Under Secretary to the Home Department forwarded the letter to the Collector of Customs (Preventive), Bombay 'for his comments '. On the basis of the request of the Home Department the Assistant Collector of Customs addressed a letter to the Deputy Director of Directorate of Revenue Intelligence, Bombay on March 15, 1980 for his comments. On March 18, 1980 the Assistant Director, Revenue Intelligence wrote a letter to the Assistant Collector of Customs conveying the decision of the Directorate of Revenue Intelligence to supply the detenu with copies of the documents on which the order of detention was based, and the documents were forwarded for onward transmission to the Home Department 'for doing the needful '. The letter was received by the Assistant Collector of Customs on March 19, 1980. On the same day i.e. March 19, 1980, the Assistant Collector of Customs sent a letter to the Joint Secretary, Home Department (Special) conveying the decision of the Directorate of Revenue Intelligence to supply copies and also forwarded a set of documents for being supplied to the detenu. The case was put up before the Secretary to the Government, Home Department (Transport) on March 25, 1980. On March 26, 1980 the Secretary directed that the detenu be furnished with the documents on which his order of detention was based. Eventually, the documents were sent to the detenu 's solicitors on March 27, 1980 by registered post and were received by them on April 1, 1980. But 855 the detenu 's solicitors in the meanwhile, had already submitted an incomplete representation against the order of detention on March 31, 1980. The Courts have always viewed with disfavour the detention without trial whatever be the nature of offence. The detention of individuals without trial for any length of time, however short, is wholly inconsistent with the basic ideas of our Government. This has always been the view consistently taken by this Court in a series of decisions. It is not necessary to burden this judgment with citations of these decisions. We say and we think it is necessary to repeat, that the gravity of the evil to the community resulting from anti social activities can never furnish an adequate reason for invading the personal liberty of a citizen except in accordance with the procedure established by law. This Court has forged certain procedural safeguards in the case of preventive detention of citizens. The constitutional imperatives indicated in article 22(5) are two fold: (1) the detaining authority must, as soon as may be, that is, as soon as practicable, after the detention, communicate to the detenu the grounds on which the order of detention has been made, and (2) the detaining authority must afford the detenu the earliest opportunity of making a representation against the order of detention. The right to make a representation implies what it means 'the right of making an effective representation '. Where certain documents are relied upon in the grounds of detention the grounds would be incomplete without such documents. The detenu, therefore, has the right to be furnished with the grounds of detention along with the documents relied upon. The power of preventive detention by the Government under the is necessarily subject to the limitation enjoined on the exercise of such power by article 22(5) of the Constitution, as construed by this Court. The case raises the fundamental issue: Who is to be arbiter of what the Constitution says ? In matters relating to preventive detention, the Executive is subject to the Court 's authority. The Court, not the Executive, has the 'ultimate authority ' to interpret the law. Although the Executive has large potential powers, limitations and restraints on that power are built into the Constitution. In a series of decisions, this Court has, on a construction of article 22(5) of the Constitution, read with sub s.(3) of s.3 of the Act, held that 'the right of making an effective representation ' carries with it the right to have the documents relied upon in the grounds of 856 detention: Ramchandra A. Kamat vs Union of India, Frances Coralie Mullin vs W. C. Khambra, Smt. Icchu Devi Choraria vs Union of India and Pritam Nath Hoon vs Union of India. In Kamat 's case it is laid down that if there is undue delay in furnishing the statements and documents relied upon in the grounds of detention, the right to make an effective representation is denied, and the detention becomes illegal. It was observed: "The right to make a representation is a fundamental right. The representation thus made should be considered expeditiously by the government. In order to make an effective representation, the detenu is entitled to obtain information relating to the grounds of detention. When the grounds of detention are served on the detenu, he is entitled to ask for copies of the statements and documents referred to in the grounds of detention to enable him to make an effective representation. When the detenu makes a request for such documents, they should be supplied to him expeditiously. The detaining authority in preparing the grounds would have referred to the statements and documents relied on in the grounds of detention and would be ordinarily available with him when copies of such documents are asked for by the detenu the detaining authority should be in a position to supply them with reasonable expedition. What is reasonable expedition will depend on the facts of each case. It is the duty of the detaining authority to satisfactorily explain the delay, if any, in furnishing of these documents. If there is undue delay in furnishing the statements and documents referred to in the grounds of detention the right to make effective representation is denied. The detention cannot be said to be according to the procedure prescribed by law. When the Act contemplates the furnishing of grounds of detention ordinarily within five days of the order of detention, the intention is clear that the statements and documents which are referred to in the grounds of detention and which are required by the detenu and are expected to be in possession of the detaining authority should be furnished with reasonable expedition. " 857 The rationale of the decision is that the right to be supplied with copies of the documents, statements and other materials relied upon in the grounds of detention without any undue delay flows directly as a necessary corollary from the right conferred on the detenu to be afforded the earliest opportunity of making a representation against the detention, because unless the former right is available the latter cannot be meaningfully exercised. In Frances Coralie Mullin 's case the Court, however, added a note of caution: ". the time imperative can never be absolute or obsessive. The Court 's observations are not to be so understood. " The nature of the constitutional obligation to furnish the statements and documents relied upon in the grounds of detention to enable the detenu to make an effective representation against his detention under article 22(5) read with sub section (3) of section 3 of the Act has been reiterated in Smt. Icchu Devi Choraria 's case and Pritam Nath Hoon 's case. In Smt. Choraria 's case one of us, Bhagwati J., has dealt with the question at some length, and he observes: "It will be seen that one of the basic requirements of clause (5) of Article 22 is that the authority making the order of detention must, as soon as may be, communicate to the detenu the grounds on which the order of detention has been made and under sub section (3) of section 3 of the COFEPOSA Act, the words "as soon as may be" have been translated to mean "ordinarily not later than five days and in exceptional circumstances and for reasons to be recorded in writing not later than fifteen days, from the date of detention." The grounds of detention must therefore be furnished to the detenu ordinarily within five days from the date of detention, but in exceptional circumstances and for reasons to be recorded in writing, the time for furnishing the grounds of detention may stand extended but in any event it cannot be later than fifteen days from the date of detention." Having pointed out the two outside time limits provided by sub section (3) of section 3 of the Act, he further says: "Now it is obvious that when clause (5) of Article 22 and sub section (3) of section 3 of the COFEPOSA Act provide that the grounds of detention should be communicated to the detenu within five or fifteen days, as the case may be, what is meant is that the grounds of detention in their entirety must be 858 furnished to the detenu. If there are any documents, statements or other materials relied upon in the grounds of detention, they must also be communicated to the detenu, because being incorporated in the grounds of detention, they form part of the grounds and the grounds furnished to the detenu cannot be said to be complete without them. * * * * * There can therefore be no doubt that on a proper construction of clause (5) of Article 22 read with section 3, sub section (3) of the COFEPOSA Act, it is necessary for the valid continuance of detention that subject to clause (6) of Article 22 copies of the documents, statements and other materials relied upon in the grounds of detention should be furnished to the detenu alongwith the grounds of detention or in any event not later than five days and in exceptional circumstances and for reasons to be recorded in writing, not later than fifteen days from the date of detention. If this requirement of clause (5) of Article 22 read with section 3, sub section (3) is not satisfied, the continued detention of the detenu would be illegal and void. " Alternatively, he observes: "It may be pointed out that even if our interpretation of the words "the grounds on which the order has been made" in clause (5) of Article 22 and section 3 sub section (3) of the COFEPOSA Act be wrong and these words do not include the documents, statements, and other materials relied upon in the grounds of detention, it is unquestionable that copies of such documents, statements and other materials must be supplied to the detenu without any unreasonable delay, because otherwise the detenu would not be able to make an effective representation and the fundamental right conferred on him to be afforded the earliest opportunity of making a representation against his detention would be denied to him. " We refrain from expressing any final opinion on the construction placed in Smt. Choraria 's case on sub section (3) of section 3 of the Act. In spite of this Court 's decision in Ramchandra A. Kamat case (supra) holding that a detenu is entitled under article 22(5) of the Constitution read with sub section (3) of section 3 of the Act, to be served with copies of all the relevant documents relied upon in the grounds of detention, it is somewhat strange that the State Government acted in a cavalier fashion in dealing with the detenu 's application to be 859 supplied with copies of such documents. What makes it worse is that in utter defiance of this Court 's decision in Kamat 's case. P. V. Nayak, Secretary to the Government of Maharashtra, Home Department (Transport) to whom the powers of making an order of detention under sub section (3) of section 3 have been delegated under the Rules of Business and is, therefore, the detaining authority, should have come forward with a counter affidavit dated June 13, 1980 stating: "I deny that I was under constitutional obligation to supply the documents and statements relied upon in the grounds of detention. I say that the grounds of detention were elaborate, precise and clear and the copies of the documents and statements were not necessary for making an effective representation." This shows lack of awareness of his constitutional obligation. What followed is not difficult to understand. Though the detenu 's letter dated March 8, 1980 making a request for being furnished with copies of 'all documents, statements and writings ', upon which the detention order was based, was admittedly received in the Mantralaya on March 10, 1980 the Under Secretary, Home Department instead of acting upon that request within a reasonable time, forwarded the application to the Collector of Customs (Preventive), Bombay 'for his comments ' on March 13, 1980. On the basis of the request of the Home Department, the Assistant Collector of Customs addressed a letter to the Deputy Director of the Directorate of Revenue Intelligence, Bombay, on March 15, 1980 'for his comments '. It, therefore, appears that the Secretary to the Government of Maharashtra, Home Department (Transport), who was the detaining authority, failed to apply his mind and abdicated his functions of supplying the copies of documents on which the order of detention was based, to the Collector of Customs, who in his turn referred the matter to the Directorate of Revenue Intelligence. The decision of the Directorate of Revenue Intelligence to supply the copies was conveyed to the Home Department on March 19, 1980; and on the same day, the Assistant Collector of Customs forwarded a set of the relevant documents to the Home Department. The documents were admittedly lying in the Mantralaya from March 19, 1980 to March 27, 1980, i.e., for nine days. The application of the detenu for grant of copies was, however, not placed before the Secretary, Home Department till March 25, 1980 and he was not furnished with copies till April 1, 1980 leaving him with no other alternative but to make his representation without having an opportunity to peruse the documents and make his submissions with reference to them. 860 From the narration of facts, it is quite obvious that no one really wanted to take a decision in the matter of grant of copies. The Secretary to the Government, Home Department (Transport) left the decision to the Collector of Customs (Preventive), who left it to the Directorate of Revenue Intelligence. We could understand if the Collector of Customs had sworn an affidavit explaining the reason why he could not attend to the matter between March 13, 1980 and March 19, 1980 i.e., for seven days. Further, there is no explanation whatever forthcoming for the delay between March 19, 1980 when the documents were received in the Home Department and March 25,1980 when the application of the detenu was put up before the Secretary to the Government, Home Department for orders. When the matter came up for hearing before one of us, Venkatramiah J., as the Vacation Judge, on June 17, 1980, the State Government was directed to file an affidavit explaining the time spent between March 10, 1980 and March 27, 1980 since there was no explanation forthcoming in the affidavit dated June 13, 1980 sworn by C. L. Mulherkar, Deputy Secretary to the Government of Maharashtra, Home Department (Special). In furtherance of that direction, B. section Shetye, Desk Officer, Home Department (Special) has sworn an affidavit dated June 18, 1980 to the effect: "On 18th March 1980 a letter was addressed by the Assistant Director, D.R.I. to the Assistant Collector of Customs informing him about the decision to give copies and the copies of the statements, etc. were forwarded to the Customs for onward transmission to the Home Department of Maharashtra Govt. for doing the needful. The said letter dated 18th March, 1980 was received by the Assistant Collector of Customs on 19th March, 1980. On the same day i.e. 19th March, 1980 the Assistant Collector of Customs addressed a letter to the Joint Secretary, Home Department (Special), Mantralaya, Bombay to communicate the decision of the D.R.I. to supply copies and also forwarded a set of relevant documents for being supplied to M/s. Mahimtura and Company. I say that the Home Department received the said letter and the copies of the documents on 19th March 1980. On 21st March, 1980, after scrutiny the case was submitted to the Secretary, Home Department (Transport), Mantralaya, Bombay by the Assistant through concerned officers. I say that 22nd March, 1980 and 23rd March, 1980 were holidays in Maharashtra as 22nd March, 1980 was 4th Saturday and 23rd March was Sunday. 24th March, 1980 was an optional holiday on 861 account of Chaitra Sud 15. The case was, therefore, put up to the Secretary on 25th March, 1980 by the Deputy Secretary. A formal decision to supply the copies was necessary and there fore the case was put up before the Secretary on 25th March, 1980. On 26th March, 1980 the Secretary, Home Department (Transport) accepted the request of the detenu 's advocate for supply of copies. " He goes on to explain that it is not the practice of the Home Department to retain the documents or copies thereof, after an order of detention is passed. According to him, the documents were taken away by the officers of the Directorate of Revenue Intelligence and no copies were made or retained by the Home Department. This reflects a sad state of affairs in the Home Department. When the law enjoins the detaining authority by sub section (3) of section 3 of the Act to serve the detenu with the grounds of detention within five days of the making of the order of detention, it is reasonable to expect that the Home Department would retain the documents or have copies made thereof for being supplied to the detenu, if asked for, for the purpose of making his representation. The Government must evolve some process by which the requirements of article 22(5) of the Constitution read with sub section (3) of section 3 of the Act can be complied with as expeditiously as possible. The is enacted to serve a laudable object. It is a measure to prevent smuggling of goods into or out of India and to check diversion of foreign exchange by immobilising the persons engaged in smuggling, foreign exchange racketeering and related activities by preventive detention of such persons. Violations of foreign exchange regulations and smuggling activities are having an increasingly deleterious effect on the national economy and thereby a serious adverse effect on the security of the State. Such economic offences disrupt the economic life of the community as a whole. It is necessary to protect the basic economic order of the nation. Nevertheless, the Act is a law relating to preventive detention. That being so, the power of detention exercisable under sub section (1) of section 3 of the Act is subject to the limitations imposed by the Constitution. As observed by this Court in Narendra Purshotam Umrao vs B. B. Gujral & Ors. when the liberty of the subject is involved, whether it is under the Preventive Detention Act or the Maintenance of Internal Security Act or the or any other law providing for preventive detention: 862 "It is the bounden duty of the Court to satisfy itself that all the safeguards provided by the law have been scrupulously observed and that the subject is not deprived of his personal liberty otherwise than in accordance with law. " The community has a vital interest in the proper enforcement of its laws, particularly in an area such as conservation of foreign exchange and prevention of smuggling activities in dealing effectively with persons engaged in such smuggling and foreign exchange racketeering by ordering their preventive detention and at the same time, in assuring that the law is not used arbitrarily to suppress the citizen of his right to life and liberty. The Government must, therefore, ensure that the constitutional safeguards of article 22(5) read with sub section (3) of section 3 of the Act are fully complied with. In the view we take of this case, the question whether there was such unreasonable delay in disposal of the detenu 's application for revocation made under sub section (1) of section 11 of the Act as to render his continued detention invalid is, in any event, basically irrelevant. For these reasons, the order of detention passed by the State Government of Maharashtra dated February 12, 1980 detaining Bhalabhai Motiram Patel under sub section (1) of section 3 of the is set aside. There shall be no order as to costs. P.B.R. Petition allowed.

The constitutional imperatives indicated in article 22(5) are: firstly, the detaining authority must, as soon as practicable, after the detention, communicate to the detenu the grounds on which the order of detention has been made and secondly, the detaining authority must afford the detenu the earliest opportunity of making a representation against the order of detention. [855D] 2. The right to make a representation implies what it means 'the right of making an effective representation '. Where certain documents are relied upon in the grounds of detention the grounds would be incomplete without such documents. The detenu has the right to be furnished with the grounds of detention alongwith the documents relied upon. [855E] 3. By a long line of decisions, this Court has on a construction of article 22(5) of the Constitution read with section 3(3) of the held that the right of making an effective representation carries with it the right to have the documents relied upon in the grounds of detention furnished without unreasonable delay. Failure to supply the documents within a reasonable time is tantamount to denial of the right of making representation and renders the continued detention invalid. [855H] Ramchandra A. Kamat vs Union of India ; , Frances Coralie Mullin vs W. C. Khambra ; , Smt. Icchu Devi Choraria vs Union of India, Pritam Nath Hoon vs Union of India W.P. referred to. 4. The detaining authority must keep ready all the documents relevant to the grounds of detention and expeditiously furnish copies thereof to the detenu on demand for making a representation. In the instant case, the State Government acted in a cavalier fashion in dealing with the detenu 's application for copies of all the relevant documents. The detaining authority failed to apply his mind and abdicated his functions of supplying the copies of documents on which the order of detention was based. He passed on the papers to the Collector of Customs, who in his turn referred the matter to the Directorate of Revenue Intelligence. Even after the replies were received the documents were lying in the Mantralaya for 9 days without being placed before 853 the detaining authority. No reasonable explanation is furnished for this delay. There was unexplained delay of 43 days in supplying copies of such documents. The continued detention was thus bad. [858H 859F] 5. When the liberty of the subject is involved whether under the Preventive Detention Act or the Maintenance of Internal Security Act or the or any other law providing for preventive detention, it is the bounden duty of the Court to satisfy itself that all the safeguards provided by the law have been scrupulously observed and that the subject is not deprived of his personal liberty otherwise than in accordance with law. [861H] Narendra Purshotam Umrao vs B. B. Gujral & Ors. ; referred to.

vil Appeal No. 1306 (N) of 1973. From the Judgment and Order dated 25.10.1971 of the Gujarat High Court in F.A. No. 320 of 1967. G. Ramaswamy, Additional Solicitor General, H.K. Puri and S.C. Dhanda for the Appellant. M.V. Goswami for the Respondents. The Judgment of the Court was delivered by 756 THAKKAR, J. While in some States1 a widow of a victim of a motor vehicle accident can recover the amount of compensa tion awarded to her from the Insurance Company, in a pre cisely similar fact situation she would be unable to do so, in other States2, conflicting views having been taken by the respective High Courts. The unaesthetic wrinkles from the face of law require to be removed by settling the law so that the same law does not operate on citizens differently depending on the situs of the accident. The question is whether the insurer is entitled to claim immunity from a decree obtained by the dependents of the victim of a fatal accident on the ground that the insurance policy provided "a condition excluding driving by a named person or persons or by any person who is not duly licensed or by any person who has been disqualified for holding or obtaining a driving licence during the period of disqualification," and that such exclusion was permissible in the context of Section 96(2)(b)(ii)3 for claiming immunity against the obligation to satisfy the judgments against the insured in respect of third party risks. The facts are not in dispute. The Claims Tribunal as also the High Court have concurred with the findings which are recorded in the following passage: "The accident in question took place on Novem ber 14, 1964. The truck had come from Barejadi and had been unloaded at Baroda. The driver had gone for bringing snacks from the opposite shop leaving the engine running. The ignition key was in the ignition lock and not in the cabin in the truck as alleged by the driver. The driver had handed over control of the truck to the cleaner. On these facts the driver having been grossly negligent in leav ing 1. Andhra Pradesh, Gujarat. Assam, Madhya Pradesh, Orissa. Duty of insurers to satisfy judgments against per sons insured in respect of third party risks (1) If, after a certificate of insurance has been issued under sub section (4) of Section 95 in favour of the person by whom a policy has been effected, judgments in respect of any such liabili ty is required to be covered by a policy under clause (b) of sub section (1) of Section 95 (being, a liability covered by the terms of the policy) is obtained against any person insured by the policy, then, nothwithstanding that the insurer may be entitled to avoid or cancel or may have avoided or cancelled the policy, the insurer shall, subject to the provisions of this section, pay to the person enti tled to the benefit of the decree any sum not exceeding the sum assured payable thereunder, as if he were the judgment debtor in respect of the liability . . . 757 such a truck with its running engine in the control of the cleaner, this being the immedi ate cause of the accident, the owner of the car viz. the insured was held vicariously liable along with the driver and the cleaner. " The view taken by the High Court has been summed up as under: "In the present case there is not an allega tion even that the insurer had at any time committed a breach of this condition. The insured has never permitted the cleaner to drive on the fatal occasion. The insured has permitted only the driver who is admittedly the licenced driver. It is the driver 's negli gence in leaving the vehicle with its engine running with the ignition key in the ignition lock that resulted in this accident. But for this gross negligence of the driver, the cleaner would not have been able to interfere with this vehicle. Once a finding is that the driver in the course of the employment or the master 's agent in the course of that agency, he negligently left the vehicle with the cleaner, the vicarious liability would immedi ately be fastened to the owner of the truck . . Even if vicarious liability arises because of this principle of social justice and not because the owner committed any breach of the policy condition. The owner in the present case never gave permission to this cleaner to drive and, therefore, the f.n. 3 contd. No sum shall be payable by an insurer under sub section (1) in respect of any judgment unless before or after the commencement of the proceedings in which the judgment is given the insurer had notice through the Court of the bring ing of the proceedings, or in respect of any judgment so long as execution is stayed thereon pending an appeal; and an insurer to whom notice of the bringing of any such pro ceeding is so given shall be entitled to be made a part thereto and to defend the action on any of the following grounds, namely: (a). xxx (b) that there has been a breach of a specified condition of the policy, being one of the following conditions namely: (i) xxxx (a) to (d) x x x x (ii) a condition excluding driving by a named person or persons or by any person who is not duly licensed, or by any person who has been disqualified for holding or obtaining a driving licence during the period of disqualification; or XXXX" 758 owner even though he had become liable by reason of his vicarious liability he could not be held guilty of the breach of the contractu al condition embodied in the policy of insur ance. Therefore, the insurer cannot plead any exemption on the ground that the owner had committed breach of the specified condition . " It has been contended on behalf of the Insurance Company that since admittedly there was an exclusion clause, the Insurance Company would not be liable in case at the point of time when the accident occurred the person who had been driving the vehicle was not a duly licensed person to drive the vehicle. It was immaterial that the insured had engaged a licensed driver and had entrusted the vehicle for being driven to the licensed driver. Once it was established that the accident occurred when an unlicensed person was at the wheels the Insurance Company would be exonerated from the liability. The validity of this argument advanced in order to assail the view taken by the High Court has to be tested in the light of the provisions contained in Sections 96(1) and 96(2)(b)(ii) of the (Act). But before doing so a brief survey of the decisions of the High Courts may be usefully made. Reliance is placed on behalf of the appellant on Kripa Natha Chakravanhy and others vs Rup Chand Lunawar, A.I.R. 1955 Assam p. 157. The view has been taken therein .that while the master is .undoubtedly liable for the wrongful conduct or negli gence of his servant where the act or conduct or negligence occurs in the course of the master 's employment or in fur therance of his interest notwithstanding the fact that the servant may have been prohibited from doing such an act. The High Court has however proceeded to absolve the Insurance Company from the liability in the light of Section 96(2) of the Act. The High Court in doing so has not examined or analyzed the provisions of Section 96(2) and has taken for granted that once it is established that the vehicle was being driven by an unlicensed person the Insurance Company stood exonerated. The decision is therefore of little sig nificance for testing the validity or otherwise of the view taken in the judgment under appeal. The appellant has also relied on Shankar Rao vs M/s Babulal Fouzdar and another, A.I.R. 1980 (Madhya Pradesh) p. 154. wherein the High Court has exonerated the Insurance Company on the following reasoning: "According to one of the terms of the policy of insurance 759 the insurer 's liability is subject to the condition that person driving the vehicle holds a licence to drive the vehicle or has held and is not disqualified from holding or obtaining such a licence and provided he is in the employment of insured and is driving on his order or with his permission. Unless the person driving the vehicle falls in that category, the insurer is not liable under the policy and is, therefore, exempted from indem nifying the insured. In the present case, apart from the question whether Hari Prasad held a driving licence or not, he was neither in the employment of the insured nor was he driving the bus at the time of the accident on the order or with the permission of the in sured. The insurer, therefore, is exempt from any liability under the terms of the policy and there is no infirmity even in this conclu sion reached by the Tribunal. " It has to be noticed that the conclusion of the High Court is backed only by an assertion and not by reasoning. It is therefore of little assistance in resolving the issue. So also the appellant has placed reliance on Orissa State Commercial Transport Corporation, Cuttack vs Dhumali Bewa & Ors. , A.I.R. 1982 (Orissa) 70 wherein the High Court came to the conclusion that the insurer was not li able. The entire reasoning is contained in the following passage which does not threw any light in regard to the basis of the reasoning or the interpretation of Section 96(2)(b)(ii): "The insurer who is opp. party no.2 in the common written statement denied the averments made in the petitions. It contended that it is not liable to compensate the appellant as the vehicle was driven by section Appa Rao who had no driving licence. Further the accident took place near Jetty No. 1 which is not a public place. For the aforesaid reasons, it is con tended that opp. party No. 2 is not liable to indemnify opp. party No. 1. " On behalf of the respondents support is sought from Kilari Mammi and others vs Barium Chemicals Ltd. & Ors., A.I.R. 1979 (Andhra Pradesh) 75 decided by the Andhra Pra desh High Court which has taken the same view as has been taken by the Gujarat High Court in the judgment under ap peal. Says the High Court: "If the first respondent had authorised only a licensed 760 driver to drive the vehicle, then the defence under section 96(2) could be rightly invoked by the 4th respondent. But this is a case where due to the negligence of the authorised driver, the third respondent, a third person, drove the vehicle and, therefore, I do not think the decision relied upon by the learned counsel is of any reliance to the facts of this case. " This decision is also exposed to the same criticism. It is buttressed by 'ipse dixit ' rather than rationation. The respondents have also placed reliance on Dwarka Prasad Jhunjhunwala and another vs Sushila Devi & Ors., A.I.R. 1983 Patna 246. It is no doubt true that the High Court has upheld the claim of the insured to be reimbursed by the Insurance Company but as is evident from paragraph 9 of the judgment, which is reproduced below things have been taken for granted: "From the above discussions it is clear and was not disputed that the liability of appel lant No. 1 for the negligent act of his driver is there. If appellant No. 1 being the owner of the car is liable, then I do not see why if the insurance company cannot be fastened with the liability. The appellant had taken an insurance policy to cover the risk against third party. Clause (b) of Section 95(1) ensures the person against the liability incurred by him in respect of the death or bodily injury to any person caused by or arising out of the use of the vehicle in public place. In view of this cover the appel lant No. 1 appears to me to be certainly entitled to shift the burden of the compensa tion awarded against him on the Insurance company which, in this case the car being a private one, is unlimited. I would, therefore, accept the argument of Mr. S.C. Ghose that on the facts and in the circumstances discussed above the liability of appellant No. 1 should be shifted from him to the National Insurance Co. Ltd., respondent No. 7. " The question therefore deserves to be examined afresh on its own merits on principle. Now, the proposition is incon trovertible that so far as the owner of the vehicle is concerned, his vicarious liability for damages arising out of the accident cannot be disputed having regard to the general principles of law as also having regard to the violation of the obligation imposed by Section 84 of the Act which provides that no person driving or in charge of a motor vehicle shall cause or allow the vehicle to remain stationary in any public place, 761 unless there is in the deiver 's seat a person duly licensed to drive the vehicle or unless the mechanism has been stopped and a brake or brakes applied or such other measures taken as to ensure that the vehicle cannot accidentally be put in motion in the absence of the driver. However, in the present case the appellant contends that the exclusion clause is strictly in accordance with the statutorily per missible exclusion embodied in Section 96(2)(b)(ii) and that under the circumstances the appellant Insurance Company is not under a legal obligation to satisfy the judgment pro cured by the respondents. The defence built on the exclusion clause cannot succeed for three reasons, viz: 1. On a true interpretation of the relevant clause which interpretation is at peace with the conscience of Section 96, the condition excluding driving by a person not duly licensed is not absolute and the promisor is absolved once it is shown that he has done everything in his power to keep, honour, and fulfil the promise and he himself is not guilty of a deliberate breach. Even if it is treated as an absolute promise, there is substantial compliance therewith upon an express or implied mandate being given to the licensed driver not to allow the vehicle to be left unattended so that it happens to be driven by an unlicensed driver. The exclusion clause has to be 'read down ' in order that it is not at war with the 'main purpose ' of the provisions enacted for the protection of victims of accidents so that the promisor is exculpated when he does every thing in his power to keep the promise. In order to divine the intention of the legislature in the course of interpretation of the relevant provisions there can scarcely be a better test than that of probing into the motive and philosophy of the relevant provisions keeping in mind the goals to be achieved by enacting the same. Ordinarily it is not the concern of the legislature whether the owner of the vehicle insures his vehicle or not. If the vehicle is not insured any legal liability arising on account of third party risk will have to be borne by the owner of the vehicle. Why then has the legislature insisted on a person using a motor vehicle in a public place to insure against third party risk by enacting Section 94. Surely the 762 obligation has not been imposed in order to promote the business of the insurers engaged in the business of automo bile insurance. The provision has been inserted in order to protect the members of the Community travelling in vehicles or using the roads from the risk attendant upon the user of motor vehicles on the roads. The law may provide for compen sation to victims of the accidents who sustain injuries in the course of an automobile accident or compensation to the dependents of the victims in the case of a fatal accident. However, such protection would remain a protection on paper unless there is a guarantee that the compensation awarded by the Courts would be recoverable from the persons held liable for the consequences of the accident. A Court can only pass an award or a decree. It cannot ensure that such an award or decree results in the amount awarded being actually recov ered, from the person held liable who may not have the resources. The exercise undertaken by the law Courts would then be an exercise in futility. And the outcome of the legal proceedings which by the very nature of things involve the time cost and money cost invested from the scarce re sources of the Community would make a mockery of the injured victim, or the dependents of the deceased victim of the accident, who themselves are obliged to incur not inconsid erable expenditure of time, money and energy in litigation. To overcome this ugly situation the legislature has made it obligatory that no motor vehicle shall be used unless a third party insurance is in force. To use the vehicle with out the requisite third party insurance being in force is a penal offence.1 The legislature was also faced with another problem. The insurance policy might provide for liability walled in by conditions which may be specified in the con tract of policy. In order to make the protection real, the legislature has also provided that the judgment obtained shall not be defeated by the incorporation of exclusion clauses other than those authorised by Section 96 and by providing that except and save to the extent permitted by Section 96 it will be the obligation of the Insurance Compa ny to satisfy the judgment obtained against the persons insured against third party risks. (vide Section 96). In other words, the legislature has insisted and made it incum bent on the user of a motor vehicle to be armed with an insurance policy coveting third party risks which is in conformity with the provisions enacted by the legislature. It is so provided in order to ensure that the injured vic tims of automobile accidents or the dependents of the vic tims of fatal accidents are really compensated in terms of money and not in terms of promise. Such a benign provision enacted by the legislature having regard to the fact that in the modern age the use of motor vehicles notwithstanding the attendant hazards, has be 1. Section 94 of the . 763 come an inescapable fact of life, has to be interpreted in a meaningful manner which serves rather than defeats the purpose of the legislation. The provision has therefore to be interpreted in the twilight of the aforesaid perspective. Section 96(2)(b)(ii) extends immunity to the Insurance Company if a breach is committed of the condition excluding driving by a named person or persons or by any person who is not fully licensed, or by any person who has been disquali fied for holding or obtaining a driving licence during the period of disqualification. The expression 'breach ' is of great significance. The dictionary meaning of 'breach ' is 'infringement or violation of a promise or obligation '.1 It is therefore abundantly clear that the insurer will have to establish that the insured is guilty of an infringement or violation of a promise that a person who is duly licensed will have to be in charge of the vehicle. The very concept of infringement or violation of the promise that the expres sion 'breach ' carries within itself induces an inference that the violation or infringement on the part of the promi sor must be a wilful infringement or violation. If the insured is not at all at fault and has not done anything he should not have done or is not amiss in any respect how can it be conscientiously posited that he has committed a breach? It is only when the insured himself places the vehicle in charge of a person who does not hold a driving licence, that it can be said that he is 'guilty ' of the breach of the promise that the vehicle will be driven by a licensed driver. It must be established by the Insurance Company that the breach was on the part of the insured and that it was the insured who was guilty of violating the promise or infringement of the contract. Unless the insured is at fault and is guilty of a breach the insurer cannot escape from the obligation to indemnify the insured and successfully contend that he is exonerated having regard to the fact that the promisor (the insured) committed a breach of his promise. Not when some mishap occurs by some mis chance. When the insured has done everything within his power inasmuch as he has engaged a licensed driver and has placed the vehicle in charge of a licensed driver with the express or implied mandate to drive himself it cannot be said that the insured is guilty of any breach. And it is only in case of a breach or a violation of the promise on the part of the insured that the insurer can hide under the umbrella of the exclusion clause. In a way the question is as to whether the promise made by the insured is an absolute promise or whether he is exculpated on the basis of some legal doctrine. The discussion made in paragraph 239 of Breach of Contract by Carter (1984 Edition) under the head Proof of Breach, 1. See Collins English Dictionary. 764 gives an inkling of this dimension of the matter1 In the present case even if the promise were to be treated as an absolute promise the grounds for exculpation can be found from Section 84 of the Act which reads under: "84. Stationary vehicles No person driving or in charge of a motor vehicle shall cause or allow the vehicle to remain stationary in any public place, unless there is in the driver 's seat a person duly licensed to drive the vehicle or unless the mechanism has been stopped and a brake or brakes applied or such other measures taken as to ensure that the vehicle cannot accidentally be put in motion in the absence of the driver. " In view of this provision apart from the implied mandate to the licensed driver not to place an unlicensed person in charge of the vehicle. There is also a statutory obligation on the said person not to leave the vehicle unattended and not to place it in charge of an unlicensed driver. What is prohibited by law must be treated as a mandate to the em ployee and should be considered sufficient in the eye of law for excusing non compliance with the conditions. It cannot therefore in any case be considered as a breach on the part of the insured. To construe the provision differently would be to re write the provision by engrafting a rider to the effect that in the event of the motor vehicle happening to be driven by an unlicensed person regardless of the circum stances in which such a contingency occurs, the insured will not be liable under the contract of insurance. It needs to be emphasised that it is not the contract of insurance which is being interpreted. It is the statutory provision defining the conditions of exemption which is being interpreted. These must therefore be interpreted in the spirit in which the same have been enacted accompanied by an anxiety to ensure that the protection is not nullified by the backward looking interpretation which serves to defeat the provision rather than to fulfil its life aim. To do otherwise would amount to nullifying the benevolent provision by reading it with a non benevolent eye and with a mind not tuned to the purpose and 1. "Exculpation of a promisor. Given a presumption of abso luteness of obligation, a promisor who is alleged to have failed to perform must either prove performance or establish some positive excuse for any failure on his part. In other words he must find exculpation from what is presumed to be a breach of contract, either in the contract itself or in some external rule of law. These are five grounds for exculpa tion: construction of the contract; the doctrine of frustra tion; the existence of an implied term; the presence of an exclusion clause; and the application of a statutory rule or provision. These will be considered later." 765 philosophy of the legislation without being informed of the true goals sought to be achieved. What the legislature has given, the Court cannot deprive of by way of an exercise in interpretation when the view which renders the provision potent is equally plausible as the one which renders the provision impotent. In fact it appears that the former view is more plausible apart from the fact that it is more de sirable. When the option is between opting for a view which will relieve the distress and misery of the victims of accidents or their dependents on the one hand and the equal ly plausible view which will reduce the profitability of the insurer in regard to the occupational hazard undertaken by him by way of business activity, there is hardly any choice. The Court cannot but opt for the former view. Even if one were to make a strictly doctrinaire approach, the very same conclusion would emerge in obeisance to, the doctrine of 'reading down ' the exclusion clause in the light of the 'main purpose ' of the provision so that the 'exclusion clause ' does not cross swords with the 'main purpose ' high lighted earlier. The effort must be to harmonize the two instead of allowing the exclusion clause to snipe success fully at the main purpose. This theory which needs no sup port is supported by Carter 's "Breach of Contract" Vide paragraph 251. To quote: "Notwithstanding the general ability of con tracting parties to agree to exclusion clause which operate to define obligations there exists a rule, usually referred to as the "main purpose rule", which may limit the application of wide exclusion clauses defining a promisor 's contractual obligations. For example, in Glynn vs Margetson & Co., at 357 Lord Halsbury L.C. stated: "It seems to me that in construing this docu ment, which is a contract of carriage between the parties, one must be in the first instance look at the whole instrument and not at one part of it only. Looking at the whole instru ment, and seeing what one must regard . . as its main purpose, one must reject words, indeed whole provisions, if they are inconsistent with what one assumes to be the main purpose of the contract. " Although this rule played a role in the devel opment of the doctrine of fundamental breach, the continued validity of the rule was ac knowledged when the doctrine was rejected by the House. of Lords in Suissee Atlantigue Societed ' 766 Armement Maritime S.A.v. N.V. Rotterdamsche Kolen Centrale, at 393,412 413,427 428, 430. Accordingly, wide exclusion clauses will be read down to the extent to which they are inconsistent with the main purpose, or object of the contract. " _ (Exphasis added). In our opinion, therefore, the High Courts of Gujarat and Andhra Pradesh are right and the High Courts of Orissa, Patna and Madhya Pradesh are in error. The exclusion clause does not exonerate the Insurer. The appeal accordingly fails and is dismissed with costs. A.P.J. Appeal dismissed.

The driver of a truck handed over the control of his vehicle to the cleaner while its engine was running and the ignition key was in the ignition lock. In the absence of the driver, who had gone for bringing snacks the cleaner inter fered with the vehicle. which resulted in an accident. The Tribunal as well as the High Court held that this being the immediate cause of the accident, the owner of the truck was vicariously liable. The High Court further held that since the owner never gave permission to his cleaner to drive, he could not he held guilty of the breach of the contractual condition embodied in the policy of insurance and, therefore, the insurer cannot plead any exception on the ground that the owner had committed breach of the speci fied condition. In the appeal to this Court, on behalf of the appellant Insurance Company it was contended: (i) that in view of the exclusion clause in the insurance policy the Insurance Company would not be liable if it was established that the accident occurred when an unlicenced person was at the wheels; (ii) that the exclusion clause is strictly in accordance with the statutorily permissible exclusion em bodied in section 96(2)(b)(ii) of the and (iii) that under the circumstances the appellant Company is not under a legal obligation to satisfy the judgments against the insured. Dismissing the Appeal, HELD: 1. The exclusion clause in the policy of insurance does not exonerate the Insurer. [766B] 753 Kilari Mammi and Others. vs Barium Chemicals Ltd. & Ors., A.I.R. 1979 (Andhra Pradesh) 75, approved. Kirpa Natha Chakravarthy and others vs Rup Chand Luna wat, A.I.R. 1955 Assam p. 157; Shankar Rao vs M/s Babulal Fouzdar and another, A.I.R. 1980 (Madhya Pradesh) 9. 154; Orissa State Commercial Transport Corporation, Cuttack vs Dhumali Bewa & Ors. , A.I.R. 1982 (Orissa) 70 and Dwarka Prasad Jhunjhunwala and another vs Sushila Devi & Ors., A.I.R. 1983 Patna 246, overruled. The vicarious liability of the owner of the vehicle for damages arising out of the accident cannot be disputed having regard to the general principles of law also having regard to the violation of the obligation imposed by section 84 of the Act which provides that no person driving or in charge of a motor vehicle shall cause or allow the vehicle to remain stationary in any public place, unless there is in the driver 's seat a person duly licensed to drive the vehi cle or unless the mechanism has been stopped and a brake or brakes applied or such other measures taken as to ensure that the vehicle cannot accidentally be put in motion in the absence of the driver. [764B C] 3. In order to divine the intention of the legislature in the course of interpretation of the relevant provisions there can scarcely be a better test than that of probing into the motive and philosophy of the relevant provisions keeping in mind the goals to be achieved by enacting the same. [761G] 4. Ordinarily it is not the concern of the legislature whether the owner of the vehicle insures his vehicle or not. If the vehicle is not insured any legal liability arising on account of third party risk will have to be borne by the owner of the vehicle. Section 94 has been enacted to protect the members of the community travelling in vehicles or using the roads from the risk attendant upon the user of motor vehicles on the roads. The law may provide for compensation to victims of the accidents who sustain injuries in the course of an automobile accident or compensation to the dependents of the victims in the case of a fatal accident. However, such protection would remain a protection on paper unless there is a guarantee that the compensation awarded by the Courts would be recoverable from the persons held liable for the consequences of the accidents. The legislature has, therefore, made it obligatory that no motor vehicle shall be used unless a third party insurance is in force. To use the vehicle without the requisite third party insurance being in force is a penal offence under section 94 of the Act. In 754 order to make the protection real, the legislature has also provided that the judgment obtained shall not be defeated by the incorporation of exclusion clauses other than those authorised by section 96 and it will be the obligation of the Insurance Company to satisfy the judgment obtained against the persons insured against third party risks. [761G H; 762A B] 5. Section 96(2)(b)(ii) extends immunity to the Insur ance Company if a breach is committed of the condition excluding driving by a named person or persons or by any person who is not fully licensed, or by any person who has been disqualified for holding or obtaining a driving licence during the period of disqualification. Therefore, the insur er will have to establish that the insured is quilty of an infringement or violation of a promise that a person who is duly licensed will have to be in charge of the vehicle. The very concept of infringement of violation of the promise that the expression 'breach ' carries within itself induces an inference that the violation or infringement on the part of the promiser must be a wilful infringement or violation. If the insured is not at all at fault and has not done anything he should not have done or is not amiss in any respect how can it be conscientiously posited that he has committed a breach? It is only when the insured himself places the vehicle in charge of a person who does not hold a driving licence, that it can be said that he is 'guilty ' of the breach of the promise that the vehicle will be driven by a licensed driver. It must be established by the Insurance Company that the breach was on the part of the insured and that it was the insured who was guilty of violating the promise or infringement of the contract. Unless the insured is at fault and is guilty of a breach the insurer cannot escape from the obligation to indemnify the insured and successfully contend that he is exonerated having regard to the fact that the promisor (the insured) committed a breach of his promise. Not when some mishap occurs by some mis chance. When the insured has done everything within his power inasmuch as he has engaged a licensed driver, and has placed the vehicle in charge of a licensed driver, with the express or implied mandate to drive himself it cannot be said that the insurer is guilty of any breach. And it is only in case of a breach or a violation of the promise on the part of the insured that the insured can hide under the umbrella of the exclusion clause. [763B G] 6. The question is as to whether the promise made by the insured is an absolute promise or whether he is exculpated on the basis of some legal doctrine. In the present case even if the promise were to be treated as an absolute prom ise the grounds for exculpation can be found from section 84. In view of this provision apart from the implied mandate to the licensed driver not to place a non licensed person in charge of the 755 vehicle, there is also a statutory obligation on the said person not to leave the vehicle unattended and not to place it in charge of an unlicensed driver. What is prohibited by law must be treated as mandate to the employee and should be considered sufficient in the eye of law for excusing non compliance with the conditions. It cannot therefore in any case be considered as a breach on the part of the insured. [763G 764A; C El 7. The statutory provisions defining the conditions of exemption under section 96(2)(b)(ii) and not the contract of insurance must be interpreted in the spirit in which the same have been enacted, accompanied by an anxiety to ensure that the protection is not nullified by the backward looking interpretation which serves to defeat the provision rather than to fulfil its life aim. To do otherwise would amount to nullifying the benevolent provision. [764F G] 8. When the option is between opting for a view which will relieve the distress and misery of the victims of accidents or their dependents on the one hand and the equal ly plausible view which will reduce the profitability of the insurer in regard to the occupational hazard undertaken by him by way of business activity, there is hardly any choice. The Court cannot but opt for the former view. [765B C] 9. The exclusion clause has to be 'read down ' in order that it is not at par with the 'main purpose ' of the provi sions enacted for the protection of victims of accidents so that the promisor is exculpated when he does everything in his power to keep the promise. [765C D] Collins English Dictionary and Carter 's Breach of Con tract (1984 Edn.) Paras 239 and 251, relied upon.

N: Criminal Appeal No. 183 of 1984. Appeal by Special leave from the Judgment and order dated the 26th August, 1983 of the Punjab and Haryana High Court in Cr. Writ Petition No. 392 of 1983. C.M. Nayar and Vijay Jhani for the Appellant. Puran Chand, Mrs. Naresh Bakshi and Miss Kailash Mehta for the Respondents The Judgment of the Court was delivered by CHANDRACHUD C. J. ,: The appellant, Surinder kaur Sandhu, is the wife of respondent 1, Harbax Singh Sandhu. Respondent 2 is the father of respondent 1 Appellant and respondent 1 were married in 1975 at Bodni Kalan, District Faridkot, Punjab, according to Sikh rites. Soon after the marriage they left for England, where a boy named Pritpal Singh was born to them on October 24, 1976. Within a short period after the birth of the boy, the relationship between the spouses came under a strain resulting in a serious episode. The husband was trapped by the Berkshire Police who got the scent that he was negotiating with a hitman to have the wife run over by a car. The husband was convicted and sentenced 425 to a term of three years for that offence. Ironically, it was the wife who intervened and succeeded in obtaining a probation order for the man who had attempted to procure her murder. The husband was released on probation on February 4, 1982. The period of probation expired on December 24, 1982. On January 31, 1983, while the wife was away at work, the husband removed the boy from England and brought him to India. On the same date, the wife obtained an order under section 41 of the Supreme Court Act, 1981 under which the boy became the Ward of the Court with effect from that date. That order was confirmed on July 22, 1983 by Mrs. Justice Booth of the High Court of Justice (Family Division). By the said order, the husband was directed to hand over the custody of the minor boy to the wife or her agent forthwith. The wife came to India in April 1983. On May 5, 1983 she filed a petition under section 97 of the Code of Criminal Procedure in the Court of the learned Judicial Magistrate, First Class, Jagraon. She asked for the custody of her son, contending that he was in the illegal custody of the respondents. Section 97 authorises the Magistrate to direct a search to be made for persons wrongfully confined and, on their being found, to be produced in the Court in order to facilitate the passing of such order as the circumstances of the case may require. The respondents relied upon section 6 of the Hindu Minority and Guardianship Act, 1956, and opposed the petition on the ground that Respondent 1 was the natural guardian of the minor boy. Accepting that contention, the learned Magistrate dismissed the petition, leaving the question of the custody of the child to be decided in an appropriate proceeding. The wife then went back to England to resume her work and obtained the order dated July 22, 1983 to which we have already referred. She came back to India once again, this time armed with the aforesaid order of the English High Court. She then filed the present writ petition in the High Court of Punjab and Haryana, asking for the production and custody of her minor son. The learned single Judge of the High Court who dealt with the petition made an excellent effort to bring about rapprochement between the spouses but, he did not succeed. He questioned the boy more than once and he even presided the spouses to live together for a couple of days in the house of the Inspector General of Prisons, Haryana. The spouses reported back to him that they 426 were unable to resolve their differences. The learned Judge dismissed the wife 's petition on the grounds, inter alia, that her status in England is that of a foreigner, a factory worker and a wife living separately from the husband that she had no relatives in England; and that, the child would have to live in lonely and dismal surroundings in England. On the other hand, according to the learned Judge, the father had gone through a traumatic experience of a conviction on a criminal charge; that he was back home in an atmosphere which welcomed him; that his parents were in affluent circumstances; and that, the child would grow in an atmosphere of self confidence and self respect if he was permitted to live with them. Some of these circumstances mentioned by the learned Judge are not beside the point but, their comparative assessment is difficult to accept as made. For example, the `traumatic experience of a conviction on a criminal charge ' is not a factor in favour of the father, especially when his conduct following immediately upon his release on probation shows that the experience has not chastened him. On the whole, we are unable to agree that the welfare of the boy requires that he should live with his father or with the grand parents. The father is a man without a character who offered solicitation to the commission of his wife 's murder. The wife obtained an order of probation for him but, he abused her magnanimity by running away with the boy soon after the probationary period was over. Even in that act, he displayed a singular lack of respect for law by obtaining a duplicate passport for the boy on an untrue representation that the original passport was lost. The original passport was, to his knowledge, in the keeping, of his wife. In this background, we do not regard the affluence of the husband 's parents to be a circumstance of such overwhelming importance as to tilt the balance in favour of the father on the question of what is truly for the welfare of the minor At any rate, we are unable to agree that it will be less for the welfare of the minor if he lived with his mother. He was whisked away from her and the question is whether, there are any circumstances to support the view that the new environment in which he is wrongfully brought is more conducive to his welfare. He is about 8 years of age and the loving care of the mother ought not to be denied to him. The father is made of coarse stuff. The mother earns an income of $100 a week, which is certainly not large by English standards, but is not so low as not to enable her 427 to take reasonable care of the boy. Section 6 of the Hindu Minority and Guardianship Act, 1956 constitutes the father as the natural guardian of a minor son. But that provision cannot supersede the paramount consideration as to what is conducive to the welfare of the minor. As the matters are presented to us to day, the boy, from his own point of view, ought to be in the custody of the mother. We may add that the spouses had set up their matrimonial home in England where the wife was working as a clerk and the husband as a bus driver. The boy is a British citizen, having been born in England, and he holds a British passport. It cannot be controverted that, in these circumstances, the English Court had jurisdiction to decide the question of his custody. The modern theory of Conflict of Laws recognises and, in any event, prefers the jurisdiction of the State which has the most intimate contact with the issues arising in the case. Jurisdiction is not attracted by the operation or creation of fortuitous circumstances such as the circumstance as to where the child, whose custody is in issue, is brought or for the time being lodged. To allow the assumption of jurisdiction by another State in such circumstances will only result in encouraging forum shopping Ordinarily, jurisdiction must follow upon functional lines. That is to say, for example, that in matters relating to matrimony and custody, the law of that place must govern which has the closest concern with the well being of the spouses and the welfare of the offsprings of marriage. The spouses in this case had made England their home where this boy was born to them. The father cannot deprive the English Court of its jurisdiction to decide upon his custody by removing him to India, not in the normal movement of the matrimonial home but, by an act which was gravely detrimental to the peace of that home. The fact that the matrimonial home of the spouses was in England, establishes sufficient contacts or ties with that State in order to make it reasonable and just for the Courts of that state to assume jurisdiction to enforce obligations which were incurred therein by the spouses. (See International Shoe Company vs State of Washington (1) which was not a matrimonial case but which is regarded as the fountainhead of the subsequent developments of jurisdictional issues like the one involved in the instant case) It is our duty and function to protect the wife against the burden of litigating in an inconvenient forum which she and her husband had left voluntarily in order to make their living in England, where they gave birth to this unfortunate boy. 428 For these reasons, we set aside the judgment of the High Court and direct that the custody of the child shall be handed over to the appellant mother. that shall be done during the course of this day. The High Court has referred to the evidence showing that the annual income of the father 's family is in the range of Rs. 90,000. That would justify an order directing the respondents to pay a sum of Rs. 3,000 (three thousand) to the appellant for her costs of this appeal. order accordingly, S.R. Appeal allowed.

Appellant and Respondent No.1 were married in 1975 at Bodni Kalan District Faridkot, Punjab according to Sikh rites. Soon after the marriage, they left for England, where a boy named Pritpal Singh was born to them on October 24, 1976. Soon thereafter, their relationship came under a strain with the result Respondent 1 was trying to negotiate with a hitman to have the appellant run over by a car. The Berkshire Police got scent of it resulting in the Respondent 's conviction and sentence for a period of three years. Ironically the appellant wife intervened and succeeded in obtaining a probation order for the man who had attempted to procure her murder. The husband was released on probation on February 4, 1982. The period of probation expired on December 24, 1982. On January 31, 1983, while the wife was away at work, Respondent No. 1 removed the boy from England and brought him to India. On the same date, the appellant wife obtained an order under section 41 of the Supreme Court Act, 1981 under which the boy became the ward of the Court with effect from that date. This order was confirmed on July 22, 1983. In the meantime the appellant came to India in April, 1983 and on 5.5.1983 filed a petition under section 97 of the Code of Criminal Procedure in the Court of the learned Judicial Magistrate first class Jagraon praying for the custody of the child. The Respondent No. 1 contested and took an objection that under section 6 of the Hindu Minority and Guardianship Act, 1956 he was the natural guardian of the minor boy. The contention was accepted and the petition was dismissed. The appellant went back to England to resume her work and obtained the confirmation order dated 22.7.1983 referred to above. Armed with the said order she returned to India and filed a writ Petition in the High Court of Punjab and Haryana. The Writ Petition was dismissed on the grounds inter alia that her status in England is that of a foreigner, factory worker and a wife living separately from the husband and having no relatives and as such the child would have to live in lonely and dismal surroundings in England, while it would grow in an atmosphere of self confidence and self respect, if it was permitted to live with its father and grand parents: 423 Hence the appeal after obtaining special leave of the Court. Allowing the appeal, the Court, ^ HELD: 1. Section 6 of the Hindu Minority and Guardianship Act, 1956 constitutes the father as the natural guardian of a minor son. But that provision cannot supersede the paramount consideration as to what is conducive to the welfare of the minor. As the matters are presented to the Court the boy, from his own point of view, ought to be in the custody of the mother. [427A B] 2:1 The modern theory of conflict of laws recognises and, in any event, prefers the jurisdiction of the State which has the most intimate contact with the issues arising in the case. Jurisdiction is not attracted by the operation or creation of fortuitous circumstances such as the circumstance as to where the child, whose custody is in issue, is brought or for the time being lodged. To allow the assumption of jurisdiction by another State in such circumstances will only result in encouraging forum shopping. Ordinarily, jurisdiction must follow upon functional lines. That is to say, for example, that in matters relating to matrimony and custody, the law of that place must govern which has the closest concern with the well being of the spouses and the welfare of the offsprings of marriage The spouses in this case. had made England their home where this boy was born to them. The father cannot deprive the English Court of its jurisdiction to decide upon his custody by removing him to India, not in the normal movement of the matrimonial home but, by an act which was gravely detrimental to the place of that home. The fact that the matrimonial home of the spouses was in England, establishes sufficient contacts or ties with that State in order to make it reasonable and just for the Courts of that State to assume jurisdiction to enforce obligations which were incurred therein by the spouses. [427 CG] 2:2 The spouses had set up their matrimonial home in England where the wife was working as a clerk and the husband as a bus driver. The boy is a British citizen, having been born in England, and he holds a British passport. It cannot be controverted that, in these circumstances the England Court had jurisdiction to decide the question of his custody.[427B C] International Shoe Company vs State of Washington, ; [1945] quoted with approval. 3:1 In the instance case; (i) The welfare of the boy does not require that he should live with his father or with the grand parents; (ii) the "traumatic experience of a conviction on a criminal charge" is not a factor in favour of the father especially when his conduct following immediately upon his release on probation shows that the experience has not chastened him, and (iii) The father is a man without a character who offered solicitation to the commission of his wife 's murder. The wife obtained an order of probation for him but, he abused her magnanimity by running away with the boy soon after the probationary period was over. Even in that act, he displayed a singular lack of respect for law by obtaining a duplicate passport for the boy on an untrue representation that the original passport was lost. The original passport was, to his knowledge, in the Keeping of his wife. In this background, the 424 affluence of the husband 's parents cannot be regarded as a circumstance of such overwhelming importance as to tilt the balance in favour of the father on the question of what is truly for the welfare of the minor. At any rate it will not be less for the welfare of the minor if the lived with his mother. He was whisked away from her and it cannot be said that there are any circumstance to support the view that the new environment in which he is wrongfully brought is more conducive to his welfare. He is about 8 years of age and the loving care of the mother ought not to be denied to him. The father is made of coarse stuff. The mother earns an income of $100 a week, which is certainly not large by English standards, but is not so low as not to enable her to take reasonable care of the boy. [426E H] 3:2 It is the duty and function of the court to protect the wife. against the burden of litigating in an inconvenient forum which she and her husband had left voluntarily in order to make their living in England, where they gave birth to this unfortunate boy. [427H] (The court directed the custody of the child to the mother forthwith and awarded cost of Rs. 3000) [428B]

ns Nos. 188 and 189 of 1968. Petitions under article 32 of the Constitution of India for enforcement of the fundamental rights. V. Krishnamurti, section K. Dholakia and J. B. Dadachanji, for the petitioners (in both the petitions). Niren De, Attorney General, section section Shukla and section P. Nayar, for the respondents (in both the petitions). The Judgment of the Court was delivered by Ramaswami, J. In these writ Petitions under article 32 of the Constitution a common, question of law arises for determination, viz., whether the Mysore (Personal and Miscellaneous) Inams Abolition Act, 1954 (Mysore Act 1 of 1955)is constitutionally valid. The villages of Debur and Kappasoge in Mysore District were Inam grants made to Bakshi Bhima Rao, the ancestor of the petitioners. The inam grants were made by the Ruler of 3 Mysore State in recognition of the military services of Bakshi Bhima Rao. The inam included not only the income from the lands but from every kind of revenue including excise and the right to treat all lands newly brought into cultivation as the personal property of the Inamdars. The Mysore (Personal and Miscellaneous) Inams Abolition Act, 1954 (Mysore Act 1 of 1955) (hereinafter called the impugned Act) was passed by the , Mysore Legislature and received the assent of the President on the 18th March, 1955 and published in the Mysore Gazette on 19th March, 1955. The Act was subsequently amended by Mysore Act 7 of 1956 which received the assent of the President: on 28th June, 1956 and which was published in the Mysore Gazette on 5th July, 1956. By virtue of a notification dated 2nd October, 1956 under section 1 clause (iv) of the impugned Act,, the two inam villages vested in the State of Mysore under section, 3 of the impugned Act. Compensation of the various items was. the subject matter of dispute between the petitioners and the Special Deputy Commissioner who was appointed to assess. compensation under the machinery of the Act. Awards of compensation were made under sections 17 and 20 of the impugned Act by the Special Deputy Commissioner. The peti tioners preferred Miscellaneous Appeals Nos. 89 and 130 in the High Court of Mysore under section 31 of the impugned Act. These appeals were heard and decided by the Mysore High Court by a consolidated order of the 27th October, 1960. Against that decision two appeals were brought to this Court in Civil Appeals, 196 and 197 of 1965. These appeals were heard on 25th October, 1967. It was then pointed out by the Court that the. constitutional validity of the provisions of the Act cannot be challenged in the statutory appeals in view of the decision of this Court in K. section Venkataraman & Co. vs State of Madras.(1) The petitioners thereafter filed these writ petitions challenging the constitutional validity of the Act. The main contention raised by the petitioners is that the, impugned Act does not provide for adequate compensation for the property acquired, that the compensation provided for was not a "just equivalent", in other words,.the market value of the property at the time of acquisition and there was hence a violation of the guarantee under article 31(2) of the Constitution. The impugned Act is entitled as an Act to provide for the "abolition, of personal inams and certain miscellaneous inams in the State of Mysore except Bellary District". The preamble states that it is expedient in the public interest to provide for the abolition of ' personal inams and certain miscellaneous inams in the State of Mysore except Bellary District and for other matters connected therewith. , Section 1(4) enacts that this section and (1) ; 4 sections 2, 27, 38 and 40 shall come into force in respect of any inam village, or minor inam in an unalienated village, on such date as the Government may by notification appoint. Section 3 provides for the consequences of ' the vesting of an inam in the State and states as follows : "(1) When the notification under sub section (4) of section 1 in respect of any inam has been published in the Mysore Gazette, then notwithstanding anything contained in any contract, grant or other instrument or in any other law for the time being in force, with effect on and from the date of vesting, and save as otherwise expressly provided in this Act, the following consequences shall ensue, namely : (a) the provisions of the Land Revenue Code relating to alienated holdings shall, except as respects minor inams to which this Act is not applicable, be deemed to have been repealed in their application to the inam; and the provisions of the Land Revenue Code and all other enactments applicable to unalienated villages shall apply to the said inam; (b) all rights, title and interest, vesting in the inamdar including those in all communal lands, cultivated lands uncultivated lands, whether assessed or not, waste lands, pasture lands, forests, mines and minerals, ,quarries, rivers and streams, tanks and irrigation works, fisheries and ferries, shall case and be vested absolutely in the State of Mysore, free from all encumbrances; Section 9 enacts "Lands and buildings to vest in the inamdar (1) Every inamdar shall, with effect on and from the date of vesting, be entitled to be registered as an occupant of all lands other than (i) communal lands, waste lands,, gomal lands, forest lands,tank beds, mines, quarries, rivers, streams, tanks and irrigation works; (ii) lands in respect of which any person is entitled to 'be registered under sections 4, 5, 6, 7 or 8; and (iii) lands upon which have been erected buildings owned by any person other than the inamdar. (2) Every building situated within the limits of the inam which was owned immediately before the 2 date of vesting by the inamdar shall, with effect on and from such date, vest in the inamdar. Explanation : In this section inamdar ' means an inamdar other than a holder of a minor inam referred to in section 7". Section 17 provides as follows "Amount of compensation payable : (1) Save as otherwise provided in section 26, the total compensation payable in respect of any inam shall be the aggregate of the sums specified below (i) a sum equal to twenty times the amount of land revenue payable in respect of land held by kadim tenants and permanent tenants entitled to be registered under section 4 and section 5, respectively. Explanation : where the land revenue is paid in kind, the amount of land revenue for purposes of this. clause shall be determined on the basis of the market value prevailing on the 1st day of January, 1954, of the crop or crops paid as land revenue; (ii) a sum equal to seventy five per centum of the amount payable by the quasi permanent tenants of the inamdar under subsection (2) of section 6 in respect of lands of which they are entitled to be registered as occupants under sub section (1) of the said section 6; (iii) a sum calculated at the rates specified below in respect of lands referred to in clause (iii) of subsection (1) of section 7 or section 9; (a) seventy five rupees per acre within the municipal limits of the Cities of Bangalore, Mysore and Davangere and within an area of one mile from such, limits; and (b) forty rupees per acre within the municipal limits of the towns of Kolar, Tumkur, Chitaldrug, Shimoga, Bhadravati, Chickmagalur, Hassan and Mandya and the limits of the Kolar Gold Fields Sanitary Board Area, and within an area of one mile from such limits; and (c) twenty rupees per acre in all other areas; (iv) a sum equal to twenty times the jodi, quitrent or other amount, if any, of like nature, derived by the inamdar concerned from persons holding minor inams under such inamdar; and 6 (v) a sum equal to ten times the average net annual income derived by the inamdar during a period of five years immediately preceding the date of vesting, from lands other than lands referred to in clause (iii) and lands in respect of which any person is entitled to be registered under sections 4, 5, 6, 7, 8 and 9; Provided that (a) the income from sandalwood or any other forest produce shall not be included in the annual income from forests unless the right thereto was expressly conferred on the inamdar by a competent authority; (b) the income from royalty on minerals or from mining lease shall not be included in the annual in come unless the right to such minerals or mines was expressly conferred on the inamdar by a competent authority and such right was recognised under section 38 of the Land Revenue Code; (c) the income from ferries shall not be included unless the right to such ferries was expressly granted to the inamdar 'by a competent authority. On behalf of the petitioners learned counsel stressed the argument that the inamdar of the estate was completely deprived of any sort of compensation in regard to the category of lands mentioned in section 9 ( 1 ) (1). It was said that in regard to the permanent tenants, the compensation was fixed at 20 times of the land revenue, but in the case of quasi permanent tenants the compensation is 75 per cent of the value payable by the quasi permanent tenants under section 6(2). That is to say, the Government recovers a premium under section 6(2) at 40 times the land revenue and hands over 75 per cent as compensation to the holder of the inam estate. It was contended that compen sation was not fixed on the basis of the market value on the date of acquisition and that the guarantee embodied in Article 31 (2) of the Constitution has been violated. In support of this argument reference was made to the decision of this Court in The State of West Bengal vs Mrs. Bela Banerjee & Ors., (1) in which this Court observed that while under Entry 42 List III the Legislature was given discretionary (1) [1954] S.C.R.558. 7 power to lay down the principles which should govern determination of the amount to be given to the owner of the property appropriated, Article 31(2) of the Constitution required that such principles must ensure what is determined as payable must be 'compensation ', i.e. a just equivalent of what the owner has been deprived. Whether such principles take into account all the elements which make up the true value of the property appropriated and exclude matters which are to be neglected is a justiciable issue to be adjudicated by the Court. The Court, therefore, held in that case that the West Bengal Land Development and Planning Act, 1948 which was enacted primarily for the settlement of immigrants who had migrated into West Bengal due to communal disturbances in East Bengal and which by section 8 provided that the compensation to be awarded for compulsory acquisition to the owner of the land was not to exceed the market value of the land on 31st December, 1946 was ultra vires of the Constitution and void under Article 31(2) of the Constitution. At page 564 of the report the Court observed as follows: " Turning now to the provisions relating to compensation under the impugned Act, it will be seen that the latter part of the proviso to section 8 limits the amount of compensation so as not to exceed the market value of the land on December 31, 1946, no matter when the land is acquired. Considering that the impugned Act is a permanent enactment and lands may be acquired under it many years after it came into force, the fixing of the market value on December 31, 1946 as the ceiling on the land at the time of the acquisition is arbitrary and cannot be regarded as due compliance in letter and spirit with the requirement of . Article 31(2)". In our opinion, this principle cannot apply in testing the validity of the impugned Act in the present case. Article 31(2) before its amendment by the Constitution (4th Amendment) Act reads as follows : "(2) No property, movable or immovable, including any interest in, or in any company, owning, any commercial or industrial undertaking, shall be taken possession of or acquired for public purposes under any law authorising the taking of such possession or such acquisition, 'unless the law provides for compensation for the property taken possession of or acquired 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". 8 But Article 31A was added in the Constitution with retros pective effect by section 4 of the Constitution (1st Amendment) Act, 1951 which provides as follows : "4. After Article 31 of the Constitution, the following article shall be inserted, and shall be deemed always to have been inserted, namely : 31A. Saving of laws providing for acquisition of estates. etc. (1) Notwithstanding anything in the foregoing provisions of this Part, no law , providing for the acquisition by the State of any estate or of any rights therein or for the extinguishment or modification of any such rights 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, any provisions of this Part Provided that where such law is a law made by the Legislature of a State, the provisions of this article shall not apply thereto unless such law, having been reserved for the consideration of the President, has received his assent. (2) In this article (a) the expression 'estate ' shall, in relation to any local area, have the same meaning as that expression or its local equivalent has in the existing law relating to land tenures in force in that area, and shall also include any jagir, inam or maufi or other similar grant; (b) the expression 'rights ' in relation to an estate, shall include any rights vesting in a proprietor, sub proprietor, under proprietor, tenure holder or other intermediary and any rights or privileges in respect ofland revenue". Article 31A was amended again by section 3 of the Constitution (4th Amendment) Act, 1955 with retrospective effect. Section 3 of the Constitution (4th Amendment) Act reads, as follows "(a) for clause (1), the following clause shall be, and shall be deemed always to have been substituted, namely : (1) Notwithstanding anything contained in article 13, no law providing for (a) the acquisition by the State of any estate or of any rights therein or the extinguishment or modification of any such rights, or 9 (b) the taking over of the management of any "property by the State for a limited period either in the public interest or in order to secure the proper management of the property; or (c) the amalgamation of two or more corpora tions either in the public interest or in order to secure the proper management of any of the corporations, or (d) the extinguishment or modification of any rights of managing agents, secretaries and treasurers, managing, directors, directors or managers or corporations, or of any voting rights of shareholders thereof, or (e) 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 article 3 1; Provided at where such law is a law made by the Legislature of a State, the provisions of this article shall not apply thereto unless such law, having been reserved for the consideration of the President, has received his assent; and (b) in clause (2), (i) in sub clause (a), after the word 'grant ' the words 'and in the States of Madras and Travancore Cochin, any janmam right ' shall be, and shall be deemed always to have been inserted. (ii) in sub clause (b), after the word 'tenure holder ' the words 'raiyat, under raiyat ' shall be, and shall be deemed always to have been, inserted. In the present case, it is plain that under Article 31A as introduced by the 1st Amendment to the Constitution or as altered by the 4th Amendment, the impugned Act is protected from attack in any Court on the ground that it contravenes the provisions of Article 31(2) of the Constitution. The reason is that the impugned Act is a law providing for the acquisition by the State of any estate or of any rights therein or for the extinguishment or modification of such rights as contemplated by Article 31A of the Constitution. The impugned Act provides L7 Sup. C.1.169 2 10 for acquisition of the rights of inamdars in inam estates in Mysore State and it is intended to abolish all intermediate holders who were termed as Superior holders and to establish direct relationship between the Government and occupants of land in the Inam Villages in respect of which notifications had been issued. The legislation was undertaken as a part of agrarian reform which the Mysore State Legislature proposed to bring about in the former State of Mysore. The impugned statute, therefore, falls under the protection of Article 31A of the Constitution and cannot be challenged on the ground that Article 31 has been violated, that no principle of compensation has been provided or that the compensation provided for is illusory or inadequate. On behalf of the petitioners Mr. Krishnamurthi in support of his argument referred to the decision of this Court in State of Madras vs D. Namasivaya Mudaliar and Ors. (1) in which Madras Lignite (Acquisition of Land) Act (Madras Act XI of 1953) was held invalid on the ground that the provisions of the Act relating to compensation violated Article 31(2) of the Constitution as it stood before the Constitution (4th Amendment) Act, 1955 and that the principle laid down in The State of West Bengal vs Mrs. Bela Banerjee & Or s.(2) was applicable. Reference was also made to another decision of this Court in P. Vajravelu Mudaliar vs Special Deputy Collector, Madras & Anr. ,(3) in which the question was raised with regard to the validity of Land Acquisition, Madras Amendment Act, 1961 (Madras Act 23 of 1961). In that case the petitioners ' lands were notified for acquisition for the purpose of housing schemes and the object of the acquisition was slum clearance. In that case also it was held by this Court that the principle of Bela Banerjee 's(2) case should be applied and by virtue of Article 31(2) the Legislature in making the law of acquisition must provide for a "just equivalent" of what the owner has been deprived of or specify the principles for the purpose of ascertaining such "just equivalent" It was pointed out that the comparative study of the principal Act and the Amending Act showed that if land was acquired for a housing scheme under the Amending Act, the claimant would get a lesser value than what he, would get for the same or similar land acquired for some public purpose under the Principal Act. The discrimination between persons whose lands were acquired for housing schemes and those whose lands were acquired for other public purposes could not be sustained on the principle of reasonable classification and the Amending Act clearly violated Article 14 of the Constitution and was void. In our opinion, the ratio of the two decisions, in State Of Madras vs (1) [1964] 6S.C.R.936. (2) [1954] S.C.R.558. (3) ; , 11 D.Namasivaya Mudaliar & Ors. (1) and P. Vajravelu Mudaliar vs Special Deputy Collector, Madras and Anr. (2) has no application to the present case because those cases related to legislation not dealing with agrarian reform and the protection of Article 31A of the Constitution was not available to either of the statutes challenged in those cases. We pass on to consider the next question raised on behalf of the petitioners, namely, whether, the impugned Act was beyond the legislative competence of the Mysore Legislature under Entry 36 of List 11 to the 7th Schedule and Entry 42 of List III as those Entries stood before the 7th Amendment of the Constitution. The argument maybe summarised thus : Entry 36 of List 11 read with Article 246(3) of the Constitution was obviously intended to authorise the State Legislature to exercise the right of eminent domain i.e., right of compulsory acquisition of private property. The exercise of such power has been recognised in Anglo Saxon jurisprudence as conditioned by public necessity and payment of compensation. All legislation in this country authorising such acquisition of property from Regulation 1 of 1824 to Land Acquisition Act 1894 proceeded on that footing. The existence of public purpose and the obligation to pay compensation are, therefore, necessary concomitants of compulsory acquisition of private property, and so, the term "acquisition" must be construed as importing by necessary implication the aforesaid two conditions. It is also a recognised rule for the construction of statutes that, unless the words of the statute clearly so demand, a statute is not to be construed so as to take away the property of a subject without compensation : 'Attorney General V. De Keyser 's Royal Hotel.(3) The power to take compulsorily raises by implication a right to payment : Central Control Board vs Cannon Brewery(4). The words "subject to the provisions of entry 42, in List 111" in entry 36 reinforce the argument, as these words must be taken to mean that the power to make a law with respect to acquisition of property should be exercised subject to the condition that such law should also provide for the matters referred to in entry 42, in other words, a two fold restriction as to public purpose and payment of compensation (both of which are referred to in entry 42) is imposed on the exercise of the law making power under entry 36. Entry 36 at the material time read as follows .lm15 " Acquisition or requisition of property, except for the purposes of the Union, subject to the provisions of entry 42 of List III". Entry 42 was to the following effect (1) ; (2) ; (3) ; , 542. (4) [1919] A.C. 744. 12 "Principles on which compensation for property acquired or requisitioned for the purpose of the Union or of a State or for any other public purpose is to be determined, and the form and the manner in which such compensation is to be given". By the Constitution (7th Amendment) Act, 1956, Entries 36 of List 11, 33 of List I were omitted and Entry 42 of List III was altered and the altered entry reads as follows : "Acquisition and requisitioning of Property" it was however pointed out on behalf of the petitioners that the amendment was not retrospective and the validity of the impugned Act must be tested by the language of entries 36 of List II and 42 of List III as they stood at the material time. In our opinion, there is no substance in the argument. It is true that under the common law of eminent domain as recognised in Anglo Saxon jurisprudence the State cannot take the property of its subject unless such property is required for a public purpose and without compensating the owner for its loss. But, when these limitations are expressly provided for in Article 31(2) and it is further enacted that no law shall be made which takes away or abridges these safeguards, 'and any such law, if made, shall be void, there can be no room for implication, and the words "acquisition of property" in entry 36 must be understood in their natural sense of the act of acquiring property, without importing into the phrase an obligation to pay compensation or a condition as to the existence of a public purpose. In other words, it is not correct to treat the obligation to pay compensation as implicit in the legislative entry 33 of List I or legislative entry 36 of List II for it is separately and expressly provided for in Article 31(2). The well known maxim expressum facit cessare tacitum is indeed a principle of logic and common sense and not merely a technical rule of construction. The express provision in Article 31(2) that a law of acquisition in order to be valid must provide for compensation will, therefore, necessarily exclude all suggestion of an implied obligation to provide for compensation sought to be imported into the meaning of the word "acquisition" in entry 36 of List II. In the face of the express provision of Article 31(2), there remains no room for reading any such implication in the legislative heads. The entries in the Lists of the Seventh Schedule are designed to define and delimit the respective areas of legislative competence of the Union and State Legislatures. Such a context is hardly appropriate for the imposition of implied restrictions on the exercise of legislative powers, which are ordinarily matters for positive enactment in the body of the Constitution. It was said that the words "subject to the provisions of entry 42 of List 111" must be taken to mean that the law making power under entry 36 could be exercised subject to the two conditions as 13 to public purpose and payment of compensation both of which are referred to in entry 42. In our opinion, the contention is unsound. The two entries are merely heads of legislation and are neither interdependent nor complementary to each other. These words in entry 36 mean no more than that any law made under entry 36 by a State Legislation can be displaced or overridden by the Union Legislation making a law under entry 42 of List II. It is important to notice that similar words do not occur in entry 33 of List I which confers on Parliament the power to make laws with respect to acquisition of property for the purpose of the Union. For if these restrictive conditions as to public purpose and payment of compensation are to be derived only from those words, then it must follow that in the absence of those words, Parliament can make law, authorising acquisition of property without a public purpose and without a provision for compensation. No reason was suggested why Parliamentary Legislation with respect to such acquisition of property is to be free from such restrictive condition, while State Legislation should be subject to them. The true inference is that the power to make law belonging to both Parliament and the State Legislatures can be exercised only subject to the aforesaid two restrictions not by, reason of anything contained in the legislative entries themselves but by reason of positive provisions contained in Article 31(2). But as legislation falling within Article 31A cannot be called in question in a Court of law for noncompliance with those provisions such legislation cannot be struck down as unconstitutional and void. In our opinion, counsel on behalf of the petitioners is, unable to make good his argument that the impugned Act was beyond the legislative competence of the Mysore Legislature at the time when it was enacted. For these reasons we hold that the petitioners have made out no case for grant of relief under article 32 of the Constitution. These writ petitions accordingly fail and are dismissed with costs. There will be one set of hearing fee. V.P.S. Petitions dismissed.

By virtue of a notification under section 1(4) of the Mysore (Personal 'and Miscellaneous) Inams Abolition Act, 1954, the Inam villages of the petitioners vested in the State of Mysore. The petitioner challenged the validity of the Act on two grounds, namely : (1) that the compensation provided by the Act was not the market value of the property at the time of acquisition and since it did not, provide for an adequate compensation as a 'just equivalent ' there; was a violation of article 31(2); and (2) that the impugned Act was beyond the legislative competence of the Mysore Legislature under Entry 36 of List 11 and Entry 42 of List III to the 7th Schedule as the Entries stood before the 7th Amendment of the Constitution, because, (i) the existence of public purpose and the obligation to pay compensation are necessary concomitants of compulsory acquisition of property, and so, the term 'acquisition ' must be construed as importing by necessary implication the two conditions of public purpose and payment of adequate compensation, and (ii) the words 'subject to the provisions of Entry 42, List III ' in Entry 36 of List 11 reinforce the argument that a law with respect to acquisition of property made under Entry 36 should be exercised subject to the two fold restriction as to public purpose and payment of compensation both of which are referred to in Entry 42, List Ill. HELD : (1) (a) The impugned Act provides for the acquisition of rights of inamdars in inam estates and it is intended to abolish 'all intermediate holders and to establish direct relationship between the Government and occupants of land in Inam villages in respect of which notifications had been issued. The legislation was undertaken as a part of agrarian reform which the Mysore State Legislature proposed to bring about in the State. Therefore, the impugned Act is a law providing for the acquisition by the State of any estate or of any rights therein or for the extinguishment or modification of such rights as contemplated by article 31A and hence, the impugned Act is protected from attack in any court on the ground that it contravenes article 31(2). [9 G H; 10 A B] (b) The ratio of the two decisions in State of Madras vs Namasivaya Mudaliar ; and Vajravelu Mudaliar vs Spl. Collector, ; , in which it was held that the principle of Beta Banerjee 's case. ; , that the Legislature in making a law of acquisition must provide for a 'just equivalent ' as compensation, has no application to the present case, because, those two cases related to legislation not dealing with agrarian reform and the protection of article 31A was not available to either of the statutes challenged in those cases. A B] 2 (2) (1) Under the common law of eminent domain the State cannot take the property of its subject unless such property is required for a public purpose and without compensating the owner for its loss. But, when these limitations are expressly provided for in article 31(2) and it is further enacted that no law shall be made which takes away or abridges those safeguards, and any such law, if made, shall be void, there can be no room for implication, and the words 'acquisition of property ' in Entry 36 must be understood in their natural sense of the mere 'act of acquiring property without importing into the phrase an obligation to pay compensation or a condition as to the existence of a public purpose. The entries in the Lists of the VII Schedule are designed to define and delimit the respective areas of legislative competence, of the Union and State Legislatures and the principle of the maxim expressum facit cessare tacitum, makes it inappropriate to treat the obligation to pay compensation as implicit in Entry 33 of List I or Entry 36 of List 11 when it is separately and expressly provided for in article 31(2). [12 C F] (3) The words 'subject to the provision of Entry 42 of List III ' mean no more than that any law made under Entry 36 by a State Legislature can be displaced or overridden by the Union Legislature making a law under Entry 42 of List 11. If the restrictive conditions as to public purpose and payment of compensation are to be derived from these words, their absence in Entry 33 of List I leads to the unreasonable inference that Parliament can make law authorising acquisition of property without a public purpose and without a provision for compensation. The true inference is that the power to make a law, belonging both to Parliament and State Legislatures, can be exercised subject to the two restrictions not by reason of anything contained in the legislative entries but by reason the positive provisions in article 31(2). But as legislation falling within article 31A cannot be called in question in a court for non compliance with those provisions in article 31(2) such legislation cannot be struck down as unconstitutional and void. [13 B E]

Appeal No. 379 of 1958. Appeal from the judgment and decree dated January 17, 1956 of the Patna High Court in Appeal from Original Decree No. 169 of 1947. L. K. Jha, D. P. Singh, R. K. Garg, M. K. Ramamurthi and section C. Agarwal, for the appellant. R. C. Prasad, for the respondent. September 15. The Judgment of the Court was delivered by DAS GUPTA, J. Can a wife 's sister 's daughter 's son be validly adopted to a person governed by the Benaras School of the Mitakshara Hindu Law ? That is the main question raised in this appeal brought on a certificate granted by the High Court at Patna. The plaintiffs who would succeed to the properties left by Babu Ram Singh on the death 629 of his widow but for the adoption of Devendra Singh which this widow made on June 9, 1935, brought the present suit for a declaration that Devendra Singh was not adopted by the second defendant, Babu Ram Singh 's widow and that in any case, the adoption is invalid in law and so Devendra Singh acquired no right in the properties left by Babu Ram Singh. The main ground on which the adoption is attacked as invalid is based on the fact that Devendra Singh is Babu Ram Singh 's widow 's sister 's daughter 's son. The other ground raised in the plaint based on the plaintiff 's allegation that Babu Ram Singh was governed by Mithila School of Hindu Law was negatived by the courts below and has been abandoned before us. No dispute is also raised now as regards the factum of adoption. The only question that arises in this appeal therefore is whether the adoption of a wife 's sister 's daughters son is valid in law. The High Court answered this question in the affirmative and dismissed the suit. It is against that decision that the present appeal has been preferred. In support of his contention that such an adoption is invalid in Hindu Law reliance is placed by the learned counsel on the following passage of Nanda Pandit 's Dattak Mimansa : (see Whitley Stokes 's Hindu Law Books at pp. 590 and 591). Accordingly, the brother, paternal and maternal uncles, the daughter 's son, and that of the sister, are excluded : for they bear no resemblance to a son. Intending this very position, it is declared in the sequel, by the same author: "The daughter 's son, and the sister 's son, are declared to be the sons of Cudras. For the three superior tribes, a sister 's son, is No. where mentioned as a son. Here even the 630 term "sister 's son" is illustrative of the whole not resembling a son, for prohibited connection is common to them all. Now, prohibited connection is the unfitness of the son proposed to be adopted to have been begotten by the individual himself through appointment to raise issue on the wife of another. The mutual relation between a couple, being analogous to the one, being the father or mother of the other, connection is forbiden: as for instance the daughter of the wife 's sister, and the sister of the paternal uncle 's wife". The meaning of the text is this. Where, the relation of the couple, that is of the bride and bridegroom, bears analogy to that of father or mother ; if the bridegroom be, as it were, father of the bride, or the bride stand in the light of mother, to the bridegroom, such a marriage is a prohibited connection. The two examples illustrate these cases in their order. In the same manner as in the above text, of the Grihaparisistha, on marriage, prohibited connection, in the case of marriage, is excepted and so in the case in question, one who if begotten by the adopter, would have been the son of a prohibited connection, must be excepted; in other words, such person in to be adopted, as with the mother of whom, the adopter might have carnal knowledge. It is urged that in view of this specific exclusion of a wife 's sister 's daughter 's son from the list of those who are fit for adoption there is no escape from the conclusion that such an adoption would be invalid in law. Learned Counsel has emphasised that great authority attaches to all statements of law as regards adoption that are contained in Dattak Mimansa. There is no doubt that for many years now the Dattak Chandrika of Kuvera and Dattak Mimansa of Nanda Pandit have been recognised to 631 be of great authority on all questions of adoption. It is true that Prof. Jolly in his Tagore Law Lectures had in no uncertain terms characterised the latter to be of little value; and eminent scholars like Dr. Mandlik and Golap Chandra Sarkar while writing in the latter part of the last century subjected many of Nanda Pandit 's views to unfavorable criticism. In spite of all this the Privy Council in Bhagwan Singh vs Bhagwan Singh(1) did recognise that both the Dattak Mimansa and Dattak Chandrika had been received in courts of law including the Privy Council as high authorities and after drawing attention to Lord Kingsdown 's statements as regards these in Rungama vs Atchama (2) and Sir James Colvile 's statement in Collector of Madura vs Moottoo Ramlinga Sathupathy(3), stated thus : ",To call it (i.e., Dattak Mimansa), infallible is too strong an expression, and the estimates of Sutherland and of West and Buhler, seem nearer the true mark; but it is clear that both works must be accepted as bearing high authority for so long a time that they have become embedded in the general law. " While saying this mention must also be made of the observations of the Privy Council in Sri Balusu Gurulingaswami vs Sri Balasu Ramalakshmamma(4) decided on the same date (March 11, 1899) but immediately before Bhagwan Singh 's Case, was decided, expressing their concurrence with the view that caution was required in accepting the glosses in Dattaka Mimansa and Dattak Chandrika where they deviate from or added to the Smirities. There can be no doubt that in laying down the rule that the adoption of the son of a woman who could not have been married by the adoptive father because of incongruous relationship (Viruddha Sambandha) Nanda Pandit was adding to the existing state of law. It 'is interesting to notice here that commenting on what Saunaka had said in describing the ' ritual of adoption that a (1) (1899) L.R. 26 I.A. 153, 161. (2) (1846) T.A. 1, 97. (3) (1863) 12 M.I.A. 397, 437. (4) (1899) L.R. 26 I.A. 113,136. 632 son should be adopted the Dattaka Chandrika observed at p. 14 : (Reflection of a son The resemblance of a son,or in other words the capability to have been begotten, by the adopter, through appointment, and so forth). (Sutherland 's translation). The Dattak Mimansa adopts this view, and introduces the further doctrine of (Viruddha Sambandha) relationship as a bar to adoption. It is unnecessary for us to examine what authority should be attached to this serious addition to the texts for determining who can be adopted, as for reasons to be presently mentioned we are of opinion that assuming that this rule should be accepted as of authority Nanda Pandit has stated this merely as a recommendation and not as a mandatory prohibition. For many years now courts have recognised the position that not only the Dharma Sutras and Grihya Sutras but also the commentaries thereon and digests mingle without hesitation statements of law which are intended to be recommendations merely with statements which are intended to be mandatory. In Balu Gurulingaswami 's case to which reference has just been made the Privy Council pointed out that recent extension of the study of Sanskrit had strengthened the view of Sir William Macnaughten that "it by no means follows that because an act has been prohibited it should therefore be considered illegal. The distinction between the vinculum juris and the vinculum pudoris is not always discernible," and adding to the previous statement of the Board in Rao Balwant Singh vs Rani Kishori(1) decided in the previous year the Privy Council observed these ,words of caution in Balusu Gurulingaswami 's case : .lm15 "They now add that the further study of the subject necessary for the decision of these (1) (1898) L.R. 25 I.A. 69. 633 appeals has still more impressed them with the necessity of great caution in interpreting books of mixed religion, morality and law, lest foreign lawyers, accustomed to treat as law what they find in authoritative books and to administer a fixed legal system, should too hastily take for strict law precepts which are meant to appeal to the moral sense, and ,should thus fetter individual judgments in private affairs, should introduce restrictions into Hindu society, and impart to it an inflexible rigidity never contemplated by the original law givers. " The importance of this caution has by no means decreased in the years that have gone by. It is therefore necessary to examine the words used by Nanda Pandit himself in laying down this rule against Viruddha Sambandha adoption. It has to be noticed that while he says (One who if begotten by the adopter would have been the son of a prohibited connection must be excepted Sutherland 's translation), he does not say anything about what would happen if Viruddha Sambandha Putra was adopted. If the rule was intended to be mandatory it is reasonable to expect that the author who as the treatise itself shows was a master of logic and well acquainted with the rules of logic and other rules which deal with the question of mandatory injunctions would give clear indication of that view. This was all the more reasonable to expect as he was introducing a new rule. But he contents himself with saying that We do not think this language that adoption of a son of a Viruddha Sambandha girl should be avoided, can properly be taken as mandatory so that the rule must be obeyed on pain of the adoption being otherwise invalid in law. Notice has necessarily to be taken in this connection of the fact that the only authority mentioned by Nanda Pandit himself against 634 Viruddha Sambandha marriage from which he deduces his rule of Viruddha Sambandha in matters of adoption is to be found in the text of Ashvalayana (The bridegroom duly qualified should marry a duly qualified maiden who is younger in years, is not a sapinda, is not of the same gotra, and whose marriage does not involve a viruddha sambandha) (contrary relationship). It is followed a little later by this comment: (Viruddha Sambandha is that Sambandha (relation) which is viruddha (contrary or im proper) owing to the relationship (existing) between the bride and the bridegroom (before their marriage) being similar to that of a father or mother. As for instance the daughter of the wife 's sister (and) the sister of the maternal uncle 's wife). Is this rule mandatory? In other words, would a marriage of a girl standing in the Viruddha Sambandha relationship to the bridegroom be invalid. We are not satisfied that this is the position in law. It is striking that though the numerous Dharma Sutras and Grihya Sutras, deal at great length with the question of the girl who can be taken in marriage not one of them with the solitary exception of Ashvalayana has anything to say about Viruddha Sambandha. Coming to more recent times the only Digest in which any reference to this Virudha Sambandha of Ashvalayana can be traced is in Nirnaya Sindbu (late 16th century). There is no reference to this however in Raghunandana 's exhaustive treatise on marriage udhvahatattva which was written in the early 16th century. In Nirnaya Sindhu there is only bald reference to this in these words 635 (There is also the bar to marriage by sayings (of sages). As in the Grihyaparishistha should not marry a girl of Viruddha Sambandha (incongruous relationship)" Viruddha Sambandha was illustrated thus : "As in the case of wife ',% sister 's daughter; father 's brother 's wife 's sister." without any comments whatsoever. It is reasonable to think that the numerous Smritikars and commentators who have dealt with the subject of marriage were acquainted with Ashvalayana 's text but (lid not think it necessary to refer to it as it was a recommendatory rule not considered to be of much importance. Mr. Jha argues that when a positive statement is followed by a negative statement, the negative statement should always be held to contain a prohibitory mandate. Thus he says that as after saying says next the rules contained in this latter portion should be held to be mandatory. We can find no justification either in the modern rules of interpretation or in the rules of interpretation of the old Hindu Shastras for such a view. One instance where a negative rule following a positive direction on this very subject of marriage cannot possibly be I considered to be mandatory can be found in Yajnavalkaya 's text : (Let him, whose life as bachelor is unsullied marry a wife who possesses good qualities, who has not been enjoyed by another, who is beautiful, who is not his sapinda, who is younger than himself, who is not suffering 636 from any complaints, who has brothers, and who does not belong to the family descended from the same primitive guide." Quite clearly the rule that a girl suffering from disease should not be married is not a mandatory rule even though it follows some positive rules about marriage. That this is the position has been pointed by Vigyaneshwar. It is interesting to notice in this connection Ashvalayana 's own statement about marriage rules in the fourth section of the first Chapter of his Grihaya Sutra. After saying (a daughter should be given to a man of understanding) he says in the next text (that one should marry a girl of understanding, good looks, good conduct and good qualities) and one who is not suffering from any disease. This also is a case of a positive statement that a person should marry a girl of understanding, good looks, good conduct and good qualities, followed by a rule that a person should not marry a girl suffering from disease. Even so, it cannot be imagined for a moment that this rule that one should not marry a girl suffering from disease is a mandatory rule, implying that marriage with such a girl would be invalid. In any case, argues the learned counsel, when we find the three rules against marriage to a sapinda girl and sagotra girl and Viruddha Sambandha girl in the same text as here and admittedly the first two are mandatory and marriage to a sapinda girl or a sagotra girl would be invalid there is no reason why the same result should not follow on breach of the third rule against marrying a Viruddha Sambandha girl. The reasons why marriage to a sapinda girl or a sagotra girl has always been held to be invalid are succinctly stated by Raghunandana in his Udhvahatattva in a passage which has been translated thus by Dr. Jogendra Nath Bhattacharyya in his Commentaries on Hindu Law; Third Edition, Vol. I at P. 188: 637 "The negative ordinances, prohibiting marriage with girls of the same gotra, pravara etc., are parudasa (exceptional clauses) having reference to a vidhi; they are also prohibitions proper, like the prohibitory rule about the sexual union on parva days, because they forbid such marriages by the accompaniment of condemnatory and penance clauses, (See Texts of Apastamba. and Sumantu), (cited on p. 187) and in view also of the fact that such marriages may spring from natural inclination. The term wife is like the terms yupa (sacrificial post) ahavaniya (sacrificial fire), and denotes a female taken in marriage with occult ceremonies. Therefore, where a sapinda or a sagotra girl is taken in marriage, she does not become a wife. " It is a clear that none of the reasons which justify the view that a breach of the first two rules in Ashvalayana 's text viz., the rules against marriage of a sapinda girl, or a sagotra girl, should have the consequence that the marriage should be invalid are present in the case of a breach of the third rule, which is against marrying a Viruddha Sambandha girl. It appears clear to us that Ashvalayana himself did not intend the rule against marrying a Viruddha Sambandha girl as a mandatory prohibition. This must have been even more clear to Nanda Pandit and so when extending Viruddha Sambandha to adoption on the % cry basis of Ashvalayanas rule against Viruddha Sambandha marriage, Nanda Pandit could not have but intended his rule against Viruddha Sambandha adoption as a mere recommendation and not a mandatory prohibition. Our attention was drawn to a decision of the Madras High Court in Minakshi vs Ramanada where the learned judges observed: (1) Mad. 49. 638 "In the case of marriage. , there are three prohibitions, viz., (1) The couple between whom marriage is proposed should not be sapindas; (2) They should not be sagotras; and (3) There should be no Viruddha Sambandha or contrary relationship as would render sexual connection between them incestuous." The real question which was before the Full Bench 'Was whether there can be valid adoption under the Hindu law if a legal marriage is not possible between the person for whom the adoption is made and the mother of the boy who is adopted, in her maiden state. In the case before the Full Bench, the adoptee 's mother was a sagotra of the adoptive father, and so, there could be no legal marriage between them. It was not necessary there "ore for the learned judges in the Minakshi 's case to consider whether the Viruddha Sambandha rule against marriage was mandatory or not. We are not aware of any decision in any of the High Courts where Nanda Pandit 's rule against Viruddha Sambandha adoption has been considered to be a mandatory, prohibition. For the reasons discussed above we are of opinion that this rule introduced by Wanda Pandit is only a recommendation and consequently it is of no avail to the appellant to show that the adoption of wife 's sister 's daughter 's son is invalid. Mr. Jha then tried to take advantage of the rule which has been accepted by almost all the High Courts except Bombay that there can be no valid legal adoption unless a legal marriage is possible between the person for whom the adoption is made and the mother of the boy who is adopted, in her maiden state, by urging that there can be no legal marriage between a person and, his wife 's sister 's daughter. Assuming for the present that it is no 630 longer open to challenge the correctness of this rule at least so far as the Banaras School is concerned, we are still of the opinion that this argument is of no avail, for the simple reason that we see no reason to think that there can be no legally valid marriage between a person and his wife 's mister 's daughter. For,the only argument in support of the contention, that there can be no such legal marriage between persons thus related, the learned counsel had to fall back upon Asvalayana 's Viruddha Sambandha rule. That however as we have already shown, is in our opinion only a recommendation and cannot support a proposition that a marriage in breach of the Viruddha Sambandha rule is invalid. An early as 1878 Dr. Gooroodas Banerjee (whose erudition equalled his orthodoxy) dealing with this question in his Tagore Law Lectures on the Hindu Law of Marriage and Stridhan observed thus (p. 64). "The prohibition by reason of affinity, which exsts in other systems, has no place in Hindu Law. But the prohibition of marriage with sapindas to some extent supplies its place and so did the prohibition of widow marriage. The Hindu Law, however, does not prohibit marriage with the wife 's sister, or even with her niece or her aunt." Dr. Jogendra Nath Bhattacharya in his Commentaries on Hindu Law (Third Edition) Vol. I, also stated after referring to what has been mentioned in Nirnaya Sindhu against marriage with the wife 's sister 's daughter (already quoted above): " 'Instances of marriage with wife 's sister 's daughter, and wife 's brother 's daughter, are also not unknown in Bengal though, Hindu sentiment is strong against such marriages. " The question was directly raised in Ragavendra Rau vs Jayaram Rau (1). Mr. Justice Subramania Ayyar and Mr. Justice Benson relying on Dr. Gooroodas Banerjee 's statement of the law (1) Mad. 640 and also on Syama Charan Sarkar 's VyavasthaDarpan, Dr. Bbattacharyya 's commentaries on Hindu Law and certain other text books held that marriage between a man and his wife 's sister 's daughter is valid. The learned judges pointed out that in South India at least there was little to 'indicate that such marriages are disapproved of "by the members of any section of the community." In our opinion a marriage of a Hindu with his wife 's sister 's daughter is not invalid in law even though it may not be liked by certain people. Mr. Jha 's second argument based on the rule which we have assumed to be not open to challenge for the purpose of this case that there can be no valid adoption unless a legal marriage is possible between the person for whom the adoption is made and the mother of the boy who is adopted in her maiden state, must therefore fail. We therefore hold that the High Court was right in its conclusion that the adoption of a wife 's sister 's daughter 's son is valid in law. The appeal is accordingly dismissed with costs. Appeal dismissed.

The appellant as reversioner sued for a declaration that the adoption of respondent 1 by respondent 2 to her deceased husband was invalid in law and respondent 1 acquired no right to the properties left by the husband of respondent 2. The parties were governed by the Banaras School of Mitakshal a Hindu law and respondent 1 was the sister 's daughter 's son of respondent 2. The question was whether a wife 's sister 's daughter 's son could 'be validly adopted to a person governed by the Banaras School of Mitakshara Hindu Law. The High Court answered it in the affirmative and dismissed the suit. Reliance wag placed on behalf of the appellant in this Court on Nanda Pandit 's Dattak Mimansa which specifically ,excluded a wife 's sister 's daughter 's son for the purpose of adoption on the ground of incongruous relationship (Viruddha Sambandha) as also on the text of Ashvalayana interdicting marriage with a sapinda, sagotra and viruddha sambandha girl such as a wife 's sister 's daughter on which the author of Dattak Mimansa had relied. It was contended that when a positive statement in the text was followed by a negative one, the latter 628 containing the prohibition must be held to be mandatory and that in any case since the prohibition against marriage to a sapinda or sagotra girl was mandatory, the prohibition against marriage to a Viruddha Sambandha girl must also be equally go. Held, that the contentions were without substance and must fail. Adoption of a wife 's sister 's daughter 's son is legally valid under the Banaras School of Mitakshara Hindu law. None of the reasons which rendered marriage to a sapinda or sagotra girl invalid were present in the case of a marriage to a Viruddha Sambandha girl and the rule against marrying a Viruddha Sambandha girl was not intended by its author to be mandatory. The extension of the rule of Viruddha Sambandha to adoption made by Nanda Pandit was not meant by him to be mandatory. Minakshi vs Ramanada, Mad. 49, distin guished. Held, further, that the marriage of a Hindu with his wife 's sister 's daughter is not invalid in Hindu law. Ragavendra Rau vs Jayaram Rau, Mad. 283, referred to. Case law reviewed.

121 of 1958. Petition under Article 32 of the Constitution for enforcement of Fundamental rights. G. B. Pai and Sardar Bahadur, for the petitioner. M. C. Setalvad, Attorney General for India, B. Sen and T. M. Sen, for the respondents. December 11. The Judgment of the Court was delivered by GAJENDRAGADKAR, J. The petitioner has been doing business as an exporter of coir products to foreign countries for the last twenty years. On July 4, 1958, he applied to respondent 2, the Chairman, Coir Board, Ernakulam, requesting that he should be registered as an established exporter. This application was accompanied by an income tax clearance certificate and attested copies of bills of lading. Respondent 2 declined to register the petitioner on the ground that his application was defective inasmuch as the requisite certificate regarding his financial status bad not been produced and no evidence had been given to show that he had exported the minimum quantity required (500 Cwts.). The petitioner was told that unless he complied with the requirements asked for within seven days his application would be rejected without further notice. The petitioner found that he could not comply with the directions issued by respondent 2 and so it became impossible for the petitioner to get registration and licence applied for by him. That is why he filed the present petition under article 32 of the Constitution and prayed for the issue of a writ or order in the nature of mandamus to direct the second respondent to grant the petitioner registration and licence as applied for by him and to prohibit or restrain the said respondent from acting on, or implementing, the rules issued under the , by issue of a writ of certiorari, prohibition or such other writ or order appropriate to protect his rights. The petitioner also prayed that " if found necessary " the said 781 rules should be declared to be ultra vires the powers of the Central Government and invalid being in violation of the fundamental rights guaranteed by articles 14 and 19 of the Constitution. The Union of India has, been impleaded as respondent 1 to the petition. Before dealing with the points raised by the petition it would be necessary to refer briefly to the provisions( of the (45 of 1953), hereinafter called the Act, and the rules framed under it in 1958. This Act was enacted by the Parliament because it was thought expedient in the public interest that the Union should take under its control the coir industry (section 2). Section 4 of the Act provides for the establishment and constitution of the Coir Board and section 10 enumerates its functions and duties. Under section 10(1) it shall be the duty of the Board to promote by such measures as it thinks fit the development under the control of the Central Government of the coir industry. Sub section (2) enumerates the measures which the Board may take with the object of developing the coir industry without prejudice to the generality of the provisions of sub section Amongst the measures thus enumerated, sub section (2) (b) refers to the regulation under the supervision of the Central Government of the production of husks, coir yarn and coir products by registering coir spindles and looms for manufacturing coir products, as also manufacturers of coir products, licensing exporters of coir yarn and coir products and taking such other appropriate steps as may be prescribed. Sub section (2)(g) refers to the promotion of co operative Organisation among producers of husks, coir fibre and coir yarn and manufacturers of coir products, and sub section (2)(1) refers to the licensing of retting places and warehouses and otherwise regulating the stocking and sale of coir fibre, coir yarn and coir products both for internal market and for exports. Section 26(1) confers on the Central Government power to make rules for carrying out the purposes of the Act subject to the condition of previous publication. Sub section (2) enumerates the matters in res pect of which rules may be made, in particular and without prejudice to the generality of the power 782 conferred by sub section Sub section (2) (k) refers inter alia to the registration of manufacturers of coir products and the conditions for such registration and the ,,grant or issue of licences under the Act; and sub section (2)(1) deals with the form of applications for registration and licences under the Act and the fee, if any, to be paid in respect of any such applications. Under the powers conferred by section 26 the Central Government framed rules in 1958. For the purposes of the present petition it would be relevant to refer to rr. 17 to 22. Rule 17 deals with registration and licensing of exports; and it provides that no person shall, after the coming into force of the rule, export coir fibre, coir yarn or coir products unless he has been registered as an exporter and has obtained an export licence under these rules. The proviso deals with exemptions with which we are not concerned. Rule 18 lays down that any person who has in any of the three years immediately preceding the commencement of the rules exported not less than twenty five tons of coir yarn or coir products other than coir rope, or exported any quantity of coir fibre or coir rope, may be registered an exporter of coir yarn, coir products other than coir rope or coir fibre or coir rope as the case may be. Rule 19 provides for the registration of persons other than those covered by r. 18 and it lays down inter alia that such persons may be registered as exporters of coir yarn if, during the period of twelve months immediately preceding the date of application, a minimum quantity of twenty five tons of coir yarn had been rehanked or baled in a factory owned or otherwise possessed by the applicant and registered under the Indian , or, if the applicant has had a total purchase turnover of one hundred tons of coir yarn. The proviso to this rule authorises the Chairman by notification to exempt from the operation of this rule any co operative society the members of which are owners of industrial establishments or any Central Co operative Marketing Society. Rules 20 and 22 prescribe the mode of making an application for registration as an exporter and for licence respectively while r. 21 provides for the 783 cancellation of registration. The present petition does not challenge the validity of any of the provisions of the Act. It, however, seeks to challenge the vires of rr. 18, 19, 20(1)(a), 21 and 22(a). There is no doubt that coir and coir products play an important role in our national economy. They are commodities which earn foreign exchange, the total ' value of our exports in these commodities being of the order of Rupees Ten Crores per year. It was found that several malpractices had crept in the export trade of these commodities such as non fulfilment of contracts, supplying goods of inferior qualities and cut throat competition; and these in turn considerably affected the volume of the trade. That is why Parliament thought it necessary that the Union should take under its control the coir industry in order to regulate its export trade. It is with the object of developing the coir industry that the Coir Board has been established and the registration and licensing of exporters has been introduced. The petitioner does not dispute this position and makes no grievance or complaint against the relevant provisions in the Act. It is, however, urged that the relevant rules which prescribe the quantitative test for the registration of established exporters are ultra vires because the introduction of the said test is inconsistent with the provisions of the Act. In this connection Mr. Pai, for the petitioner, sought to rely on the report submitted by the Ad Hoc Committee for external marketing which the Coir Board had appointed on August 20, 1954. His grievance is that the report of the said Committee does not recommend the adoption of the quantitative test, but seems to suggest that a qualitative test would be more appropriate ; and that, according to Mr. Pai, also indicates that the quantitative test had been improperly prescribed by the rules. We are not impressed by these arguments. It is clear that there is no provision in the Act which excludes or prohibits the application of the quantitative test in making rules for registration of exporters or for issuing licences for export trade. In fact the Act has deliberately left it to the rule making authority to frame rules 784 which it may regard as appropriate for regulating the trade; and so it would be impossible to accept the argument that the rule making authority was bound to prescribe the qualitative rather than the quantitative test. Besides, it does not appear that the report of the Committee on which Mr. pai relied definitely indicated its partiality for the adoption of the qualitative test. Indeed Appx. XI to the said report would suggest that the Committee in fact was not averse to the adoption of a quantitative test; but even if the Committee had expressly recommended the adoption of a qualitative, not a quantitative, :test, it would be idle to suggest that the Coir Board was bound to accept the said recommendation or that the Central Government was not competent to make rules contrary to the recommendations of the Committee. The validity of the rules can be successfully challenged if it is shown that they are inconsistent with the provisions of the Act or that they have been made in excess of the powers conferred on the rule making authority by section 26 of the Act. In our opinion, no such infirmity has been established in respect of the impugned rules. It is then contended that the relevant rules would ultimately tend to establish a monopoly in the export trade of coir commodities and would thereby extinguish the trade or business of small dealers like the petitioner. It is also contended that the application of the quantitative test discriminates between persons carrying on business on a large scale and those who carry on business on a small scale. That is how articles 19 and 14 of the Constitution are invoked and the validity of the relevant rules is challenged on the ground that they violate the fundamental rights of the petitioner under the said Articles. We think there is no substance in this contention. If it is conceded that the regulation of the coir industry is in the public interest, then it would be difficult to entertain the argument that the regulation or control must be introduced only on the basis of a qualitative test. It may well be that there are several difficulties in introducing and effectively enforcing the qualitative test. It is well known that granting 785 permits or licences to export or import dealers on the basis of a quantitative test is not unknown in regard to export and import of essential commodities. It would obviously be for the rule making authority to decide which test would meet the requirements of public interest and what method would be most expedient in controlling the industry for the national ' good. Beside,%, even the adoption of a qualitative test may tend to extinguish the trade of those who do not satisfy the said test; but such a result cannot obviously be treated as contravening the fundamental rights under article 19. Control and regulation of any trade, though reasonable within the meaning of article 19, sub article (6), may in some cases lead to hardship to some persons carrying on the said trade or business if they are unable to satisfy the requirements of the regulatory rules or provisions validly introduced ; but once it is conceded that regulation of the trade and its control are justified in the public interest, it would not be open to a person who fails to satisfy the rules or regulations to invoke his fundamental right under article 19(1)(g) and challenge the validity of the regulation or rule in question. In our opinion, therefore, the challenge to the validity of the rules on the ground of article 19 must fail. The challenge to the validity of the said rules on the ground of article 14 must also fail, because the classification of traders made by rr. 18 and 19 is clearly rational and is founded on an intelligible differentia distinguishing persons falling under one class from those falling under the other. It is also clear that the differentia has a rational relation to the object sought to be achieved by the Act. As we have already pointed out, the export trade in coir com modities disclosed the existence of many malpractices which not only affected the volume of trade but also the reputation of Indian traders; and one of the main reasons which led to this unfortunate result was that exporters sometimes accepted orders far beyond their capacity and that inevitably led to non fulfilment of contracts or to supply of inferior commodities. In 99 786 order to remedy this position the trade had to be regulated and so the intending exporter was required to satisfy the test of the prescribed minimum capacity and to establish the prescribed minimum status before his application for registration is granted. In this connection it may also be relevant to point out that the rules seem to contemplate the granting of exemption from the operation of some of the relevant tests to co operative societies; and that shows that the intention of the Legislature is to encourage small traders to form co operative societies and carry on export trade on behalf of such societies; and so it would not be possible to accept the argument that the impugned rules would lead to a monopoly in the trade. It is thus clear that the main object which the rules propose to achieve is to remove the anomalies and malpractices prevailing in the export trade of coir commodities and to put the said trade on a firm and enduring basis in the interest of national economy. We are, therefore, satisfied that the challenge to the impugned rules on the ground of infringement of article 14 of the Constitution must also fail. In the result we hold that there is no substance in the petition. It accordingly fails and is dismissed with costs. Petition dismissed.

The petitioner, an unsuccessful applicant for registration as an exporter and licensee for exporting coir products, challenged the vires of the rr. 18, 19, 20(1)(a), 21 and 22(a) made by the Central Government in exercise of its powers under section 26(1) of the (45 Of 1953). The Act had for its object the regulation and control of the Coir industry in public interest. It was contended on his behalf that the impugned rules, which prescribed the quantitative, and not the qualitative, test for registration of established exporters, were inconsistent with the provisions of the Act and as such, ultra vires the Act and that they tended to create a monopoly in the export trade of coir commodities and thereby destroy the business of small dealers and discriminated between those who carried on large scale business and those who carried on small scale business and thus impugned articles 19 and 14 Of the Constitution. Held, that the contentions were without substance and must be negatived. There was no provision in the , that excluded or prohibited the application of the quantitative test and the rules were in no way inconsistent with the Act nor in excess of the powers conferred on the Central Government by section 26 of the Act. Where an Act sought to control an industry in public interest it would obviously be for the rule making authority to decide which rules and regulations would meet the requirement of public interest. Such rules and regulations, though reasonable within the meaning of article 19(6), might cause hardship to those who failed to comply with them. But once it was conceded that the regulation and control of the trade were justified in public interest, article 19(1)(g) could not be invoked to challenge the validity of the rules. Nor did the impugned rules violate article 14 Of the Constitu tion. The classification of traders under rr. 18 and 19 was clearly founded on an intelligible differentia that had a rational relation to the object of the Act. The exemption made by the rules in favour of co operative societies from some of the relevant tests indicated that the Legislature intended to encourage small 780 traders. It was not, therefore, correct to say that the rules would lead to a monopoly in the trade.

Civil Appeal No. 280 of 1988. From the Judgment and order dated 20.5.1987 of the Calcutta 820 High Court in Civil order No. 1344 of 1987. Somnath Chatterjee and Rathin Dass for the Appellants. S.N. Kacker, Badar Durrez Ahmed and Parijat Sinha for the Respondents. The Judgment of the Court was delivered by OZA, J. Leave granted. This appeal has been filed aggrieved by the judgment of the High Court of Calcutta dated 20th May 1987 wherein the learned Judge allowed a petition under Article 227 and quashed suo moto proceedings under Sec. 44(2a) of the West Bengal Estates Acquisition Act, 1953 ( 'Act ' for short) and also the appeal which was pending before the lower appellate court under the Act. The proceedings under Article 227 reached the High Court rather in an interesting situation. Suo moto proceedings in 1968 were started by the Revenue officer Tollygunj under Sec. 44(2a) of the Act. There were also proceedings under Sec. 6 clause 5 read with Sec. 47 of the same Act started by Revenue officer and the case was registered as Case No. 22 of 1968. A suit filed in 1969 between parties to which the State of West Bengal was not a party ended in a compromise decree on 6.8.70 and a decree in terms of compromise was drawn up. It was title suit No. 67 of 1969. After the final orders were passed by the Revenue officer in Case No. 22 of 1968 wherein the respondent Ashit Nath Das did not participate and against these final orders a petition was filed in the High Court of Calcutta where rule was issued and by orders of the High Court dated 1.4.81 the rule was made absolute quashing the orders in the said revenue case directing the settlement officer to issue proper notice to Ashit Nath Das as he claimed to be an interested party and dispose of the matter after giving him opportunity of hearing. As a result of this order passed by the High Court on 22.1.82 the proceedings under Sec. 44(2a) of the Act was re opened according to the orders passed by the High Court and on 9.2.82 final orders were passed in these proceedings by the special revenue officer. Against this order Ashit Nath Das preferred an appeal before the 9th Additional District Judge, Alipore who is the competent authority to hear an appeal under this Act which was registered as EA Appeal No. 2 of 1982. On 1.12.83 it appears that Ashit Nath Das obtained an opinion 821 Of the Advocate General of West Bengal regarding the aforesaid proceedings pending in Appeal No. 2 of 1982 before the 9th Additional District Judge, Alipore and filed that opinion with an application in the Court of Additional District Judge. The Additional District Judge passed an order on 25.2.86 rejecting the prayer of the respondent by saying that the opinion of the Advocate General could only be looked into as the ground of appeal on behalf of the appellant and the prayer of the appellant before the Additional District Judge the present respondent that the appeal be disposed of in accordance with the opinion of the Advocate General was rejected. It is interesting to note that such a strange prayer was made and the learned Additional District Judge by his order rejected that prayer. The relevant part of the order reads as under: "It is his case that after the order of the R.O. now impugned in this appeal, his client had made a reference of the matter to the Adv. General, Govt. Of West Bengal and sought for his opinion. It is alleged that the Adv. General had given his opinion that the order of the R.o. was wrong on the basis of this the appellants now want that the appeal should be disposed of as per opinion of the Adv. General because all relevant papers were submitted to him and copy of his opinion and the copy of the petition and copies of the papers were handed over to the State lawyer. " As the learned Judge observed that it could only be considered as a ground. The date of hearing of the appeal was fixed on 19.4.86 to suit the convenience of the advocates of parties. It is against this order that a petition under article 227 was filed before the High Court. Learned counsel appearing for the appellants read through the petition which was filed before the High Court to contend that in fact there was nothing in the order of the Additional District Judge which could be said to be an order against the respondent of which a grievance could be made in a petition under article 227. As regards the date of hearing the learned Additional District Judge had observed in his order that to suit the convenience of advocates appearing in the case 19.4.86 is fixed as the date of hearing Learned counsel for the appellants referred to us paragraph No. 14 of the petition under article 227 in which a ground was specifically raised saying. "It was further contended that the Advocate General had 822 given his opinion that the order of the Revenue officer was wrong and as such on the basis of the said opinion the petitioner wanted that the appeal should be disposed of as per opinion of the Advocate General. " A grievance also was made in this petition that the learned Additional District Judge refused to look into the opinion of the Advocate General except as a ground of appeal on behalf of the appellants. In the grounds in this petition under article 227 one ground urged was that the learned Additional District Judge should have disposed of the appeal in accordance with the opinion of the Advocate General and that should have fixed an early date for the hearing of the appeal and it is significant that nothing on the merits or the validity of the proceedings under Sec. 44(2a) of the Act were challenged in this petition under article 227. The manner in which the petition was entertained in the High Court and the impugned order was passed also is rather interesting. on 18.4.86 it appears that this petition was presented and orders were passed. The presence of the counsel of both the parties is mentioned, thereafter it is stated that further proceedings before the appellate tribunal be stayed and it is further stated that Advocate General is also directed to appear on Friday next (25.4.86) at the first sitting of the Court. Apparently from this what appears is that after asking the Advocate General to remain present the learned Judge kept the matter to be taken up on 25.4.86. It appears that thereafter the case did not appear in the list for hearing as is apparent from the order dated 18.4.86 when rule was not issued and the matter was kept on 25.4.86. It is alleged that this was contested by the State Govt. but neither the parties were called upon to file affidavits nor any rule was issued and subsequently on 13.6.86 this case was shown in the list of the Hon 'ble Judge for judgment but on 13.6.86 the judgment was not delivered and thereafter the case appeared in the list on 20.5.87 for judgment and on this date the judgment was delivered although the file had no number as it appears that rule was not issued and the petition was not even numbered and it is this impugned judgment which is challenged by the State of West Bengal in this appeal in special leave. In this order the learned Judge has treated this petition under article 227 as a revisional application of the petitioner challenging the order passed by Additional District Judge on 25.2.86 which has been referred to above. 823 The learned Judge has reproduced the contention advanced by the counsel for the respondents that the appellate court i.e. 9th Additional District Judge should have disposed of the appeal in accordance with the opinion of the Advocate General and about this contention the learned Judge of the High Court has made the following observation in his impugned judgment: "It is most regretable to note the stand taken by the State in the matter in disregarding the written opinion given by no loss person that the Advocate General of West Bengal showing such scant respect or no respect at all to such opinion and I hudder to think that if such disrespect is shown to the opinion of the Advocate General of West Bengal what should be the position of the Advocate General before the court and also to the State Government". However the learned Judge did not agree that the Additional District Judge should have decided in accordance with the opinion of the Advocate General and we are happy that the 9th Additional District Judge, Alipore did not accede to such a prayer but after the above quoted observation the learned Judge has decided matters which were not raised before the High Court in the petition under article 227. No ground about the validity of 44(2a) proceedings on the basis of Amending Act not getting the assent of President was raised. When the case was fixed for 25th April Friday next directing the Advocate General to remain present, there after it was never heard and it only ultimately resulted in the impugned order. It is not contended even by the learned counsel for the respondents that any additional grounds were urged in the petition under article 227 inviting the Court to consider the matter as to the effect of the Amendment Act, 1969 not receiving the assent of the President and the subsequent Amendment Act receiving the assent of the President and the effect thereto. Unfortunately the learned Judge of the High Court lost sight of the fact that the only grievance against the order of the Additional District Judge was that he refused to decide the appeal in accordance with the opinion of the Advocate General and that he did not give an early date of hearing. This question about the suo moto proceedings under Sec. 44(2a) and the validity of the Amendment Act and its effect were neither considered by the appellate authority and in fact the appeal was still pending before the 9th Additional District Judge which was yet to be heard and disposed of but it appears that the 824 learned Judge of the High Court after examining these legal aspects without having been raised before it decided the matter so that neither appeal remains nor any proceedings remain and in doing so the learned Judge went on without their being proper grounds before it and without giving an opportunity to the present appellant State of West Bengal to have their say in the matter. Under these circumstances it is apparent that the order passed by the learned Judge of the High Court dated 20.5.87 is completely without jurisdiction and on matters which were not before it and also without giving adequate opportunity of hearing and therefore the order deserves to be quashed and is quashed. Apparently therefore the appeal filed by the respondent before the 9th Additional District Judge which was pending when the learned Judge of the High Court passed the impugned order revives and it could not be said that the appeal is disposed of as observed by the learned Judge of the High Court. Consequently it is directed that the appeal which was pending before the 9th Additional District Judge Alipore shall be heard by the learned Additional District Judge in accordance with law. The learned Additional District Judge while hearing and disposing of the appeal shall not be bound or obsessed by any observation made by the learned Judge in the impugned order. In the circumstances of the case parties are directed to bear their own costs. N. V. K. Appeal allowed.

% As a result of the order passed by the High Court, proceedings under section 44(2a) of the West Bengal Estates Acquisition Act, 1953 were re opened by the Special Revenue officer and final orders were passed on 9.2.1982. The Ist respondent preferred an appeal against this order before the 9th Additional District Judge, the competent authority to hear an appeal. On 1.12.83 the Ist respondent obtained an opinion of the Advocate General regarding the aforesaid proceedings, and filed that opinion with an application. The Additional District Judge passed an order on 25.2.86 rejecting the prayer of the Ist respondent that the appeal be disposed of in accordance with the opinion of the Advocate General, but observed that the opinion of the Advocate General could only be looked into as the ground of appeal on behalf of the Ist respondent. The date of hearing of the appeal was fixed on 19.4.86 to suit the convenience of the Advocates of the parties. A petition under article 227 was filed in the High Court against the 818 aforesaid order by the Ist respondent. The High Court treated this petition as a revision application challenging the order passed by the Additional District Judge on 25.2.86, and held that the Additional District Judge should have disposed of the appeal in accordance with the opinion of the Advocate General, and quashed the proceedings under Section 44(2a) as well as the appeal that was pending hearing before the Additional District Judge. Allowing the Appeal by the State this Court, ^ HELD: l. The High Court lost sight of the fact that the only grievance against the order of the 9th Additional District Judge was that he refused to decide the appeal in accordance with the opinion of the Advocate General and that he did not give an early date of hearing. The question about the suo moto proceedings under section 44(2a) and the validity of the Amendment Act, 1969 and its effect were not considered by the appellate authority and in fact the appeal was still pending before the 9th Additional District Judge which was yet to be heard and disposed of. [823G H] 2. The High Court after examining the legal aspect without having been raised before it decided the matter so that neither appeal remains nor any proceedings remain and in doing so the High Court went on without there being proper grounds before it and without giving an opportunity to the appellant State of West Bengal, to have their say in this matter. [824A B] 3. The order passed by the High Court dated 20.5.87 is, therefore, completely without jurisdiction and on matters which were not before it and also without giving adequate opportunity of hearing and, therefore, deserves to be quashed, and is quashed. [824B c] 4. The appeal that was filed by the Ist respondent before the 9th Additional District Judge was pending when the High Court passed the impugned order, revives. It could not be said that the appeal is disposed of as observed by the High Court. It is directed that the appeal which was pending before the 9th Additional District Judge shall be heard by the Additional District Judge in accordance with law. [824C D]

Appeal No. 329 of 1960. 717 Appeal from the judgment and order dated October 28, 1958, of the Punjab High Court in L. P. A. No. 72 of 1958. N. N. Keswani, for the appellant. N. section Bindra and P. D. Menon, for the respondents. August 27. delivered by SHAH, J. The appellant Madan Gopal was appointed an Inspector of Consolidation by order dated October 5, 1953 of the Settlement Commissioner of the Patiala and East Punjab States Union. The appointment was ,on temporary basis and terminable with one Month 's notice". On February 5, 1955, the appellant was served with a "charge sheet" by the Settlement Officer, Bhatinda that he (the appellant) had received Rs. 150/ as illegal gratification from one Darbara Singh and bad demanded Rs. 30/ as illegal gratification from one Ude Singh. The appellant was called upon to show cause why disciplinary action should not be taken against him if the allegations in the charge sheet were proved. The appellant submitted his explanation to the charge sheet. On February 22, 1955, the Settlement Officer submitted his report to the Deputy Commissioner Bhatinda, that the chage relating to recept of illegal gratification from Darbara Singh was proved. The Deputy Commissioner by order dated March 17, 1955 ordered that the services of Madan Gopal Inspector be terminated forthwith and that in lieu of notice be will get one month 's pay as required by the Rules. The appellant requested the Deputy Commissioner to review the order, and also submitted a memorial to the Minister for Revenue affairs. Having failed to obtain relief, the appellant applied to 718 to the High Court of Pepsu for a writ under article 226 of the Constitution quashing the order dated March 17, 1965 on the"ground inter alia that the order of dismissal from service was in contravention of article 311 of the Constitution as no reasonable opportunity to show . cause against the order of dismissal was at all given. He also challenged the authority of the Settlement Officer to hold the enquiry and submitted that the procedure followed by that Officer in making the enquiry was irregular. The petition was transferred to the High Court of Punjab on the reorganization of the State of Punjab. Mr. Justice Bishan Narain who heard the application issued the writ prayed for, because, in his view, the order of termination of employment was in the nature of an order of punishment and an the provisions of article 311(2) had not been complied with by the Enquiry Officer, the. Deputy Commis sioner or the Settlement Commissioner, the order was invalid. In appeal under the Letters Patent, the order was reversed by, a Division Bench of the High Court. The High Court held that the appellant was a temporary servant and had no right to hold the post he was occupying and by the impugned order the appellant was not dismissed or removed from service, but his employment was terminated ,in exercise of authority reserved under the terms of employment, and no penalty was imposed upon the appellant, The appellant was a temporary employee, and hill employment was liable to be terminated by ,, 'notice of one mouth," without assigning. any reason ' The Deputy Commissioner, however, did not act in exercise of this authority : the appellant was served, with a charge sheet setting out his mis demeanour, an enquiry was held in respect of the alleged misdemeanour and his employment was terminated because in the view of the Settlement Officer with 719 which view the Deputy Commissioner agreed. the misdemeanor was proved. Such a termination amounted to casting a ,,stigma affecting his future career". In State of Bihar vs Gopi Kishore Prasad (1), the learned Chief Justice in dealing with cases of termination of service or discharge of public servant on probation set out five propositions of which the 3rd is enunciated thus "But. if instead of terminating such a person 's service without any enquiry, the employer chooses to hold an enquiry into his alleged misconduct, or inefficiency, or for some similar reason, the termination of service is by way of punishment, because it puts a stigma on his competence and thus affects his future career. In such a case, he is entitled to the protection or article 311 (2) of the Constitution. " It is true that in that case the Court was dealing with the case of a public servant on probation whereas the appellant was a temporary employee, but, in principle, it will make no difference whether the appellant was a probationer or a temporary employee. The appellant had been served with a charge sheet that he. had received illegal gratification from one person and had demanded illegal gratification from another. The appellant was given an opportunity to make his defence and it appears that witnesses in support of the charge and in defence were examined before the Settlement Officer. The Settlement Officer reported that on the evidence he was satisfied that the appellant had received Rs. 150/ as illegal gratification and that the appellant did not ,enjoy good reputation and was a person of doubtful integrity". It is now well settled that the protection of article 311 (2) of the Constitution applies as much to a temporary public (1) A.I.R. 1960 S.C. 689, 720 servant as to permanent public servants. By virtue of article 311 of the Constitution the appellant was not liable to be dismissed or removed from service until he had been given reasonable opportunity against the action proposed to be taken in regard to him. The appellant was given no such opportunity and article 311 of the Constitution was therefore not complied with. Counsel appearing for the State of Punjab contended that the order dated March 17, 1955, was not the order pursuant to which employment ' of the appellant was terminated, the effective order being one passed by the Settlement Officer on March 30, 1955. No such order is however found on the record, and it appears that in the written statement filed by the State in the High Court it was expressly admitted that the employment of the appellant was terminated on March 17, 1955. Counsel also contended that enquiry was made by the Settlement Officer for the purpose of ascertaining whether the appellant who was a temporary employee should be continued in service or should be discharged under the terms of his employment, and to "a termination made pursuant to such an enquiry the protection of article 311 (2) of the. Constitution was not attracted, and in support of his submission counsel relied upon a judgment of this Court in the State of Orissa vs Ram Narayan Das (1). In Ram Narayan Das 's case enquiry was made pursuant to Rules governing the conduct of public servants for ascertaining whether the probation of the public servant concerned should be con tinued and a notice to show cause in that behalf was served upon him. On the report of the enquiry officer that the work and conduct of the public servant *as unsatisfactory, an order of termination of employment was passed without affording him an (1) ; 721 opportunity of showing cause against the action proposed to be taken in regard to him. This Court pointed out that the public servant had no right to the post he occupied and under the terms of his appointment he was liable to be discharged at any time during the period of probation. It was observed that mere termination of employment ;does not carry with it "any evil consequences" such as forfeiture of his pay or allowances, loss of seniority, stoppage or postponement of future chances of promotion etc. and, therefore, there was no stigma affecting the future career of the public servant by the order terminating his employment for unsatisfactory work and conduct. "The enquiry against the respondent was for ascertaining whether he was fit to be confirmed. An order discharging a public servant, even if a probationer, in an enquiry on charges of misconduct. negligence, inefficiency or other disqualification, may appropriately be regarded as one by way of punishment. , but an order discharging a probationer following upon an enquiry to ascertain whether he should be confirmed, is not of that nature x x x x x The third proposition in the latter (Gopi Kishore Prasad 's) case refers to an enquiry into allegations of misconduct or inefficiency with a view, if they were found established, to imposing punishment and not to an enquiry whether a probationer should be confirmed. Therefore, the fact of the holding of an enquiry is not decisive of the question. What is decisive is whether the order is by way of punishment, in the light of the tests laid down in Parshotam Lal Dhingra case (1). " In this case the enquiry made by the Settlement Officer was made with the object of ascertaining whether disciplinary action should be taken against the appellant for his alleged misdemeanour. It was clearly an enquiry for the purpose of taking (1) (1958) S.C.R.828. 722 punitive action including dismissal or removal from service if the appellant was found to have committed the misdemeanour charged against him. Such an enquiry and order consequent upon the report made in the enquiry will not fall within the principle of Ram Narayan Das 's case The appeal is therefore allowed and the order passed by the High Court is set aside and the order passed by Mr. Justice Bishan Narain is restored with costs in this Court and the High Court. Appeal allowed.

The appellant, a temporary Government servant, was served with a charge sheet alleging misconduct. An enquiry was held on the charges by the Settlement Officer and the appellant was found guilty. The Deputy Commissioner accepting the findings of the Settlement Officer and without giving a reasonable opportunity to the appellant of showing cause against the action proposed to be taken in regard to him terminated his services after giving him one month 's pay in lieu of one month 's notice. The appellant changed the termination of his service by way of a writ petition before the Punjab High Court. The Single judge granted the writ quashing the order. The Division Bench reversed the Single Judge 's order. Held, that the termination of the appellant 's service which was preceded by an enquiry into his alleged misconduct and based on the finding of misconduct, amounted to casting a stigma affecting his future career, and, then being non compliance with article 311(2) of the Constitution of India in that the appellant was not afforded the opportunity to show cause against the proposed punishment, the order contravened article 311(2) of the Constitution. Purushottam Lal Dhingra vs Union of India, (1958) S, C. R. 828, referred to. State of Bihar vs Gopi Kishore Prasad A. 1. R. 1960 section C. 689, followed. State of Orisa vs Ram Narain Das, ; , distinguished.

Petition No. 13688 of 1983 etc. Under Article 32 of the Constitution of India) T.U. Mehta and S.M. Ashri for the Petitioners. Dr. Y.S. Chitale, G.L. Sanghi, V.C. Mahajan, R.B. Datar, Miss Bina Tamta, S.K. Mehta, M.K. Dua, Aman Vachhar, H.S. Parihar, Vipin Chandra, G.D. Gupta, M.L. Kaicker and V.B. Saharya for the Respondents. Bye law No. 3(1) reads as follows: "3(1). No person shall keep or ply for the hire a cycle rickshaw in Delhi unless he himself is the owner thereof and holds a licence granted in that behalf by the Commissioner on payment of the fee that may, from time to time, be fixed under sub section (2) of section 430. Provided that no person will be granted more than one such licence. No person shall drive a cycle rickshaw for hire unless he holds a driving licence granted in that behalf by the Com missioner on payment of the fee that may, from time to time be fixed under sub section (2) of section 430. " The petitioners are owners of cycle rickshaws. Some of them own two or more cycle rickshaws which are hired out by them to rickshaw pullers under a contract under which the rickshaw pullers have to pay some amount to the owners of the cycle rickshaws at the end of the day out of their earnings during the day. In order to eliminate the exploita tion of rickshaw pullers by the owners of the cycle rick shaws the Delhi Municipal Corporation amended the Cycle Rickshaw Bye laws, 1960 by introducing bye law No.3. Under that bye law only the owner of the cycle rickshaw can obtain a licence to keep a cycle rickshaw or to ply 908 for hire and only one such licence would be issued to a person. By necessary implication it excludes persons who own a number of cycle rickshaws from applying for licences and prohibits the hiring out of the cycle rickshaw by the owner in favour of a rickshaw puller against payment of considera tion. The contention of the petitioners is mainly dependent upon section 48 1(I)L(5) of the Act which reads thus: "481(1). Subject to the provisions of this Act the Corpora tion may, in addition to any bye laws which it is empowered to make by any other provision of this Act, make bye laws to provide for all or any of the following matters. namely: . . . . . . . . . L. Bye laws relating to miscellaneous matters . . . . . . . . . . (5). the rendering necessary of licences (a) for the proprietors or drivers of hackney carriages; cycle rickshaws, thelas and rehires kept or plying for hire or used for hawking articles; . . . . . . . . . " It is argued on behalf of the petitioners that the above provision in the Act does not permit the Corporation to make a bye law which prohibits the issue of licences to the owners of cycle rickshaws who are not themselves rickshaw pullers. It is also urged that the bye law is violative of Article 19(1)(g) of the Constitution. The respondentCorpora tion contends that the impugned bye law No. 3 is within the scope of the authority conferred on it by the Act to make the bye law in question and that it is not opposed to Arti cle 19(1)(g). The constitutional validity of a similar provision in the Punjab Cycle Rickshaws (Regulation of Licence) Act, 1976 (Punjab Act 41 of 1975) came up for consideration before this Court in Azad Rickshaw Pullers Union (Regd) Ch, Town Hail, Amritsar & Ors., etc. vs State of Punjab & Others, ; In the course of its judgment the Court approved a scheme flamed for providing financial assistance to the richshaw pullers for acquiring cycle rickshaws. The 909 provision of the Act which was impugned in that petition was, however, left untouched. On the same date this Court pronounced another judgment in Nanhu & Ors., etc. vs Delhi Administration & Ors., ; in which the very same bye law with which we are concerned in these cases came up for consideration. That case was disposed of by this Court by a short order which reads thus: "We have disposed of today applications from cycle rickshaw pliers of Amritsar Municipality where a scheme has been worked out to help them become owners of cycle rickshaws. A similar scheme, says the Solicitor General appearing for the Delhi Administration, will be extended to the Delhi territo ry. We, therefore, annex a copy of the judgment in Writ Petitions Nos. 839 of 1979 and 563 of 1979 Azad Rickshaw Pullers Union, Amritsar and others vs State of Punjab & Others and Nanak Chand and Others vs State of Punjab and Others, respectively to this judgment. There is another problem which arises in these two cases and that is that the Delhi Administration has put a ceiling on the total number of cycle rickshaws permissible to be plied within its territory perhaps we do not know for certain this number may not accommodate all the applicants for cycle rickshaws plying licencees. We are told that apart from the applicants in this Court under Article 32 of the Constitution, there are numerous petitioners who have ap proached the High Court of Delhi under Article 226 of the Constitution and yet others who have filed suits in civil courts for the same relief. All that we can do is to accept the suggestion made by the learned Solicitor General that the Delhi Administration will effectively publicize and notify applications for licencees for plying of cycle rick shaws and all those who apply will be considered on their merits including length of service as cycle rickshaw pliers. The criteria that the Delhi Administration will adopt must be reasonable and relevant; otherwise it will be open to the aggrieved parties to challenge the selection. Likewise we do not want to fetter the rights of parties aggrieved if the ceiling upon the total number of rickshaws permissible within the Delhi territory is arbitrary. On the basis of reasOnable criteria the Delhi Administra 910 tion will direct the concerned Municipal authorities to grant licences for plying rickshaws and if the applicants so chosen are not owners themselves all the facilities we have indicated in the Amritsar order will be extended to such cycle rickshaw pliers fixing reasonable time limits. With these directions we dispose of the applications. Until fresh licences are issued by the Delhi Administration and the Municipal authorities the present petitioners will be al lowed to ply their cycle rickshaws. " It is clear from the above order that this Court did not say anything about the constitutional validity of bye law No. 3. We, however, find on a consideration of the language of clause (5) in section 481(1)L of the Act that the bye law falls within the scope of the power conferred on the Corpo ration to frame bye laws for the issue of licences in re spect of cycle rickshaws which are kept or used for plying in the Delhi Municipal Corporation area. While framing bye laws under the above statutory provision it is permissible for the Corporation to restrict the issue of licences only to the owners of the rickshaws who themselves act as rick shaw pullers. This is apparently done to prevent exploita tion of the rickshaw pullers by the owners of the cycle rickshaws. A licensing authority may impose any condition while issuing a licence which is in the interest of the general public unless it is either expressly or by necessary implication prohibited from imposing such a condition by the law which confers the power of licensing. The restriction imposed by the Corporation in the present case is according to us in the interest of the general public. In Man Singh and Others vs State of Punjab and Others, the petitioners contended that the provision in the Punjab Cycle Rickshaw (Regulation of Licence) Act, 1976 was viola tive of Articles 19(1)(g) and 21 of the Constitution as also Articles 14 and 16 of the Constitution. This Court negativ ing the said contention observed thus: "In the instant case, section 3 of the Punjab Act has the effect of making it possible for the rickshaw puller to ply the rickshaw as owner of the vehicle and thereby to be the full owner of the income earned by him. No longer will he be obliged to part with an appreciable portion of that income in favour of another who owns the vehicle. The Punjab Act is beneficial legislation bringing directly home to the rick shaw puller the entire fruit of his dally toil. The enact ment is intended as a social welfare measure against the exploitation of the poor and unemployed by rapacious 911 cycle rickshaw owners who by reason of their superior finan cial resources fatten their wealth from the sweated toil of rickshaw pullers. Even if we look at the impugned legisla tion from the point of view of its impact on the fundamental right of rickshaw owners who give them on hire to rickshaw pullers for plying, it is plain that the legislation consti tutes a reasonable restriction on the right of such rickshaw owners to carry on the business of hiring out cycle rick shaws inasmuch as the exercise of the right is excluded by legislation designed for the economic and social welfare of rickshaw pullers, who constitute a significant sector of the people, a sector so pressed by poverty and straightened by the economic misery of their situation that the guarantee of their full day 's wages to them seems amply justified. " We do not, therefore, find any ground to set aside the bye law in question either on the ground that it is outside the scope of section 48 1 of the Act or on the ground that it is opposed to the provisions of the Constitution. The above contentions, therefore, fail. During the pendency of these proceedings the Court issued notices to the Punjab National Bank, the Bank of Baroda and the State Bank of India and also the Credit Guarantee Corporation of India (Small Loans) to ascertain whether the banks are willing to extend financial assistance to the rickshaw pullers to acquire the ownership of cycle rickshaws and to ply them within the Corporation area and also to ascertain whether the Credit Guarantee Corporation of India Small (Loans) would guarantee the loans advanced to the rickshaw pullers. The learned counsel for these banks and the Credit Guarantee Corporation of India (Small Loans) have submitted that the banks are willing to advance upto Rs.2,000 by way of loan at reasonable rate of interest to the rickshaw pullers on the security of the cycle rickshaws owned by them in order to assist the rickshaw pullers to acquire the cycle rickshaws. The banks have put forward before the Court two schemes: (1) the scheme for finance to cycle rickshaw pullers, and (2) Self employment programme for urban poor (SEPUP) under which it is possible for them to give financial assistance to the rickshaw pullers. The Credit Guarantee Corporation of India (Small Loans) is agreeable to guarantee the repayment of loans advanced to the rickshaw pullers. The Corporation authorities are agree able to issue necessary eligibility certificates to the rickshaw pullers to obtain the loan. 912 In view of the above submissions, we direct the several branches of the Punjab National Bank, the Bank of Baroda and the State Bank of India operating in Delhi to give financial assistance to rickshaw pullers who wish to own cycle rick shaws and ply them under licences issued by the Corporation subject to their producing the necessary eligibility certif icate issued by the Corporation and satisfying the other terms of the Schemes referred to above. We also direct the Delhi Administration to comply with the directions issued by this Court in Nanhu & Others (supra). In the course of the argument the learned counsel for the petitioners incidentally made a complaint about the seizure of cycle rickshaws by the Corporation officers without issuing an acknowledgment to the owners whenever they found that the cycle rickshaws were being used on the roads contrary to the rules. The learned counsel for the Corporation stated that whenever the cycle rickshaws are seized written acknowledgments will be issued to the owner if he is found near the cycle rickshaw at the time of its seizure. We record the above statement made on behalf of the Corporation. These petitions are accordingly disposed of. No costs. S.R. Petitions disposed of.

Section 481(1) of the Delhi Municipal Corporation Act, 1957 empowers the Corporation to make additional bye laws to the existing ones. Under the power so conferred the Corpora tion introduced Byelaw No.3(i) in the Cycle Rickshaw Bye laws, 1960, under which only an owner of the cycle rickshaw can obtain a licence to keep a cycle rickshaw or to ply for hire and only one such licence would be issued to a person. By necessary implication it excludes persons who own a number of cycle rickshaws from applying for licences and prohibits the hiring out of the cycle rickshaw by the owner in favour of a rickshaw puller against payment of considera tion. The Writ Petitioners are owners of cycle rickshaws. Some of them own two or more cycle rickshaws which are hired out by them to rickshaw pullen under a contract under which the rickshaw pullen have to pay some amount to the owners of the cycle rickshaws at the end of the day out of their earnings during the day. Being aggrieved by the introduction of Bye law No.3(i), they have moved the Supreme Court under Article 32 of the Constitution that the said Bye law is opposed to Article 19(1)(g) of the Constitution and also outside the scope of section 481 (1)L(5) of the Delhi Municipal Corpora tion Act, 1957. Dismissing the petitions, the Court, 906 HELD: 1.1 On a consideration of the language of clause (5) in section 481(1) L of the Delhi Municipal Corporation Act, 1957, it is clear that Bye law 3(1) falls within the scope of the power conferred on the Corporation to frame bye laws for the issue of licences in respect of cycle rickshaws which are kept or used for plying in the Delhi Municipal Corporation area. While framing bye laws under the above statutory provision it is permissible for the Corpora tion to restrict the issue of licences only to the owners of the rickshaws who themselves act as rickshaw pullers. This is apparently done to prevent exploitation of the rickshaw pullen by the owners of the cycle rickshaws. A licensing authority may impose any condition while issuing a licence which is in the interest of the general public unless it is either expressly or by necessary implication prohibited from imposing such a condition by the law which confers the power of licensing. The restriction imposed by the Corporation in the present case is in the interest of the general public. [910C E] 1.2 The Bye law No.3(1) cannot therefore be said to be either outside the scope of section 481 of the Corporation Act or opposed to the provisions of the Constitution. [911D] Azad Rickshaw Pullers Union (Regd) Ch. Town Hall, Amrit sar & Ors. vs State of Punjab & Ors., [1981] 1 SCR366 and Nanhu & Ors. etc. vs Delhi Administration & Ors., ; , referred to. Man Singh & Ors. vs State of Punjab & Ors., , followed. (The Court approved the two schemes of financial assist ance, put forward, at its instance, by the Bank of Baroda and the State Bank of India and the willingness of the Credit Guarantee Corporation of India (Small LOans) to guarantee the repayment of the loans advanced to the rick shaw pullers and directed, accordingly, the several branches of the Punjab National Bank, the Bank of Baroda and the State Bank of India operating in Delhi to give financial assistance to rickshaw pullers who wish to oWn cycle rick shaws and ply them under licences issued by the Corporation subject to their producing the necessary eligibility certif icate issued by the Corporation and satisfying the other terms of the Schemes, namely (i) the scheme for financial to cycle rickshaw pullers; and (ii) self employment programme for urban poor (SEPUP). The court also directed the Delhi Administration to comply with the directions issued in Nanhu

Civil Appeal No. 2720 of 1972. From the Judgment and order dated 29/30 8 72 of the Gujarat High Court in Special Civil Appeal No. 315 of 1971. T.U. Mehta and M.N. Goswami for the Appellant. Vimal Dave, M.N. Shroff and KMM Khan for the Respondents. The Judgment of the Court was delivered by KANIA, J. This is an Appeal against the judgment of a Division Bench of the Gujarat High Court dismissing a writ petition filed by the Appellant herein. The Appeal has been filed on a certificate of fitness granted by the Gujarat High Court under Article 133(1)(c) of the Constitution. The main challenge in the writ petition was to the vires of sections 4 and 6 respectively of the Land Acquisition Act, 1894. That challenge no longer survives in view of the validity of the sections having been upheld by this Court in Manubhai Jehtalal Patel and Anr. vs State of Gujarat and others, The lands in question are situated at village Bhairav, Taluka Kamrege, District Surat, Gujarat. The said lands are situated on the bank of the river Tapti which is known for its frequent floods and the lands are covered in Survey No. 2. The said lands admeasure 1 acre and 39 gunthas. We propose to refer to the said lands in the aggregate as "the said land". The said land is also known as the "Maksheshwar Mahadev Land". The Appellant claims to be the occupant and owner of the entire land comprising in Survey No. 2 which includes the said land. It may be mentioned that the claim of the Appellant to be the owner and 779 Occupier of the said land is based on his being the senior member of his family but we are not concerned with that question as we propose to proceed on the footing that he is in actual occupation of the said land. The preliminary notification declaring the intention to acquire the said land was issued under section 4 of the Land Acquisition Act, 1894 and published in the Government Gazette of the State of Gujarat on April 30, 1970. It was notified that the proposed acquisition was for a public purpose, namely, for extension of the village site of the village Bhairav. It is common ground that the extension of the village site was required for the purpose of housing 12 families who had been rendered homeless because of floods in Tapti river. An individual notice under section 4 of the Land Acquisition Act was served on the Appellant on May 2, 1970. The Appellant filed his objections against the proposed acquisition on May 12, 1970 and filed additional objections on June 20, 1970 and July 6, 1970 respectively. After consideration and rejection of the said objections, the notification for acquisition of the lands under section 6 of the Land Acquisition Act was issued on December 8, 1970. Notices under section 9 of the Land Acquisition Act were issued on January 8, 1971. The said acquisition was challenged by the Appellant in the writ petition on various grounds. The main ground on which the said acquisition was challenged in the writ petition was that the provisions of sections 4 and 6 respectively of the Land Acquisition Act were ultra vires the Constitution of India. That challenge, as we have already pointed out, has been finally negatived by this Court. In view of this, Mr. Mehta fairly conceded that the vires of sections 4 and 6 of the Land Acquisition Act could no longer be called in question before us. It was, however, pointed out by him that the said notification was also challenged on some other grounds. It was contended by Mr. Mehta that under the provisions of the Bombay Land Revenue Code, 1879, it must be established that the lands in the existing village site are insufficient for the extension of the village site before any acquisition can be resorted to. It was submitted by Mr. Mehta that before the said land could be acquired for the afforested public purpose, the revenue authorities should have satisfied themselves that there were no unoccupied lands in the village which were suitable, appropriate and available for the extension of the village site or abadi and since that has not been done, the acquisition could not said to be for a public purpose. Mr. Mehta sought support for these submissions from the decision of a Division Bench of the Nagpur Bench of the Bombay High Court in Chandrabhagabai Undha 780 orao and others vs Commissioner, Nagpur Division, Nagpur & Ors. ,[1962] Nagpur Law Journal, Vol. XLV at p. 466. It was held in that case that the provisions of section 226 of the Madhya Pradesh Land Revenue Code require that the Deputy Commissioner of the District or any other person authorised under law by him must record a finding that the village abadi is insufficient and that there is no other unoccupied land suitable for the purpose of extension of the village abadi before land could be compulsorily acquired for that purpose. The decision as to the sufficiency or otherwise of the land in the abadi must be taken by the Deputy Commissioner. The Land Acquisition officer cannot substitute his opinion for that of the Deputy Commissioner in purporting to comply with the provisions of section 226. Reliance was also placed by Mr. Mehta on the decision of a Division Bench (Nagpur) of the Bombay High Court, in Sitaram Maroti vs State of Maharashtra, [1963] 65 Bombay Law Reporter, 241 which is to the same effect as the aforesaid decision and, in fact, follows it. It was submitted by Mr. Mehta that the provisions of section 226 of the Madhya Pradesh Land Revenue Code were substantially similar to the provisions of section 126 of the Bombay Land Revenue Code which is really the provision applicable to the lands in question before us. We are totally unable to accept the submission of Mr Mehta that the provisions referred to above are in pari materia. Section 226 of the Madhya Pradesh Land Revenue Code provides as follows: "226. (1) Where the area reserved for abadi is in the opinion of the Deputy Commissioner insufficient, he may reserve such further area from the unoccupied land in the village as he may think fit. (2) Where unoccupied land for purposes of abadi is not available, the State Government may acquire any land for the extension of abadi and the Deputy Commissioner shall dispose of such land on such terms and conditions as may be prescribed. (3) The provisions of the Land Acquisition Act, 1894 shall apply to such acquisition and compensation shall be payable for the acquisition of such land in accordance with the provisions in that Act." A perusal of the said section shows that before the State Government 781 acquires any land for extension of abadi, the Deputy Commissioner has to give his opinion that the area reserved for abadi in the village in question in insufficient. A reading of sub section (2) of the said section shows that it is only where unoccupied land for the purpose of abadi is not available, that the State can acquire any land for extension of abadi. Sub section (3) merely makes the provisions of the Land Acquisition Act applicable to the procedure for acquisition and for determining the compensation. The provisions of section 126 of the Bombay Land Revenue Code, 1879 read altogether differently. The said section runs as follows: "126. Limits of sites of villages, towns and cities how to be fixed. It shall be lawful for the Collector or for a survey officer, acting under the general or special orders of the State Government, to determine what lands are included within the site of any village, town, or city, and to fix, and from time to time to vary the limits of the same, respect being had to all subsisting rights of landholders. " A perusal of section 126 of the Bombay Land Revenue Code shows that unlike section 226 of the Madhya Pradesh Land Revenue Code, there is nothing in section 126 which indicates that the Collector or a Survey officer acting under his orders has to first decide to enlarge or vary the site of any village, town or city before acquisition is resorted to for enlarging or varying such site under the Act. Section 126 merely deals with the limits of the site of any village, town or city and prescribes the procedure for fixing the limits of such sites. There is nothing in the Bombay Land Revenue Code or the Land Acquisition Act which would suggest that before acquisition can be resorted to for enlarging a village site, the Collector or a Survey officer or Revenue Authority must decide upon such enlargement. Great emphasis was laid by Mr. Mehta on the last part of section 126 which shows that the enlargement of the site has to be made, keeping in mind the rights of the landholders. However, in our opinion, this factor is of no relevance in the present case as there is nothing on record to establish that such rights have not been taken into account. The next submission of Mr. Mehta was that the land acquisition authorities have failed to consider what were the other lands available which could have been more conveniently acquired for the public purpose referred to earlier. It was pointed out by him that in the writ petition, the Appellant (petitioner) has alleged that he could have 782 pointed out certain other lands and open spaces where the twelve families rendered homeless by the floods of Tapti river could have been housed. With reference to these allegations, the Respondents in their counter affidavit filed before the Gujarat High Court have rightly pointed out that the Appellant had not given any details regarding other more suitable lands available for acquisition and hence it was not open to him to make a grievance on that score. Moreover, in paragraph 29 of the counter affidavit, the Respondents have pointed out that the lands referred to by the Appellant in his petition were not suitable for housing the victims of the floods because they were lowlying lands lands and not suitable for residential purposes. The assessment of suitability of the land proposed to be acquired for the concerned public purpose is primarily for the Land Acquisition officer consider and no good reason has been shown to us which could warrant interference with his decision. Moreover, we are satisfied that the Appellant had not even given proper particulars of the other lands which, according to him, were available for acquisition and were more suitable for acquisition and hence he can make no grievance on the score of proper consideration not having been given to the question of acquiring such lands. It was lastly submitted by Mr. Mehta that since several years had passed from the date of the Notification under section 4, the victims of the floods must have been housed and rehabilitated elsewhere and hence the public purpose for which the lands were sought to be acquired does not survive. We are a little surprised at this argument. The delay has taken place on account of the legal proceedings adopted by the Appellant himself and by reason of the interim orders obtained by him. He cannot take advantage of this delay and claim that the public purpose no longer survives. Moreover, the public purpose stated in the Notification is the extension of a village site or goathan of the village Bhairav and there is nothing to show that this public purpose has exhausted itself. In fact, we presume, on account of the increasing population, it will be more necessary today that the village site should be extended even then it was the time when the notification was issued. This submission must also fail. The other controversies sought to be raised by the Appellant are factual in nature and we do not consider it necessary to go into the same. In the result, the Appeal fails and is dismissed with costs. N.V.K Appeal dismissed.

% The lands of the appellant were situated on the banks of the river Tapti known for its frequent floods. They were sought to be acquired under the Land Acquisition Act, 1894. The preliminary notification declaring the intention to acquire the said land was issued under section 4 of the act and published in the Government Gazette on April 30, 1970. It was notified that the proposed acquisition was for the public purpose for extension of the village site for the purpose of housing 12 families who had been rendered homeless because of floods in the Tapti river. An individual notice under section 4 of the Act was served on the Appellant on May 2, 1970. He filed his objections against the proposed acquisition on May 12, 1970 and filed additional objections on June 20, 1970 and July 6, 1970 respectively. After the consideration and rejection of the said objections, the notification of the lands under section 6 was issued on December 8, 1970. Notices under section 9 were issued on January 8, 1971. The appellant challenged the aforesaid acquisition in a writ petition in the High Court on various grounds, the main ground being that the provisions of sections 4 and 6 of the Act were ultra vires the Constitution. The High Court dismissed the petition, but granted a certificate of fitness under Article 133(t)(c) of the Constitution. 777 In the appeal to this Court on behalf of the appellant it was conceded: (1) that the vires of sections 4 and 6 could no longer be called in question, but it was submitted that (t) under the provisions of the Bombay Land Revenue Code, 1879 it must be established that the lands in the existing village site are insufficient for the extension of the village site before any acquisition can be resorted to, (2) the land acquisition authorities had failed to consider what were the other lands available which could have been more conveniently acquired, and (3) since several years have passed from the date of the Notification under section 4, the victims of the floods must have been housed and rehabilitated elsewhere and hence the public purpose for which the lands were sought to be acquired does not survive. Dismissing the Appeal the Court, ^ HELD: t. The challenge to the vires of sections 4 and 6 of the Land Acquisition Act, 1894 no longer survive in view of the validity of the sections having been upheld by this Court in Manubhai Jehtalal Patel and Anr. vs State of Gujarat and others, ]983 4 SCC 553. [778F] 2. Section 126 of the Bombay Land Revenue Code merely deals with the limits of the site of any village, town or city and prescribes the procedure for fixing the limits of such sites. There is nothing in the Bombay Land Revenue Code or the Land Acquisition Act which would suggest that before acquisition can be resorted to for enlarging a village site, the Collector or a Survey officer or Revenue Authority must decide upon such enlargement. [781E F] Chandrabhagabai Udhaorao and others vs Commissioner, Nagpur Division, Nagpur Ors., [1962] Nagpur Law Journal, Vol. XLV at p. 466 and Sitaram Maroti vs State of Maharashtra, [1963] 65 Bombay Law Reporter, 241 distinguished. The assessment of suitability of the land proposed to be acquired for the concerned public purpose is primarily for the Land Acquisition officer to consider, and no good reason has been shown on behalf of the appellant which could warrant interference with his decision. Moreover, the appellant had not even given proper particulars of the other lands which, according to him, were available and were more suitable for acquisition and hence he can make no grievance on the score of proper consideration not having been given to the question of acquiring such lands. [782BC D] 778 4. The delay in the acquisition has taken place on account of the legal proceedings adopted by the Appellant himself and by reason of the interim orders obtained by him. He cannot take advantage of this delay and claim that the public purpose no longer survives. Moreover, the public purpose stated in the Notification is the extension of a village site or goathan of the village Bhairav and there is nothing to show that the public purpose has exhausted itself. In fact, on account of increasing population, it would be more necessary today that the village site should be extended even then it was at the time when the notification was issued.[782E F]

Civil Appeal No. 1153 of 1975. Appeal by Special Leave from the Judgment and order dated the 29th November 1974 of the Mysore High Court at Bangalore Writ Petition No. 117 of 1973. section V. Gupte, K. R. Nagaraja for the Appellant. Shyamla Pappu (Mrs.) for Respondent No. 3. The Judgment of the Court was delivered by Gupta, J. on the application of the appellant the Regional Transport Authority, Mandya, granted him. a contract carriage permit on February 8, 1972, valid for the entire State of Karnataka. The grant was cancelled by the Karnataka State Transport Appellate Tribunal by its order dated August 19, 1972 on appeal preferred by the third respondent, Karnataka State Road Transport Corporation. The appellant filed a writ petition in the High Court of Karnataka at Ban galore challenging the order of the Appellate Tribunal. The High Court dismissed the petition by its order dated November 29, 1 974 agreeing with the Appellate Tribunal that the Regional Transport Authority, Mandya, had no jurisdiction to grant permits valid throughout the State of Karnataka in view of the first proviso to sub section (1) of section 45 of the (hereinafter referred to as the Act). The correctness of that decision is questioned by the appellant in this appeal by special leave. Section 45(1) with its first proviso which is the only part of the section relevant for the present purpose is in these terms: General provision as to applications for permits. 30 "45 (1) Every application for a permit shall be made to the Regional Transport Authority of the region in which it is proposed to use the vehicle or vehicles: Provided that if it is proposed to use the vehicle or vehicles in two or more regions lying within the same State, the application shall be made to the Regional Transport Authority of the region in which the major portion of the proposed route or area lies, and in case the portion of the proposed route or area in each of the regions is approximately equal, to the Regional Transport Authority of the region in which it is proposed to keep the vehicle or vehicles :" As its marginal note indicates, section contains a general provision regulating applications for permits. The proviso, quoted above, lays down that where the applicant for a permit proposes to use his vehicle in two or more regions in the same State, the application must be made to the Regional Transport Authority within whose jurisdiction the major portion of the proposed route or area lies. The appellant had asked for a contract carriage permit that would be valid throughout the State of Karnataka which meant that he proposed to use his vehicle in all the different regions lying in the State. The second proviso to section 44(1) of the Act lays down that the area specified as the region of a Regional Transport Authority shall not be less than an entire district, or the whole area of a Presidency town. In the State of Karnataka there are 19 Regional Transport Authorities, one for each district in the State. In terms of the first proviso to section 45 (1), an application for an inter regional permit that the appellant was asking for had to be made to the Regional Transport Authority of the region that included the major portion of the proposed area. The question debated before the appellate tribunal and the High Court was whether the area lying within the jurisdiction of the Regional Transport Authority, Mandya, was larger than the area within the region of any other Regional Transport Authority in the State, and in that context the meaning of the term 'area ' in the first proviso to section 45 (1) arose for consideration. According to the applicant for the permit, 'area ' in section 45 meant the extent of motorable tract in the region, and the Regional Transport Authority, Mandya, agreeing with this interpretation of the word 'area ' found that the 'Mandya Region has more motorable roads than any other district in the State". The appellate tribunal and the High Court both refused to accept this meaning of 'area ' which they held to mean plain geographical area and as the Regional Transport Authority, Mandya, was admittedly not the largest district in that State, the High Court dismissed the writ petition and affirmed the decision of the appellate tribunal that the grant of permit was without jurisdiction. Before proceeding to consider the merits of the rival contentions as to the meaning of the word 'area ' in the first proviso to section 45(1), it would be helpful to refer to certain other provisions of the Act which seem to be relevant in this context. The appellant had asked for a contract carriage permit. Section 2(3) defies a contract carriage as a motor vehicle which carries passengers for hire or reward under a contract for the use of the vehicles as a whole either on a time basis or 31 from one point to another, and in both cases without stopping to pick up or set down along the line of route passengers not included in the contract. A motor vehicle is defined in section 2(18) as a mechanically propelled vehicle 'adapted for use upon roads '. Section 49 lays down the particulars that an application for a contract carriage permit shall contain, and the 'area ' for which the permit is required is one of the matters that the application must state. The word route which has been used in association with 'area ' in section 45(1) is defined by section 2(28A) as "a line of travel which specifies the highway which may be traversed by a motor vehicle between one terminus and another." Section 2(1) defines 'area ' as follows: " "area", in relation to any provision of this Act, means such area as the State Government may, having regard to the requirements of that provision, specify by notification in the official Gazette;" The terms and expressions defined in section 2 will apply only if there is nothing repugnant in the subject or context as the opening words of the section indicate. The first proviso to section 45 (1) speaks of the route or area proposed in an application for a permit and, as such, there can be no question here of the State Government specifying the area. Clearly, the definition of area in section 2(1) has no relevance in this context. The question therefore remains to be answered, whether 'area` in section 45(1) has been used in the wider sense of geographical area, or it means only the area of motorable roads ? The section uses both the words, 'route ' and 'area ', whichever is applicable in a given case. A route as defined is a line of travel between two termini on a highway, but the idea of a route as a notional line that the definition suggests has not been consistently maintained in the Act. In Dosa Satyanarayanamurty etc. vs The Andhra Pradesh State Road Transport Corpn. (1) this Court observed: "There is no inherent in consistency between an "area" and a "route". The proposed route is also an area limited to the route proposed. " A similar observation was made in C.P.C. Motor Service, Mysore vs The State of Mysore(2) that in the scheme of the Act, by the word "route" is meant "not only the notional line but also the actual road over which the omnibuses run". Of course, it would not be correct to say that the Act recognizes no distinction between 'route ' and 'area '. A route may mean not only the notional line of travel between one terminus and another, but also the area of the road over which the motor vehicles ply, yet the two terms are not interchangeable; as pointed out in C.P. Sikh Regular Motor Service etc. vs The State of Maharashtra,(3) "a route is an area plus something more". This "something" is the notional line of travel between two termini which distinguishes a route ` from an area simpliciter. The first proviso to section 45(1) speaks of "route or area" apparently making a distinction between them to cover applications relatable to either. A contract carriage does not ply along a fixed route or routes but over an area, which is why an application for a contract carriage permit has to contain a statement as to the proposed area. (1) (644). (2) [1962 Supp. (1) S.C.R. 717 (725). (3) ; 32 All the decisions to which we have referred above have taken the view that by area is meant the road, the physical tract, over which the motor vehicles ply without reference to any notional line of travel. Of course, this meaning was given to the word 'area ' in the context of the provisions of the Act considered in these cases, in none of which section 45 came up for consideration. We do not however find any reason to think that 'area ' in section 45 ( 1 ) has a different connotation. Except that the territorial jurisdiction of the regional transport authorities is fixed in terms of geographical area districtwise in the State of Karnataka 'area ' in that wider sense is irrelevant to the purposes of the Act. Counsel for the respondent, Mysore State Road Transport Corporation, Bangalore, built an argument on the provisions of section 12 of the Act that the meaning of 'area ' is not restricted only to the area of motorable roads in a region. Section 42 prohibits the use of a transport vehicle in any public place except in accordance with the conditions of a valid permit. A transport vehicle includes a motor vehicle used for the carriage of passengers [section 2(33) and section 2(25). Public place has been defined by section 2(24) of the Act as "road, street, way or other place, whether a thoroughfare or not, to which the public have a right of access, and includes any place or stand at which passengers are picked up or set down by a stage carriage". lt was argued that a contract carriage which does not ply on a fixed route could be used in any public place which need not necessarily be a road; this, according to counsel, indicated that the word area occurring in section 45(1) meant geographical area and not motorable roads only. We do not find it possible to accept this contention. Assuming that a contract carriage could be used in places which are not really roads, the fact remains that a contract carriage being a motor vehicle is intended for use upon roads, and any casual use of it in places other than roads is not decisive on the interpretation of the word area. The prohibition against the use of transport vehicles in public places which are not roads serves to repel a possible claim that for using a motor vehicle in places which cannot be called roads no permit was necessary. We hold therefore that the word area in the first proviso to section 45(1) of the Act means the area of motorable roads within the territorial jurisdiction of a regional transport authority. The Regional Transport Authority, Mandya, held that it had within its jurisdiction the largest area of motorable roads in the State of Karnataka, and this finding has not been disturbed by the appellate tribunal. The appellate tribunal thought that the expression "motorable roads" was vague as the area comprising of motorable roads would be changing from time to time", but the jurisdiction of a regional transport authority to grant an inter regional permit depends on the existing area of motorable roads when an application for a permit is made. In the course of arguments before us doubts were expressed on the reasonableness of a provision which requires an application for an inter regional permit to be made to the regional transport authority of the region in which the major portion of the proposed route or area lies when section 63 of the Act provides elaborate checks and lays 33 down conditions for the validation of permits for use outside the region in which it has been granted. It was submitted that in view of the provisions of section 63 there was no point in insisting on the application being made to the Regional Transport Authority of any particular region. We see the logic of this submission, but this is a matter of policy on which the court has no say. However, the policy itself does not appear to have been stated very clearly. On the provisions as they are it is difficult to say that the construction put forward on behalf of the third respondent is altogether implausible. It is also true that there can be practical difficulties, whichever interpretation was adopted. This being the position we should have thought that instead of leaving the law in such a slippery state, the State should clarify it by appropriate legislation so that the law may be clear and easily ascertainable by the concerned section of the public. The appeal is allowed and the impugned order including the order of the Mysore State Transport Appellate Tribunal is set aside. We make it clear that all we have decided in this case is that the Regional Transport Authority, Mandya, had jurisdiction to issue the permit to the appellant, whether the permit satisfies the other conditions of a valid inter regional permit did not arise for consideration in this appeal In the circumstances of the case we make no order as to costs. S.R. Appeal allowed.

Section 45(1) of the , a general provision regulating applications for inter regional route permits within a State requires an application to be made to the appropriate Regional Transport Authority mentioned in the proviso thereto namely, either to the Regional Transport Authority of tho region in which the major portion of the proposed route or area lies or to the Regional Transport Authority of the region in which it is proposed to keep the vehicle or vehicles in case the portion of the proposed route or area in each of the regions are approximately equal. The appellant applied for a contract carriage permit that would be valid throughout the State of Karnataka, which meant that he proposed to use his vehicle in all the nineteen regions, to the Regional Transport Authority, Mandya, who granted him on 8 2 1972 a contract carriage permit valid for the entire State of Karnataka. The permit was granted as Mandya region has more motorable roads than any other district in the State. On appeal preferred by the State Road Transport Corporation, taking the view that geographically Mandya region was smaller in area and, as such, the jurisdiction of the Regional Transport Authority, Mandya was ousted, the permit granted to the appellant was cancelled by the State Transport Appellate Tribunal by its Order dated 19 8 1972, resulting in a writ Proceedings before the Karnataka High Court which was dismissed. On appeal by Special Leave, the Court, ^ HELD: (1) The word "route" which has been used in association with "area specifically notified by the State Government". However, the terms and "a line of travel which specifies the highway which may be traversed by a motor vehicle between one terminus and another". Section 2(1) defines "area" as "area specifically notified by the State Government". However, the terms and expressions defined in section 2 will apply only if there is nothing repugnant in the subject or context. Tho first proviso to section 45(1) speaks of the route or area proposed in an application for a permit and, as such, there can be no question of the State Government specifying the area. The definition of "area" in section 2(1) has therefore no relevance in this context. [31B D] (2) section 45 uses both the words "route" and "area" whichever is applicable in a given case. A route as defined is a line of travel between two termini on a highway, but the idea of a route as a notional line that the definition suggests has not been consistently maintained in the Act. [31D E] (3) A route may mean not only the notional line of travel between one terminus and another, but also the area of the route over which the motor vehicles ply, yet the two terms are not interchangeable. "A route is an area plus some thing more." This "something" is the notional line of travel between the two termini which distinguishes a route from an area simpliciter. The first proviso to section 45(1) speaks of "route or area" apparently making a distinction between 29 them to cover applications relatable to either. A contract carriage does not ply along a fixed "route or routes" but over an "area" which is why an application for a contract carriage permit has to contain a statement as to the pro posed area. [31G H] Dosa Satyanarayanamurty etc. vs The Andhra Pradesh State Road Transport Corpn., (644). C. P. C. Motor Service, Mysore vs The State of Mysore, [1962]Supp. (1) S.C.R. 717 (725). C. P. Sikh Regular Motor Service etc. vs The State of Maharashtra, [1975] (2) S.C.R. 10, followed. (4)The word "area" in the first proviso to section 45(1) of the Act means the area of motorable roads within the territorial jurisdiction of a regional transport authority. Except that the territorial jurisdiction of the regional transport authority is fixed in terms of "geographical area "district wise in the State of Karnataka "area" in that wider sense is irrelevant to the purpose of the Act. [32 B, F] (5) The jurisdiction of a regional transport authority to grant an inter regional permit depends on the existing areas of motorable roads when an application for a permit is made. [32 G] [On the question of the reasonableness of a provision which requires an application for an inter regional permit to be made to the Regional Transport Authority of the region where the major portion of the proposed route or area lies, the Court observed that this was a matter of policy but added that the policy has not been stated very clearly, and that instead of leaving the law in such a "slippery state," the State should clarify it by appropriate legislation so that the law may be clear and easily ascertainable by the concerned section of the public.]

Appeal No. 95 of 1953. On appeal from the Judgment and decree dated the 29th day of June 1951 of the Bombay High Court in Appeal No. 93 of 1949 arising out of the order dated the 16th September 1949 of the Court of Bombay City Civil Court at Bombay in Award No. 45 of 1949. M.C. Setalvad, Attorney General of India (H. J. Umrigar, Sri Narain Andley, Rameshwar Nath and Rajinder Narain, with him), for the appellant. H.R. Mehervaid and R. N. Sachthey, for the respondent. October 4. The Judgment of the Court was delivered by VENKATARAMA AYYAR J. The appellant is a share broker carrying on business in the City of Bombay, and a member of the Native Share and Stock Brokers ' Association, Bombay. The respondent, Mrs. Goolbai Hormusji, employed him for effecting sales and purchases of shares on her behalf, and on 6 8 1947 there was due from her to the appellant on account of these dealings a sum of Rs. 6,321 12 0. On that date, the respondent had outstanding for the next clearance, sales of 25 shares of Tata Deferred and 350 shares of Swadeshi Mills. On 11 8 1947, the appellant effected purchases of 25 shares of Tata Deferred and 350 shares of Swadeshi Mills to square the outstanding sales of the respondent, and sent the relative contract notes therefor Nos. 2438 and 2439 (Exhibit A) to her. She sent a reply repudiating the contracts on the ground that the appellant had not been authorised to close the transactions on 11 8 1947, and instructed him to square them on 14 8 1947. The appellant, however, declined to do so, maintaining that the transactions had been closed on 11 8 1947 under the 109 860 instructions of the respondent. After some correspondence which it is needless to refer to, the appellant applied on 21 8 1947 to the Native Share, and Stock Brokers Association, Bombay for arbitration in pursuance of a clause in the contract notes, which runs as follows: "In event of any dispute arising between you and me/us of this transaction the matter shall be referred to arbitration as provided by the Rules and Regulations of the Native Share and Stock Brokers ' Association". The Association gave notice of arbitration to the respondent, and called upon her to nominate her arbitrator, to which she replied that the contract notes were void, and that in consequence, no arbitration proceedings could be taken thereunder. The arbitrators, however, fixed a day for the hearing of the dispute, and gave notice thereof to her, but she declined to take any part in the proceedings. On 10 10 1947 they made an award in which, on the basis of the purchases made by the appellant on 11 8 1947 which were accepted by them, they gave credit to the respondent for Rs. 1,847, and directed her to pay him the balance of Rs. 4,474 12 0. The respondent then filed the application out of which the present appeal arises, for setting aside the award on the ground, inter alia, that the contracts in question were forward contracts which were void under section 6 of the Bombay Securities Contracts Control Act VIII of 1925, that consequently the arbitration clause was also void and inoperative, and that the proceedings before the arbitrators were accordingly without jurisdiction and the award a nullity. Section 6 of the Act is as follows: "Every contract for the purchase or sale of securities, other than a ready delivery contract, entered into after a date to be notified in this behalf by the Provincial Government shall be void, unless the same is made subject to and in accordance with the rules duly sanctioned under section 5 and every such contract shall be void unless the same is made between members or through a member of a recognised stock 861 exchange; and no claim shall be allowed in any Civil Court for the recovery of any commission, brokerage, fee or reward in respect of any such contract". Section 3(1) defines 'securities ' as including shares, and therefore, contracts for the sale or purchase of shares would be void under, section 6, unless they were made in accordance with the rules sanctioned by the Provincial Government under section 5. The appellant sought to avoid the application of section 6 on the ground that the contracts in question were 'ready delivery contracts ', and fell outside the operation of that section. Section 3(4) of Act VIII of 1925 defines 'ready delivery contract ' as meaning "a contract for the purchase or sale of securities for performance of which no time is specified and which is to be performed immediately or within a reasonable time", and there is an Explanation that "the question what is a reasonable time is in each particular case a question of fact". The contention of the appellant was that contracts Nos. 2438 and 2439 were ready delivery contracts as defined in section 3(4), as no time was specified therein for performance. The learned City Civil Judge, who heard the application agreed with this contention, and holding that the contracts were not void under section 6 of Act VIII of 1925, dismissed the application. The respondent took the matter in appeal to the High Court of Bombay, and that was beard by Chagla, C.J. and Tendolkar, J. They were of the opinion that the con ' tracts in question were not ready delivery contracts as defined in section 3(4) of the Act, because though no time for performance was specified therein, they had to be performed within the period specified in the Rules and Regulations of the Association, which were incorporated therein by reference, and not "immediately or within a reasonable time" as provided in section 3(4), that they were accordingly void under section 6, and that consequently, the arbitration clause and the proceedings taken thereunder culminating in the award were also void. They accordingly set aside the award as invalid and without jurisdiction. Against this judgment, the appellant has preferred this appeal 862 on a certificate under article 133(1) (c). It was argued by the learned Attorney General in support of the appeal that even apart from the question whether the contracts in question were for ready delivery or not, they would be outside the purview of section 6, because they were not contracts for sale and purchase of securities. This contention was not raised in the courts below, and learned counsel for the respondent objects to its being entertained for the first time in this Court, as that would involve investigation of facts, which has not been made. But in view of the terms of the contract notes and the admission of the respondent in her petition, we are of opinion that the point is open to the appellant, and having heard counsel on both sides, we think that the appeal should succeed on that point. The dispute between the parties is as to whether the appellant was acting within the scope of his authority when he purchased 25 shares of Tata Deferred and 350 shares of Swadeshi Mills on 11 8 1947. If he was acting within his authority, then the respondent was entitled only to a credit of Rs. 1,847 on the basis of the said purchases. ' But if these purchases were unauthorised, the appellant was liable to the respondent in damages. In either case, the dispute was one which arose out of the contract of employment of the Appellant by the respondent as broker and not out of any contract of sale or purchase of securities. The question of sale or purchase would arise between the respondent and the seller or purchaser, as the case may be, with reference to the contract brought about by the appellant. But the relationship between the respondent and the appellant was one of principal and agent and not that of seller and purchaser. The contract of employment is no doubt connected, and intimately, with sales and purchases of securities; but it is not itself a contract of sale or purchase. It is collateral to it, and does not become ipso facto void, even if the contract of purchase and sale with which it is connected is void. Vide the decision of this Court in Kishan Lal and another vs Bhanwar Lal(1) The legis (1) (1955] 1 S.C.R. 439. 863 lature might, of course, enact that not merely the contract of sale or purchase but even contracts collateral thereto shall be void, in which case the contracts of employment with reference to those contracts would also be void. But that is not what Act VIII of 1925 has done. Section 6 expressly provides that no claim shall be maintained in a civil court for the recovery of any commission, brokerage, fee or reward in respect of any contract for the purchase or sale of securities. That is to say, the bar is to the broker claiming remuneration in any form for having brought about the contract. But the contract of employment is not itself declared void, and a claim for indemnity will not be within the prohibition. The question whether contract notes sent by brokers to their constituents are contracts for the sale and purchase of securities within section 6 of Act VIII of 1925, came up for consideration before the Bombay High Court in Promatha Nath vs Batliwalla & Karani (1) and it was held therein that they were not themselves contracts for sale or purchase but only intimations by the broker to the constituent that such contracts had been entered into on his behalf. We agree with this decision. It may be argued that if the contract note is only intimation of a sale or purchase on behalf of the con stituent, then it is not a contract of employment, and that in consequence, there is no agreement in writing for arbitration as required by the Arbitration Act. But it is settled law that to constitute an arbitration agreement in writing it is not necessary that it should be signed by the parties, and that it is sufficient if the terms are reduced to writing and the agreement of the parties thereto is established. Though the respondent alleged in her petition that she had not accepted the contract notes, Exhibit A, she raised no contention based thereon either before the City Civil Judge or before the High Court, and even in this Court the position taken up by her counsel was that Exhibit A constituted the sole repository of the contracts, and as they were void, there was no arbi (1) I.L.R. [1942] Bom. 655; A.I.R. 1942 Bom. 864 tration clause in force between the parties. We accordingly hold that the contract notes contained an agreement in writing to refer disputes arising out of the employment of the appellant as broker to arbitration, and that they fell outside the scope of section 6 of Act VIII of 1925, that the arbitration proceedings are accordingly competent, and that the award made therein is not open to objection on the ground that Exhibit A is void. It was next contended for the respondent that the contract notes were void under Rule 167 of the Native Share and Stock Brokers ' Association, and that on that ground also, the arbitration proceedings and the award were void. Rule 167 so far as it is material is as follows: "167. (a) Members shall render contract notes to non Members in respect of every bargain made for such non Member 's account, stating the price at which the bargain has been made. Such contract notes shall contain a charge for brokerage at rates not less than the scale prescribed in Appendix G annexed to these Rules, or as modified by the provisions of rules 168 and 170(b). Such contract notes shall show brokerage separately and shall be in Form A prescribed in Appendix annexed to these Rules. . . . . . . . . (c) No contract note not in one of the printed Forms in Appendix H shall be deemed to be valid. . . . . . . . . (g) A contract note referred to in this rule or any other rule for the time being in force shall be deemed to mean and include a contract and shall have the same significance as a contract". Form A in Appendix H referred to in Rule 167(a) contains two columns, one showing the rate at which the securities are purchased or sold and the other, the brokerage. The contract notes sent to the respondent are not in this form. They are in accordance with Form A in Appendix A, and show the rates at which the securities are sold or purchased, the brokerage not being separately shown. At the foot of the document, there is the following note; 865 "This is net contract. Brokerage is included in the price". The contention of the respondent is that the contract notes are not in accordance with Form A in Appendix H, as the price and brokerage are not separately shown, and that therefore they are void under Rule 167(c). Now, Rule 167 applies only to forward contracts, and the basis of the contention of the respondent is that inasmuch as the contract notes, Exhibit A, have been held by the learned Judges of the High Court not to be ready delivery contracts but forward contracts, they would be void under Rule 167(c), even if they were not hit by section 6 of Act VIII of 1925. The assumption underlying this argument is that what is not a ready delivery contract under the definition in section 3(4) of Act VIII of 1925 must necessarily be a forward contract for purposes of Rule 167. But that is not correct. The definition of a ready delivery contract in section 3(4) is only for the purpose of the Act, and will apply only when the question is whether the contract is void under section 6 of that Act. But when the question is whether the contract is void under Rule 167, what has to be seen is whether it is a forward contract as defined or contemplated by the Rules. The definition in section 3(4) of Act VIII of 1925 would be wholly irrelevant for determining whether the contract is a forward contract for purposes of Rule 167, the decision of which question must depend entirely on the construction of the Rules. The relevant Rules are Nos. 359 to 363. Rule 359 provides that "contracts other than ready delivery contracts shall not be made or transacted within or without the ring". Rule 361 confers on the Board power to specify which securities shall be settled by the system of Clearance Sheets and which, by the process of Tickets. Rules 362 and 363 prescribe the modus operandi to be followed in effecting the settlement. It was with reference to these rules which under the contract notes were to be read as part of the con tract, that the learned Judges held that the contracts were not ready delivery contracts as defined in sec 866 tion 3(4) of Act VIII of 1925. But reading the above Rules with Rule 359, there can be no doubt that the contract notes, Exhibit A, would for the purpose of the Rules be ready delivery contracts. Indeed, the form of the contract notes, Exhibit A, is the one provided under the Rules for ready delivery contracts, whereas Form A in Appendix H is, as already stated, for forward contracts. Thus, contracts which are regulated by Rules 359 to 363 cannot be forward contracts contemplated by Rule 167, and they cannot be held to be void under that Rule. The error in the argument of the respondent is in mixing up two different provisions enacted by two different authorities and reading the one into the other. The rules framed by the Association form a code complete in itself, and any question arising with reference to those rules must be determined on their construction, and it would be a mistake to read into them the statutory provisions enacted in Act VIII of 1925. In this view, the contract notes, Exhibit A, cannot be held to be void under rule 167. In the result, we must hold, differing from the learned Judges of the court below, that the arbitration proceedings are not incompetent and that the award made therein is not void on the ground that the contracts containing the agreement are void. The respondent contested the validity of the award on several other grounds. They were rejected by the City Civil Judge and in the view taken by the learned Judges of the High Court that the contract notes were void under section 6 of Act VIII of 1925, they did not deal with them. Now that we have held that the contracts are not void, it is necessary that the appeal should be heard on those points. We accordingly set aside the order of the court below, and direct that the appeal be reheard in the light of the observations contained herein. As the appeal succeeds on a point not taken in the courts below, the parties will bear their own costs throughout. The costs of the further hearing after remand will be dealt with by the High Court.

The appellants share broker carrying on business in the City of Bombay and a member of the Native Share and Stock Brokers ' 858 Association was employed by the respondent for effecting sales and purchases of shares on her behalf. The appellant effected purchases of 25 shares of Tata Deferred and 350 shares of Swadeshi Mills to square the outstanding sales of the same number of shares standing in her name and sent the relative contract notes therefor to her. She repudiated the contracts on the ground that the appellant had not been authorised to close the transactions on the date mentioned by him and asked him to square them at a later date. The appellant maintained that the transactions had been closed in accordance with her instructions. The appellant referred the dispute for arbitration to the Native Share and Stock Brokers ' Association in pursuance of an arbitration clause in the contract notes. The respondent refused to submit to arbitration of the association on the ground that the contract notes were void and therefore no arbitration proceedings could be taken thereunder. The arbitrators made an award in favour of the appellant in the absence of the respondent who declined to take part in the proceedings. The respondent filed an application for setting aside the award. The Bombay High Court held that the contracts in question were not ready delivery contracts as defined in section 3(4) of the Bombay Securities Contracts Control Act VIII of 1925 and that they were accordingly void under section 6 of the Act and therefore the arbitration clause and the proceeding taken thereunder culminating in the award were also void. Held that apart from the question whether the contracts in question were for ready delivery or not, they were outside the purview of section 6 of Bombay Act VIII of 1925 because they were not contracts for sale and purchase of securities. The dispute between the parties was as to whether the appellant was acting within the scope of his authority when he purchased the shares. If he was acting within his authority, the respondent was liable to him. If those purchases were unauthorised, the appellant was liable to the respondent for damages. In either case the dispute was one which arose out of the contract of employment of the appellant by the respondent as a broker and not out of any contract of sale or purchase of securities. The relationship between the respondent and the appellant was that of principal and agent, and not that of seller and purchaser. The contract notes sent by brokers to their constituents are not themselves contracts for sale or purchase of securities within section 6 of the Bombay Act VIII of 1925 but only intimations by the broker to the constituent that such contracts had been entered into on his behalf. It is settled law that to constitute an arbitration agreement in writing it is not necessary that it should be signed by the parties, and that it is sufficient if the terms are reduced to writing and the agreement of the parties thereto is established. The Rules framed by the Native Share and Stock Brokers ' Association, Bombay form a code complete in itself and any question 859 arising with reference to those Rules must be determined on their construction and it would be a mistake to read into them the statutory provisions enacted in the Bombay Act VIII of 1925 and therefore the contract notes cannot be held to be void under Rule 167.

ppeal No. 652 of 1964, Appeal from the judgment and order dated May 7, 1963 of the Rajasthan High Court in D.B. Civil Misc. Writ Petition No. 157 of 1962. G.C. Kasliwal, Advocate General for Rajasthan. K.K. Jain, for the appellants. M.D. Bhargava and B.D. Sharma, for the respondent. The Judgment of the Court was delivered by Siki, J. This appeal by certificate of fitness granted by the Rajasthan High Court is directed against its judgment dated May 7, 1963, quashing the order of assessment dated March 5, 1962, made by the Sales Tax Officer, Jodhpur City, in so far as it levied sales tax on the turnover of Rs. 23,92,252.75 np. The respondent, M/s Shiv Ratan G. Mohatta, which is a partnership firm having its head office at Jodhpur, hereinafter referred to as the assessee, claimed before the Sales Tax Officer that they were not liable to be assessed to sales tax in respect of the above turnover because, firstly, the assessee was not a dealer within section 2(f) of the Rajasthan Sales Tax Act (Rajasthan Act XXlX of 1954) with respect to this turnover, and secondly, because the sales were in the course if import within article 286 (1)(b) of the Constitution. Although the Sales Tax Officer set out the facts of the case relating to the second ground, he deemed it sufficient to assess this turnover on the ground that the assessee was a dealer within section 2(f) of the Rajasthan Sales Tax Act, without adverting to the second ground. The facts on which the assessee had relied upon to substantiate his second ground were these. The Zeal Pak Cement Factory, Hyderabad (Pakistan), hereinafter called the Pakistan Factory, manufactured cement in Pakistan. The Pakistan Industrial Development Corporation, hereinafter called the Pakistan Corporation, entered into an agreement with M/s Milkhiram and Sons (P) Ltd., Bombay, for the export of cement manufactured in Pakistan to India. The State Trading Corporation of India entered into an agreement with the said M/s Milkhiram & Sons for the purchase of, inter alia, 35,000 long tons of cement to be delivered to it F.O.R. Khokhropar in Pakistan, on the border of Rajasthan. The State Trading Corporation appointed the assessee as its agent, broadly speaking, to look after the import and the sale of the imported cement. The modus operandi adopted by the assessee for the sale of the cement was as follows. It would obtain from a buyer in Rajasthan an order under an agreement, a sample of which is on the record 73 The agreement fixed the price and the terms of supply. By one clause the assessee disclaimed any responsibility regarding delay in dispatch and non receipt of consignment or any loss, damage or shortage in transit due to any reason whatsoever. The agreement further provided that "all claims for loss, damage or shortage, etc., during transit will lie with the carriers and our payments are not to be delayed on any such account whatsoever. " It was further provided in the agreement that the dues were payable in advance in full, or 90% in advance and the balance within 15 days of billing plus sales tax and other local taxes. Clause 6 of the agreement is in the following terms: "A Post Card Loading Advice will be sent to you by the Factory as soon as the wagons are loaded in respect of your orders, and it will be your responsibility to arrange for unloading the consignment timely according to Railway Rules. Ourselves. and the suppliers will not be responsible for demurrage etc. on any account whatsoever. If the consignment reaches earlier than the Railway Receipt, it is the responsibility of buyer to arrange for and get the delivery timely against indemnity bond etc. All the Railway Receipts etc. will be sent by registered post by the Suppliers in Pakistan.". After this agreement had been entered into, the assessee would send despatch instructions to the Pakistan Corporation. These instructions indicated the name of the buyer consignee and the destination, and provided that the railway receipt and D/A should be sent by registered post to the consignee. These instructions were sent with a covering letter to the Pakistan Corporation requesting that these instructions be passed on to the Pakistan Factory for necessary action. The Pakistan Corporation would then forward these despatch instructions to the Zeal Pak Cement Factory. Later, the Pakistan Factory would advise the consignee that they had "consigned to the State Bank of India, Karachi, the particular quantity as per enclosed railway receipt and invoice. " The State Bank of India, Karachi, would endorse the railway receipt in favour of the consignee and send it to him by post. The consignee would take delivery either by presentation of the railway receipt or by giving indemnity bond to the Station Master undertaking to deliver the railway receipt on its receipt. The Sales Tax Officer did set out most of these facts and the contentions of the assessee in the assessment order but disposed of the case with the following observations: "All the above went to prove that the assessee was an Agent of the non resident dealer for the supplies in the State. The Assessee was an importer and hence submitted an application to the Custom Authority for the same. It booked orders and issued sale bills. Under the terms of an agreement of appointment of Agent, sale was to be effec 74 ted by the Agent. Again while obtaining orders from the buyers under condition 5 Sales Tax was to be paid by the buyers to the assessee. Thus to all intents and purposes the assessee is a dealer who is liable for payment of Sales Tax to the State. They have rightly collected this amount from the buying dealers and retained with them. This should come to the Government.". We can find no discussion in the order on the question raised by the assessee that the sales were made in the course of import within article 286(1)(b) of the Constitution. The assessee then filed a petition under article 226 of the Constitution and raised two contentions before the High Court, namely, (1) that the Sales Tax Officer failed to consider the impact and the effect of article 286(1)(b) on the facts of the case, and (2) that the Sales Tax Officer illegally held that the petitioner for all intents and purposes was a dealer liable to pay sales tax. The State raised an objection to the maintainability of the petition on the ground that the petitioner should have availed of the alternative remedy of appeal provided under the Rajasthan Sales Tax Act, but the High Court overruled this objection on the ground that "the contention of the petitioner is that in view of article 286(1)(b) of the Constitution, the respondent had no jurisdiction to assess the petitioner to pay the sales tax on the sale of goods in the course of the import into the territory of India", and that even if there was no total lack of jurisdiction in assessing the petitioner to pay sales tax. the principle enunciated in A.V. Venkateswarn v Ram chand Sobharaj Wadhwani (1) applied, and it was a case which should not be dismissed in litnine. Then the High Court proceeded to deal with the merits of the case. It first dealt with the question whether the petitioner was a dealer within the meaning of section 2(f) of the Rajasthan Sales Tax Act, and came to the conclusion that the petitioner must be deemed to be a dealer within the said section 2(f). Then it proceeded to deal with the question whether the sales had taken place in the course of import. The High Court held that in the circumstances of the case these sales had not occasioned the movement of goods but it was the first sale made by M/s Milkhiram and Sons to the State Trading Corporation which had occasioned the movement of goods. Secondly, it held that in the circumstances of the case "the property in goods after the delivery had been taken by the petitioner on behalf of the State Trading Corporation passed to the State Trading Corporation and simultaneously to the ultimate buyers. Thus the property in the (1) ; 75 goods passed to the ultimate buyers in Rajasthan when the goods had not reached the territory of India and were in course of import. In view of the authority of their Lordships of the Supreme Court in J. V. Gokal and Co. (Private) Ltd. vs The Assistant Collector of Sales Tax (Inspection) & Others, ( '), it must be taken that the sale took place when the goods were in the course of the import and they should not be liable to the payment of the Sales Tax by virtue of article 286(1)(b).". In the result, the High Court quashed the order of assessment in so far as it sought to levy tax on the turnover in dispute. The Sales Tax Officer, Jodhpur, and the State of Rajasthan having obtained certificate of fitness from the High Court filed this appeal. The learned Advocate General has raised two points before us: First, on the facts of this case the High Court should have refused to entertain the petition, and secondly, that it has not been established that the cement was sold in the course of import within article 286(1)(b). Regarding the first point, he urges that an appeal lay against the order of the Sales Tax Officer; no question of the validity of the Sales Tax Act was involved and the taxability of the turnover depended on where the property passed in each consignment. This involved consideration of various facts and, according to him.the crucial facts had not been brought on the record by the assessee on whom lay the onus to establish that the sales were in the course of import. He says that the assessee should have proved that each railway receipt was endorsed by the State Bank of India, Karachi, to the buyer before each consignment crossed the frontier. We are of the opinion that the High Court should have declined to entertain the petition. No exceptional circumstances exist in this case to warrant the exercise of the extraordinary jurisdiction under article 226. It was not the object of article 226 to convert High Courts into original or appellate assessing authorities whenever an assessee chose to attack an assessment order on the ground that a sale was made in the course of import and therefore exempt from tax. It was urged on behalf of the assessee that they would have had to deposit sales tax, while filing an appeal. Even if this is so. does this mean that in every case in which the assessee has to deposit sales tax, he can bypass the remedies provided by the Sales Tax Act? Surely not. There must be something more in a case to warrant the entertainment of a petition under article 226, something going to the root of the jurisdiction of the Sales Tax Officer, something to show that it would be a case of palpable injustice to the assessee to force him to adopt the remedies provided by the Act. But as the High Court chose to entertain the petition, we are not inclined to dismiss the petition on this ground at this stage. (1)[1960] 2 S.C.R. 852. 76 Regarding the second point, the learned Advocate General .argues that the onus was on the assessee to bring his case within article 286(1)(b) of the Constitution in respect of the sales to the various consignees. He says that there is no evidence on record as to when the State Bank of India endorsed the railway receipt in favour of the ultimate buyer in respect of each consignment and without this evidence it cannot be said that the title to the goods passed to the ultimate buyer at Khokhropar or in the course of import. He further urges that it would have to be investigated in each case as to when the State Bank endorsed the railway receipt and when the goods crossed the customs barrier. He says that it is not contested that the ultimate buyer took delivery of goods without producing the railway receipt by virtue of special arrangements entered into with the railway, and according to him. it is only when the delivery was taken by the buyer in Rajasthan that the title passed. By that time, according to him, the course of import had ceased. We do not think it necessary to consider the various arguments addressed by the learned Advocate General or the soundness of the view of the High Court on this point, because we are of the opinion that the High Court should not have gone into this question on the facts of this case. The Sales Tax Officer had not dealt with the question at all, and it is not the function of the High Court under article 226, in taxing matters, to constitute itself into an original authority or an appellate authority to determine questions relating to the taxability of a particular turnover. The proper order in the circumstances of this case would have been to quash the order of assessment and send the case back to the Sales Tax Officer to dispose of it according to law. Under the Rajasthan Sales Tax Act, and other Sales Tax Acts, the facts have to be found by the assessing authorities. If any facts are not found by the Sales Tax Officer, they would be found by the appellate authority. and it is not the function of a High Court to find facts. The High Court should not encourage the tendency on the part of the assesses to rush to the High Court after an assessment order is made. It is only in very exceptional circumstances that the High Court should entertain petitions under article 226 of the Constitution in respect of taxing matters after an assessment order has been made. It is true, as said by this Court in A. V. Venkateswarn vs Ramchand Sobharaj Wadhwani(1) that it would not be .desirable to lay down inflexible rules which should be applied with rigidity in every case, but even so when the question of taxability depends upon a precise determination of facts and some of the facts are in dispute or missing, the High Court should decline to decide such questions. It is true that at times the assessee alleges some additional facts not found in the assessment order and the State, after a fresh investigation, admits these facts, but in a petition under article (1)[1962] 1 S.C.R. 753. 77 226 where the prayer is for quashing an assessment order, the High Court is necessarily confined to the facts as stated in the order or appearing on the record of the case. In this case, as already indicated, we have come to the conclusion that the High Court should not have decided disputed questions of fact, but should merely have quashed the assessment order on the ground that the Sales Tax Officer had not dealt with the question raised before him and remanded the case. Accordingly. we allow the appeal, set aside the order of the High Court, quash the assessment order in so far as it relates to the. turnover of Rs. 23,92.252.75 up, and remit the case to the Sales Tax Officer to decide the case in accordance with law. He will find all the facts necessary for the determination of the question and come to an independent conclusion untrammeled by the views expressed by the High Court. We may make it clear that we are not expressing any view whether the finding of the High Court that the property in the goods passed simultaneously at Khokhropar to the State Trading Corporation and the ultimate buyer is correct or not. There would be no order as to costs in this appeal. Appeal allowed.

The Sales Tax Officer rejected the assessed 's claim that he was not liable to be assessed to sales tax in respect of certain .sales of cement imported from Pakistan because (i) he was not a. dealer within the meaning of s.2(f) of the Rajas than Act 29 of 1954, and (ii) the sales in question were in the course of the import within the meaning of article 286(1)(b) of the Constitution. In the order of assessment, there was no discussion of the question of applicability of article 286(1) (b). The assessee therefore filed a petition under article 226 challenging the assessment order on the grounds taken before the Sales Tax Officer and also claiming that the latter had failed to consider the impact and effect of article 286(1)(b)on the facts of the case. The State objected to the maintainability of the petition on the ground that the petitioner should have availed of the alternative remedy of appeal provided under the Rajasthan Sales Tax Act, but the High Court overruled this objection for the reason, inter alia, that the petitioner had challenged the appellant 's jurisdiction to assess him to. sales tax in view of the. provisions of article 286(1) (b). Upon dealing with the merits of the case, the High Court held that on the facts of the case it was clear that the sales in question took place when the goods were in the course of import and therefore, by virtue of article 286(1)(b) were not liable to sales tax. The court therefore quashed the order of assessment. On appeal to this Court, it was contended on behalf of the State that the High Court should have refused to entertain the petition as many of the crucial facts had not been brought on the record by the respondent, and further more, it was not established that the cement was sold in the course of import into India. HELD: The High Court should not have decided the disputed questions of fact, but should merely have quashed the assessment order on the. ground that the Sales Tax Officer had not dealt with the question raised before him and remanded the case. [77 B] OBITER: The High Court should have declined to entertain the petition, as in this case there were no exceptional circumstances to warrant the exercise of the extraordinary jurisdiction under article 226. It was not the object of article 226 to convert High Courts into original or appellate assessing authorities whenever the assessee chose to attack an assessment order on the ground that a sale was made in the course of import and was therefore exempt from tax. The fact that an assessee might have to deposit sales tax when filing an appeal could not in every case justify his bypassing the remedies provided by the Sales Tax Act. There must be something more in a case to warrant the entertainment of a petition under article 226, something going to the root of the jurisdiction of the Sales 72 Tax Officer, something to show that it would be a case of palpable injustice to the assessee to force him to adopt the remedies provided by the Act. [75 G, H] A.V. Venkatesweran vs Ramchand Sobhraj Wadwani, A.I.R. , referred to.

Civil Appeal No. 2129 of 1970. From the Judgment and order dated the 29th May, 1970 of the Calcutta High Court in Income Tax Reference No. I of 1967 and Civil Appeals Nos. 2455 2457 of 1972 Appeals by Special Leave from the judgment and order dated the 25th February, 1972 of the Kerala High Court in Income Tax Reference Nos. 9, to and 11 of 1970. A. K. Sen, Mrs. Leila Seth, o. P. Khaitalz and B. P Maheshwari for the appellant in C.A. No. 2129 of 1970. G. C. Sharma, B. B. Ahuja and section P. Nayar for the respondents in C.A. 2129 of 1970. J. Ramamurthy and D. N. Gupta for intervener No. I, in C.A. No. 2129 of 1970. A. K. Sen and D. N. Gupta for Intervener No. 2 in C.A. No. 2129 of 1970. 835 J. Ramamurthi and D. N. Gupta for Intervener No.3 in C.A. No. 2129 of 1970. G. C. Sharma B. B. Ahuja and section P. Nayar for the appellants in C.AS. NOS.2455 2457/72. A K Sen and D. N. Gupta for respondent in C.As. 2455 57/72. The Judgment of the Court was delivered by KRISHNA IYER, J. These four appeals raise but one question, turning on the meaning of charitable purpose ', as defined in section 2(15) of` the Income Tax Act, 1961 (Act No. XLIII of 1961) (for short. the Act) . They may be disposed of by one common judgment, although the two High Courts (Calcutta and Kerala) from where the appeals have come have taken contrary views on the single point in issue. What are the words set for earning exemption by a combined application of section 11(1) read with section 2(15) of the Act? What is the para meter of the legal concept of charitable purpose ? Are the triune activities, which have yielded income and have been assessed to tax, eligible for exemption as falling within the scope of section 2(15) as it now stands ? These points of law, in the conspectus of facts presented in the case, have been argued in the light of conflicting decisions of the High Courts and illumined in part by a very recent pronouncement of this Court in Loka Shikshana Trust vs C.I.T. , Mysore.(1) The assesses are the Indian Chambers of Commerce and the Cochin Chambers of Commerce. their memoranda and articles of association are substantially similar and so the facts in the first case alone need be slated and the question of law discussed with reference to that case only. Hardly any distinction on facts or law which desiderata a separate consideration exists. The Indian Chamber of Commerce is a company registered under section 26 of the Indian Companies Act, 1913. Its memorandum and articles of association spell out the broad objects and there is no doubt that they fall within the sweep of the expression 'the advancement of any . Object of general public utility ' as set down in section 2 (15) of the Act. Briefly put, they are primarily promotional and protective of Indian trade interests and other allied service operations. A general concluding clause authorizes it 'to do all other things as may be Conducive to the development o trade, commerce and industries or incidental to attainment of the above objects or any of them '. It is clear from clauses 4 and 8 of the Memorandum of Association that the Members of the Chamber do not and cannot stand to gain personally since no portion of 'income and property of the association ' shall be paid . directly or indirectly, by way of dividend or bonus or otherwise howsoever by way of profit to the persons who at any time are . Members of the Association . '. Even on the dissolution of the Association the Members cannot claim any share in the assets. These highlight the fundamental fact that the Chamber, by and large, strives to advance the general trade interests of India and Indians without [916] 1 S.C.R. 471 836 seeking to make profits for its Members. In the light of this Court 's decision in C.I.T vs, Andhra Chamber of Commerce(1) one may readily state that the Chambers advance objects of general public utility and, prima facie more into the exclusionary area of charitable purpose. However, the bone of contention in this case is as to whether the three source of income, viz., (a) arbitration fees levied by the Chamber; (b) fees collected for the certificates of origin; and (c) share of profit in M/s. Calcutta Licensed Measures for issue of certificates of weighment and Measurement fall within the exclusion. It may be mentioned that all these three services were extended to Members and non Members or, rather, to the trade generally. Had the law bearing on 'charitable purpose ' been what it was prior to 1961, the Chamber would have won hands down may be. But then there is a significant change in the definition of 'charitable purpose ' by the addition of nine new words which cut back on the amplitude of the expression in the prior Act. The straight question to be answered here is whether in plan English the there activities which have yielded profits to the chamber involve 'the carrying on of any activity for profit ', uncomplicated by casuistic, nicetics, semantic nuances and case law conflicts. Unfortunately, legislative simplicity has not been accomplished by the draftsman in the amended definition and, consequently, interpretative complexity persists. The Judges of the Andhra Pradesh High Court in A. P. State Road Transport Corporation vs C.I.T.(2) observed, while considering the import of section 2(15) of the 1961 Act: "It is one of the fundamental principles in legislation and the drafting of statutes that the provisions contained therein should be clear and cogent and, more so, with regard to the fiscal statutes which impose a burden on the public. But, in this case, what we find is that the amendment, instead of being clear and cogent, is complicated and courts have taken different views in interpreting the same. " We dare say that achieving greater simplicity and clarity in statute law will be taken up by the draftsmen of the legislative bills to avoid playing linguistic games in Court and promotion of interpretative litigation Lawyers and legislators must stop confusing each other and start talking to their real audience the people so that communication problems may not lead to prolific forensic battles. We must confess to having been hard put to it to get at the controlling distinction between activities which fall on one side or the other of 'charitable purpose '. The assesses the Indian Chamber of Commerce,, was assessed for the accounting year 1963 64 on the income which arose from the three heads of arbitration fees, fees for certificates of origin and the share of profits in the firm M/s. Calcutta Licensed Measurers which issued weighment and measurement certificates charging a fee therefore the return for the assessment year showed a profit of Rs. 1,58,690/ made up of a small amount from arbitration fees, and a similar sum from fees for issue of certificates of origin but a substantial sum by way of share of income from the fees charged for weighment and measurement. Although the Income tax officer repelled the claim OF (1) (2) [1975] 100 I.T.R. 392, 397. 837 charitable purpose ' on the view that these activities were for profit the Appellate Tribunal took a contrary view reversing the concurrent findings of the Income tax officer and the Appellate Assistant Commissioner. The conclusion of the Tribunal was that section 2(15) applied but the High Court on a reference under section 256(1) of the Act, answered the question in favour of the Revenue. We have indicated earlier that the various High Courts have taken contrary views. Kerala has consistently held on facts substantially identical that section 2(15) is attracted. Andhra Pradesh has concurred, while Calcutta and Mysore have ranged themselves on the opposite side. A recent decision of this Court earlier mentioned has given some telling guidelines although the precise facet pressed before us may not be said to have been wholly covered by it. The scheme of the Act may be briefly indicated to the extent it is relevant, before entering on the discussion. 'Income ' is taxable, but certain incomes shall not be included in the total incomes of the previous years of the person in receipt of the income. Section 11 excludes from the computation income derived from property held under trust wholly for charitable purpose. The Chamber of Commerce is a trade association which renders specific services to its members and there fore section 28 will ordinarily apply to its income, unless section 11 read with section 2(15) excludes it from taxability. The income drawn from non members by the Chamber will clearly be taxable unless section 2(15) comes to its rescue. Thus the pivotal issue is as to whether the three channel of income may be treated as charitable purposes and therefore eschewed by section 11 from the charging provision. At this stage we may read section 2(15): "2(15) In this Act, unless the context otherwise requires, charitable purpose ' includes relief of the poor, education medical relief, and the advancement of any other object of general public utility not involving the carrying on of any activity for profit. ' The obvious change as between the old and the new definitions is the exclusionary provision introduced in the last few words. The history which compelled this definitional modification was the abuse to which the charitable disposition of the statute to charitable purposes was subjected by exploiting businessmen. You create a charity, earn exemption from the taxing provision and run big industries virtually enjoying the profits with a seeming veneer of charity a situation which exsus citated Parliament and constrained it to engraft a clause deprivatory of the exemption if the institution fulfilling charitable purposes undertook activities for profit and thus sought to hoodwink the statute. The Finance Minister 's speech in the House explicates the reason for the restrictive condition. He stated in the House;(l) (1) Lok Sabha Dabates, Vol. LVl.1961, p.3073 (Aug.18,1961) 838 The definition of 'charitable purpose in that clause is it present so widely worded that it can be taken advantage of even by commercial concerns which, while ostensibly serving a public purpose, get fully paid for the benefits provided by them, namely, the newspaper industry which while running its concern on commercial lines can claim that by circulating newspapers it was improving the general knowledge of the public. In order to prevent the misuse of this definition in such cases, the Select Committee felt that the words 'not involving the carrying on or and activity for profit ' should be added to the definition. Beg J., in Lok Shikshana Trust (supra) has adverted to this statement as throwing light on the new provision. The evil sought to be abolished is thus clear. The interpretation of the provision must naturally fall in line with the advancement of the object. Of course, there are borderline cases where it becomes difficult to decide at first sight whether the undertaking which yields profit is a deceptive device or a bonafide adventure which results in nominal surplus although substantially intended only to advance the charitable object. Chambers of Commerce dot this country and, by and large, they have the same complex of objects. They exist to promote the trading interests of the Commercial community and, after the Andhra Chamber of Commerce Case (supra) have been regarded as pursuing charitable purposes. This expression, defined in section 2(15), is a term of art and embraces objects of general public utility. But, under cover of charitable purposes, a crop of camouflaged organisations sprung up. The mask was charitable, but the heart was hunger for tax free profit. When Parliament found this dubious growth of charitable chameleons, the definition in section 2(15) was altered to suppress the mischief by qualifying the broad object of 'general 'public utility ' with the additive 'not involving the carrying on of any activity for profit '. The core of the dispute before us is whether this intentional addition of a 'cut back ' clause expels the Chamber from the tax exemption zone in respect of the triune profit fetching sub enterprises undertakes by way of service or facility for the trading community. The rival constructions put forward by counsel at the bar may now be noticed. Shri A. K. Sen 's argument for the Chamber is that the controlling distinction between what is 'charitable purpose ' and what is not lies in discovering the dominant intent as distinguished from the subsidiary consequence, the principal object" not the incidental inflow, the profit motive of the operation as against the service oriented activity which may or may not en passant yield an income His stress, a la the Kerala cases, is on whether the activity is wrapped up, entangled and intertwined with the public utility object. If it is, the resultant surplus is not an exigible income. Such, certainly, are the passwords and touch stones used in several Kerala decisions. If this be the parameter, he argues, the three activities are saved because 839 they render service, promote trade and facilitate the wheels of business to move. They do not form activities for making profit; they are in fulfillment of the objects of the Chamber. Shri Sharma for the Revenue reads into the amended definition a total exclusion from the charmed circle of charitable purposes all activities which are prone to produce profits. The telling test, according to this view, is to see that the means, like the ends, are charitable, untainted by gainful stimulus and purged of the potential for profit in reality By this canon the Chamber 's desire to serve businessmen by offering arbitral or certificate facilities in return for a price is prima, facie an 'activity for profit ' unless the circumstances, express or necessarily implicit eloquently proclaim a 'no profit ' foundation for the undertaking. The linkage is not between object of public utility and the challenged activity but between the methodology adopted for the advancement of such objects and proneness for profit flowing from such method or activity. If this standpoint be sound, the three services which have yielded profits, although wrapped in, entangled or inter twined with the object of promoting trade interests, are still liable to tax, there being no visible limitation on the revenues that Any arise from them and these precise activities could be carried on by private individuals for profit The legal break through lies along a realistic line of reasoning taking care to avoid the extreme position of Shri Sharma which will render the last limb of section 2(15) illusory or ineffectual and as serviceable for tax exemption of charities as the appendix to the human physiology. In our view the key to the problem is furnished not merely by a careful ,. Took at the history of the evil and the Parliamentary debate at least the Finance Minister 's speech on the new change but the language of section 2(15) itself read in the light of the guidelines in Lok Shikshana Trust (supra) . Taking a close up of section 2(15) with special emphasis on the last concluding words, we have to interpret 'charitable purpose ' in such manner that we do not burke any word, treat any expression as redundant or miss the accent of the amendatory phrase. So viewed, an institution which carries out charitable purpose out of income 'derived from property held under trust wholly for charitable purposes ' may still forfeit the claim to exemption in respect of such takings or incomes as may come to it from pursuing any activity for profit. Notwithstanding the possibility of obscurity and of dual meanings when the emphasis is shifted from 'advancement ' to 'object ' used in section 2(15), we are clear in our minds that by the new definition the benefit of exclusion from total income is taken away where in accomplishing a charitable purpose the institution engages itself in activities for profit. The Calcutta decisions are right in linking; activities for profit with advancement of the object. If you want immunity from taxation, your means of fulfilling charitable purposes must be unsullied by profit making ventures. The 11 advancement of the object of general public utility must not involve the carrying on of any activity for profit If it does, you forfeit. The Kerala decisions fall into the fallacy of emphasizing the linkage between the objects of public utility and the activity carried on. 840 According to that view,. whatever the activity, if it is intertwined with, A wrapped in or entangled with the object of charitable purpose even if profit results therefrom, the immunity from taxation is still available. This will result in absurd conclusions. Let us take this very case of a Chamber of Commerce which strives to promote the general interests of the trading community. If it runs certain special types of services for the benefit of manufacturers and charges remuneration from them, it is undoubtedly an activity which, if carried on by private agencies, would be taxable. Why should the Chamber be granted exemption for making income by methods which in the hands of other people would have been exigible to tax ? This would end up in the conclusion that a Chamber of Commerce may run a printing press, advertisement business market exploration activity or even export promotion business and levy huge sums from its customers whether they are members of the organisation or not and still claim a blanket exemption from tax on the score that the objects of general public utility which it has set for itself implied these activities even though profits or surpluses may arise therefrom. Therefore, the emphasis is not on the object of public utility and the carrying on of related activity for profit. On the other hand, if in the advancement of these objects the Chamber resorts to carrying on of activities for profit, then necessarily section 2(15) cannot confer cover. The advancement of charitable objects must not involve profit making activites. That is the mandate of the new amendment. The opposite position in its extreme form is equally untenable. While Shri Sharma is right that merely because service is rendered to traders escapement from tax liability does not follow. Every type of service oriented activity, where some charge is levied from the beneficiary and at the end of the year some surplus is left behind, does not lose the benefit of section 2(15). For, then., one cannot conceive of any object of general public utility which can be advanced by the Chamber of Commerce. For every such activity some fee will have to be levied if the Chamber is not to turn bankrupt and merely because a fee is levied one cannot castigate the activity as one for profit. Therefore it is a false dilemma to talk of activity for profit as against activity rendered free. The true demarcating line lies in between. In our view, the ingredients essential to earn freedom from tax are discernible from the definition, if insightfully read against the brooding presence of the evil to be suppressed and the beneficial object to be served. The policy of the statute is to give tax relief for charitable purpose, but what falls outside the pale of charitable purpose ? The institution must confine itself to the carrying on of activities which are not for profit. It is not enough if the object be one of general public utility. The attainment of that object shall not involve activities for profit. What then is an activity for profit ? An undertaking by a business organisation is ordinarily assumed to be for profit unless expressly or by necessary implication or by eloquent surrounding circumstances the making of profit stands loudly negatived. We will illustrate to illumine. If there is a restrictive provision in the bye laws of 841 the charitable organisation which insists that the charges levied for services of public utility rendered are to be on a 'no profit ' basis, it . clearly earns the benefit of section 2(15). For instance, a funeral home, an S.P.C.A. Or a cooperative may render services to the public but write a condition into its constitution that it shall not charge more than is actually needed for the rendering of the services,may be it may not be an exact equivalent, such mathematical precision being impossible in the case of variables,may be a little surplus is left over at the end of the year the broad inhibition against making profit is a good guarantee that the carrying on of the activity is not for pro fit. As an antithesis, take a funeral home or an animal welfare organisation or a super bazaar run for general public utility by an institution which charges large sums and makes huge profits. Indubitably they render services of general public utility. Their objects are charitable but their activities are for profit Take the case of a blood bank which collects blood on payment and supplies blood for a higher price thereby making profit Undoubtedly the blood bank may be said to be a general public utility but if it advances its public utility by sale of blood as an activity for (making) profit, it is difficult to call its purposes charitable. It is just blood business ! In the United States, for instance, there are many funeral homes which make considerable profits. There are super bazaars and animal welfare institutions in many countries which may be run on a profit motive. Inevitably these activities are caught in the meshes of the tax law. Readymade nostrums like 'dominant intent '" 'incidental profits ', 'real object ' as against 'ostensible purpose ', 'entangled ', 'wrapped in, ' 'inter twined ' and the like fail as criteria in critical cases, although they have been liberally used in judicial vocabulary. In this branch of law verbal labels are convenient but not infallible. We have to be careful not to be victimised by adjectives and appellations which mislead, if pressed too far, although they may loosely serve in the ordinary run of case. To sum up, section 2(15) excludes from exemption the carrying on of activities for profit even i they are linked with the objectives of general public utility, because the statute interdicts, for purposes of tax relief, the advancement of such objects by involvement in the carrying on of activities for profit. We appreciate the involved language we use but when legislative draftsmanship declines to be simple, interpretative complexity becomes a judicial necessity. Lok Shikshana Trust (supra) is the latest perhaps the only case of this Court dealing directly with section 2(15) of the Act. Khanna J., speaking on behalf of himself and Gupta J. Observed: "As a result of the addition of the words 'not involving the carrying on of any activity for profit ' at the end of the definition in section 2(15) of the Act even if the purpose of the trust is 'advancement of any other object of general public utility ', it would not be considered to be 'charitable purpose ' unless it is shown that the above purpose does not involve the carrying on of any activity for profit. The result 842 thus of the change in the definition is that in order to bring A a case within the fourth category of charitable purpose, it would be necessary to show that ( 1 ) the purpose of the trust is the advancement of any other object of general public utility, and ( 2 ) the above purpose does not involve the carrying on of any activity for profit. Both the above conditions must be fulfilled before the purpose of the trust can be held to be charitable purpose." * *: * "It is true that there are some business activities like mutual insurance and cooperative stores of which profit making is not an essential, ingredient, but that is so because of a self imposed and innate restriction on making profit in the carrying on of that particular type of business. Ordinarily profit motive is a normal incidence of business activity and if the activity of a trust consists of carrying on of a business and there are no restrictions on its making profit, the court would be well justified on assuming in the absence of some indication that the contrary that the object of the trust involves the carrying on of an activity for profit." (emphasis. ours) "By the use of the expression 'profit motive ' it is not intended that profit must in fact be earned. Nor does the expression cover a mere desire to make some monetary gain out of a transaction or even a series of transactions. It predicates a motive which pervades the whole series of transactions effected by the person in the course of his activity." * * * * "We are not impressed by the submission of the learned counsel for the appellant that profit under section 2(15) of the Act means private profit. The word used in the definition given in the above provision is profit and not private profit and it would not be permissible to read in the above definition the word 'private ' as qualifying profit even though such word is not there." Beg J., spoke on the subject with different accent but drew pointed attention to one aspect: "The deed puts no condition upon the conduct of the .1 newspaper and publishing business from which we co infer that it was to be on 'no profit and no loss ' basis. I mention this as learned counsel for the appellant repeatedly asserted that this was the really basic purpose and principle for the conduct of the business of the trust before us. This assertion seems to be based on nothing more substantial than that the trust deed itself does not expressly make profit 843 making the object of the trust. But, as I have already indicated, the absence of such a condition from the trust deed would not determine its true character. That character is determined for more certainly and convincingly by the absence of terms which could eliminate or prevent profit making from becoming the real or dominant purpose of the trust. It is what the provisions of the trust make possible or permit coupled with what had been actually done without a illegality in the way of profit making, in the case before us, under the cover of the provisions of the deed, which enable us to decipher the meaning and determine the predominantly profit making character of the trust." (emphasis, ours) We do not think it necessary to discuss the various decisions of the High Courts cited before us nor need we seek light from the English Cases either. After all, Indian law must bear Indian impress derived from Indian life. In All India Spinners ' Association vs Commr. Of Income tax Bombay, (1) Lord Wright, speaking for the Judicial Committee d considering the subject of 'charitable purposes ' as justifying exemption from Income tax, observed: `It is now recognised that the Indian Act must be construed on its actual words and is not to be governed by English decisions on the topic." * . : * *: * "The Indian Act gives a clear and succinct definition which must be construed according to its actual language and meaning. English decisions have no binding authority on its construction and though they may sometimes afford help or guidance, cannot relieve the Indian Courts from their responsibility of applying the language of the Act to the particular circumstances that emerge under conditions of Indian life." * * * Crypto colonial inclinations have sometimes induced Indian draftsmen and jurists to draw inspiration from English law but, for reasons felicitously expressed by Lord Wright, we are adopting interpretation of section 2(15) according to the language used there and against the background of Indian life. Coming to the facts of the present case, the criteria we have evolved have to be applied. Among the Kerala Cases which went on the wrong test we wish lo mention one" Dharmodayam. The assessee company was conducting a profitable business of running chit funds and its memorandum (1) [1944] 12 ; 486. (2) C. 1. T. vs Dharmodayam Co. 844 of association had as one of its objects to do the needful for the promotion of charity, education and industry. The court found it possible on these facts to (grant the benefit of section 2(15) by a recondite reasoning. If this ratio were to hold good businessmen have a highroad to tax avoidance Dharmodayam (supra) shows how dangerous the consequence can be if the provisions were misconstrued. The true test is to ask for answers to the following question (a), Is the object of the assessee one of general public utility? (b) Does the advancement of the object involve activities bringing in moneys ? (c) If so, are such activities undertaken (i) for profit or (ii) without profit ? Even if (a) and (b) are answered affirmatively, if (c) (i) is answered affirmatively, the claim for exemption collapses. The solution to the problem of an activity being one for or irrespective of profit is gathered on a footing or facts. What is the real nature of the activity? one which is ordinarily carried on by ordinary people for gain '? Is there a built in prescription in the constitution against making a profit? Has there been in practice, profit from this venture ? Although this last is a weak test. The mere fact that a service is rendered is no answer to chargeability because all income is often derived by rendering some service or other. Further, what is an activity for profit depends on the correct connotation of the preposition. 'For ' used with the active participle of a verb means 'for the purpose of (Sec judgment of Westbury C., 1127) 'For ' has many shades of meaning. It connotes the end with reference to which anything is done. It also bears the sense of 'appropriate or 'adopted to ': 'suitable to purpose ' vide Black 's Legal Dictionary. An activity which yields a profit or.gain in the ordinary course must be presumed to have been done for profit or gain. Of course, an extreme case could be imagined where without intent or purpose an activity may yield profit. Even so, it may legitimately be said that the activity is 'appropriate or adapted to such profit '. We may wind up with a brief rounding off and indication on the approach. A pragmatic condition, written or un written, proved by. a prescription of profits or by long years of invariable practice or spelt from strong surrounding circumstances indicative of anti profit motivation such a condition will qualify for 'charitable purposes ' and legitimately get round the fiscal hook. Short of it, the tax tackle holds you fast. A word about the burden of proof is necessary here. Income. Ordinarily chargeable, can be free from exigibility only if the assessee discharges the onus of bringing himself within section 2(15). In so doing, he has to attract and repel attract the condition that his objects are of 'general public utility ' and repel the charge that he is advancing these objects by involvement in activities for profit. Once this broad dual basis is made out, the Revenue will not go into meticulous mathematics and charge every chance excess or random surplus; If the activity is Prone to yielding income and in fact results in profits, the 845 Revenue will examine the reality or pretence of the condition, that the activity is not for profit. Here, one may well say: 'Suit the action to the word, the word to the action '. If such be the legal criteria for fixing charitable purpose, low does the Indian Chamber fare ? The substantial item of income comes from the share of profits in the firm called M/s. Calcutta Licensed Measurers. True, the issuance of weighment and measurement certificates is a great facility for traders and under the only recognised institutions arc permitted to issue such certificates. Recognition be speaks the status, integrity and efficiency of the institution but does not transmute a service for profit into nonprofitable activity. It is irrelevant whether this service is in implementation of or interwoven with trade promotion. What is partinent is whether the advancement of trade promotion by issuing such certificates is done for a nominal fee conditioned by the cost of the operation, and profit making by this means is tabooed. For there is nothing in the memorandum or articles of association which sets any limit on making a large profit this way. And, after all, any institution.or individual may set up a weighment and measurement business as a source of income and if it is of sufficient probity and competence recognition to may well be accorded under the . We cannot mix up or confuse the two concept. The activity of charging fees and issuing certificates of origin valuable as a service though it be, is in not different position. Both these activities are amenable to tax as being carried on for profit, there being nothing to show that the Chamber was undertaking this job on a 'no profit ' basis. The presumption, if at all, is that a businessman association does a business of it. more so when the facility is available to members and non members. Not infrequently one comes across weighment stations where loaded trucks are weighed for payment as a business. So also approved valuers value property as business and charge for that service. Merely because it is carried on by a Chamber of Commerce no difference in incidents arises and tax incidence can be repelled only if the work is done explicitly on a 'no profit ' basis. Such is not shown to be the case here. The objects of the Chamber include settlement of disputes among traders by arbitration. This is undoubtedly a service of general public utility preventing protracted commercial litigation. If the fee charged for doing so is more or less commensurate with the expense the Chamber has to incur, a minor surplus will not attract tax. But no such restriction is written into the rules governing the Chamber. It may charge a heavy sum and spend much less for hiring experts to decide the dispute. There is no magna carta hiding the Indian or Cochin or Bengal Chamber of Commerce not to sell arbitral justice. Suppose ; specialist in mercantile law and practice of reputable integrity offers himself regularly for arbitration of commercial disputes for a high fee, is he not making an income? The difference between the two is as between Tweedledum and Tweedledee. Surely, if an innate, articulated, restraint on the levy for these undoubted services to Trade existed as a fact, so as to remove the slur of activity for profit, then the umbrella of charitable purpose would protect small surpluses. 846 We hold that the incomes of the Chambers sought to be taxed are taxable. Civil Appeal No. 2129 of 1970 is dismissed and civil Appeals Nos. 2455 to 2457 of 1972 are allowed. Parties will bear their respective costs. Before parting with the case we may as well make it clear that our conclusion would have been the same even without reference to or reliance on the speech of the Finance Minister we have excerpted earlier. V.P.S. Appeals partly allowed.

Under the Income tax Act 1961 one of the items not included in the total income of an assessee for purposes of tax is under s.11 income derived from property held under trust wholly for charitable purpose. Charitable purpose is defined in s.2 (xv). Chambers of commerce, promoting the trade interest of the commercial community, have been regarded as pursuing charitable purposes within the meaning of s.2 (xv). But under cover of charitable purposes C ' they have been indulging in various activities, and deriving tax free profit. Therefore, section 2 (xv) was amended by adding a clause at the end. Under the amended definition, unless the context` otherwise requires, charitable purpose includes the advancement of any object of general public utility not involving the carrying on of any activity for profit. ^ HELD: The income of the assesses, which are chambers of commerce, from three sources, namely, (a) arbitration fees levied by them; (b) fees collected for issuing certificates of origin; and (c) share of profit in another company for issue of certificates of weighment and measurement, which services are extended to members and non members. that is, to be trade generally, is not entitled to the exemption, and is liable to tax.[845E G] (1) The test is to ask for answers to the following questions: (a) Is the object of the assessee one of general public utility; (b) Does the advancement of the object involve activities bringing in money? (c) If so, are such activities undertaken (1) for profit or (ii) without profit. Even if ' (a) and (b) are answered affirmatively, if (c) (1) is also answered affirmatively the claim for exemption collapses. [844B C] (2) Section 2 (xv) must be interpreted in such a manner that every word is given a meaning and not to treat any expression as redundant or miss the accent of the amendatory phrase. So viewed, an institution which carries out charitable purposes out of income 'derived from property held under trust wholly for charitable purposes ' may still forfeit the claim to exemption in respect of such takings or incomes as may come to it from pursuing any activity for profit. By the new definition the benefit of exclusion from total income is taken away where, in accomplishing a charitable purpose, the institution engages itself in activities for profit If ' it wants immunity from taxation the means of fulfilling charitable purposes must be unsullied by profit making ventures. The advancement of the object of general public utility must not involve the carrying on of any activity for profit. otherwise, it will lead to the absurd conclusion that a Chamber of Commerce may run a printing press, advertisement business, market exploration activity or even export promotion business and levy huge sums from its customer whether they are members of the organisation or not and still claim a blanket exemption from tax on the score that the objects of general public utility which it had set forth for itself implied these activities even though profits or surpluses may arise therefrom. If it runs special types of services for the benefit of manufacturers and charges remuneration from them. it us undoubtedly an activity which. if carried on by private agencies, would be taxable. and there is no reason why a Chamber of Commerce should be exempt. The policy of the statute is to give tax relief for charitable purposes. An undertaking by a business organisation is ordinarily assumed to be for profit unless expressly or by necessary implication. Or by eloquent surrounding circumstances the making of ' profit stands clearly negatived. For example. if ' there is a restructure provision in the bye laws which insists that the charges levied for services of public utility rendered are to be on a 'no profit ' basis, that is, that it shall not charge more 831 than is actually needed for the rendering of the services then it earns the benefit of s.2(xv). It may not be an exact equivalent such mathematical precision being impossible in such case and there may be little surplus at the end of the year; but the broad inhibition against making profit is a good guarantee that the carrying on of the activity is not for profit.[839F 840D. G 841C] (3) The answer to the question whether an activity is one for or not for profit depends on the facts. An activity which yields profit or gain in the ordinary course must be presumed to have been done for profit or gain There may be activities, where` without intent or purpose the activity may yield profit. Even then it may legitimately be said that the activity is for profit in the sense that it is ` appropriate or adapted to such profit. [844C E F] (4) If The activity is prone to yielding income and in fact results in profit the Revenue will examine the reality or pretence of the condition that the activity is not for profit But; if the broad basis that the activity is not for profit is made out, by the assessee, the Revenue will not be meticulous and charge every chance excess or random surplus. [844G 845A] (5) The assesses contention that the Revenue should only look at the dominant intent or real object of the assessee and that if its activity is wrapped up entangled or intertwined with a public utility object then any incidental profit arising from it is not taxable. does not afford a valid or satisfactory test. [841D F.] (6) Equally The contention of the Revenue that all activities which are prone to produce profits should be excluded is not correct. [840E F] (7) In the present case the issuance of weighment and measurement certificates the issuance of certificates of origin and the settlement of disputes by arbitration are great facilities for trader of general public utility. There is however nothing in the memorandum or articles of association of the assesses which provides for only nominal fees and sets a limit on making large profits from the services. [845B E G H] Loka Shikshana Trust vs C.I.T. Mysore [1976] 1 S.C.R: 471. C.I.T. vs Andhra Chamber of Commerce [1965] 55 I.T.R. 722 applied. C.I.T. vs Dharmodayam Co. overruled. ARGUMENTS For the appellant l. The primary or dominant or real objects of the Indian Chamber Of Commerce are to promote protect, aid and stimulate trade, commerce and industry in India. (Clause 3 of the Memorandum of Association). The Income received was to be applied solely for the promotion of the objects and upon dissolution no property was to be paid or distributed among the members but was to be given or transferred to some other institution having similar objects. (Clauses 4 and 8 of the Memorandum of Association). It is well settled that These objects which lead to economic prosperity and enure for the benefit of the entire community are objects of general public utility and as such as charitable. See ITR 722 Commissioner of Income tax vs Andhra Chamber of Commerce. The Indian Chamber of Commerce provides inter alia for arbitration facilities so that trade disputes may be speedily and efficiently settled. It further provides for certificates of origin and certificates of weighment and measurement to be issued under the under Entry 18 and Entry 6 of the Schedule to the said Act respectively These certificates can only be issued by certain bodies such as recognised chambers of commerce. The certificates are necessary for facilitating trade. 5 L1127SCI/75 832 The carrying on of the activities of granting certificate of origin and/or weighment and measurement and arbitration are not activities for profit hut are in he nature of services and/or facilities provided to the commercial community. As fees are charged the result at the end of the year is sometimes a loss and on times surplus. The dominant purpose for these service is not profit making but rendering a statutory service for trade and commerce generally. The services cannot be gratuitous as the Chamber cannot be expected to be a charitable institution like as Dharamsala. The fees charged are related to the services rendered by way of quid pro quo. Quid pro quo does not mean an equivalent mathematically. If incidental to the advancement of the objects of general public utility some services are rendered for fees as a result of which income results it does not means that the objects of the Chamber involves carrying on Any activity for profit in the sense of that being. the dominent object. The dominant or real purpose is not to earn profit or income but to serve trade and help the commercial community. As such the above mentioned activities carried on by the Chamber will not be activities for profit. involving in the dominant object of the Chamber. In order to be activities for profit the involvement of profit making should be by the object and must be of such a degree or to such an extent as to lead to the influence that profit making is the real object. Since the real or dominant objects of the Chamber are not for profit and profit is not an essential ingredient but a mere bye product of the activities of the Chamber. The income must be held to be exempt under section 11(1) d with section 2(15) of the Act. See The Sole Trustee Loka Shikshana Trust vs Commissioner of Income tax, Mysore. The purpose and/or dominant object must be distinguished from the powers which are incidental to the carrying out of the objects of The Trust. See of Income tax vs Breach Candy Swimming Bath Trust. [1918] Appeal Cases 514 Cotman vs Brougham 4. Under section 2(15) of the Act the words carrying on of any activity for profit must mean an activity whose dominant object is profit making and not an activity which may incidentally result in some profit as a bye product. Of this meaning is not given then there. will be no activity of any institution doing work of general public utility which will he exempt including activities like those of All India Spinners Association. If the primary and dominant purpose is charitable then even if there are some incidental powers which are not charitable it will not prevent the trust from being a valid charity. The intention will have to be gleaned from the Constitution of the Trust or the Memorandum of Association. See Re: Trustees of The Tribune. All India Spinners Association vs Commissioner of Income tax of Income tax vs And/1/a Chamber of Commerce Andhra Pradesh State Transport Corporation vs Commissioner of Income tax. Under Section 11 of the Income tax Act 1961 it is the income derived from property held under trust wholly for charitable purposes which is not to be included in the total income. The word property is . Of wide import and can include a business or an undertaking or fees and restaurant charges etc. All India Spinners Association vs Commissioner of Income 833 of Income tax, Bombay City vs Breach Candy Swimming Bath Trust. K Trust, Bombay vs Commissioner of Income tax, Excess profit Tax, Bombay. of Income tax, Kerala & Coimbatore vs P. Krishna Warriar. 7 In any event the activities of arbitration and granting certificates of origin and weighment and/or measurement are not activities "for profit". of Income tax, Kerala v Indian Chamber of Commerce. Commissioner of Income tax vs Kochin Chamber of Commerce. [1975] 40 Taxation (III) 15 Commissioner of Income tax Kerala vs Ernakulam Chamber of Commerce. As such the Chamber is entitled to exemption under section 11 read with 2(15) of the Income tax Act. For the Respondent 1. The Appellant Chamber of commerce was deriving income by performing three kinds of services namely providing arbitration facilities for standard weights and measurements to traders in general. This was in furtherance of its objects clause 2(a); 2(b); 2(c); 2(d); 2(z); 3(h); 3(i); 3(p); 2(q); 3(v) The performance of such services for remuneration clearly was an activity for profit and the said activity was closely linked with. Or involved with the advancement of the aforesaid objects of the Chamber. Such close linking and involvement by itself rendered the object non charitable within the meaning of section 2 (15) of the Income tax Act 1961. If the Chamber of Commerce performed the same kind of services for it members for remuneration the income so derived was certainly liable to tax under section 28(iii) of the Income tax Act, 1961. The position became worse if the income was so derived by rendering such services to non member traders in general. It was assumed by the Tribunal and by the High Court for which there was no warrant that the income from the said three sources was income derived from property held under trust and the case proceeded on such assumption although the High Court doubted the validity of such an assumption as is clear from the text of their judgment at pp. 76 77 of the Paper Book. The High Court. therefore proceeded to consider only whether the production of the income from the aforesaid three sources was involved with the advancement of any object of general public utility. The Tribunal had held that such income was derived by carrying out the ancillary object of the Trust and not the main object although it found as a fact that the income was deriv d from; carrying on an activity for profit. The High Court did not recognise such . distinction and it was urged that the High Court was right. No valid reason could be found for making a distinction between any individual or any association of persons on the one hand, and the appellant on the other hand in respect of producing taxable income by carrying on identical activities for profit. It was beyond any doubt that ii an Individual or an association of persons had carried on similar activities from profit they would not be entitled to any exemption from tax. The appellant therefore could not be placed at a better level especially when the words of Statute themselves had debarred it from getting the exemption. Prior to the introduction of the qualifying clause in section 2(15) of the Current Act such bodies or 834 Organisations were undoubtedly enjoying exemption by virtue of the repealed Indian Income tax Act of 1922. The Legislature clearly intended to remove this unreasonable distinction by adding the qualifying clause as it is found in section 2(15) of the Income tax Act, 1961. The effect of such amendment of the definition was that the institutions otherwise regarded as charitable trusts have now been placed at par with any private organisation or individual who would render the same kind of services to the public for profit. Unless the memorandum or articles governing a Trust or any Institution prohibated the making of profit by carrying on any activity or the earning of the profits was not ruled out and in fact profit resulted, the Court would assume that the activity was carried on for profit. In support of this the Revenue counsel relied upon the judgment of the Supreme Court recently delivered in the case of Sole Trustee Loke Shikshana Trust There was no such prohibition in the regulations governing the activities of the Indian Chamber of Commerce and therefore its case fell squarely within the principles valid by the Supreme Court in the case of Loke Shikshana Trust. In order that an activity might be called a business activity or any other activity for profit it was not necessary to show that it was an organised activity or that it was indulged in with a motive on making profit. it was well established that it was not the motive of a person doing in act which decided whether the act done by him was carrying on an activity for profit . If any activity. business of otherwise in fact produced an income that was taxable income and was none the less so because it was carried on without the motive of producing an income. Reference was invited in this connection to the observations o the Supreme Court in the case of P. Krishna Menon vs Commissioner of Income tax, Mysore (35 I.T.R. p. Even in the ease of classical charities such as promotion of education and giving of medical relief no exemption is available if these two activities of charitable nature are carried on for purposes of profit. A fortiori, the exemption will be denied in the case of advancement of an object of general public utility howsoever charitable it may otherwise be regarded in character if the advancement involved the carrying on an activity for profit. The intention of Legislature was fully vindicated in the language employed ins. 2(15) of the Act.

Appeal No. 696 of 1976. (Appeal by Special Leave from the Judgment and Order dated 16 4 1976 of the Madhya Pradesh High Court in M.P. No. 697/72). A.K. Sen, S.S. Khanduja and S.K. Jain for the Appellant. D.N. Mukherjee and C.L. Sahu, for Respondent No. 4. Ram Panjwani, H.S. Parihar and 1. N. Shroff, for Respondents 1 3. The Judgment of the Court was delivered by CHANDJACHUD, J. The management of Primary and Middle Schools was taken over by the Madhya Pradesh Government from the Local Authorities under the Madhya Pradesh Local Author ities School Teachers (Absorption in Government Service) Act, 1963. In 1968, the State Government decided to take over the management of Higher Secondary Schools also. One such school was Kanya Naween Vidya Bhawan, Gadarwara, which was run by a Society registered trader the Societies Regis tration Act. The appellant, Smt. Juthika Bhattacharya. who was a B.A.B.T., was the Head Mistress of that school. Her scale of pay was Rs. 275 700 and at the relevant time she was drawing a monthly salary of Rs. 500. On February 23, 1970 the Divisional Superintendent of Education, Narmada Division, Hoshangabad, wrote to the Society that the management of the school run by it would be taken over by the Government if there was no improvement in its financial position. On June 7, 1971 he informed the Society that the Government had issued directions for taking over the management of the school. In pursuance of this letter, the management of the school, along with its assets, was taken over by the Government on June 18,1971. The Government assured the Society that the staff of the school will be absorbed in the new set up. 479 The case of the appellant is that she was entitled to be appointed as a Principal since she was holding a corre sponding post in a substantive capacity on the date of her absorption viz., June 18, 1971. But the Divisional Superin tendent of Education acting under the directions of the State Government, and the Director of Public Instructions directed that the appellant should be absorbed as an Upper Division Teacher in the time scale of Rs. 150 290. Accord ing to the respondents, the appellant did not hold a post graduate degree and no person could be appointed to the post of a Principal unless he or she held a post graduate degree and possessed the stated length of experience. Appellant having had the requisite, experience, the only question for decision in this appeal is whether she is entitled to be appointed as a Principal notwithstanding the fact that she. does not hold a postgraduate degree. Relying upon a Memorandum dated December 6, 1972 issued by the Government of Madhya Pradesh in its Department of Education, the appellant contended that even assuming that she could not be appointed as a Principal for the alleged reason that she did not hold a post graduate degree, she could obtain that degree any time within 3 years from the date of her absorption and therefore the order passed by the, State Government, before the expiry of that period, appointing her on a lower post is illegal. There is no substance in this argument because the Memorandum of Decem ber 6, 1972 applies, in terms, only to the staff of the Higher Secondary, Schools run by Janpad Sabhas and Munici palities and not to the staff of schools run by private Societies like the school of, which the appellant, on the date of absorption, was the Head Mistress. Paragraph 4(b) of the aforesaid Memorandum undoubtedly affords the facili ty that where the qualification for a post is post gradua tion, the post graduate degree may be obtained within 3 years from the date of absorption. But in view of the express statement in the Memorandum that it will be "ap plicable only to previous teachers of Janpad Sabhas and municipalities", the appellant cannot claim the benefit of the ' particular facility. Any lurking doubt in this behalf stands resolved by the further statement in the Memorandum that except in regard to schools run by Janpad Sabhas and Municipalities, the Rules dated December 21, 1967 will continue to apply to nonGovernment schools without the amendments introduced by the Memorandum. The Memorandum dated December 21, 1967, the Rules con tained in which remain unaffected by the amendments intro duced by the Memorandum dated December 6, 1972 provides by paragraph 3(b) that for absorption in the post of the Prin cipal of a Higher Secondary School, the person concerned "should" possess the post graduate degree and should also possess experience of a certain number of years. The appel lant did have the requisite experience but the question is whether paragraph 3(b) of the Memorandum contains but a directory rule as it uses the word 'should ' and secondly, whether the appellant can be said to possess a 'post gradu ate degree ' since she holds the qualification of B.A.B.T. It is urged on the first limb of this argument that as contrasted with the Memorandum of December 21, 1967 which uses the word "should", 480 the one dated December 6, 1972 Says that the. person concerned "must" have obtained a post graduate degree and therefore the former rule is directory in character. We are unable to agree. The mere use of the word "should" does not mean necessarily that the compliance with the rule is dis cretionary. It is well settled that whether a provision is directory or mandatory depends on its object and purpose, not merely on the use of any particular word or phrase. The object of the Memorandum is to prescribe qualifications for the staff of non Government schools and Local Body schools taken over by the State Government. In that context, the use of the word "should" cannot justify the construction that for absorption in the post of a Principal of a Higher Secondary School, the incumbent may or may not possess a post graduate degree. In a memorandum containing a set of rules prescribing qualifications for various posts, it is meaningless to provide that the incumbent of a certain post may or may not possess a certain qualification, if the possession of the particular qualification is considered to be a matter of no importance or consequence. Paragraph 3(b) consists of a complex provision, one part of which refers to the requirement of a post graduate degree and the other to the need to. possess a certain amount of experience. Both the clauses of a single sentence are governed by the verb "should". If the requirement as to the possession of a post graduate degree is to be directory in character, the same consideration must apply equally to the requirement of experience, with the result that for eligibility for the post of a Principal, it would neither be necessary to possess any particular educational qualification nor any particular experience of teaching. The appointment then to the highest post in the school would depend upon the sweet will of the appointing authority, unguided alike in the matter of minimum qualification and minimum experience. The word "should" occurring in paragraph 3(b) of the Memorandum of 1967 must therefor be understood in a mandatory sense, so that no person who does not hold a post graduate degree and possess the requisite experience would be eligible for being appointed as the Principal of a higher secondary school. As regards the second limb of the argument that since the appellant holds the qualification of B.A.B.T., she ought to be considered as holding a "post graduate degree", regard must again be had to the context in which the particular expression occurs and the purpose of the prescription. It is not inconceivable that the expression "post graduate degree" may in a broad and general sense mean in a given context any degree obtained after graduation and which a graduate alone can obtain. But that is not the sense in which the Memorandum uses the particular expression. By "post graduate degree" is meant a Master 's degree like the M.A. or M.Sc. and not a Bachelor 's degree like the B.T. In other words, the expression connotes the successful comple tion of a course of studies at a higher level in any spe ciality, after the acquisition of a basic qualification at the graduate level. The B.T. course of studies, we are informed, is open only to graduates and in dictionary manner of speaking, the degree of "Bachelor of Teaching" may be said to be a "post" graduate degree in the sense that the degree is obtainable only "after" graduation. That is the sense in which the word "post" is used in expressions like "post nuptial", "post prandial", 481 "post operative", "post mortem" and so forth. In these expressions, "post" means simply "after", the emphasis being on the happening of an event after a certain point of time, But the expression "postgraduate degree" has acquired in the educational world a special significance, a technical content. A Bachelor 's degree like the B.T., or the LL.B is not considered to be a post graduate degree even though those degrees can be taken only after graduation. In the refined and elegant world of education, it is the holder of a Master 's degree like the M.Ed. or the LL.M. who earns ,recognition as the holder of a post graduate de gree. That is the sense in which the expression is used in the Memorandum. Mr. Sen says that in some foreign universi ties even a Bachelor 's degree, obtainable only after gradua tion, is considered as a post graduate qualification. We are concerned with the interpretation of an indigenous instrument and must have regard for local parlance and understanding. Such awareness and understanding compel the construction for which we have indicated our preference. Indeed, everyone concerned understood the rule in the same sense as is evident from the permission sought by the appel lant herself to appear for the M.A. examination. She asked for that permission in order to qualify for the Principal 's post. The appellant ' made a serious grievance that she was discriminated against in comparison with several others who have been appointed as principals in higher secondary schools run by the Government. On the record is a statement (Annexure P VIII) which does show that in schools which were from their inception run by the Government, several teachers were appointed as Principals though they did not hold the Master 's degree. Mr. Panjwani appearing on behalf of the state Government has given a valid explanation for this differentiation. Speaking generally, in schools which were always under Government control, a teacher could aspire to become a Principal only after a long period of service. Most of the 19 teachers whose names appear in Annexure P VIII had served for about 20 years before being appointed as principals. On the other hand, private schools like the one in which the appellant was working as a Head Mistress or a principal did not follow any such convention and appoint ments to the post of the head of the school were made there in directly and straightway without insistence on any worth while experience of teaching. The appellant herself was appointed to the post of a Head Mistress directly in the year 1958. The state Government had therefore a valid reason for prescribing comparatively stringent qualifica tions for the post of Principal in schools taken over by it from private institutions. It may be added that in its own schools, the Government appointed persons holding merely the qualification of B.A.B.T., to the post of Principal by reason of the long and valuable experience gained by them as teachers and not on the supposition that they held a post graduate degree. Reliance was placed by the appellant 's counsel on "Regulations of the Board of Secondary Education, Madhya Pradesh", in support of his submission that the qualifica tions of the teaching staff in any institution have to be the same as prescribed for the corresponding staff in Gov ernment institutions. But these Regulations have no rele vance in the present case. They were framed under section 28(4) of the 482 Madhya Pradesh Madhyamik Shiksha Adhiniyam, 1965. Regula tion 61 and the allied regulations on which reliance is placed show that they were framed in order to prescribe conditions with which an educational institution had to comply before seeking recognition of the Board of Second ary Education. The various conditions prescribed by the Regulations do not constitute conditions of service and can create no rights and obligations, contractual or statutory, as between a school and its employees whether the school is a Government institution non Government institution. Before concluding we would like to say that the State Government ought to consider the request which was made by the appellant long since for permission to appear for the final M.A. Examination. She has already passed Part I of that examination with Political Science as her subject but she was refused permission to complete. the course on the ground that she had not yet completed one year 's service under the State Government. That objection. can no longer hold good. We are confident that the proceedings taken by the appellant for vindicating her rights will not be allowed to stand in her way if and when she is found fit and quali fied for further ' promotion in accordance with the ' rele vant rules. For these reasons we confirm the judgment of the High Court and dismiss the appeal but there will be no order as to costs. P.B.R. Appeal dismissed.

Paragraph 3(b) of a memorandum dated December 21, 1967 issued by the State Government provides that for absorption in the post of Principal of a Higher Secondary School, the person concerned "should" possess a post graduate degree and should also possess the prescribed experience. An amendment introduced by the memorandum dated December 6, 1972 says that wherever the qualification for a post is post graduate, the person concerned will have to obtain this degree within three years of absorption. But this amendment was made applicable only to persons who had been working in schools run by Janpad Sabhas and Municipal Committees and for all teachers of non Government schools taken over by the Govern ment 1967 orders applied. The appellant, who was a B.A.B.T., was the Head Mistress of a Private school. When the administration of the school was taken over by the Government, she was fixed in a lower time scale of pay because, under the rules, no person could be appointed as Principal unless she held a post graduate degree and possessed the requisite experience. The High Court dismissed her Writ Petition. In appeal to this Court it was contended that (i) her appointment in a lower post was illegal because she could have obtained the Post graduate degree within the three years ' time from the date of her absorption; (ii) the word 'should ' used in the 1967 memorandum showed that the rule is directory in charac ter; (iii) since. she held B.A.B.T., she should be consid ered as having a post graduate qualification; (iv) she was discriminated against because in the schools run by Govern ment from their inception, teachers who did not hold a Master 's degree were appointed as Principals and (v) the qualifications of the teaching staff have to be the same as prescribed in the Regulations of the Board of Secondary Education. Dismissing the appeal, HELD: (1) In view of the express statement in the 1972 Memorandum that it would be applicable only to previous teachers of Janpad Sabhas and Municipalities, the appellant could not claim the benefit of the particular facility. [479 E F] (2) The word 'should occurring in paragraph 3(b) must be understood in a mandatory sense. The use of word "should" cannot justify the construction that for absorption in the post of a Principal of a Higher Secondary School the incum bent may or may not possess the Post Graduate Degree. In a memorandum containing a set of rules prescribing the quali fications for various posts, it is meaningless to provide that the incumbent of a certain post may or may not possess a certain qualification, if the possession of the particular qualification is considered to be a matter of no importance or consequence. Paragraph 3(b) consists of a complex provi sion one part of which refers to the requirement of a Post Graduate Degree and the other to the need to possess a certain amount of experience. Both the clauses of a single sentence are governed by the verb "should". If the require ment as to the possession of a Post graduate Degree is to be directory in character, the same consideration must apply equally to the requirement of experience, with the result that for eligibility for the post of a Principal, it would neither be necessary to possess any particular educational qualification nor any particular experience of teaching. [480 C E] 478 (3) By "Post graduate Degree" is meant a Master 's degree like the M.A. or M.Sc. and not a Bachelor 's degree like B.T. In expressions like "post nuptial", "post operative" etc., "post" means "after", the emphasis being on the happening of an event after a certain point of time. In the educational world the expression "post graduate" has acquired a special significance. It is the holder a Master 's Degree like the M.Ed. or LL.M., who earns recognition as the holder of a post graduate degree. That is the sense in which the ex pression is used in the Memorandum. [480 G, 481 A] (4) The State Government had a valid reason for pre scribing comparatively stringent qualifications for Princi pals in schools taken over from privae institutions. While a teacher in a Government school was appointed as Principal by reason of long and valuable experience gained as teacher, a Head Mistress or a. Principal of a private school was appointed directly and straightway without insistence on any worthwhile experience of teaching. [481 G] (5) Regulations of the Board of Secondary Education framed under the Madhya Pradesh Madhyamik Siksha Adhiniyam 1965 have no relevance in the present ease. They prescribe conditions with which an educational institution had to comply before seeking recognition. The various conditions prescribed ' by the Regulations do not constitute conditions of service and can create no rights and obligations, con tractual or statutory, as between a school and its employ ees, whether the school is a Government institution or a non Government institution. [482 A B]

o. 305 of 1964. Appeal by Special Leave from the order dated the 9th April, 1963 of the Labour Court, Coimbatore, in C.S.O. Appeal No. 1 of 1962. M. C. Setalvad, and Naunit Lai, for the appellant. M. K. Ramamurthi, R. K. Garg, D. P. Singh and section C. Agar wala, for the respondents. The Judgment of the Court was delivered by Gajendragadkar, C.J. The appellant, Salem Erode Electricity Distribution Co., Ltd., is a licensee under the , and its business consists in buying electrical energy in bulk from the State Electricity Board of Madras and selling it to consumers in Salem and Erode and certain rural districts in the State of Madras. For the purpose of carrying on this business, the appellant has an industrial establishment at Salem. In or about 1940, when the number of the appellant 's con sumers was about 3,000, and that of its workmen 'about 45, the appellant framed certain terms and conditions of its workmen 's employment. Amongst these were included terms about leave and holidays. Later, when the (No. 20 of 1946) (hereinafter called 'the Act ') came into force, the provisions as to leave and holidays which had been introduced by the appellant in the terms and conditions of the employment of its workmen, were embodied in the appellant 's Standing Orders which were certified under the relevant provisions of the Act in or about 1947. The said terms read thus : "Standing Order 5(b) The number of holidays to be granted to the workmen and the days which shall be observed as holidays by the Establishment shall be regulated in accordance with the or other relevant law for time being in force and the custom or usage of the Establishment, viz., holidays under the and festival holidays peculiar to this locality which are being given. 5 0 0 Standing Order 10(a) : Leave will be given in accordance with the law and existing practice provided the leave facilities now available to the workers are not curtailed in any manner". The proceedings which have, given rise to the present appeal by special leave between the appellant and the respondents, its employees, began with the application made by the appellant on the 6th October, 1960, before the Certifying Officer, Madras, for the amendment of the certified Standing Orders to which we have just referred. By its application, the management of the appellant wanted the said Orders to read thus "Standing Order 5(b) : For all workmen who have joined service prior to . holidays under the , and festival holidays of one day per year which day may be chosen by the workmen shall be given. For all workmen who have joined on and after holidays under the Madras Industrial Establishments (National and Festival holidays) Act, 1958 shall be given." "Standing Order 10(a) Leave will be given to all employees who are appointed on and after . iii accordance with the provisions of the Madras Shops and Establishment Act, 1947 or any statutory modification thereof (irrespective of whether this Act applies or not to any category of employee or employees). Provided, however, that for all employees who have been confirmed prior to the above said date, viz the leave facilities now available are not curtailed in any manner". It is relevant to mention the background of the present application. The appellant believed that the urgent need for increased production and for increased supply of electrical energy could be met if the existing rules embodied in Standing Orders 5(b) and 10(a) were suitably modified; and so, the appellant wanted to make the change in the said two Standing Orders on the lines indicated by it in its application to the Certifying Officer. It appears that these Rules were introduced by the appellant on the 1st October, 1960, and were embodied in the contracts of service of new entrants who joined the appellant 's employment as from that date. In fact, they were agreed to by such new entrants. 501 In order to regularise the steps taken by the appellant by revising the relevant Rules in respect of the new entrants to its employment, the appellant made the present application. The change proposed to be made by the appellant in the two Standing Orders in question was resisted by the respondents ' Union. It was urged by the respondents that the proposed change was unfair and unreasonable, and it was also argued that it would introduce discrimination between one set of employees and another working under the same employer, and that would naturally cause industrial unrest and disharmony. The Certifying Officer upheld the pleas raised by the respondents and he accordingly directed that the proposed amendments should be negatived. The appellant then preferred an appeal against the said order before the appellate authority. Both the parties urged similar contentions before the appellate authority and the said authority agreed with the view taken by the Certifying Officer and dismissed the appeal preferred by the appellant. It is against this order that the appellant has come to this Court by special leave. On behalf of the appellant, Mr. Setalvad has urged that the change which the appellant wants to make in the two relevant orders is, on the merits, fair and reasonable; and he adds that the appellant wanted to prove its bona fides by making the changed Standing Orders applicable to the future entrants and not extending them to its employees who were already in its employment and who are governed by the existing Standing Orders. According to Mr. Setalvad, the Certifying Officer and the appellate authority have erred in law in not certifying the changed Standing Orders as proposed by the appellant. In dealing with this point, it is necessary to examine the broad features of the Act and consider its main purpose and object. The Act was passed in 1946 and its main object was to require the employers in industrial establishments to which the Act applied, to define formally the terms and conditions of employment in their respective establishments. In imposing this obligation on the employers, the Act intended that the terms and conditions of industrial employment should be well defined and should be known to the employees before they accepted the employment. As we will presently point out, one of the objects of the Act was to introduce uniformity of terms and conditions of employment in respect of workmen belonging to the same category and discharging the same or similar work under an industrial establishment. Before the Act was passed, employees in many industrial establishments were governed by oral terms and conditions of service which CI/66 2 502 were not uniform and which had been entered into on an ad hoc basis. The Act now requires that terms and conditions of employment in relation to matters specified in the Schedule must be included in the Standing Orders and they must be certified. It would at once be clear that by the operation of the Act, all industrial establishments will have to frame terms and conditions of service in regard to all the matters specified in the Schedule, and that naturally would introduce an element of uniformity inasmuch as industrial employment in all establishments to which the Act applied would, after the Act was passed, be governed by terms and conditions of service in respect of matters which are common to all of them. That, in brief, is the object which the Act intends to achieve. Let us now see the scheme of the Act. "Standing Orders" are defined by section 2(g) as meaning rules relating to matters set out in the Schedule; these matters are 11 in number, and the last one of them refers to any other matter which may be prescribed "Prescribed" according to section 2(f) means prescribed by rules made by the appropriate Government under this Act; and so, Standing Orders mean rules made in relation to the matters enumerated in clauses 1 to 10 in the Schedule as well as any other matter which may in future be added by means of rules to be made by the appropriate Government. This gives a general idea about the matters which are intended to be covered by the Standing Orders. Section 3 of the Act requires the submission of draft Stand ing Orders by the employer within six months from the date on which the Act becomes applicable to an industrial establishment. A statutory obligation has been imposed upon the employer to take necessary action as required by section 3(1). Section 4 requires that the Standing Orders must deal with every matter set out in the Schedule which is applicable to the industrial establishment, and must be in conformity with the provisions of the Act. Section 5 deals with the proceedings for certification of the standing orders by the Certifying Officer. Section 6 provides for appeals against the orders passed by the Certifying Officer Section 7 prescribes the date on which the certified standing orders will come into operation. Section 10(2) provides for the modification of the standing orders. Section 13A provides for the machinery to deal with questions in relation to the application or interpretation of the standing orders certified under the Act; and section 15 confers powers on the appropriate Government to make rules to carry out the purposes of the Act. 5 0 3 When the Act was originally passed, the powers of the Certi fying Officer as well as those of the appellate authority were limited to consider the question as to whether the standing orders submitted for certification were in accordance with the Act or not. By an amendment made in 1956, jurisdiction has been conferred on the Certifying Officer as well as the appellate authority to adjudicate upon the fairness or reasonableness of the provisions of the Standing Orders submitted for certification. That means the jurisdiction of the appropriate authorities functioning under the Act has now been widened and they are required to consider whether the Standing Orders submitted to them for their approval are fair or reasonable. Parties can make their contentions in respect of the fairness or reasonableness of the proposed Standing Orders, and the appropriate authorities will adjudicate upon the said contentions. That is one change made in 1956. The other change made in the original provisions of the Act which is relevant for our purpose is in regard to the provisions contained in section 10(2). Under the original provision of section 10(2), it was only the employer who was authorised to make an application to the Certifying Officer to have the Standing Orders modified. By the amendment made in 1956, even workmen are now entitled to apply for the modification of the Standing Orders. The result of this amendment is that if workmen are dissatisfied with the operation of the existing Standing Orders, they can move for their modification by applying to the Certifying Officer in that behalf. Before this amendment was made, the only course open to the workmen to adopt for securing any modification in the existing Standing Orders was to raise an industrial dispute and move the appropriate government to refer the said dispute to the adjudication of the appropriate Industrial Tribunal. Both these amendments have been introduced by Act No. 36 of 1956. Now, the question which we have to decide is : is it permis ible for an industrial establishment to have two sets of Standing Orders to govern the relevant terms and conditions of its employees ? Mr. Setalvad argues that if the change is intended to be made in the existing Standing Orders, it should be permissible and indeed legitimate for an employer to seek for the change on .he ground that the said change would be reasonable and fair,, provided the existing rights of employees already employed are ,lot affected by such change. Prima facie, this argument appears to be attractive; but if we examine the scheme of the relevant Provisions of the Act in the light of the matters specified in the schedule in respect of which Standing Orders are required to be 504 made, it appears that two sets of Standing Orders cannot be made under the Act. Let us first examine the matters specified in the Schedule. They are specified under cls. ( 1 ) to ( 11 ). The first is in regard to classification of workmen. The second is in relation to the manner of intimating to workmen periods and hours of work, holidays, pay days and wage rates. The third has reference to shift working; the fourth to attendance and late coming. Clause (5) relates to conditions of, procedure in applying for, and the authority which may grant, leave and holidays. Clause (6) deals with the requirement to enter premises by certain gates, and liability to search. Clause (7) is concerned with the closing and reopening of sections of the industrial establishment, and temporary stoppages of work and the rights and liabilities of the employer and workmen arising therefrom. Clause (8) deals with the termination of employment, and the notice thereof to be given by employer and workmen. Clause (9) covers the subject of suspension or dismissal for misconduct, and acts or omissions which constitute misconduct. Clause (10) relates to means of redress for workmen against unfair treatment or wrongful exactions by the employer or his agents or servants. Clause (11) is the residuary clause which refers to any other matter which may be prescribed. One has merely to examine these clauses one by one to be satisfied that there is no scope for having two separate Standing Orders in respect to any one of them. Take the case of classification of workmen. It is inconceivable that there can be two separate Standing Orders in respect of this matter. What we have said about classification is equally true about each one of the other said clauses; and so, the conclusion appears to be irresistible that the object of the Act is to certify Standing Orders in respect of the matters covered by the Schedule; and having regard to these matters, Standing Orders so certified would be uniform and would apply to all workmen alike who are employed in any industrial establishment. Prior to the enactment of the Act, industrial establishments used to employ workmen on different terms and conditions of service and they used to enter into separate agreements with employees on an ad hoc basis. It was precisely with the object of avoiding this anomalous position that the Act has been passed, and an obligation has been imposed upon the industrial establishments to have their Standing Orders certified by the appropriate authorities. Therefore, we do not think Mr. Setalvad is right in 505 contending that it is open to an industrial establishment to have two sets of Standing Orders certified in relation to leave and holidays provided that the modified Standing Orders apply to future entrants and the existing Standing Orders apply to entrants who are already in the employment of the establishment. On principle, it seems expedient and desirable that matters specified in the Schedule to the Act should be covered by uniform Standing Orders applicable to all workmen employed in an industrial establishment. It is not difficult to imagine how the application of two sets of Standing Orders in respect of the said matters is bound to lead to confusion in the working of the establishment and cause dissatisfaction amongst the employees. If Mr. Setalvad is right in contending that the Standing Orders in relation to these matters can be changed from time to time, it may lead to the anomalous result that in course of 10 or 15 years there may come into existence 3 or 4 different sets of Standing Orders applicable to the employees in the same industrial establishment, the application of the Standing Orders depending upon the date of employment of the respective employees. That, we think, is not intended by the provisions of the Act. Once the Standing Orders are made, it is not unlikely that disputes may arise between the employer and the employees in regard to their application or their interpretation, and the Act has specifically made a provision for dealing with problems of this kind. As we have already indicated, section 13A provides that if any question arises as to the application or interpretation of a Standing Order certified under the Act, an employer or a workman may refer the question to any one of the Labour Courts indicated by the section, and the said Labour Court shall, after giving the parties an opportunity of being heard, decide the question and such decision be final and binding on the parties. The result, therefore, appears to be that in regard to the certification of the Standing Orders, the Act provides for a self contained Code. The Certifying Officer is given the power to consider questions of fairness and reasonableness as well as the other questions indicated by section 4(a) and (b). An appeal is provided against the decision of the Certifying Officer and in case a dispute arises as to the interpretation or the application of the Standing Order, a remedy is provided by section 13A. Besides, as we have already pointed out, a right is given both to the employer and the workmen to move the appropriate authorities for modification of the existing Standing Orders. That is why we do not think that Mr. Setalvad is right in contending that the Certifying 506 Officer as well as the appellate authority erred in law in refusing to certify the modified Standing Orders submitted by the appellant for certification. It may be that even in regard to matters covered by certified Standing Orders, industrial disputes may arise between the. employer and his employees, and a question may then fall to be considered whether such disputes can be referred to the Industrial Tribunal for its adjudication under section 10(1) of the Industrial Disputes Act. In other words, where an industrial dispute arises in respect of such matters, it may become necessary to consider whether, notwithstanding the self contained provisions of the Act, it would not still be open to the appropriate Government to refer such a dispute for adjudication. We wish to make it clear that our decision in the present appeal has no relation to that question. In the present appeal, the only point which we are deciding is whether under the scheme of the Act, it is permissible to the em ployer to require the appropriate authorities under the Act to certify two different sets of Standing Orders in regard to any of the matters covered by the Schedule. It now remains to consider the three decisions to which Mr. Setalvad has invited our attention. In Rai Bahadur Diwan Badri Das vs The Industrial Tribunal, Punjab(1), this Court had to consider the question as to whether the Tribunal against whose award an appeal had been brought to this Court by the appellant Rai Bahadur Diwan Badri Das was in error in refusing to allow the appellant 's prayer that he should be permitted to introduce a new rule in respect of leave with wages applicable to the entrants in his employment after the 1st of July, 1956. It appears that on the said date, the appellant made a rule that every workman employed on or before that date would be entitled to 30 days leave with wages after working for 11 months and workmen employed after that date would be entitled to earned leave in accordance with the provisions of section 79 of the Indian . This rule led to an industrial dispute which was referred to the Industrial Tribunal, and the Tribunal held that all the workmen were entitled to 30 days earned leave as under the existing rule and that the rule made by the appellant on the 1st of July, 1956 cannot be enforced. It was this award which was challenged by the appellant before this Court, and the challenge was based on the broad and general ground that the employer had full freedom of contract to make a rule for the employment of his employees and that the Industrial Tribunal is not entitled to (1) 507 interfere with his freedom of contract. It appears that the change which the employer sought to make by the new rule did not involve any appreciable financial burden, and it was not the case of the appellant that the existing rule caused any hardship to him. The appellant, however, wanted to urge before this Court the theoretical ground that in a matter of employment, an industrial employer is entitled to make his own conditions with his employees and that industrial adjudication should not interfere with his freedom of contract in that behalf. Indeed, as the majority judgment shows, the appellant was a good employer and was treating his employees in a very liberal manner. He, however, brought the dispute before this Court in order to assert the general principle which was raised for the decision of this Court. That is the background of the majority decision in Rai Bahadur Diwan Badri Das 's(1). Dealing with the broad point raised by the learned Solicitor General on behalf of the appellant in that case, this Court held that several decisions pronounced by industrial adjudication had now established the principle that the doctrine of absolute freedom of contract had to yield to the higher claims for social justice. Even so, this Court took the precaution of making it clear that the general question about the employer 's right to manage his own affairs in the best way he chooses, cannot be answered in the abstract without reference to the facts and circumstances in regard to which the question is raised, and it was pointed out that in industrial matters of this kind, there are no absolutes and no formula can be evolved which would invariably give an answer to different problems which may be posed in different cases on different facts. Having thus dealt with the general point raised by the learned Solicitor General in Rai Bahadur Diwan Badri Das 's(1) case, the majority decision considered the facts in that particular case and held that the Tribunal was not shown to have been in error when it held that in the matter of earned leave there should be uniformity of conditions of service governing all the employees in the service of the appellant. It was in that connection that reference was made to the fact that in regard to all the other terms and conditions of service, there was uniformity in the appellant 's establishment itself; and so, it was thought that the Tribunal might have been justified in discouraging a departure from the said uniformity in respect of one item, viz., earned leave. It would thus be clear that this decision does not lay down any general (1) 508 principle at all. In fact, this decision emphatically brings out the point that in dealing with industrial disputes, industrial adjudication should always resist the temptation of laying down any broad, general or unqualified propositions. Therefore, we do not think that the decision of this Court in the case of R. B. Diwan Badri Das(1) is of much assistance. In that case, the Court was dealing with an award pronounced by an Industrial Tribunal in an industrial dispute; and the narrow question which the Court decided was that the Industrial Tribunal was not in error in not upholding the rule made by the employer on the 1st July, 1956. In the present case, we are dealing with proceedings arising under the Act and that means that considerations which govern the present proceedings are not necessarily the same as those which would govern the decision of an industrial dispute brought before the Industrial Tribunal for its adjudication under the Industrial Disputes Act. The next decision to which Mr. Setalvad has referred was pronounced by this Court in the case of Associated Cement Staff Union and Another vs Associated Cement Company and Others(1). During the course of the hearing of this appeal, some arguments were urged before us on the question about the relation between terms and conditions of service governing working hours, leave, and the like, and the wages paid to the employees. Mr. Ramamurti who appeared for the respondents conceded that the terms and conditions in regard to leave or working hours can be changed; but he contended that the increase in the working hours or the reduction of earned leave should not be permitted to be introduced without taking into account the question about the consequent increase in the wage structure itself; and it was with a view to combat this contention that Mr. Setalvad referred us to the decision in the Associated Cement Co.(1). In that case, the question of holidays, working hours and wages were all referred to the Industrial Tribunal for its decision. The matter which arose for the decision of this Court in the appeals which were brought to this Court in that case, was, inter alia, in regard to holidays. The Tribunal had allowed 21 holidays, whereas this Court reduced the number to 16. Dealing with the question about the normal working hours, this Court observed that "once a conclusion about the normal working hours is reached after considering the optimum working hours on a consideration of all the relevant factors, industrial adjudication cannot hesitate to give effect to its conclusion merely because the workmen would have been entitled (1) (2) 509 to more wages at overtime rates if the hours of work had been fixed at less". Mr. Setalvad relies upon this observation. But we think it would be unreasonable to read this observation in isolation, because in the very next sentence, this Court has added that it is true that in fixing the proper wage scale, the question of workload and the matter of working hours cannot be left wholly out of consideration, though it further observed that many other factors including the need of the workmen, the financial resources of the employer, the rates of wages prevailing in other industries in the region, have all to be considered in deciding the wage scale. It appears that in that case, the Tribunal itself had held that 21 holidays erred on the side of excessive liberality, and yet it did not reduce that number. That is why this Court reduced the number of holidays from 21 to 16. This decision, in our opinion, does show that where industrial adjudication has to deal with an industrial dispute in relation to wage structure, working hours, and holidays, it must consider the problem comprehen sively and in prescribing the working hours, and making provision for holidays and leave with or without pay, amongst other relevant factors, the wages paid to the 'employees have no doubt to be taken into account. But these considerations do not arise in the present proceedings, because what the appropriate authorities under the Act had to consider was whether two sets of Standing Orders should be permitted under the same establishment or not. The last case to which reference must be made is Guest, Keen, William Private Ltd. vs P. J. Sterling and Others(1). In that case, the Standing Order had been certified under the Act prior to its amendment. The relevant Standing Order had relation to the age of retirement of the employees under the establishment in question. When the Standing Order was certified, its fairness and reasonableness could not have been examined by the Certifying Authority. After it was certified, the employer sought to give effect to the age of retirement in regard to employees who were already in its employment; and that gave rise to an industrial dispute. The employees who were already in the employment of the employer, contended that prior to the certification of the Standing Order, there was no, age of retirement in the concern and they urged that the certified Standing Order could not affect their right to continue in the employment so long as they were fit to discharge their duties. It was in the contending this dispute that the question arose as to whether the certified Standing Order applied to the previously existing employees. The Labour Appel (1) ; 510 late Tribunal against whose decision the appeal was brought to this Court by the appellant Guest, Keen, Williams Private Ltd., had held that the certified Standing Order could not apply to the ,employees who were already in the employment of the appellant. This Court affirmed the view expressed by the Labour Appellate Tribunal that the certified Standing Order could not affect the rights of the previous employees; nevertheless, it was held that the question of prescribing an age of retirement for them could be considered in the proceedings before the Court and under the special circumstances to which reference has been made in the judgment, it was thought that the age of superannuation for prior employees could be reasonably and fairly fixed at 60 years. This decision again is not of any assistance, because the matter came to this Court from an industrial dispute which was the subject,matter of industrial adjudication before the Industrial Tribunal and the Labour Appellate Tribunal; and all that this Court did was to fix an age of superannuation or workmen who had been employed prior to the date of the certification of the relevant Standing Order, at 60, and that course was adopted under the special and unusual circumstances expressly stated in the course of the judgment. As we have already pointed out, the question as to whether two sets of Standing Orders can be certified under the provisions of the Act, did not fall to be considered in that case. Therefore, we are satisfied that the Certifying Officer as well as the appellate authority committed no error of law in refusing to certify the modified Standing Orders submitted by the appellant in the present proceedings. The result is, the appeal fails and is dismissed with costs. Appeal dismissed.

The appellant company, which carried on the business of buying bulk electrical energy and distributing it to consumers, made an application under the , to the Certifying Officer, Madras, for an amendment of two of its certified Standing Orders relating to holidays and leave. It was claimed by the appellant that the urgent need for increased production and for increased supply of electrical energy could be met if the existing rules embodied in the two standing orders were suitably amended; the amendments pro posed sought to introduce different rules relating to holidays and leave for employees who were appointed before a specified date and those who joined service after that date. The proposed amendments were resisted by the respondents ' union on the ground, inter alia, that they would introduce discrimination between one se of employees and another resulting in industrial unrest and disharmony. The Certifying Officer upheld the respondents I plea and nega tived the amendments. An appeal to the appellate authority against this decision was dismissed. it was contended on behalf of the appellant that the proposed amendments were fair and reasonable and that the Certifying Officer and, the appellate authority had erred in law in not certifying the Standing Orders as proposed to be amended. HELD : (i) The Certifying Officer and the appellate authority committed no error of law in refusing to certify the modified Standing Orders. [510 E] The Act provides a self contained code and the Certifying Officer is given the power to consider questions of fairness and reasonableness as well as other questions indicated by section 4(a) and (b). An appeal is provided against the decision of the Certifying Officer and in case a dispute arises as to the interpretation or the application of the Standing Order, a remedy is provided In section 13A. A Tight is given both to the employer and the workman to move the appropriate authorities for modification of the existing Standing Orders. [505 G H] (ii) It is clear from the provisions of the Act requiring industrial establishments to have their Standing Orders certified that matters specified in the Schedule to the Act should be covered by uniform Standing Orders applicable to all workmen employed in an industrial establishment. [505 B] 499 Rai Bahadur Diwan Badri Das V. The Industrial Tribunal, Punjab;[1963] 3 S.C.R. 930; Associated Cement Staff Union vs Associated Cement Co.,& Ors. ; Guest Keen Williams Private Ltd. vs F. I. Sterling and others: ; ; referred to.

Civil Appeals Nos. 1912 1914 of 1976. (Appeal by special Leave from the Judgment and order dated 7 2 1975 of the Madhya Pradesh High Court in Misc. Petition No. 231/74 and 685 and 732/73 respectively.) I.N. Shroff and H.S. Parihar, for the appellants. S.K. Gambhir, for respondents Nos. 1 and 2. The Judgment of the Court was delivered by FAZAL ALI, J. In this appeal by special leave, on an application filed by the respondents before the High Court of Madhya Pradesh, the High Court struck down the constitu tional validity of sub section (5) (a) of section 37 of the Madhya Pradesh Krishi Upaj Mandi Adhiniyam, 1972 hereinafter referred to as 'the Act ' (No. 24 of 1973). The impugned sub section runs as follows: "(5) Every commission agent shall be liable (a) to keep the goods of his principal in safe custody without any charge other than the commission payable to him; and" 620 The High Court thought that this statutory provision places unreasonable restriction on the commission agent and puts great burden on him for storing the goods given to him by the principal without charging the commission for its safe custody. The Act is a social piece Of legislation and should have been liberally construed so as to advance the object of the Act and fulfil the aims to be achieved there by. The main purpose of the Act is to secure a scientific method of storage, sale, distribution and marketing of agricultural produce and cut out as far as possible middle man 's profit. The Act, therefore, contains provisions of a beneficial nature preventing profiteering tendencies. It is not, however, the hardship that can be termed unreasonable so as to make a statute unconstitutional. Moreover, the High Court does not appear to have looked to. the scheme of the Act and has in fact completely overlooked the provisions of section 37(4) which runs as follows: "(4) The commission agent shall recover his commission only from his principal trader at such rates as may be specified in the bye laws including all such expenses as may be incurred by him in storage of the produce and other services rendered by him." This section clearly empowers the commission agent to charge such rates as may be specified by the bye laws even for the storage of the Produce and other services rendered by him. This provision also does not prevent the commission agent from levying reasonable charges for the storage over and above his commission. All that the Act prevents is that the commission agent is prohibited from levying any charges for safe custody from the farmer or the principal. This is done in order to attract and lure the farmers to place their goods with commission agents without additional payment of charges for safe custody. Section 37 (4), however, compen sates the commission agent by authorising him to charge his commission and all expenses which may be incurred by the commission agent in connection with the storage of the produce and the services rendered by him. This section, therefore, clearly authorises the commission agent not only to charge his commission from the principal trader but also expenses incurred by him for the purpose of the storage. That apart section 2(e) of the Act whiCh defines a "Commission agent" empowers him to charge any commission o.r percentage upon the amount involved in such transaction. For these reasons, therefore, we do not see any hardship or unreasonableness in the provisions Of section 37(5)(a) of the Act. The High Court, therefore, committed an error of law in striking down this provision as unconstitutional. In our opinion, therefore, section 37 (5) (a) of the Act is constitu tionally valid. In the view we take, it is not necessary to go into the question whether the law violates article 19 of the Constitution which stands suspended during the emergen cy. The appeal is accordingly allowed. The order of the High Court is quashed. In the circumstances, there will be no order as to. costs. M.R. Appeal al lowed.

The respondents challenged the constitutional validity of section 37(5)(a) of the Madhya Pradesh Krishi Upaj Mandi Adhiniyam, 1972, before the High Court on the ground that it places unreasonable restriction on the commission agent and puts a great burden on him for storing the goods given to him by his principal, without charging the commission for its safe custody. The plea was accepted and the High Court struck down the impugned provision as unconstitutional. Allowing the appeal by Special Leave, the Court, HELD: Section 37(5)(a) is constitutionally valid and there is no hardship or unreasonableness in it. The provi sion prevents the commission agent from levying any addi tional charges from the farmer or the principal for safe custody of the goods. but section 37(4) of the Act compensates him by authorising him to charge not only his commission from the, principal trader, but also the expenses incurred by him for the purpose of storing the produce, and the services rendered by him. [620 D, E, G]

Criminal Appeal No. 56 of 1951. Appeals by special leave from the Judgment and Order dated the 9th March, 1950, of the High Court of Judicature at Nagpur (C. R. Hemeon J.) in Criminal Revisions Nos. 152 and 153 of 1949 arising out of Judgment and Order dated the 24th March, 1949, of the Court of the Sessions Judge, Nag pur, in Criminal Appeals Nos. 26 and 27 of 1949 and Judgment and Order dated the 15th January, 1949, of the Court of the Special Magistrate, Nagpur, in Criminal Case No. 1 of 1948. 1092 N.C. Chatterjee (B. Bannerjee and A.K. Dart, with him) for the appellant in Criminal Appeal No. 56 of 1951. Bakshi Tek Chand(K. V. Tarnbay, with him) for the appel lant in Criminal Appeal No. 57 of 1951. T.L. Shivde, Advocate General of Madhya Pradesh (T. P. Naik, with him) for the respondent. Sept. 23. The Judgment of the Court was delivered by MAHAJAN J. This is a consolidated appeal by special leave from the two orders of the High Court of Judicature at Nagpur passed on the 9th March, 1950, in Criminal Revisions Nos. 152 and 153 of 1949. On a complaint filed by the Assistant Inspector General of Police, Anti Corruption Department, Nagpur, the appel lant in Criminal Appeal No. 56 of 1951 (H. G. Nargundkar, Excise Commissioner, Madhya Pradesh), and the appellant in Criminal Appeal No. 57 of 1951 (R.S. Patel) were tried in the court of Shri B.K. Chaudhri, Special Magistrate, Nag pur, for the offence of conspiracy to secure the contract of Seoni Distillery from April, 1947, to March 1951 by forging the tender, Exhibit P 3A, and for commission of the offences of forgery of the tender (Exhibit P 3A) and of another document, Exhibit P 24. The learned Special Magistrate convicted both the appellants on all the three charges. He sentenced R.S. Patel to rigorous imprisonment for one year under each charge and to pay fines of Rs. 2,000, Rs. 2,000, and Rs. 1,000, under the first, second and third charges respectively. The appellant Nargundkar was sentenced to rigorous imprisonment for six months under each charge and to pay fines of Rs. 2,000, Rs. 2,000 and Rs. 1.,000, under the first, second and third charges respectively. Each of the appellants appealed against their respective convictions and sentences to the Court of the Sessions Judge, Nagpur. The learned Sessions Judge quashed the conviction of both the appellants under the first charge of criminal conspiracy under section 120 B, I.P.C., but maintained the 1093 convictions and sentences under section 465, I.P.C. or the charges of forging Exhibits P 3 (A) and P 24. Both the appellants went up in revision against this decision to the High Court but without any success. An application was then made under article 136 of the Constitution of India for special leave to appeal and this was allowed by this Court on 24th March, 1950 The appellant, Nargundkar, is a member of the Central Provinces & Berar Provincial Service and held the substan tive post of Deputy Commissioner for several years. In April, 1946, he was appointed Excise Commissioner. Madhya Pradesh, and continued to hold that office till the 5th September, '1947. The appellant, R.S. Patel, is a sugar Technologist and Chemical Engineer. He received his technical education and practical training in America and after working as Chief Chemist and General Manager in factories in Madras for five years, came to the Central Provinces in 1944, when the Provincial Government gave him a licence to set up a dis tillery for the manufacture of industrial spirit. On the 11th September, 1946, Nargundkar in his capacity as Excise Commissioner invited tenders for working the Government distillery at Seoni and supplying spirit to certain specified districts f or a period of four years from 1st April, 1947, to 31st March, 1951. The last date for submitting the tenders was the 31st October, 1946. In response to this tender notice, five tenders were filed including those filed by (1) appellant, R.S. Patel, (2) K.B. Habibur Rahman, (3). Zakirur Rahman, and (4) Edulji V. Doongaji (P. W. 4), in sealed covers with the Excise Commis sioner on the 31st October, 1946, and he handed them over with the seals intact to the office superintende. nt, S.W. Gadgil (P. w. 13), for safe custody. Gadgil took them to his room and kept them under lock and key in the office safe. The case for the prosecution is that on the 9th Novem ber, 1946, accused Nargundkar took these sealed tenders home, that the tenders were opened by him at his house, that the rates of the tender (Exhibit 1094 P 6) of E.J. Doongaji (P. W. 4) were divulged to accused 2 (R. section Patel), who was allowed to substitute another tender (Exhibit P 3A), containing rates lower than those of Doongaji, that thereafter these open tenders were brought to the office on the 11th November, 1946, and given to Amarnath (P.W. 20) who was the Assistant Commissioner of Excise, for submitting a report and that on the recommendation of Nar gundkar the tender of accused 2 (Patel) was accepted and the contract was given to him. In May, 1947, on receipt of an application (Exhibit P 1) from one Dilbagrai (P. W. 14), enquiries were started by the Anti Corruption Department. Both the accused became aware of the enquiry. In order to create evidence in their favour they brought into existence a letter (Exhibit P 24) and antedated it to 20th November, 1946. This document was forged with the intention of com mitting fraud and of causing injury to Amarnath (P. W. 20) and also to Doongaji (P.W. 4). Exhibit P 24 is alleged to have been typed on a typewriter (Article A) which was pur chased on the 30th December, 1946, by the National Industri al Alcohol Co., Nagpur, of which accused Patel was the managing director. It Was further alleged that the endorse ment made by accused 1 (Nargundkar) in the said letter "No action seems necessary. File", and marked to Superintendent "S" was not made on the 21st November, 1946, which date it bears. This letter was handed over by accused 1 to the Office Superintendent, S.W. Gadgil (P.W. 13) about the middle of August, 1947, and thereafter accused I wrote a letter (Exhibit P. 26), on the 2nd October, 1947, to Sri section Sanyal (P.W. 19) who was then the Excise Commissioner, requesting that this letter (Exhibit P 24) and a note sheet (Exhibit P 27) be kept in sale custody. Both the accused denied the commission of the offences of criminal conspiracy, forgery and abetment thereof. Nargundkar denied having attended office on the 9th Novem ber, 1946. He denied having taken the tenders home. Ac cording to him, the tenders were opened by him in the office on the 1095 11th November, 1946. Accused 2 denied that the tender of Doongaji was shown to him by accused 1 between the 9th and 11th November, 1946. He stated that the tender (Exhibit P 3A) was the original tender submitted by him on the 31st October, 1946. As regards Exhibit P 24, it was denied that it was fabricated or antedated. Accused 2 stated that it was not typed on article A. He also alleged that the allegations made in Exhibit P 24 were correct. Accused Nargundkar stated that the endorsement was made by him on the 21st November, 1946. The first charge having failed, nothing need be said about it herein. In order to prove the second charge the prosecution had to establish that Gadgil, P.W. 13, handed over the sealed tenders on the 9th November, 1946, to accused Nargundkar, that the latter took them home, that between the 9th and the 11th November he met Patel at his house or elsewhere and that accused. Nargundkar showed or communicated the particu lars of the tender of Doongaji to accused Patel who substi tuted Exhibit P 3A for his original tender before the 11th November, 1946. Admittedly there is no direct evidence to prove any of these facts except the first one, and the nature of the case is such that recourse could only be had to circumstantial evidence to establish those facts. The fact that the sealed tenders were handed over by Gadgil to accused Nargundkar on the 9th November has been held proved solely on the uncorroborated testimony of Gadgil as against the denial of Nargundkar. Gadgil was himself a suspect in the case. He was kept by the police away from the office for about eight months during the investigation, he was asked to proceed on leave at the instance of the police and his leave was extended at their request. On the expiry of his leave he was kept off duty without salary for a period of about five months but later on he was paid his full salary after he had given evidence in support of the prosecution. He made addi tions and improvements on vital points from stage to stage of his deposition and in certain particulars his statement was contradicted by Ramaswami, P.W. 80. On his own admission he is an accomplice in respect 1096 of the forgery of Exhibit P 27, one of the documents al leged to have been forged for purposes of the defence but concerning which no prosecution was started. Exhibit P 27 bears date 31st October, 1946. Gadgil 's statement about it is as follows: "He (Nargundkar) put down his signature and the date 31st October, 1946. This order was actually written by Sh. Nargundkar in the note sheet, Exhibit P 27, in the month of July or August, 1947. The dates were antedated. In the margin of the note sheet I have put down my initials S.W.G. and put the date 31st October, 1946. This note sheet was not prepared on gist October, 1946. He asked me to keep it in my custody. " The witness admittedly became a party to the preparation of a forged document. Whether he was telling the truth, or he was telling a lie, as appears likely from his cross examination, he is in either event, not a person on whom any reliance could be placed. It is curious that this aspect of the evidence of Gadgil has not been noticed by any of the three courts below. When the court of first instance and the court of appeal arrive at concurrent findings of fact after believing the evidence of a witness, this court as the final court does not disturb such findings, save in most exceptional cases. But where a finding of fact is arrived at on the testimony of a witness of the character of Gadgil and the courts below depart from the rule of prudence that such testimony should not be accepted unless it is corroborated by some other evidence on the record, a finding of that character in the circumstances of a particular case may well be reviewed even on special leave if the other circumstances in the ease require it, and substantial and grave injustice has result ed. After fully examining the material on the record we have reached the conclusion that the courts below were in error in accepting the uncorroborated testimony of Gadgil to find the fact that he handed over the tenders to Nargund kar on the 9th November, 1946. The witness was not allowed to live in a free atmosphere and was kept under police 1097 surveillance during the whole of the period of investigation and the trial and was rewarded with payment of his full salary after he had given evidence to the satisfaction of the prosecution. He is a person who felt no hesitation in deposing on oath that he willingly became a party to the forgery of Exhibit 13 27. Assuming that the accused Nargundkar had taken the tenders to his house, the prosecution, in order to bring the guilt home to the accused, has yet to prove the other facts referred to above. No direct ' evidence was adduced in proof of those facts. Reliance was placed by the prosecution and by the courts below on certain circumstances, and intrinsic evidence contained in the impugned document, Exhibit P 3A. In dealing with circumstantial evidence the rules specially applicable to such evidence must be borne in mind. In such cases there is always the danger that conjecture or suspi cion may take the place of legal proof and therefore it is right to recall the warning addressed by Baron Alderson to the jury in Reg vs Hodge (1) where he said : "The mind was apt to take a pleasure in adapting circum stances to one another, and even in straining them a little, if need be, to force them to form parts of one connected whole; and the more ingenious the mind of the individual, the more likely was it, considering such matters, to over reach and mislead itself, to supply some little link that 'is wanting, to take for granted some fact consistent with its previous theories and necessary to render them complete. " It is well to remember that in cases where the evidence is of a circumstantial nature,the circumstances from which the conclusion of guilt is to be drawn should in the first instance be fully established, and all the facts so estab lished should be consistent only with the hypothesis of the guilt of the accused. Again, the circumstances should be of a conclusive nature and tendency and they should be such as to exclude every hypothesis but the one proposed to be proved. In (1) 141 1098 other words, there must be a chain of evidence so far com plete as not to leave any reasonable ground for a conclusion consistent with the innocence of the accused and it must be such as to show that within all human probability the act must have been done by the accused. In spite of the force ful arguments addressed to us by the learned Advocate Gener al on behalf of the State we have not been able to discover any such evidence either intrinsic within Exhibit P 3A or ,outside and we are constrained to observe that the courts below have just fallen into the error against which warning was uttered by Baron Alderson in the above mentioned case. The trial magistrate was of the opinion that friendship between the two accused was of a very rapid growth and that their relations were very intimate and accused 2 was in a position to influence accused 1. He thus found that there was motive for the commission of the crime. The learned Sessions Judge disagreed with this finding and the High Court agreed with the Sessions Judge on this point. It observed that the evidence which tended to prove friendship or undue favour was not such as to form the basis for a finding. It further found that there was nothing to show that the appellant Nargundkar received any illegal reward or the promise of one for showing Doongaji 's tender to accused R.S. Patel. The first circumstance therefore on which the trial Judge placed considerable reliance was negatived by the court of appeal and in revision. It having been found that there was no motive whatsoever for accused Nargundkar to show the tenders to accused Patel and to take a substi tuted tender from him, the main link in the chain of reason ing of the trial court vanishes. Amiable relations between the two accused or their official relationship could not be regarded as sufficient motive for committing the crime of forgery. The mainstay of the prosecution case is the intrinsic evidence of the contents of Exhibit P 3A itself which ac cording to the courts below are unusual, peculiar and strange and which according to the Advocate General could not be there if it was a genune 1099 document. The argument would have force provided the prem ises on which it is based are correct. Having examined the contents of Exhibit P 3A, we do not find anything very unusual or extraordinary in it which could not be there without its author having seen Exhibit P 6. We now proceed to examine the so called peculiar features in Exhibit P 3A. In order to appreciate the points made by the learned Advocate General it is necessary to set out certain facts. Exhibit P 9 is the notice calling for tenders for the supply of country spirit in the Seoni distillery area. The rates which were called for by this notice were as follows: 1. Flat rate for four years. Rates on sliding scale for four years. All in rate on the sliding scale for one year 1947 48. 4. Flat rates on the basis of the price of mahua flowers for three years 1948 51. 5. All in sliding scale rate on the basis of the price of mahua flowers for three years 1948 51. The trial magistrate held on a construction of it that no rate or rates of separate years were asked for in this notice and that one flat rate was only asked for, for four years. Habibur Rahman and Zakirur Rahman in their tenders, Exhibits P 4 and P 5, quoted one flat rate for four years and did not mention separate flat rates for separate years. Doongaji in his tender, Exhibit P 6, mentioned separate flat rates for each separate year also. He did so because he consulted one Mr. Munshi, Personal Assistant to the Excise Commissioner, whether he should quote each rate separately and Mr. Munshi told him that he could give flat rate for the combined years as well as flat rates and also sliding scale rates for each year separately. Admittedly accused 2 was working as an agent of Habibur Rahman and his son Zakirur Rahman for the distillery contracts of Betul and Seoni, and, therefore, he must have been the author not only of his own tender but of the tenders submitted by Habibur Rahman and Zakirur Rahman, Exhibits 1100 P 4 and P 5. All of them were acting together with the object of getting the contract though they were submitting three separate tenders. The trial magistrate held that as Habibur Rahman and Zakirur Rahman gave one flat rate for four years as called for by Exhibit P 9, but accused 2, the author of all these tenders, did not do it in Exhibit P 3A, but followed the method of Doongaji in giving the rates of each year separately as well as the rate for the combined four years. lie must have done so as he was shown the tender Exhibit P section The question arises whether the circumstance that the accused Patel and Habibur Rahrnan and Zakirur Rahman were acting together was such from which a necessary inference arises that the accused Patel must have been the author of all the three tenders and, if he were, that he could not have departed from the method adopted by him in preparing Exhibits P 4 and P 5 unless and until he had seen Exhibit P 6. We are clearly of the opinion that from the premises stated this inference does not necessarily follow. Doongaji even after reading Exhibit P 9, could not make up his mind whether to submit the tender with one flat rate for all the four years or whether to submit it by giving sepa rate flat rates for each of the four years and made enquiry from the office of the Excise Commissioner and then quoted separate rates for each of the four years separately also. Patel who has admittedly considerable experience of distill ery contracts and about the method of submitting tenders might very well have thought that it was best to quote a flat rate for all the years as well as a flat rate for each year separately. The circumstance that he did not do so in the other two tenders prepared by him does not materially advance the prosecution case. The very object of submitting several tenders on behalf of three persons acting in unison was to indicate to the excise authorities that they were being submitted by three different persons. If there were no variations whatsoever between those tenders that would have defeated the very purpose of submitting them. More over, a variation of this trifling nature between Exhibits P 3A and P 4 1101 and P 5 cannot be said to be of such an unusual or of such an extraordinary character as to warrant the inference that it could not have been made except without a look at the tender of Doongaji. The circumstance is of a neutral charac ter and the trial magistrate and the learned Sessions Judge gave undue importance to it, being obsessed with the idea that such a quotation of flat rates for each year could not be mentioned in a tender by a contractor merely on a con struction of Exhibit P 9 and without any further inquiry or without seeing the tender of somebody else who had followed that method. The next circumstance on which considerable reliance is placed is that accused 2 studiously maintained rates below the rates of Doongaji throughout, that when Doongaji lowered his rates for the second year accused 2 did the same, and when Doongaji raised his rates for the third and fourth years accused 2 also did so, at the same time maintaining rates lower than Doongaji 's rates. It is said that the system followed by Habibur Rahman and Zakirur Rahman and Patel originally must have been the same as Patel was the author of all the three tenders, that Habibur Rahman 'srates were higher than Zakirur Rahman 's by six pies and this variation was constant throughout, that in Patel 's original tender which must have followed the same system his rates would be lower than Habibur Rahman 's by three pies through out. Exhibit P 3A, however, shows that this is not so. Patel abandoned the system when he found that his rates on his original scheme would be higher than the correspond ing rates of Doongaji. Learned Advocate General contended that it was impossible for Patel unless he had seen Exhibit P 6, to quote rates of a large number of items numbering about 197, in every case lower than the rates given in Exhibit P 6 and the circumstance that in not a single case he has quoted a higher rate than Exhibit P 6 is conclusive of the fact that he had done so after he had seen Exhibit P 6. It was also said that there is no satisfactory explana tion why Patel abandoned the scheme adopted by him in 1102 drawing up Exhibits P 4 and P 5 and his original tender. In our view, this circumstance again is not so strange or peculiar as was made out by the learned Advocate General or in the courts below. In the first place, there is no material whatsoever for the assumption that the so called original tender was drawn up on the same scheme as Exhibits P 4 and P 5 or that there was a constant variation in rates between it and Habibur Rahman 's tender. It has been assumed on mere surmise that the first five rates in the tender, Exhibit P 3A, are the rates that had been originally quoted. The original tender is not forthcoming and there is no evidence at all about its contents. Moreover, in the depo sition of Doongaji it was elicited that in the year 1942 when tenders for the Seoni distillery contract were called for, the rates quoted by Ratanshah were lower than his rates for all items. He, however, voluntarily added that Ratanshah obtained his rates of the previous contracts before he submitted his tender for the year 1942 and that he had made a reduction of annas two to three in those rates but he was forced to admit that the rate of Ratanshah in the tender was not only lower than his but was also lower throughout than the rates of Laxminarain, Haji Ismail and Habibur Rahman even without seeing their tenders. From this statement it is quite clear that even without seeing the tenders of differ ent tenderers a contractor may quote rock bottom rates of all items on his own calculation or impelled by the desire of taking the contract anyhow. We do not follow why Patel could not do in 1946 what was done by Ratanshah in his tenders in 1942 and quote rates lower in all particulars and regarding all items than the rates of Doongaji. If a person is out to give rockbottom rates and his calculation is such that his rates work out lower than the rates of others, it may well be that he may quote lower rates in respect of all items. It was then said that Patel had adopted a particular plan in submitting the three tenders, of himself, Habibur Rahman and Zakirur Rahman and that his plan was that his rates should be less by three pies 1103 than the rates he had quoted for Habibur Rahman, that in the first five items of Exhibit 145 he stuck to that plan and did not alter the rates of those items as originally submit ted by him, as those rates were lower than the rates of Doongaji but from the sixth item onwards he substituted new rates for the ones he had originally submitted and he de parted from the plan so that his rates for each item were to be lower only by three pies as compared with the rates of Habibur Rahman. It is no doubt true that Patel did not adhere to the plan that he adopted in the first five items of his tender but is that a circumstance from which any inference can be drawn that the first five items are a part of his original tender or that he did so depart from them because he had seen Exhibit P 6 and he wanted to underbid Doongaji. As we have already said, the object of submitting three separate tenders ostensibly by persons who were acting together was to secure the contract in one or the other name and Patel who was the author of all the three documents may very well in his own document have quoted much lower figures than were quoted by Habibur Rahman and Zakirur Rahman, in order also to give the impression that all these tenders had not been submitted by one and the same person. Be that as it may, a closer examination of the tenders of Doongaji and Patel completely negatives the theory of the courts below. The rates quoted in the first five items of Exhibit P 145 are lower than the rates of Doongaji by 102, 69, 18, 12 and 9 pies respectively. Even in the subsequent quotations except in one case where the disparity in the tales of Doongaji and Patel is only two pies, the disparity in the rates is from 9 to 11 pies. Patel is certainly a businessman and the whole object of quoting the rates was to earn the maximum profit. If he had seen the tender of Doongaji he would have modelled the rates in a manner that would give him the highest profit. The learned Advocate General could not suggest any reason whatsoever why Patel would maintain his quotation for the quantity of 50,000 gallons at Rs, 2 10 6 when the rate of Doongaji was Rs. 3 3 0 1104 He could easily raise the quotation to Rs. 3 and similarly in all other cases he could have underbid Doongaji by 2, 3 or 6 pies at the most. He need not have maintained a dis parity of 9 to 11 pies between his rates and the rates of Doongaji. In our opinion, therefore, no conclusion of any character could be drawn from the disparity in the rates of Doongaji or of Patel or of the expected uniformity in the rates of Habibur Rahman or of R.S. Patel which would estab lish that Exhibit P 3A had been prepared by having a look at Exhibit P 6. Another circumstance on which reliance was placed was that certain rates in Exhibit P 3A are lower than the corre sponding rates in Exhibit P 6 by only one or two pies. There is no doubt that one or two rates are lower by two pies than the rates in Exhibit P 6 but nothing follows from that innocent circumstance, unless one starts with a pre sumption of guilt. Once it is assumed that the tender of Doongaji was shown to Patel, all these circumstances might to some extent fit in with the view that in certain respects it may have been copied from Exhibit P 6. The courts below fell into this error and departed from the rule that in a criminal case an accused person is to be presumed to be innocent and that it is for the prosecution to establish his guilt conclusively. Next it was urged that in the covering letter Exhibit P 3 sent by Patel he mentions three appendices numbered 1, 2 and 3, The same expression finds place in the covering letter Exhibit P 4 of Habibur Rahman and Exhibit P~5 of Zakirur Rahman, that appendices 1 to a of the tender of Habibur Rahman and Zakirur Rahman correctly answer to the reference in the covering letters but this is not so in Patel 's case; on the other hand, instead of appendix 1, Patel has appendix 1 (a) and 1 (b) and the number of his appendices thus goes up to four and this departure from Exhibits P 4 and P 5 came about because of his having seen Exhibit P 6 and the number of appendices annexed to it. It was urged that the original tender of Patel must have contained three appendices like those of Habibur Rahman and 1105 Zakirur Rahman and not appendix l(a) and l(b) as now found and that this circumstance showed substitution of the 'tender. The learned magistrate, in our opinion, in giving importance to this circumstance mislead himself completely. In the first place, it is not accurate to say that the expression appendices 1, 2 and 3 was common to the covering letters Exhibts P 4 and P 5. In Exhibit P 5 the appen dices are marked A, B and C. Therefore, no uniform method was adopted by Patel in marking the appendices to the ten ders, Exhibits P 4 and P 5. Secondly, there is no conflict in the expression of the appendices of Habibur Rahman and Patel. They have been marked as 1, 2 and 3 and a mere subdi vision of the first appendix into (a) and (b) could not be taken to be a departure from the method adopted in the description of the appendices. It may further be observed that the covering letter signed by Patel mentions four appendices, while the covering letters of Habibur and Zaki rur Rahman only mention three appendices. The trial magis trate as well as the Sessions Judge ignored all these dif ferences in the method of the description of the appendices and assumed that they had been uniformly described. The result therefore is that all these so called peculiar features found by the courts below in Exhibit P 3A should be eliminated from consideration and it must be held that there are really no circumstances inconsistent with Exhibit P 3A being a genuine document. It could have been made out without looking at Exhibit P 6. In this view of the case the whole basis on which the judgments of the courts below are founded vanishes, and in the absence of any evidence of motive, we are of the opinion that the facts did not on any just or legal view of them warrant a conviction, and al though the proceedings are taken to have been unobjection able in form, justice has gravely and injuriously miscar ried. We therefore set aside the conviction of both the appellants on the second charge and acquit them, 142 1106 In order to appreciate the third charge, it is necessary to set out the terms of Exhibit P 24 which it is said was antedated in order to create evidence for the defence of the accused and to injure Amarnath. It is in these terms: Congress Nagar, Nagpur, 20th November, 1946. The Commissioner of Excise, C.P. & Berar, Nagpur. Dear Sir, I beg to submit few of my complaints for such action as you may be pleased to take, which are as under. I went to see Mr. Amarnath last week, at his residence in connection with Seoni Distillery work. I saw Mr. Edulji and his partner with Mr. Amarnath in the office room of his residence with some office files. From the papers I could recognize my tender open on the table in front of them. As soon as I went there, all of them were astonished and they could not speak with me for a moment, and then they carried on some dry general conversation with me. Same way after about a week, when I went to Seoni for mahua bill, when Mr. Amarnath visited for sanctioning the advance, I had the opportunity to see Mr. Amarnath in dak bungalow at about 9 30 p.m. when I saw Mr. Mehta the ex manager of Mr. Edulji (who is also the manager of Seoni Electric Co.) with Mr. Amarnath near table with the same file of the tender. No doubt after seeing the above two incidents I requested Mr. Amarnath to be fair in this af fair. I am bringing these incidents to your notice, as I fear that something underhand may not be going on, and I am afraid that my tender may be tampered with. Hoping to get justice, Yours faithfully, Sd. R.S. Patel. " 1107 The words "Congress Nagar, Nagpur, 20th November, 1946" are in manuscript, while the rest of the letter has been typed. The digit 6 of the year 1946 has been over written on digit 7 written in continental style and it is apparent to the naked eye that originally the writer wrote 7 and subsequently changed it to 6. It was contended by the learned Advocate General, and this is the finding of the courts below, that this letter was written some time during the investigation of the case in July or August 1947, and was antedated in order to implicate Amarnath and to use it as evidence in defence. The point for decision is wheth er there is any evidence whatsoever to establish this act. We have not been able to discover any such evidence on the record; on the other hand the intrinsic evidence in the letter proves that most likely it came into existence on the date it bears. The relevant facts are that the tenders were opened by accused Nargundkar on the 11th November, 1946, he handed them over after making the endorsements to Amarnath and Amarnath had to submit a report about them. It is alleged in this letter that "last week", i.e., during the week commencing on the 11th November, 1946, accused Patel went to see Amarnath and there he saw Edulji Doongaji with him with his tender open on his table in front of him and that he was astonished at it, that about a week later he again went to Seoni and had the opportunity to see Amarnath and Mr. Mehta, ex manager of Edulji Doongaji, was with him and the tender file was lying there. It was stated that he had requested Amarnath to be fair in this affair and the Commissioner was asked that he should see that his tender was not tampered with and he got justice. The whole purpose and object of this letter was to protect himself against any underhand dealing in the granting of the contract. In his statement under section 342, Cr. P.C., Patel said that he saw Amarnath on the morning of the 15th or 16th November, 1946, and he met Amarnath at Seoni at the distillery prem ises on the 16th November, 1946, and on the same 1108 day he met him at about 9 p.m. at the Seoni dak bungalow and that he again met him on the 17th November, at 10 a.m. He also stated that he had gone to see Amarnath at his resi dence at Nagpur between the dates 12th and 18th November. It was contended by the learned Advocate General that his statement was inconsistent with the recitals contained in Exhibit P 24. We see nothing inconsistent between this statement and the recitals. If accused Patel saw Amarnath on the 12th, the letter having been written on the 20th November, it would be quite a correct thing to say that he saw him "last week" and the next recital when he said that about a week thereafter he saw him again is quite consistent with his going and seeing him on the 16th or 17th November. That would be about a week after the first visit. To draw any conclusion adverse to the accused from a slight inaccu racy in the description of dates and to conclude therefrom that it was established that the accused Patel had seen Amarnath on the 9th November, 1946, amounts to unnecessari ly stretching a point against the accused. The recitals in the letter, true or false, are quite consistent with the letter bearing date 20th November, 1946. The magistrate observed that the vagueness about the date and the week shows that the allegations therein are not correct. We have not been able to understand how the vagueness about the date could lead to the conclusion arrived at. Emphasis was laid on the overwriting of the figure 6 over the figure 7 in the manuscript part of the letter. It was said that the normal experience is that it becomes a subconscious habit to automatically write the year correctly when several months have elapsed after the change of the year and that by sheer force of habit the correct year must have been put down when the date was entered in the letter Exhibit P 24 and that the figure was subsequently changed to 6 and this fact was an indication that the letter was written some time in the year 1947. In our view this argument again involves an element 1109 of conjecture. The mistake may well have been inadvertent ly made and the correction made there and then. That such mistakes are not very uncommon or unusual and occur in official documents is fully established on the record, in para 93 of the judgment of the learned Sessions Judge and it is said as follows: "The appellants have produced a file which is Exhibit ID 35. It contains a sheet which bears pages 9 and 10. On the 10th page there are two office notes one is written by A.M. Naidu and the other by the appellant Nargundkar. A.M. Naidu below his signature has written '6 4 1948 '. The appellant Nargundkar below his signature has written '6 4 1947 '. The other notes in the office file show that the correct date of the two signatures was 6th August, 1947. Thus in this sheet there are two mistakes in mentioning the number of the month and one mistake in mentioning the number of the year. The appellants contend that such mistakes are possible. Nobody can deny that such mistakes are possible; but it has to be decided what inferences can be drawn from such mistakes, if there is other evidence also. " We have looked in vain for other evidence to prove that the letter was not written on 'the date it bears. Even Gadgil could not explain why he said that the letter was written in July, 1946. It is clear that he is not telling the ' truth in this respect. The endorsement made on the letter by accused Nargundkar clearly bears the date 21st November, 1946, and if this letter was not given to him on the date of the endorsement and was given to him several months afterwards he would in ordinary course have made some note either on the letter or in the receipt register of his office when that letter was received by him. Then it was said that this letter was not in the file of the tenders which were kept separate. The Commissioner had noted that the letter be filed and he sent it to the office. If the office people did not put it in the file, from that circum stance no adverse inference could 1110 be drawn as to the date that the letter bears. It is dear that no forger would have in such a clumsy manner corrected 1947 into 1946 so as to leave the original figure "7" intact and thus leave evidence of its suspicious character writ large on its face. There was no hurry about it, and a second letter without the alteration could easily have been typed. Next it was argued that the letter was not typed on the office typewriter that was in those days, viz., article B, and that it had been typed on the typewriter article A which did not reach Nagpur till the end of 1946. On this point evidence of certain experts was led. The High Court rightly held that opinion of such experts was not admissible under the Indian Evidence Act as they did not fall within the ambit of section 45 of the Act. This view of the High Court was not contested before us. It is curious that the learned Judge in the High Court, though he held that the evidence of the experts was inadmissible, proceeded nevertheless to discuss it and placed some reliance on it. The trial magis trate and the learned Sessions Judge used this evidence to arrive at the finding that, as the letter was typed on article A which had not reached Nagpur till the end of December, 1946, obviously the letter was antedated. Their conclusion based on inadmissible evidence has therefore to be ignored. It was further held that the evidence of experts was corroborated by the statements of the accused recorded under section 342. The accused Patel, when questioned about this letter, made the following statement: "Exhibit P 31 was typed on the office typewriter article B. Exhibit P 24 being my personal complaint letter was typed by my Personal Assistant on one of the typewriters which were brought in the same office for trial, with a view to purchase. As this was my personal complaint no copy of it was kept in the Correspondence Files Exhibit P 34 and Exhib it P 35 just 1111 as there is no copy in these files of my tender Exhibit P 3A . . . In the month of September, October and November, 194t5, several machines were brought for trial from various parties in our of rice till the typewrit er article A was purchased by National Industrial Alcohol Ltd. Company. " If the evidence of the experts is eliminated, there is no material for holding that Exhibit P 24 was typed on article A. The trial magistrate and the learned Sessions Judge used part of the statement of the accused for arriving at the conclusion that the letter not having been typed on article B must necessarily have been typed on article A. Such use of the statement of the accused was wholly unwar ranted. It is settled law that an admission made by a person whether amounting to a confession or not cannot be split up and part of it used against him. An admission must be used either as a whole or not at all. If the statement of the accused is used as a whole, it completely demolishes the prosecution case and, if it is not used at all, then there remains no material on the record from which any inference could be drawn that the letter was not writeen on the date it bears. For the reasons given above we hold that there is no evidence whatsoever on the record to prove that this letter Exhibit P 24 was antedated and that being so, the charge in respect of forgery of this letter also fails. Read as a whole, this letter cannot be said to have been written with the intention of causing any injury to Amarnath or for the purpose of creating a defence in respect of the second charge. The letter read as a whole is an innocuous document and its dominant purpose and intent was to safeguard the interests of accused Patel and to protect him against any underhand or unfair act of his rival contractors. We cannot infer any intent to defraud or any intention to injure Amarnath, though in order to protect himself accused Patel made certain allegations against him. We therefore set aside the conviction of both the appellants under the third charge and acquit them. 1112 The result is that the consolidated appeal is allowed, the judgments of all the three courts below are set aside and the appellants are acquitted. Appellants acquitted. Agent for the appellant in Criminal Appeal No. 56 of 1951: Ganpat Rai. Agent for the appellant in Criminal Appeal No. S7 of 1951: Rajinder Narain.

In dealing with circumstantial evidence there is always the danger that conjecture or suspicion may take the place of legal proof. It is therefore right to remember that in cases where the evidence is of a circumstantial nature, the circumstances from which the conclusion of guilt is to be drawn should in the first instance be fully established and all the facts so established should be consistent only with the hypothesis of the guilt of the accused. Again, the circumstances should be of a conclusive nature and tendency, and they should be such as to exclude every hypothesis but the one proposed to be proved. In other words, there must be a chain of evidence so far complete as not to leave any reasonable ground for a conclusion consistent with the innocence of the accused and it must be such as to show that within all human probability the act must have been done by the accused. vs Hodge [(1838) referred to. An admission made by a person whether amounting to a confession or not cannot be split up and part of it used against him. It must be used either as a whole or not at all.

ivil Appeal Nos. 1852 & 4772 of 1989. From the Judgment and Order dated 25.5.1988 & 11.11.1988 of the Punjab and Haryana High Court in R.S.A. Nos. 2404 of 1987 and 2246 of 1988. 666 A.S. Sohal and G.K. Bansal for the Appellants. Atul Nanda, ,Francis Victor, S.K. Mehta (N.P.), Subhash G. Jindal and N.A. Siddiqui for the Respondents. The Judgment of the Court was delivered by K. JAGANNATHA SHETTY , J. These appeals against the decision of the High Court of Punjab & Haryana raise a short issue, concerning limitation governing the suit for declara tion by a dismissed employee that he Continues to be in service since his dismissal was void and inoperative. The High Court has observed that if the dismissal of the employ ee is illegal, void or inoperative being in contravention of the mandatory provisions of any rules or conditions of service, there is no limitation to bring a suit for declara tion that the employee continues to be in service. The facts giving rise to these appeals, as found by the Courts below, may be summarised as follows: CA No. 1852/89 The respondent in this appeal was ap pointed as an ad hoc sub inspector in the District Food and Supply Department of Punjab State. He absented himself from duty with effect from 29 September 1975. On 27 January 1977, his services were .terminated. On 18 April 1984, he insti tuted the suit for declaration that the termination order was against the principles of natural justice, terms and conditions of employment, void and inoperative and he con tinues to be in service. The State resisted the suit con tending inter alia, that the plaintiff 's services were terminated in accordance with the terms and conditions of his ad hoc appointment and the suit was barred by time. The trial court accepted the plea of limitation and dismissed the suit, but on appeal the Additional District Judge, Jullundhar decreed the suit. He observed that the termina tion order though simpliciter in .nature ' was passed as a measure of punishment. The plaintiff 's services were termi nated for unauthorised absence without an enquiry and he should have been given an opportunity to explain his conduct by holding proper enquiry. On the plea of limitation, learned Additional District Judge held that no limitation is prescribed for challenging an illegal order. Since the. order of termination was bad, the suit was not barred by time. In the second appeal preferred by the State the High Court agreed with the View following its earlier decisions. CA No. 4772/89 The respondent in this appeal was a Railway 667 Police Constable. He was appointed on 14 November 1977. On 15 March 1979, he was discharged from service for some misconduct. On 15 June 1979, his appeal was rejected by AIG, Railways, Patiala, Punjab. On 30 November 1979, his revision petition was dismissed by the Inspector General of Police, Punjab. On 12 February 1985 he brought a suit seeking declaration that the order discharging him from service and confirmed in the appeal and revision, was illegal, ultra vires, unconstitutional and against the principles of natu ral justice and he continues to be in service as constable. The trial court dismissed the suit. The appeal preferred by the plaintiff was accepted by the Additional District Judge who decreed the suit as prayed for. He has inter alia stated that the plaintiff was discharged from service in contraven tion of the mandatory provisions of the rules and as such it has no legal effect. There is no period of limitation for. inStituting the suit for declaration that such a dismissal order is not binding upon the plaintiff. While affirming that principle, the High Court dismissed the second appeal in limine. These are not the only cases in which the Punjab and Haryana High Court has taken the view that there is no limitation for instituting the suit for declaration by a dismissed or discharged employee on the ground that the dismissal or discharge was void or inoperative. The High Court has repeatedly held that if the dismissal, discharge or termination of services of an employee is illegal, uncon stitutional or against the principles of natural justice, the employee can approach the Court at any time seeking declaration that he remains in service. The suit for such reliefs is not governed by any of the provisions of the Limitation Act [See: (i) State of. Punjab vs Ajit Singh, and (ii) State of Punjab vs Ram Singh, First of all, to say that the suit is not governed by the law of Limitation runs afoul of our Limitation Act. The statute of limitation was intended to provide a time limit for all suits conceivable. Section 3 of the Limitation Act provides that a suit, appeal or application instituted after the prescribed "period of limitation" must subject to the provisions of Sections 4 to 24 be dismissed although limita tion has not been set up as a defence, Section 2(J) defines the expression "period of limitation" to mean the period of limitation prescribed in the Schedule for suit, appeal or application. Section 2(J) also defines, "prescribed period" to mean the period of limitation computed in accordance with the provisions of the Act. The Court 's function on the presentation of plaint is simply to examine whether, on the assumed facts the plaintiff is within time. The Court has to find out when the 668 "right to sue" accrued to the plaintiff. If a suit is not covered by any of the specific articles prescribing a period of limitation, it must fail within the residuary article. The purpose of the residuary article is to provide for cases which could not be covered by any other provision in the Limitation Act. The residuary article is applicable to every variety of suits not otherwise provided for. Article 113 (corresponding to Article 120 of the Act 1908) is a residu ary article for cases not covered by any other provisions in the Act. It prescribes a period of three years when the right to sue accrues. Under Article 120 it was six years which has been reduced to three years under Article 113. According to the third column in Article 113, time commences to run when the right to sue accrues. The words "right to sue" ordinarily mean the right to seek relief by means of legal proceedings. Generally, the right to sue accrues only when the 'cause of action arises, that is, the right to prosecute to obtain relief by legal means. The suit must be instituted when the right asserted in the suit is infringed or when there is a clear and unequivocal threat to infringe that right by the defendant against whom the suit is insti tuted (See: (i) Mt. Bole vs Mt. Koklam and Ors., AIR 1930 PC 270 and (ii) Gannon Dunkerley and Co. vs The Union of India, ; In the instant cases, the respondents were dismissed from service. May be illegally. The order of dismissal has clearly infringed their right to continue in the service and indeed they were precluded from attending the office from the date of their dismissal. They have not been paid their salary from that date. They came forward to 'the Court with a grievance that their dismissal from service was no dis missal in law. ' According to them the order of dismissal was illegal, inoperative and not binding on them. They wanted the Court to declare that their dismissal was void and inoperative and not binding on them and they continue to be in. service. For the purpose of these cases, we may assume that the order of dismissal was void inoperative and ultra vires, and not voidable. If an Act is void or ultra vires it is enough for the Court to declare it so and it collapses automatically. It need not be set aside. The aggrieved party can simply seek a declaration that it is void and not bind ing upon him. A declaration merely declares the existing state of affairs and does not 'quash ' so as to produce a new state of affairs. But nonetheless the impugned dismissal order has at least a de facto operation unless and until it is declared to be void or nullity by a competent body or Court. In Smith vs East. Elloe Rural District Council, ; at 769 Lord Redcliffe observed: 669 " An order even if not made in good faith, is still an actcapable of legal consequences. It bears no brand of invalidity upon its fore head. Unless the necessary proceedings are taken at law to establish the cause of inva lidity and to get it quashed or otherwise upset, it will remain as effective for its ostensible purpose as the most impeccable of orders. " Apropos to this principle, Prof. Wade states: "the principle must be equally true even where the 'brand ' of invalidity ' is plainly visible; for their also the order can effectively be resisted in law only by obtaining the deci sion of the Court (See: Administrative Law 6th Ed. p. 352). Prof. Wade sums up these principles: "The truth of the matter is that the court will invalidate an order only if 'the right remedy is sought by the right person in the right proceedings and circumstances. The order may be hypothetically a nullity, but the Court may refuse to quash it because of the plain tiff 's lack of standing, because he does not deserve a discretionary remedy, because he has waived his rights, or for some other legal reason. In any such case the 'void ' order remains effective and is, in reality, valid. It follows that an order may be void for one purpose and valid for another, and that it may be void against one person but valid against another." (Ibid p. 352) It will be clear from these principles, the party ag grieved by the invalidity of the order has to approach the Court for relief of declaration that the order against him is inoperative and not binding upon him. He must approach the Court within the prescribed period of limitation. If the statutory time limit expires the Court cannot give the declaration sought for. Counsel for the respondents however, has placed strong reliance on the decision of this Court in State of M. P.v. Syed Quamarali, The High Court has also relied upon that decision to hold that the suit is not governed by. the limitation. We may examine the case in detail. The respondent in that case was a sub inspector in the Central Province Police Force. He was dismissed from service on 22 December 1945. His appeal against that order was dismissed by the Provincial Government, Central Prov inces and Berar on 9 April 1947. He brought the suit on 8 December 1952 on allegation that the order of dismissal was contrary to the para 24 1 of the Central Provinces and 670 Berar Police Regulations and as such contrary to law and void, and prayed for recovery of Rs.4724/5 on account of his pay and dearness allowance as sub inspector of police for the three years immediately preceding the date of the insti tution of the suit. The suit was decreed and. in the appeal before the Supreme Court, it was urged that even if the order of dismissal was contrary to the provisions of.law, the dismissal remained valid until and unless it is set aside and no relief in respect of salary could be granted when the time for obtaining an order setting aside the order of dismissal had elapsed. It was observed: "We therefore hold that the order of dismissal having been made in breach of a mandatory provision of the rules subject to which only the power of punishment under section 7 could be exercised, is totally invalid. The order of dismissalhad therefore, no legal existence and it was not necessary for the respondent to have .the order set aside by a Court. The defence of limitation which was based .only on the contention that the order.had to be set aside by a court before it became invalid must therefore be rejected. " These observations are of little assistance to the plaintiffs in the present case. This Court only emphasized that since the order of dismissal was invalid being contrary to para 241 of the Berar Police Regulations, it need not be set aside. But it may be noted that Syed Qamarali brought the suit within the period of limitation. He was dismissed on 22 December 1945. His appeal against the order of dis missal was rejected by the Provincial Government on 9 April 1947. He brought the suit which has given rise to the appeal before the Supreme Court on 8 December 1952. The right to sue accrued to Syed Qamarali when the Provincial Government rejected his appeal affirming the original order of dismissal and the suit was .brought within six years from that date as prescribed under Article 120 of the Limitation Act, 1908. The Allahabad High Court in Jagdish Prasad Mathur and Ors. vs United Provinces Government, AIR 1956 All 114 has taken the view that a suit for declaration by a dismissed employee on the ground that his dismissal is void, is gov erned by Article 120 of the Limitation Act. A similar view has been taken by Oudh Chief Court in Abdul Vakil vs Secre tary of State and Anr., AIR 1943 Oudh 368. That in our opinion is the correct view to be taken. A suit for declara tion that an order of dismissal or termination from service passed against the plaintiff is wrongful, illegal or ultra vires is governed by Article 113 of the Limitation Act The decision to the contrary taken by the Punjab & Haryana 671 High Court in. these and other cases ((i)State of Punjab vs Ajit Singh,. and (ii) State of Punjab vs Ram Singh, is not correct and stands overruled. In the result, we allow the appeals, set aside the judgment and decree of the High Court and dismiss the suit in each case. In the circumstances, however, we make no order as to costs. V.P.R. Appeals allowed.

The respondent plaintiff in C.A. No. 18S2/89 was appointed as an ad hoc Sub inspector in the District Food and Supply Department. He absented himself from duty from 29 September 197S. On 27 January 1977, his services were terminated. On 18 April 1984, he instituted 'the mir for declaration that the termination order was against the principles of natural Justice, terms and conditions of employment, void and inoperative and be continued to be in service. The State the appellant defendant contended that the plaintiff 'sservices were terminated in accordance with the terms and conditions of his ad hoc appointment and the suit was barred by time. The trial Court dismissed the Suit on the ground of limitation, but on appeal the Additional District Judge decreed the suit, holding that the termination order though simplicitor in nature was passed as a measure of punishment without an 'enquiry and he should have been given an oppor tunity to explain his conduct by holding proper enquiry and that, since the order of termination was bad, the suit was not barred by time. The second appeal preferred by the State was dismissed by the High Court holding that as the dismissal of the employee was illegal, 664 void or inoperative being in contravention of the mandatory provisions of any rules or. conditions of service, there was.no limitation to bring a suit for declaration of contin uance in service. The respondent plaintiff in C.A. No. 4772/89 was ap pointed on. 14 November 1977. On 15 March 1979, he was discharged from service for some misconduct and against which appeal was made, which was rejected on 15.6.1979. When his revision petition was dismissed on 30.11.1979 he brought a suit on 12.2.1985 seeking declaration that the order discharging him from service was illegal, ultra vires, unconstitutional against the principles of natural justice and continuance in service. The trial court dismissed the suit. The appeal preferred by the plaintiff was allowed by the Additional District Judge that the plaintiff was discharged from service in contravention of the mandatory provisions of the rules and as such it had no legal effect. There was no period of limitation .for instituting the suit for declaration that such a dismissal order was not binding upon the plaintiff. The High Court dismissed the second appeal in limine. On the question, whether limitation governs the suit for declaration by a dismissed employee, if the dismissal was illegal, void or inoperative being in contravention of the mandatory provisions of any rules or conditions of service, this Court, allowing the appeals of the State the defendant, HELD: 1. The Court 's function on the presentation of plaint is simply to examine whether, on the assumed facts, the plaintiff is within time. The Court has to find out when the "right to sue" accrued to the plaintiff. If a suit is not covered by any of the specific articles prescribing a period of limitation, it must fall within the residuary article. [667H 668. A suit for declaration that an order of dismissal or termination from service passed against the plaintiff is wrongful, illegal or ultra vires is governed by Article 113 of the Limitation Act. [6TOG.H] 3. The party aggrieved by the invalidity of the order has to approach the Court for relief of declaration that the order against him is inoperative and not binding upon him. He must approach the Court within the prescribed.period of limitation. If the statutory time limit expires the Court cannot give the declaration sought for. [669E F] 665 4. If an act is void or ultra vires it is enough for the Court to declare it so and it collapses automatically. It need not be set aside. The aggrieved party can simply seek a declaration that it is void and not binding upon him. A declaration merely declares the existing state of affairs, and does not 'quash ' so as to produce a new state of af fairs. [668F G] But none theless the impugned dismissal order has at least a de facto operation unless and until it is declared to be void or nullity by a competent body or Court. [668H] Smith vs East Elloe Rural Disrict Council, ; at 769, referred to. Prof. Wade: Administrative Law, 6th Ed. P. 352, referred to. State of M.P.v. Syed Quamarali, , distin guished. Jagdish Prasad Mathur and Ors. United Provinces Government, AIR 1956 All 114 and Abdul Vakil vs Secretary of State and Anr , AIR 1943 Oudh 368, Approved. State of Punjab vs Ajit Singh, and State of Punjab vs Ram Singh, , over ruled. The words "right to sue" ordinarily mean the right to seek relief by means of legal proceedings. Generally, the right to sue accrues only when the cause of action arises, that is, the right to prosecute to obtain relief by legal means. The suit must be instituted when the right asserted in the suit is infringed or when there is a clear and une quivocal threat to infringe that right by the defendant against whom the suit is instituted. [668C D] Mt. Bole vs Mt. Koklam and Ors., AIR 1930 PC 270 and Gannon Dunkerley and Co. vs The Union of India, ; followed.

Civil Appeal No. 89 of 1975. (From the Judgment and Order dated the 4th May 1973 of the Madras High Court in Tax Case No. 183 of 1967). N.A. Palkhivala, R. Balasubramanian, LB. Dadachanji, A.C. Moneses, Mrs. A.K. Verma, C.R. Dun, Ravinder Narain and O.C. Mathur, for the appellant. R.M. Mehta, and R.N. Sachthey, for the respondent. K.R. Ramamani and 1. Ramamurthi, for the Intervener. The Judgment of the Court was delivered by UNTWALIA, J. This is an appeal by certificate from the decision of the Madras High Court in a Reference made by the Income tax Appellate Tribunal under section 66(1) of the Income Tax Act, 1922 hereinafter referred to as the Act. M/s Carborandum Co. of the United States of America hereinafter called the American ' Company or the Assessee Company, is: the appellant. The Central Board of Revenue has declared it a Company under section 2(5A) of the Act. It has specialized in the manufacture of bonded abra sive and coated abrasive products. For the improvement and advancement in the line of its manufacture, it has a Re search Wing also. The results of the research are incorpo rated in pamphlets prepared from time to time. The Assessee Company entered into an agreement dated June 22, 1955 with M/s Carborandum Universal Ltd. hereinaf ter called the Indian company, having its registered office at Madras. As per the terms of the agreement the American Company was to render and did render to the Indian Company certain technical and know how services of the following nature : (i) furnishing of technical information and know how" with respect to the manufacture of bonded abrasive and coated abrasive products; (ii) providing technical management including factory design and lay out, plant and equipment production, purchase of. mate rials, manufacturing specifications and quali ty of product; 4 502 SCI/77 478 (iii) furnishing comprehensive technical information of all developments in the manu facture of the special products; (iv) providing the Indian company With a resident factory manager for starting the plant and superintending its operations during its initial production stages, as also other technical personnel necessary for the operation of the plant; (v) training Indian personnel to replace the foreign technical personnel as quickly as possible. In lieu of all the services aforesaid, as per the agreement, the American company was to receive from the Indian company an annual service fee equal to 3 per centum on the net sale proceeds of the products manufactured by the latter each year. During the year of account relevant to the assessment year 1957 58 the assessee company received a sum of Rs. 95,762/ from the Indian company as its service fee. A good slab of it was deducted at source by the Indian company on account of income tax and super tax payable .on the said sum. The American company filed a Return of income for the year in question with an application for refund of the entire tax deducted at source. The Income tax Officer took the view in his assessment order that 5% of the technical fee paid to the American company was earned by it in India and Only that small amount was assessable to income tax. Consequently, he directed the refund of a major portion of the tax deducted at source to the assessee company. The Commissioner of Income tax in exercise of his power under section 338 of the Act revised the order of the Income tax Officer and took the view that at least 75 % of the techni cal fee earned by the assessee company during the year of account had accured or arisen in India. In the main, the basis of his order was that even though the technical infor mation was supplied by the assessee company from outside India, the information received by the Indian company was put to use only in the taxable territory and the technical fee paid by it was mainly on account of such use. The Commissioner was also of the view that the technical person nel furnished by the assessee company to the Indian company although worked under the control of and was paid for by the latter, the situs of the services so rendered was in India. Treating the technical fee in the nature of royalty paid, it directed the Income tax Officer to revise the assessment on the basis that 75% of it should be taken as income accruing or arising in India to the assessee company. The American company went up in appeal to the Appellate Tribunal from the revisional order of the Commissioner. The Tribunal Set aside the said order and restored that of the Income tax Officer, even though it seems to be of the view that even 5% of the technical fee could not be taken as income of the assessee company taxable under the Act. But since the assessee company had not gone .in appeal because of the smallness of the amount of tax payable on the basis of 5%, the Tribunal was obliged to maintain the order of the Income tax Officer. 479 The Tribunal took some new materials into consider ation at the appellate stage in order to ascertain the true nature of the service rendered by the American company to the Indian company as per the term of the agreement and the place of rendering such service. The findings of the Tribu nal are: (1) The American company rendered service to the Indian company for the starting of the factory in India in the shape of exami nation of the factory design and lay out prepared by the latter and sending its advice by post. These services were not proved to have been rendered in India. (2) The pamphlets and bulletins incorporating the results of research made by the American company were also furnished to the Indian company by post and thus. the said service was also rendered outside India. (3) That the services of the .foreign technical personnel were made available to the Indian company by the American company outside the country. The former employed such person nel in India on the basis of the various agreements of employment entered between the Indian company and such personnel. They were the employees of the Indian company under its Control for their day today working. (4) The training of the Indian per sonnel directly by the employees of the asses see company was imparted outside India. The Tribunal did not agree with the views of the Commissioner that the payment of the teChniCal fee of 3% was dependent upon the use of the information in India or on the volume and extent of such use. The use of the technical assistance and knowhow given by the American Company and made use of by the Indian Company in the taxable territory could not make the former liable to payment of income tax on the amount of technical fee received by it nor was it any royalty. A new stand taken before the Tribunal on behalf of the Revenue that the assessee company must be deemed to be working in conjunction with the Indian company in the manufacture of the products in question was also rejected. The Commissioner of Income tax the respondent in this appeal, asked for a reference and the Tribunal referred the following question of law for the opinion of the High Court: "Whether on the facts and in the circumstances of the case, the technical fee in excess of 5 per cent received by the asses see company from the Indian company during the account year relevant to the assessment year 1957 58 has accrued or arisen in India?" Before the High Court on behalf of the Revenue the point of conjunction between the American company and the Indian company in the manufacture of abrasive products was put in the fore front. 480 Finding this stand unsustainable in face of the agreement between the two companies and in absence of any other mate rial in support of it, the High Court rejected this stand outright. It, however, felt persuaded to permit the Revenue to change its stand even at the reference stage and to urge that the agreement Clearly established a business connection between the two companies; the technical fee received by the assessee company had accrued or arose from such business connection and hence it was assessable to income tax under section 4(1 ) (c) read. with section 42 of the Act. The objection of the assessee company to the entertainment of the new point at the reference stage that it did not arise out of the Tribunal 's order was over ruled by the High Court on the ground that the question referred was in general terms and comprehensive enough to embrace within its ambit the point of applicability of section 42(1) of the Act to the 'transactions in question.1 Upholding this stand taken on behalf of the Revenue the High Court answered the ques tion referred to ' it in its favour and against the assessee company. Hence this appeal. Mr. N.A. Palkhivala, learned counsel for the appellant company urged the following four points in support of this appeal : (1) That the High Court could not go into the matter of business connection between the two companies when .such a question was never raised or in issue at any earlier stage. (2) That the High Court was wrong in founding the tax liability of the assessee company on the basis of the alleged business connection. Its finding or view in that regard is wholly erroneous. (3) That even assuming that the High Court was right in its view of basing the tax li ability of the assessee company on the alleged business connection, it failed to examine the question of apportionment under section 42(3) of the Act. (4) That apportionment under section 42(3) and determination of the tax liability of the assessee company in pursuance thereof could not be more than the liability to pay tax on 5% of the total technical fee as found by the Income tax Officer and upheld by the Tribunal. Certain other companies have intervened in this appeal and some argument was advanced on their behalf too in sup port of the main argument of Mr. Palkhivala, Section 4(1) of the Act provides : "Subject to the provisions of this Act, the total income of any previous year of any person includes all income, profits and gains from whatever source derived which . . . . . . (c) if such person is not resident in the taxable territories during such year, accrue or arise or are deemed to. accrue or arise to him in ' the taxable territories during such year :" 481 The income assessable to income tax, therefore, is of two kinds viz (i) accruing or arising in the taxable territories and (ii) deemed to accrue or arise to the non resident in the taxable territory. The concept of actual accrual or arising of income in the taxable territories, although not dependent upon the receipt of the income in the taxable territories, is quite distinct and apart from the notion of deemed accrual or arising of the income. The High Court does not appear to have kept this distinction inview and mixed the one with the other while deciding the reference in question. Section 42 of the Act concerns itself with a deemed accrual or arising of the income within the taxable territories. Under sub section (1) "All income, profits or gains accruing or arising, whether directly or indirectly, through or from any business connection in the taxable territories . . . shall be deemed to be income accruing or arising within the taxable territories, and where the person entitled to the income, profits or gains is not resident in the taxable territories, shall be chargeable to income tax either in his name or in the name of his agent, and in the latter case such agent shall be deemed to be, for all the purposes of this Act, the assessee in re spect of such income tax :" If the whole of the deemed income can be roped in for the levy of tax under section (1) of section 42, no question of any apportionment arises. If not, sub section ( 3 ) is attracted. It says. "In the case of business of which all the operations are not carried out in the taxable territories, the profits. and gains of the business deemed under this section to accrue or arise in the taxable territories shall be only such profits and gains as are reasonably attributable to that part of the operations carried out in the taxable territo ries. " In Commissioner of Income Tax, Bombay vs Scindia Steam Navigation Co. Ltd.(1) it has been pointed out that when a question of law was neither raised before the Tribunal nor considered by it, it will not be a question arising out of its order notwithstanding that it may arise on the findings given by it. In the instant case the question of law based upon the theory of business connection was neither raised before the Tribunal nor considered by it, nor did it arise on the findings of fact recorded by it. The High Court, therefore, was wrong in entertaining this new point at the reference stage on the basis of the allegedly general and compendious nature of the question referred to it by the Tribunal. But we do not propose to rest our judgment only on this technical aspect of the matter as we find that even on merits the assessee company has a good case to succeed before us. The High Court agreed with the Tribunal that the techni cal information furnished by the assessee company by post was a.service which could not be said to have been rendered in India; putting it to use in India is not relevant as opined by the Commissioner. But in regard to the fact of the foreign technicians having been l.employed by the (1)42 I.T.R. 589. 482 Indian company on payment of salary in India, it took the view that the service was rendered in India as foreign technicians were deputed by the assessee company. In the opinion of the High Court it did amount to some activity or service in India. Then the High Court proceeds to say:" Therefore, we are of the view that the assessee having rendered at least some services in India which amounts to a business activity the technical fee should be taken to have accrued through or from its business Connection in India. " Even though, according to the High Court, the finding aforesaid was sufficient to rope in the entire receipts of the assessee company as income having accrued or arisen in India as a result of its business connection, it felt obliged to make the apportionment to the extent of 75% because of the apportionment so made by the Commissioner. In our judgment the High Court went wrong in its approach to the question raised before it and did not quite correctly appreciate the scope and applicablity of section 42 of the Act. On a plain, reading of sub sections (1) and (3) of section 42 it would appear that income accruing or arising from any business connection in the taxable territories even though the. income may accrue or arise outside the taxable territories will be deemed to be income accruing or arising in such territory provided operations in connection with such business, either all or a part, are carried out in the faxable territories. If all such opera tions are carried out in the taxable territories, sub sec tion (1 ) would apply and the entire income accruing or arising outside the taxable territories but as a result of the operations in connection with the business giving rise to the income would be deemed to accrue or arise in the taxable territories. If, however, all the operations are not carried out in the taxable territories the profits and gains of the business deemed to accure or arise in the taxable territories shall be only such profits and gains as are reasonably attributable to that part of the operations carried out in the taxable territories. Thus comes in the question of apportionment under sub section (3) of section 42. In Commissioner of Income lax Punjab vs B.D. Aggarwal and Co. and another,(1) Shall J, as he then was, speaking for this Court said at page 24: "A business connection in section 42 involves a relation between a business carried on by a non resident which yields profits or gains and some activity in the taxable ferri tories which contributes directly or indirect ly to the earning of these profits or gains. It predicates an element of continuity. be tween the business of the non resident and the activity in the taxable territories: a stray or isolated transaction is normally not to be regarded as a business connection. Business. connection may take several forms: it may include carrying on a part of the main busi ness or activity incidental to the main busi ness of the non resident through an agent, or it may merely be a relation between the busi ness of the nonresident and the. activity in the taxable territories, which facilitates or ' assists the carrying on of that business. In each case the ' question whether there is a business connection (1) 483 from or through which income., profits or gains arise or accrue to non resident must be determined upon the facts and circumstances of the case. " The learned Judge says further "A relation to be a "business connec tion" must be real and intimate, and through or from which income must accrue or arise whether directly or indirectly to the nonres ident. But it must in all cases. be remem bered that by section 42 income, profit or gain which accrues or arises to a non resident outside the taxable territories is sought to be brought within the net of the income tax law, and not income, profit or gain which accrues or arises or is deemed to accrue or arise within the taxable territories. Income received or deemed to be received or accruing or arising or deemed to be accruing or arising within the taxable territories in the previous year is taxable by section 4(1) (a) and (c) of the Act, whether the person earning is a resident or non resident. If the agent of a non resident receives that income or is enti tled to receive that income, it may be taxed in the hands of the agent by the machinery provision enacted in section 40 (2). Income not taxable under section 4 of the Act of a non resident becomes taxable under section 42 (1 ) if there subsists a connection between the activity in the taxable territories and the business of the non resident, and if throug or from that connection income directly or indirectly arises. " The High Court was wrong in its view that activities. of the foreign personnel lent or deputed by the American compa ny amounted to business activity .carried on by that company in the taxable territory. The finding of the Tribunal in that regard was specific and clear and was unassailable in the reference in question. The American company has made the services of the foreign personnel available to the Indian company outside the taxable territory. The latter took them as their employees, paid their salary and they worked under the direct control of the Indian company. The service rendered by the American company in that connection was wholly and solely rendered in the foreign territory. Even assuming, however, that there was any business connec tion between the earning of the income in the shape of the technical fee by the American company and the affairs of the Indian company, yet no part of the activity or operation could be said to have been carried on by the American compa ny in India. And in absence of such a sustainable finding by the High Court the provision of section 42, either of sub section (1) or of sub section (3), were not attracted at all. The judgment of the High Court under appeal reported in Commissioner of Income Tax, Madras J, vs Carborandum Compa ny(1) is not correct. It has rightly been pointed out by the Bombay High Court in Commissioner of Income Tax Bombay City I vs Tara Chemicals Ltd.(2) with reference to the similar or almost ( 484 identical provisions in section 9(1) of the Income tax Act, 1961 that in order to rope in the income of a non resident under the deeming provision it must be shown by the Depart ment that some of the operations ,were carried out in India in respect of which the income is sought to be assessed. The finding of fact recorded by the Tribunal being against the department in that connection the Bombay High Court refused to call for a reference. For the reasons stated above we hold that on the facts and in the circumstances of the case the technical service fee received by the Assessee company from the Indian company during the accounting year relevant to the assessment year 1957 58 did not accrue or arise in India nor could it be deemed to have accrued or arisen in India. But since 5 % of the technical service fee was brought to tax by the Income Tax Officer and no appeal was filed against it 'on behalf of the Assessee Company, we cannot interfere with. the addition of this 5% but if must be held that the technical leo in excess of 5 % was not taxable. We accordingly allow the appeal, set aside the judgment of the High Court and answer the question referred by .the Tribunal in favour of the assessee and against the Revenue. The Commissioner will pay the costs of the appeal as also of the reference to the assessee. S.R. Appeal allowed.

The appellant a foreign company within the meaning of section 2(5A) of Income Tax Act, entered into an agreement with M/s. Carborandum Universal Ltd., having its registered office at Madras on June 22, 1955 and rendered certain technical and knowhow services. In view of the said serv ices it was to 'receive from the Indian company an annual service fee equal to 3 per centum of the net sale proceeds of the products manufactured by the latter. During the year of account relevant to the assessment year 1957 58 the appellant company received a sum of Rs. 95,762/ from the Indian company as its service fee. A good slab of it was deducted at source on account of incometax and super tax. The appellant company fried its return of income for the year in question with an application for refund of the entire tax deducted at source. The income tax officer took the view in his assessment order that 5% of the technical fee paid to the American company was earned by it in India and only that small amount was assessable to in come tax and directed the refund of major portion of the tax deducted at source to the assessee company. The Commission er of Income tax in exercise of his revisional powers under section 33B of the Act took the view that at least 75% of the technical fee earned by the assessing company during the year of account had accrued or .arisen in India even though the technical information was supplied by the assessee company from outside India and the technical personnel furnished by the assessee company to the Indian company although worked under the control of and was paid for by the latter inasmuch as the situs of the services so rendered was in India. Treating the technical fee in the nature of royalty paid, it directed the Income tax Officer to revise the assessment on the basis that 75% of it should be taken as income accruing or arising in India to the assessee company. On appeal, the Appellate Tribunal set aside the said order and restored that of the Income tax Officer even though it was of the view that even 5% of the technical fee could not be taken as income of the assessee. company taxa ble under the Act. The Tribunal held that the use of the technical assistance and know how given by the American Company and made use of by the Indian Company in the taxable territory could not make the former liable to payment of income tax on the amount of technical fee received by it nor was it any royalty. It also rejected a new stand taken by the Revenue that the assessee company must be deemed to be working in conjunction with the Indian Company in the manu facture of its products. On reference under section 66( 1 ). of the Act the Revenue. took another new plea that the agree ment clearly established a business connection between the two companies and as such technical fee received by the assessee company had accrued or arose from such business connection assessable to income tax under section 4(1)(c) read with section 42 of the Act. The objection of the assessee. company to the entertainment of the new point at the refer ence stage that it did not arise out of the Tribunal 's order was over ruled by the High Court on the ground that the question referred to was in general terms and comprehensive enough to embrace within its ambit the point of applicabili ty of section 42(1) of the Act to the transactions in question. Upholding the stand taken on behalf of the Revenue the High Court answered the question referred to it in its favour against the assessee company. On appeal by certificate the appellant contended: 476 (1) That the High Court could not go into the matter of business connection between the two companies when such a question was never raised or in issue at any earlier stage; (2) That the High Court was wrong in rounding the tax liability of the assessee company on the basis of the alleged business connection. Its finding or view in that regard is wholly erroneous. (3) That even assuming that the High Court was right in its view of basing the tax li ability of the assessee company on the alleged business connection, it failed to examine the question of apportionment under section 42(3) of the Act. (4) That apportionment under section 42(3) and determination of the tax liability of the assessee company in pursuance thereof could not be more than the liability to pay tax on 5% of the total technical fee as found by the Income taxOfficer and upheld by the Tribunal, HELD: (1) The technical service fee received by the assessee company from the Indian company during the accounting year relevant to the assessment year 1957 58 did not accrue or arise in India. Since 5% of the technical service fee was brought to tax by the I.T.O. and no appeal was filed against it on behalf of the assessee company, the technical fee in excess of 5% was not taxable. [484 B D] (2) The High Court did not keep in view the distinction between the concept of actual accrual and the notion of deemed accrual evidenced from section 4(1) (c) & section 42 but mixed the one with the other while answering the reference in question. The income assessable to income tax section 4(1)(c) is of two kinds viz. (1) accruing or arising in the taxable territories and (ii) deemed to accrue or arise to the non resident in the taxable territory. The concept of actual accrual or arising of income in the taxable territories, although not depending upon the receipt of the income in the taxable territories is quite distinct and apart from the notion of deemed accrual or arising of the income. [481 A B]. (3) The High Court was wrong in entertaining at the reference stage on the basis of the alleged general and compendious nature of the question referred to it by the Tribunal the new point based upon the theory of business connection, which was neither raised before the Tribunal nor considered by it; nor did it arise on the findings of fact recorded by it. [481 F G] Commissioner of Income Tax, Bombay vs Scindia Steam Navigation Co. Ltd. ; , followed. (4) The High Court went wrong in its approach to the question raised before it and did not quite correctly appre ciate the scope and applicability of section 42 of the Act. On a plain reading of sub sections (1) and (3) of section 42, it would appear that income accruing or arising from any busi ness connection in the taxable territories even though the income may accrue or arise outside the taxable territories will be deemed to be income accruing or arising in such territory, provided operations in connection with such business, either all or a part, are carried out in the taxable territory. If all such operations are carried out in the taxable territory, sub section (1.) would apply and the entire income accruing or arising outside the taxable territory but as a result of the operations in connection with the business giving rise to the income would be deemed to accrue or arise in the taxable territories. If, however, all the operations are not carried out in the taxable terri tories, the profits and gains of the business deemed to accrue or arise in the taxable territories shall be only such 'profits and gains are reasonably attributable to that part of the operations carried out in the taxable territo ries. Thus comes in the question of apportionment under subsection (3) of section 42. [482 C F] Commissioner of Income Tax, Punjab vs R.D. Aggarwal & Co. and Anr.56 ITR 20, referred to. (5) In the instant case the High Court was wrong in its view that activities of the foreign personnel lent or deput ed by the American company amounted to a business activity carried on by that company in the taxable territory. The service rendered by the American company in that connection was wholly and 477 solely rendered in the foreign territory. No part of the activity or operation could be said to have been carried on by the American company in India, even if there was any business connection between the earning of the income in the shape of the technical fee by the American company and the affairs of the Indian company. In the absence of such a sustainable finding, the provisions of section 42 either of sub section (1) or of sub section (3):were not attracted at all. In order to rope in the income of a non resident under the deeming provision it must be shown by the Department that some of the operations were carried out in India in respect of which the income is sought to be assessed. [483 E H] Commissioner of Income Tax, Madras I vs Carborandum Co. overruled. C.I.T. Bombay City IV. Tata Chemicals Ltd. , approved.

vil Appeal No. 1826 (N) of 1974. From the Judgment and Order dated 6.4.1972 of the Madhya Pradesh High Court in F.A. No. 23 of 1966. M.V. Goswami for the Appellants. U.A. Rana and S.K. Agnihotri for the Respondents. The Judgment of the Court was delivered by SAIKIA, J. This plaintiffs ' appeal by special leave is from the appellate Judgment of the Madhya Pradesh High Court dismissing the appeal upholding the Judgment of the trial court dismissing the plaintiffs ' suit on the ground of limitation. A registered firm Rai Saheb Nandkishore Rai Saheb Ju galki 599 shore (Appellants) was allotted contracts for manufacture and sale of liquor for the calendar year 1959 and for the subsequent period from 1.1. 1960 to 31.3. 1961 for Rs.2,56,200.00 and Rs.4,71,900.00, respectively, by the Government of Madhya Pradesh who also charged 7 1/2 per cent over the auction money as mahua and fuel cess. As writ petitions challenging the Government 's right to charge this 7 1/2 per cent were pending in the Madhya Pradesh High Court, the Government announced that it would continue to charge it and the question of stopping it was under consid eration of the Government whose decision would be binding on the contractors. The firm (appellants) thus paid for the above contracts a total extra sum of Rs.54,606.00. On 17.10.1961 the Under Secretary to Government, M.P., Forest Department, Bhopal wrote the following letter No. 10 130 X/61 (Exhibit D 23) to the Chief Conservator of Forests, Madhya Pradesh, Rewa: "Subject: Levy of cess on liquor contractors. Under former M.P. Government (Forest Depart ment) memo No. 4595 CR 73 XI dated 25th July, 1953, a royalty at 7 1/2 per cent of the license fee for liquor shops was imposed on liquor contractors to cover the value of mahua & fuel extracted from the reserved or protect ed forests by the contractors for their still. The M.P. High Court has since decided that the levy of the aforesaid cess is illegal and the cess cannot be recovered from the liquor contractors. In pursuance of this decision, Government desires that all process es whenever issued or proceedings instituted against liquor contractors for recovery of the mahua or fuel cess should forthwith be with drawn and no revenue recovery certificates should be issued in respect of this cess. Simultaneously no free supply of mahua or fuel should be permitted by virtue of the imposition mentioned above. Immediate compliance is requested. No . . X/61 Dt. Bhopal the . . 661 Copy forwarded for immediate compliance to: 600 1. Conservator of Forests, Bilaspur. 2. All Divisional Forest Officers, Bilaspur Circle. Copy to C.F. Raipur Circle for similar auction in this cess levied in any division of his Circle. " On 24.4.1959 the Madhya Pradesh High Court 's Judgment in Surajdin vs State of M.P., declaring the collection of 7 1/2 per cent illegal was reported in 1960 MPLJ 39. Even after this decision Government continued to charge 7 1/2 per cent extra money. Again on 31.8. 1961 the High Court of Madhya Pradesh in N.K. Doongaji vs Collector, Surguja, decided that the charging of 7 1/2 per cent by the Government above the auction money was illegal. This Judgment was reported in 1962 MPLI 130. It is the appellants ' case that they came to know about this decision only in or about September 1962. On 17.10. 1964 they served a notice on Government of Madhya Pradesh under section 80 of the Code of Civil Procedure request ing the refund of Rs.54,606.00, failing which, a suit for recovery would be filed; and later they instituted Civil Suit No. of 1964 in the court of Additional District Judge, Jabalpur on 24.12.1964. The Government resisted the suit on, inter alia, ground of limitation. The trial court taking the view that Articles 62 and 96 of the First Schedule to the Limitation Act, 1908 were applicable and the period of limitation began to run from the dates the payments were made to the Government, held the suit to be barred by limi tation and dismissed it. In appeal, the High Court took the view that Article 113 read with section 17, and not Article 24, of the Schedule to the , was applicable; and held that the limitation began to run from 17.10. 1961 on which date the Government decided not to charge extra 7 1/2 per cent on the auction money, and as such, the suit was barred on 17.12. 1964 taking into consideration the period of two months prescribed by section 80 of the Code of Civil Procedure. Consequently, the appeal was dismissed. The appellants ' petition for leave to appeal to this Court was also rejected observing, "it was unfortunate that the peti tioners filed their suit on 24.12. 1964 and as such the suit was barred by time by seven days." Mr. M.V. Goswami, learned counsel for the appellants, submits, inter alia, that the High Court erred in holding that the limitation started running from 17.16.1961 being the date of the letter, Exhibit D 23, which was not communi cated to the appellants or any other contractor and there fore the appellants had no opportunity to know 601 about it on that very date with reasonable diligence under section 17 and the High Court ought to allow atleast a week for knowledge of it by the appellants in which case the suit would be within time. Counsel further submits that the High Court while rightly discussing that section 17 of the was applicable, erred in not applying that section to the facts of the instant case, wherefore, the impugned Judgment is liable to be set aside. Mr. Ujjwal A. Rana, the learned counsel for the respond ent, submits, inter alia, that 17.10.2961 having been the date on which the Government finally decided not to recover extra 7 1/2 per cent above the auction .money, the High Court rightly held that the limitation started from that date and the suit was clearly barred under Article 24 or 113 of the Schedule to the ; and that though the records did not show that the Government decision was communicated to the appellants, there was no reason why they, with reasonable diligence, could not have known about it on the same date The only question to be decided, therefore, is whether the decision of the High Court is correct. To decide that question it was necessary to know what was the suit for. There is no dispute that 7 1/2 per cent above the auction money was charged by the Government of Madhya Pradesh as mahua and fuel cess, and the High Court subsequently held that it had no power to do so. In view of those writ peti tions challenging that power, Government asked the contrac tors to continue to pay the same pending Government 's deci sion on the question; and the appellants accordingly paid. Ultimately on 17.10.1961 Government decided not to recover the extra amount any more but did not yet decide the fate of the amounts already realised. There is no denial that the liquor contracts were performed by the appellants. There is no escape from the conclusion that the extra 7 1/2 per cent was charged by the Government believing that it had power, but the High Court in two cases held that the power was not there. The money realised was under a mistake and without authority of law. The appellants also while paying suffered from the same mistake. There is therefore no doubt that the suit was for refund of money paid under mistake of law. The question is what was the law applicable to the case. 'Nul ne doit senrichir aux depens des autres ' No one ought to enrich himself at the expense of others. This doctrine at one stage of English common law was remedied by 'indebitatus assumpsit ' which action lay for money "had and received to the use of the plaintiff". It lay to recover 602 money paid under a mistake, or extorted from the plaintiff by duress of his goods, or paid to the defendant on a con sideration which totally tailed. On abolition of 'indebit atus assumpsit ', courts used to imply a promise to pay which, however, in course of time was held to be purely fictitious. Lord Manslied in Moses vs Macferlan, ; at 10 12 explained the juridical basis of the action for money "had and received" thus: "This kind of equitable action, to recover back money, which ought not in justice to be kept, is very beneficial, and therefore much encouraged. It lies only for money which, 'ex aequo et bono ', the defendant ought to refund; it does not lie for money paid by the plain tiff, which is claimed of him as payable in point of honour and honesty, although it could not have been recovered from him by any course of law; as in payment of a debt barred by the Statute of Limitations, or contracted during his infancy, or to the extent of principal and legal interest upon a usurious contract, or, for money fairly lost at play; because in all these cases, the defendant may retain it with a safe conscience, though by positive law he was barred from recovering. But it lies for money paid by mistake; or upon a consideration which happens to fail; or for money got through imposition, (express or implied); or extortion; or oppression; or an undue advan tage taken of the plaintiff 's situation, contrary to laws made for the protection of persons under those circumstances. In one word, the gist of this kind of action is, that the defendant, upon the circumstances of the case, is obliged by the ties of natural jus tice and equity to refund the money." In that case Moses received from Jacob four promissory notes of cash each. He endorsed these to Macferlan who, by a written agreement, contracted that he would not hold Moses liable on the endorsement. Subsequently, however, Macferlan sued Moses on the notes in a Court of Conscience. The Court refused to recognise the agreement, and Moses was forced to pay. Moses then brought an action against Macferlan in the king 's Bench for money "had and received" to his use. Lord Manslied allowed him to recover observing as above. Courts in England have since been trying to formulate a juridicial basis of this obligation. Idealistic formulations as 'aequum et bonum ' and 'natural justice ' were considered to be inadequate and the 603 more legalistic basis of unjust enrichment is formulated. The doctrine of 'unjust enrichment ' is that in certain situation it would be 'unjust ' to allow the defendant to retain a benefit at the plaintiff 's expense. The relatively modern principle of Restitution is of the nature of quasi contract. But the English law has not yet recognised any generalised right to restitution in every case of unjust enrichment. As Lord Diplock has said, "there is no general doctrine of "unjust enrichment" recognised in English law. What it does is to provide specific remedies in particular cases of what might be classed as unjust enrichment in a legal system i.e. based upon the civil law. " In Sinclair vs Brougham, Lord Haldane said that law could 'de jure ' impute promises to repay whether for money "had and received" otherwise, which may, if made defacto, it would inexorably avoid. The principle of unjust enrichment requires: first, that the defendant has been 'enriched ' by the receipt of a "benefit"; secondly, that this enrichment is "at the expense of the plaintiff"; and thirdly, that the retention of the enrichment be unjust. This justifies restitution. Enrichment may take the form of direct advantage to the recipient wealth such as by the receipt of money or indirect one for instance where inevitable expense has been saved. Another analysis of the obligation is of quasi contract. It was said; "if the defendant be under an obligation from the ties of natural justice, to refund; the law implies a debt, and give this action rounded in the equity of the plaintiff 's case, as it were, upon a contract (quasi ex contracts) as the Roman law expresses it." As Lord Wright in Fibrosa Spolka vs Fairbairn Lawson, [1943] AC 32 1942 pointed out, "the obligation is as efficacious as if it were upon a contract. Such remedies are quasi contract or restitution and theory of unjust enrichment has not been closed in English law. " Section 72 of the Indian Contract Act deals with liabil ity of person to whom money is paid or thing delivered, by mistake or under coercion. It says: "A person to whom money has been paid, or anything delivered, by mistake or under coer cion, must repay or return it." Illustration (b) to the section is: "A Railway Company refuses to deliver up certain goods to the consignee, except upon the payment of an illegal 604 charge for carriage. The consignee pays the sum charged in order to obtain the goods. He is entitled to recover so much of the charge as was illegally excessive. " Our law having been codified, we have to apply the law. It is true, as Pollock wrote in 1905 in the preface to the first Edition of Pollock and Mulla 's Indian Contract and Specific Relief Acts: "The Indian Contract Act is in effect . . a code of English law. Like all codes based on an existing authoritative doctrine, it assumes a certain knowledge of the principles and habits of thought which are embodied in that doctrine. " It is, therefore, helpful to know "those fundamental notions in the common law which are concisely declared, with or, without modification by the text. " There is no doubt that the instant suit is for refund of money paid by mistake and refusal to refund may result in unjust enrichment depending on the facts and circumstances of the case. It may be said that this court has referred to unjust enrichment in cases under section 72 of the Contract Act. See ; ; and ; The next question is whether, and if so, which provision of the will apply to such a suit. On this question we find two lines of decisions of this Court, one in respect of civil sulks and the other in respect of peti tions under Article 226 of the Constitution of India. Though there is no constitutionally provided period of limitation for petitions under Article 226, the limitation prescribed for such suits has been accepted as the guideline, though little more latitude is available in the former. A tax paid under mistake of law is refundable under section 72 of the . In Sales Tax Officer vs Kanhaiya Lal, where the respondent, a regis tered firm, paid sales tax in respect of the forward trans actions in pursuance of the assessment orders passed by the Sales Tax Officer for the year 1949 51; in 1952 the Allaha bad High Court held in M/s Budh Prakash Jai Prakash vs Sales Tax Officer, Kanpur, that the levy of sales tax on forward transactions was ultra vires. The respondent asked for a refund of the mounts paid, filing a writ peti tion under Article 226 of 605 the Constitution. It was contended for the Sales Tax Author ities that the respondent was not entitled to a refund because (1) the amounts in dispute were paid by the respond ent under a mistake of law and were, therefore, irrecovera ble, (2) the payments were in discharge of the liability under the Sales Tax Act and were voluntary payments without protest, and (3) inasmuch as the monies which had been received by the Government had not been retained but had been spent away by it and the respondent was disentitled to recover the said amounts. This Court held that the term "mistake" in section 72 of the comprised within its scope a mistake of law as well as a mistake of fact and that, under that section a party is entitled to recover money paid by mistake or under coercion, and if it is established that the payment, even though it be of a tax, has been made by the party labouring under a mistake of law, the party receiving the money is bound to repay or return it though it might have been paid voluntarily, subject, howev er, to questions of estoppel, waiver, limitation or the like. On the question of limitation, it was held that section 17(1)(c) of the would be applicable and that where a suit will be to recover "monies paid under a mistake of law, a writ petition within the period of limita tion prescribed, i.e., within 3 years ' of the knowledge of the mistake, would also lie. " It was also accepted that the period of limitation does not begin to run until the plain tiff has discovered the mistake or could, with reasonable diligence, have discovered it. The money may not be recoverable if in paying and re ceiving it the parties were in pan delicto. In Kiriri Cotton Co. Ltd. vs Ranchhoddas Keshavji Dewani, , where the appellant company, in consideration of granting to the respondent a sub lease asked for and received from him a premium of Sh. 10,000 and the latter.claimed refund thereof, the Privy Council held that the duty of observing the law was firmly placed by the Ordinance on the shoulders of the landlord for the protection of the tenant, and the appellant company and the respondent were not therefore in pari delic to in receiving and paying respectively the illegal premium, which, therefore, in accordance with established common law principles, the respondent was entitled to recover from the landlord and that the omission of a statutory remedy did not in cases of this kind exclude the remedy by money had and received. In the instant case also the parties could not be said to be in pari delicto in paying and receiving the extra 7 1/2% per cent. Had the appellants not paid this amount, they would not have been given the contracts. In D. Cawasji &. Co. vs The State of Mysore & Anr. , ; , the appellants paid certain amount to the Government as 606 excise duty and education cess for the years 195 1 52 to 1965 66 in one case and from 1951 52 to 1961 62 in the other. The High Court struck down the provisions of the relevant Acts as unconstitutional. In Writ Petitions before the High Court claiming refund, the appellants contended that the payments in question were made by them under mis take of law; that the mistake was discovered when the High Court struck down the provisions as unconstitutional and the petitions were, therefore, in time but the High Court dis missed them on the ground of inordinate delay. Dismissing the appeals, this Court held that where a suit would lie to recover monies paid under a mistake of law, a writ petition for refund of tax within the period of limitation would lie. For filing a writ petition to recover the money paid under a mistake of law the starting point of limitation is from the date on which the judgment declaring as void the particular law under which the tax was paid was rendered. It was held in D. Cawasji (supra) that although section 72 of the Contract Act has been held to cover cases of payment of money under a mistake of law, as the State stands in a peculiar position in respect of taxes paid to it, there are perhaps practical reasons for the law according different treatment both in the matter of the heads under which they could be recovered and the period of limitation for recovery. P.N. Bhagwati, J., as he then was, in Madras Port Trust vs Hymanshu Inter national, , deprecated any resort to plea of limitation by public authority to defeat just claim of citizens observing that though permissible under law, such technical plea should only be taken when claim is not well founded. Section 17(1)(c) of the , provides that in the case of a suit for relief of the ground of mistake, the period of limitation does not begin to run until the plaintiff had discovered the mistake or could with reasonable diligence, have discovered it. In a case where payment has been made under a mistake of law as contrasted with a mistake of fact, generally the mistake become known to the party only when a court makes a declaration as to the invalidity of the law. Though a party could, with reasonable diligence, discover a mistake of fact even before a court makes a pronouncement, it is seldom that a person can, even with reasonable diligence, discover a mistake of law before a judgment adjudging the validity of the law. E.S. Venkataramiah, J., as his Lordship then was, in Shri Vallabh Glass Works Ltd. vs Union of India, ; , where the appellants claimed refund of excess duty paid under Central Excise and Salt Act, 1944, laid down that the excess amount paid by the appellants would have become refundable by virtue of section 72 of the 607 if the appellants had filed a suit within the period of limitation; and that section 17(1)(c) and Article 113 of the would be applicable. In Commissioner of Sales Tax, U.P.v. M/s Auriaya Chamber of Commerce Allahabad; , , the Supreme Court in its decision dated May 3, 1954 in Sales Tax Officer vs Budh Prakash Jai Prakash, [1954] 5 STC 193 having held tax on forward contracts to be illegal and ultra vires the U.P. Sales Tax Act, and that the decision was applicable to the assessee 's case, the assessee filed several revisions for quashing the assessment order for the year 1949 50 and for subsequent years which were all dismissed on ground of limitation. In appeal to this Court Sabyasachi Mukharji, J. while dismissing the appeal held that money paid under a mistake of law comes within mistake in section 72 of the Contract Act; there is no question of any estoppel when the mistake of law is common to both the assessee and taxing authority. His Lordship observed that section 5 of the Limitation Act, 1908 and Article 96 of its First Schedule which prescribed a period of 3 years were applicable to suits for refund of illegally collected tax. In Salonah Tea Co. Ltd. & Ors. vs Superintendent of Taxes, Nowgong and Ors. , ; , the Assam Taxa tion (on Goods carried by Road or Inland Waterways) Act, 1954 was declared ultra vies the Constitution by the Supreme Court in Atiabari Tea Co. Ltd. vs State of Assam, ; A subsequent Act was also declared ultra vires by High Court on August 1, 1963 against which the State of Assam and other respondents preferred appeals to Supreme Court. Meanwhile the Supreme Court in a writ petition Khyer bari Tea Co. Ltd. vs State of Assam, ; , declared on December 13, 1963 the Act to be intra vires. Consequently the above appeals were allowed. Notices were, therefore, issued requiring the appellant under section 7(2) of the Act to submit returns. Returns were duly filed and assessment orders passed thereon. On July 10, 1973, the Gauhati High Court in its Judgment in Loong Soong Tea Es tate 's case, Civil Rule No. 1005 of 1969, decided on July 10, 1973, declared the assessment to be without jurisdic tion. In November, 1973 the appellant filed writ petition in the High Court contending that in view of the decision in Loong Soong Tea Estate 's case he came to know about the mistake in paying tax as per assessment order and also that he became entitled to refund of the amount paid. The High Court set aside the order and the notice of demand for tax under the Act but declined to order refund of the taxes paid by the appellant on the ground of delay and laches as in view of the High Court it was possible for the appellant to know about 608 the illegality of the tax sought to be imposed as early as in 1963, when the Act in question was declared ultra vires. Allowing the assessee 's appeal, Mukharji, J. speaking for this Court held: "In this case indisputably it appears that tax was collected without the authority of law. Indeed the appellant had to pay the tax in view of the notices which were without juris diction. It appears that the assessment was made under section 9(3) of the Act. Therefore, it was without jurisdiction. In the premises it is manifest that the respondents had no authority to retain the money collected with out the authority of law and as such the money was liable to refund. " The question there was whether in the application under article 226 of the Constitution, the Court should have refused refund on ground of laches and delay, the case of the appel lant having been that it was after the Judgment in the case of Loong Soong tea Estate, the cause of action arose. That judgment was passed in July, 1973. The High Court was, therefore, held to have been in error in refusing to order refund on the ground that it was possible for the appellant to know about the legality of the tax sought to be imposed as early as 1973 when the Act in question was declared ultra vires. The Court observed: "Normally speaking in a society governed by rule of law taxes should be paid by citizens as soon as they are due in accordance with law. Equally, as a corollary of the said statement of law it follows that taxes col lected without the authority of law as in this case from a citizen should be refunded because no State has the right to receive or to retain taxes or monies realised from citizens without the authority of law. " On the question of limitation referring to Suganmal vs State of M.P., AIR 1965 SC 1740, and Tilokchand Motichand vs H.B. Munshi, , his Lordship observed that the period of limitation prescribed for recovery of money paid by mistake started from the date when the mistake was known. In that case knowledge was attributable from the date of the Judgment in Loong Soong Tea Estate 's case on July 10, 1973. There had been statement that the appellant came to know of that matter in October, 1973 and there was no denial of the averment made. On that ground, the High Court was held to be in 609 error. It was accordingly held that the writ petition filed by the appellants were within the period of limitation prescribed under article 113 of the Schedule read with section 23 of the . It is thus a settled law that in suit for refund of money paid by mistake of law, section 72 of the Contract Act is applicable and the period of limitation is three years as prescribed by Article 113 of the Schedule to the Indian and the provisions of section 17(1)(c) of that Act will be applicable so that the period will begin to run from the date of knowledge of the particular law, where under the money was paid, being declared void; and this court be the date of judgment of a competent court declaring that law void. In the instant case, though the Madhya Pradesh High Court in Surajdin vs State of M.P., declared the collection on 7 1/2% per cent illegal and that decision was reported in , the Government was still charging it saying that the matter was under consideration of the Government. The final decision of the Government as stated in the letter dated 17.10. 1961 was purely an internal communication of the Government copy whereof was never communicated to the appellants or other liquor contractors. There could, there fore, be no question of the limitation starting from that date. Even with reasonable diligence, as envisaged in section 17(1)(c) of the , the appellants would have taken at least week to know about it. Mr. Rana has fairly stated that there was nothing on record to show that the appellants knew about this letter on 17.10. 1961 itself or within a reasonable time thereafter. We are inclined to allow at least a week to the appellants under the above provision. Again Mr. Rana has not been in a position to show that the statement of the appellants that they knew about the mistake only after the judgment in Doongaji 's case reported in , in or about September, 1962, whereafter they issued the notice under section 80 C.P.C. was untrue. This statement has not been shown to be false. In either of the above cases, namely, of knowledge one week after the letter dated 17.10. 1961 or in or about September, 1962, the suit would be within the period of limitation under Article 113 of the Schedule to the . In the result, we set aside the Judgment of the High Court, allow the appeal and remand the suit. The records will be sent down forthwith to the trial court to decide the suit on merit in accordance with law, expeditiously. The appellants shall be entitled to the costs of this appeal. R.N .J. Appeal allowed.

The appellant firm was allotted contracts for manufac ture and sale of liquor for the year 1959 and for the subse quent periods from 1.1. 1960 to 31.3.1961 for Rs.2,56,200 and Rs.4,71,900 respectively by the M.P. Govt. who also charged 7 1/2% over the auction money as mahua and fuel cess. As writ petitions challenging the government 's right to charge this 7 1/2% were pending in the M.P. High Court, the Govt. announced that it would continue to charge it and the question of stopping it was under consideration of Govt. whose decision would be binding on the contractors. The appellant firm paid for the above contracts a total extra sum of Rs.54,606.00. On 24.4.1959 the M.P. High Court in Surajdin vs State of M.P., declared the collection of 7 1/2% as illegal. Even after this decision the Govt. continue to charge 7 1/2% extra money. Again on 31.8.1961, the High Court of Madhya Pradesh in N.K. Doongaji vs Collector, Surguja, decided that charg ing of 7 1/2% by the Govt. above the auction money was illegal. Appellants came to know of this decision only in or about September, 1962. On 17.10.1964 the appellants gave a notice under section 80 C.P.C. to the Govt. of Madhya Pradesh requesting for the refund of Rs.54,606.00. failing which a suit for recovery would be filed and later they instituted a civil suit in the court of additional District Judge, Jabalpur on 24.12.1964. The Govt. resisted the suit inter alia on the ground of limitation. The Trial Court held that the suit was barred by 597 limitation and dismissed it. The High Court also dismissed the appeal. The appellants then came up in appeal by special leave. While allowing the appeal and remanding the suit to the Trial Court for decision on merits. This Court, HELD: 'Nul ne doit senrichir aux depens des autres ' No one ought to enrich himself at the expense of others. This doctrine at one stage of English common Law was remedied by 'indebitatus assumpsit ' which action lay for money ' had and received to the use of the plaintiff '. It lay to recover money paid under a mistake or extorted from the plaintiff by duress of his goods, or paid to the defendant on a consider ation which totally failed. On abolition of 'indebitatus assumpsit ', courts used to imply a promise to pay which, however, in course of time was held to be purely fictitious. [601G 602A] Courts is England have since been trying to formulate a juridical basis of this obligation. Idealistic formulations as 'aequum et bonum ' and 'natural justice ' were considered to be inadequate and the more legalistic basis of unjust enrichment is formulated. The doctrine of 'unjust enrich ment ' is that in certain situations it would be 'unjust ' to allow the defendant to retain a benefit at the plaintiff 's expense. The relatively modern principle of restitution is of the nature of quasi contract. But the English law has not yet recognised any generalised right to restriction in every case of unjust enrichment. [602H 603B] The principle of unjust enrichment requires; first, that the defendant has been 'enriched ' by the receipt of a "benefit"; secondly. that this enrichment is "at the expense of the plaintiff" and thirdly, that the retention of the enrichment be unjust. This justified restitution. Enrichment may take the form of direct advantage to the recipient wealth such as by the receipt of money or indirect one for instance where inevitable expense has been saved. [603C 603D] There is no doubt that the suit in the instant case, is for refund of money paid by mistake and refusal to refund may result in unjust enrichment depending on the facts and circumstances of the case. [604D] Though there is no constitutionally provided period of limitation for petitions under Article 226, the limitation prescribed for such suits has been accepted as the guide line, though little more latitude is available in the for mer. [604F] For filing a writ petition to recover the money paid under a mis 598 take of law the starting point of limitation is three years is prescribed by Article 113 of the Schedule to the Indian and the provisions of section 17(1)(c) of the Act will be applicable so that the period will begin to run from the date of knowledge of the particular law, where under the money was paid, being declared void and this could be the date of the judgment of a competent court declaring that law void. [609B] Moses vs Macferlan, ; at 1012; Sin clair vs Brougham, ; Fibrosa Spolka vs Fair bairn Lawson; , = ; ; Sales Tax Officer vs Kanhaiya Lal, ; M/s Budh Prakash Jai Prakash vs Sales Tax Officer, Kanpur, ; Kiriri Cotton Co. Ltd. vs Ranchhoddas Keshavji Dewani, ; D. Cawasji & Co. vs The State of Mysore & Anr., ; ; Madras Port 7rust vs Hymanshu Inter national, ; Shri Vallabh Glass Works Lid. vs Union of India; , ; Commissioner of Sales Tax, U.P.v. M/s. Auriaya Chamber of Commerce Allahabad; , ; Sales Tax Officer vs Budh Prakash Jai Prakash, [1954] 5 STC 193; Salonah Tea Co. Ltd. & Ors. vs Superin tendent of Taxes, Nowgong & Ors. , ; ; Atiabari Tea Co. Ltd. vs State of Assam, ; ; Khyerbari Tea Co. Ltd. vs State of Assam, ; ; Loong Soong Tea Estate 's, case decided on July 10, 1973; Suganmal vs State of M.P., AIR 1965 SC 1740; Tilokchand Motichand vs H.B. Munshi, , referred to.

Appeals Nos. 1291 and 1292 of 1967. Appeals by special leave from the award dated June 30 1967 of the Additional Industrial Tribunal, Bangalore in A.I.D. Nos.6 ',and 8 of 1966. O. P. Malhotra and D. N. Gupta, for the appellant. I. N. Keshava and K. Rajendra Chowdhary, for respondents Nos.2 and 3. Vineet Kumar, for respondents Nos. 4 to 10. On December 8, 1965, the Government of Mysore referred to the Industrial Tribunal for adjudication the following question "Is the Management of the Bangalore Woollen, Cotton and Silk Mills Company Limited, Bangalore, justified in announcing payment of one month 's basic wages as advance against wages for the half year ending June 1965 instead of declaring this payment as an ad vance against payment of bonus as was being, done all these years ? If not, what other relief the workers are entitled to. This was numbered as Reference No. A.I.D. 6 of 1966. Civil Appeal No. 1291 of 1967 is directed against that part of the order of the Tribunal regarding this Reference. On March 5, 1966, the Government of MysorE referred to the same Tribunal for adjudication the following question "Whether the demand of the workers of Bangalore Woollen, Cotton and Silk Mills Co., Ltd., Bangalore, for additional bonus for the year 1962 and 1963 at the rate of 2 months additional bonus and4 months additional bonus on total wages respectively is justified. If not, to what other relief or reliefs are the workmen entitled ?" This Reference was numbered as A.I.D. 8 of 1966. Civil Appeal No. 1292 of 1967 is directed against that part of the order of the Tribunal regarding this Reference. Both the appeals are by the Company. We will first take up Civil Appeal No. 1291 of 1967. appellant was making two payments of bonus every year, one for the half year ending 30th June and half year ending 30th December. The accounting year is the Calendar year. The half yearly payments were unilaterally declared by the appellant and not on the basis of any agreement between the parties. The quantum of bonus that was paid for each half year was also not constant. Half yearly payments were made at the end of the half year when 466 the working result of the said year was known and if there was sufficient profit to pay bonus. The payment of bonus for the half years also depended upon the approximate estimate that the Directors used to make about their prospective future earnings for next half year. According to the appellant the bonus amounts were paid out of profits. As the (hereinafter to be referred as the Act) had come into force on August 28, 1965, the appellant issued a circular to the effect that for the half year ending June 30, 1965, payments will be made as advance of wages equivalent to 1/6th of the basic earnings of the employees. In this circular there is a reference to the Payment of Bonus Ordinance 1965, promulgated on May 29, 1965 and that under the terms of the Ordinance, bonus is payable only within a period of 8 months from the end of the accounting year. The circular further states that no bonus is payable for the accounting year 1965 until the accounts for the year are closed. It was further mentioned that the amounts are paid as advance wages in view of the representations made by the employees. The circular further mentioned that the amounts paid as advance wages will be set off against the bonus that may be found payable for the ac counting year 1965 and that if no bonus is payable, the amount paid will be adjusted against the wages due for any month after March, 1966. The issue of the above circular led to the Unions concerned raising a dispute with the Management that the payment of bonus at the end of each half year has become a condition of service of the workmen as the same was being paid for several decades without any relation to profits. The appellant was charged by the Unions of having changed the conditions of service by offering to make payments as advance against wages instead of payment by way of bonus. As conciliation proceedings failed, the workmen resorted to a strike in December 1965, which led to the Reference being made by the State Government on December 8, 1965, No. A.I.D. 6 of 1966. The short stand taken by, the appellant before the Tribunal was that the payments were being made as bonus at the end of each half year on the basis of the profits earned by the Company. Such payment was a voluntary act of the appellant and related to profit and it had not become a condition of service of the employees. The further case of the appellant is that as the Act had come into force, bonus is governed by the provisions of the Act and that bonus is to be paid only within eight months after the close of the year of account, i.e., December 31, 1965. The Unions pleaded that the payment of bonus at the end of each half year, which was being done for a long number of years, 467 has become a condition of service and the amounts paid were not related to the profits earned by the Company. The Unions further contended that the Act has not in any manner affected the right of the employees getting bonus in the manner paid by the appellant namely , at the end of every half year. The Tribunal has recorded the following findings : The pay ment of bonus was not a settled condition of service, but is dependent upon the profits earned during the half year. Payments made by the appellant at the close of the half year cannot be considered as customary or festival bonus and that the appellant has made no change in the conditions of service of the workmen by altering the quantum of bonus. Though bonus was paid at the close, of each half year, the quantum of such bonus varied depending upon the profits earned by the Company. The Company has no doubt been paying for a long time profit bonus in two instalments, namely, in the month of August for the half year ending 30th June and in the month of March or April of the succeeding year for the half year ending 31st December. The coming into force of the Act has, not created any right in the appellant to withhold the payment for each half year as it used to do. The appellant will be entitled to deduct the amount of bonus paid for the first half year from the amount of bonus payable to its, employees under the Act in respect of the accounting year and the employees will be entitled to receive only the balance for the second half year. On these findings the Tribunal held that the appellant was not justified in announcing the payment of the amount towards advance wages under the circular dated August 28, 1965. In the end the Tribunal gave a direction to the effect that the appellant is liable to pay profit bonus in two instalment as advance against the final declaration of bonus to be paid during the last week of August or first week of September and the balance, if any, was to be paid in the month of March or first week of April of the succeeding year. It further gave a direction that the first payment that is to be paid is to be as advance against payment of bonus and not as against wages. Mr. Malhotra, learned counsel for the appellant, has chal lenged the above directions given by the Tribunal. The counsel pointed out that after the coming into force of the Act, the rights and liabilities of the parties, regarding bonus, are governed by its provisions. Under the Act, the computations of the available and allocable surplus have to be made on the basis of the gross profits ascertained at the end of the relevant accounting year and the payment of bonus has to be made within eight months of the close of the accounting year. As the Act envisages payment of only one bonus, at the end of the accounting year, after computation of the amount as per the Act, the direction given by the Tribunal 468 regarding payment of half yearly bonus is illegal and contrary to the provisions of the Act. This direction, the counsel pointed out, given by the Tribunal, will apply not only to the year 1965, but also to all succeeding years. On the other hand, Mr. H. K. Puri, learned counsel for the respondents Nos. 2 and 3, whose contentions have been accepted by the, counsel for the other respondents, urged that the Act does not prohibit an employer from paying bonus at the end of each half year. The appellant has been paying bonus in two installments, namely, at the end of each half year. It is always open to the appellant, both by virtue: of the provisions of the Act and the direction given by the Tribunal to deduct when paying final bonus at the end of the accounting year, any amounts that may have been paid for the first half year. Therefore, according to Mr. Puri, the directions given by the Tribunal are neither illegal nor contrary to the provisions of the Act. We are not inclined to accept the contention of Mr. Puri. We have already referred to the findings of the Tribunal to the effect that the amount that was paid by the appellant as bonus at the end of each half year was on the basis of the profits earned by it The Tribunal has rejected the claim of the Unions that the payment of bonus, in the manner claimed by them, was not a condition of service and that the payment had nothing to do with any custom or festival. These findings have not been and in fact could not be challenged by the respondents. There is also no controversy that payment of bonus for the accounting year 1965 is governed by the provisions of the Act. If so, the question is whether the directions given by the Tribunal and referred to above, can be supported by the provisions of the Act. The Act has come into force with effect from August ' IS, 1965. As provided under sub section (4) of section 1, it applies to all accounting years commencing on any day in the year 1964 and in respect of every subsequent accounting year. Section 2 defines amongst others the expressions, "accounting year", "allocable surplus", "available surplus" and "gross profits" Section 4 deals with the computation of gross profits. So far as the appellant is concerned; under section 4, cl. (b) the gross profits are to be calculated in the manner specified in the Second Schedule. Section 5 provides for computation of available surplus. It is to be ascertained after deducting from the gross profits the various items, referred to in section 6. Section 6 deals with the items to be deducted as prior charges from the gross profits. Section 10 makes it obligatory on an employer to pay minimum bonus to the employees in an accounting year of 4% of his salary or wages or Rs. 40/ whichever is higher. This payment is irrespective of the 469 fact whether a Company has or has not earned profits in an accounting year. But this provision is subject to the provisions of sections 8 and 13. Section 11 provides for payment of bonus subject to a maximum of 20% of the salary or wages, if the conditions mentioned therein are satisfied. Section 17 enables an employer, who has paid during any accounting year Puja Bonus, or other customary bonus or a part of the bonus payable under the Act before the due date, to deduct the amount so paid from the amount of bonus payable by him to an employee under the Act in respect of that accounting year. It further provides that under such circumstances the employee will be entitled to receive only the balance. Section 19 fixed the time limit for payment of bonus. If there is a dispute regarding payment of bonus pending before any authority, the bonus will have to be paid within a month from the date, on which the Award becomes enforceable or the settlement comes into operation. In any other case the bonus will have to be paid within a period of eight months from the close of the accounting year. Under the proviso to section 19, power is given to the appropriate Government to extend the period of eight months in accordance with the provisions contained therein. Section 34 provides that the Act except as otherwise provided in the section, shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in the terms of any Award, agreement, settlement or contract of service made before May 29, 1965. We have referred to some of the relevant provisions of the Act. From a perusal of the scheme of the Act, it is clear that the bonus for a particular accounting year will have to be computed in accordance with the provisions of the Act on the basis of the gross profits which are determined at the close of the accounting year. The Act itself provides as to how the gross profits are to be calculated and the available and allocable surplus arrived at The Act also provides the outer limit, the period within which bonus has to be paid. It further gives the employer a right to deduct any amount that any have been paid during the accounting year as part of the bonus payable under the Act. It will be seen from the scheme of the Act that the claim for bonus can be made only after the close of the accounting year and in accordance with the provisions of the Act. The gross profits can be calculated only at the end of the accounting year and the available and allocable surplus can also be worked out only at the end of the accounting year. There is no question of an employer computing the gross profits,, available and allocable surplus in the middle of an accounting year or at any time before the close of the relevant accounting year. The direction given by the Tribunal really amounts to the employer having to make, two 831 Sup CI/72 470 computations at the end of each half year. No doubt the Tribunal has given a direction to the effect that any amount paid for the first half year can be deducted when the final bonus is paid at the, end of the accounting year. Even without any such consideration being shown by the Tribunalallowing an employer to so deduct section 17gives such a right to an employer. We are not impressed with thecontention of Mr. Puri that as there is no prohibition in theAct against an employer making the payment by way of bonus at the end of a half year, the direction given by ' the Tribunal can be sustained. Mr. Puri referred us particularly to the provisions contained in section 17 of the Act. He pointed out that though a time limit is fixed by section 19, the Act itself as is evident from section 17, clearly envisages payment of bonus at the end of each half year. We are not inclined to accept this contention of Mr. Puri. The direction given by the Tribunal making it obligatory on the Management to make half yearly payment of bonus apart from being opposed to the scheme of the Act, also runs counter to the provisions of section 19. Whether it is the minimum bonus of, 4% under section 10 or ' the maximum bonus of 20 % under section 11, they have to be paid, as, is made clear by s ' 19, only within the period mentioned therein. ' It may be that an employer voluntarily pays amount during the accounting year by way of part bonus which he is entitled to take into account and adjust when making final payment at the close of the accounting year. It is one, thing to say that an employer can make voluntary payment, but it is a different thing for the Tribunal to give a direction to that effect. Section 17 on which reliance, is placed by Mr. Puri is as follows: "Where in any accounting year (a) an employer has paid any paid bonus or other customary bonus to an employee; or (b) an employer has paid a part of the bonus payable under this Act to an employee before the date on which such bonus becomes payable, then, the employer shall be entitled to deduct amount of bonus so paid from the amount of bonus payable by him to the employee under this Act in respect of that accounting year and the employee shall be entitled to receive only the; balance. Clause (a)has no application as the Tribunal has categori cally held that there is question of any payment by way of puja bonus, or other customary bonus. Even then if any such bonus 471 has been paid the employer is entitled to deduct the same from the amount of bonus payable under the Act. Clause (b) is an enabling section in favour of the employer in that it visualizes a situation or contingency where he may have paid during the accounting year a part of bonus payable under the Act "before date on which such bonus becomes payable". If an employer has paid any amount during an accounting year by way of part of the bonus, he, is entitled lo deduct the same from the final amounts that may be payable under the Act. That provision does not give a right to an employee to claim payment of bonus even by way of part payment during the currency of the accounting year. If so, the Tribunal has also no jurisdiction to give a direction to an employer to pay bonus at the end of each half year. In this case,it is no doubt, seen that the appellant has been paying bonus atthe end of each half year. But the Tribunal has found that suchpayment has not become a condition of service. Therefore by the mere fact that the appellant has been making payments on previous occasions every half yearly, does not confer a right on the employee to have such payments by way of bonus in the same manner even after the Act came into force,. From the above discussion it follows that the directions given, by the Tribunal in A.I.D. No. 6 of 1966 have to be set aside. Now coming to Civil Appeal No. 1292 of 1967, as mentioned earlier, it is against that part of the Award of the Tribunal in A.I.D. No. 8 of 1966. The question that was referred to the Tribunal has also been extracted in the earlier part of the judgment. That relates to a claim for additional bonus for the years, 1962 and 1963, There is no controversy that the appellant has already paid for the year 1962, three months basic wages as bonus. Similarly for the year 1963 also four months basic wages as bonus has already been paid. The claim was for, two months total wages as additional bonus for the year 1962 and four months ' total wages as additional bonus for the year 1963. The findings recorded by the Tribunal in A.I.D. No. 6 of 1966 regarding the nature of bonus paid to the employees have been adopted for this reference also. The respondents Unions do not challenge those findings. Therefore, even in respect of the years 1962 and 1963, what is payable is only profit bonus. There is also no controversy that for these two years the quantum of bonus payable has to be calculated in accordance. with what is known as the Labour Appellate Tribunal Full Bench Formula, which has been approved by this Court in The Associated Cement Companies Ltd. Dwarka Cement Works, Dwarka vs Its Workmen and Another(1). Both the parties have filed statements of calculations according to (1) 472 the said Formula. The statements Exs. M. 1 and M.2 filed by the Management represent the computation of available surplus for the years ended December 31, 1962 and 1963 respectively. exhibit M. 1 is as follows : "THE BANGALORE WOOLLEN, COTTON & SILK MILLS CO. LTD. Statement showing the computation of available surplus for the year ended 31st December, 1962 (Under L.A. T. Formula) Profit as per profit and loss Account6801756 Add: Provision for Bonus 1614000 Depreciation on Fixed Assets 1696481 Donations 107362 Additional Bonus for 1961 146000 3563843 10365599 .Less: Profit on sale of assets 1745426 8620173 Less Normal Depreciation and Shift Allowance1465812 7154361 Less: Tax Liability Profit as above 7154361 Less Development Rebate 586415 6567946 Income tax Liability at 50 Y. on Rs. 65534083276704 Income Tax at 25 % on Rs.145383635 65679463280339 Super Profits Tax on Rs. 6553408409158 3689497 Return on Capital employed Preference Share Capital 78 %. on Rs. 60000046800 ordinary Share Capital 729000 6% on Rs. 12150000 Reserves employed in the business 4% on Rs. 469379 471787 3325545336244030 Available Surplus. 910331 Subject to claim for rehabilitation. 473 We have prepared the above statement from the audited accounts of the Company and is in accordance therewith. The return on Capital and Reserves is as claimed by the Company. Sd/Illegible Chartered Accountants." Similarly exhibit M2 regarding the year 1963 is as follows : "THE BANGALORE WOOLLEN, COTTON & SILK MILLS CO. LTD. Statement showing the computation of available surplus for the year ended 31st December 1963 (Under L. A. T. Formula) Profit as per Profit and Loss Account 5239220 ADD : Provision for Labour Bonus 2245000 Depreciation on Fixed Assets 1733719 Donations 8804 Provision for Taxation 8110000 12097523 17336743 LESS: Profit on Sale of Assets 83093 Excess Provision of Electricity charges and interest written back 675184 758277 16578466 LESS: Normal depreciation and Shift Allowance 1647555 14930911 LESS Tax Liability Profit as above 14930911 Less Development Rebate 460548 14470363 Income tax Liability at 50% on Rs. 14455825 7227912 25 % on Rs. 145383635 Dividend tax 164025 Companies (Profit) Surtax Liability on Rs. 1445582 51786212 9181784 Return on Capital Employed Preference Share Capital 7 .8 % on Rs. 600000 46800 Ordinary Share Capital 6 Y. on Rs. 12150000 729000 Reserves employed in the business 4 % on Rs. 46937947 .1877518265331811835102 Available surplus 3095809 Subject to claim for rehabilitation. 474 We have prepared the above statement from the audited accounts of the company and certify that it is in accordance therewith. The return on capital and reserves is, as claimed by the company. illegible Chartered Accountants. The Tribunal has accepted as correct the gross profits as given by the appellant in these, two exhibits for the two years in question. Even though the Unions contested the return on Preference Share Capital at 7.8%, the Tribunal has rejected their objections. it has held that under the Preference Share Regulations Act, the Company is bound to pay 7.8% on Preference Share Capital. Ile Workmen did not raise any controversy regarding the return on Ordinary Share Capital at 6%. The Tribunal, therefore, accepted the figures given in both Exs. M. 1 and M. 2 and to the return of Ordinary Share Capital. But the controversy arose about the claim made by the appellant regarding return on Reserves employed during the two years. It will be noted that neither in exhibit M. 1 nor in exhibit M. 2 the appellant has made any claim for rehabilitation excepting adding a note to the statement that they are subject to a claim for rehabilitation. The two points in controversy between the parties regarding these two years were (1) The claim for Return on Reserves and (2) Provision for Rehabilitation. We will first take up the question regarding the claim of the appellant for return on Reserves. In exhibit M. 1, the appellant has claimed a sum of Rs. 178733.00 as 4% return on Rs. 44468315.00 being the amount employed in business. Similarly in exhibit M.2, for the year 1963, it had claimed Rs. 1877518.00, being 4% return on Reserves on Rs. 46937947.00, employed in the business. The Unions contested the claim of the appellant on the ground that they are not entitled to any return on Reserves. The appellant had filed two statements Exs. Ml (a) and M.2(a) for the years 1962 and 1963 respectively, showing how the amounts claimed as Reserves employed in business have been arrived at exhibit M. 1 (a). for the year 1962 is as follows THE BANGALORE WOOLLEN, COTTON & SILK MILLS CO. LTD. Year ended 31st December 1962. Reconciliation of Capital employed in the business during the year ended 31st December. 475 "As at 31 12 1961: Fixed Assets and Capital Works 43139570 in Progress Investments 595216 Interest accrued on Investments 17477 Stores and Spare parts 6179042 Raw Materials 6886058 Process Stocks 5053558 Finished Stocks 1381082 Sundry Debtors 2473722 Advances 2768233 Balance with Railway and Excise Authorities 292529 Deposits 18993 68806470 LESS Sundry Creditors 7077709 Due to Directors 63744 Unclaimed Dividends 18257 Provision for Taxation 1057850 Proposed Dividends 1481400 Provision for Gratuity 1860431 Officer 's Retiring Fund 26764 (Fund loss investments) 11588155 57218315 LESS: Share Capital 12750000 Rs. 44468315" Exhibit M.2(a) for the year 1963 is as follows "THE BANGALORE WOOLLEN, COTTON & SUR MILLS CO. LTD. Year ended 31st December, 1963. Reconciliation of Capital employed during the year ended 31 12 1963. As at 31 12 1962 45229453 Investments 548575 Interest accrued on Investments 8703 Stores and Spare Parts 6553343 Raw Materials 4701434 Process Stocks 7285534 Finished Stocks 1688931 Sundry Debtors 3429299 Advances 3165324 Balances with Railway and Excise Authorities 346450 .Deposits 24234 729811280 476 LESS: Sundry Creditors 7686123 Due to Directors 65278 Unclaimed Dividends 22837 Provision for Taxation 2305645 Proposed Dividends 1481400 Provision for Gratuity1 706251 Officers Retiring Fund 25799 (Fund less investments) 13293333 59687947 Less Share Capital 12750000 Rs. 46937947" It will be seen that the last figures shown in both the statements have been claimed by the appellant as Reserves employed in business for each of these two years. The Tribunal after a reference to the evidence of the Char tered Accountant,, M.W.1, has held that the amounts which should have been used as Working Capital are those mentioned in Exs. M.1(a) and M.2(a), less the fixed assets and capital works in progress. The Tribunal has further held that the working capital cannot include fixed assets nor the capital works in progress, as they represent the funds required for day to day work of the Company. According to the Tribunal these fixed assets have been accumulated over years and they cannot form part of the working capital. However, the Tribunal accepted the claim of the appellant that the other items in Exs. M.1(a) and M.2(a), namely, investments, interest accrued on investments, stores and spare parts, raw materials, process stocks, finished stocks, sundry debtors, advances etc. are the amounts available to be used as working capital. On this reasoning the Tribunal held that in calculating the return on working capital, the amounts mentioned in exhibit M.1(a) and M.2(a) less the amount sunk in fixed assets and working capital in progress, have to be deducted. On this basis it deducted from Rs. 44468315, a sum of Rs. 43139570, and fixed a sum of Rs. 1328745, as Reserves employed in business during the year ended December 31, 1962. On this amount it allowed a sum of Rs. 53150/ as return on Reserves at 4% for the year 1962. Similarly, for the year 1963, it deducted from Rs. 46937947 a sum of Rs. 45229423, and fixed a sum of Rs. 1708524/ as Reserves employed in business during that year. On this amount it allowed Rs. 68340/ as return on Reserves at 4%. Mr. Malhotra, learned counsel for the appellant, while accepting that the principle adopted by the Tribunal in this regard is 477 correct, contended that it had made a mistake incalculation. According to the learned counsel, the claim musthave been allowed in the manner calculated by the appellant. In this connection, the learned counsel pointed out that even in cases where the evidence regarding the utilization of Reserves as Working Capital as claimed by the Company, is not very satisfactory, this Court,, on the basis of the balance sheets, which indicated that some amount must have been used as working capital has allowed such a claim. In this connection, he relied on Workmen of M/s Hindustan Motors Ltd. vs M/s Hindustan Motors Ltd., and Another(1) and Messrs. Aluminium Corporation of India vs Their Workmen (2). We may straightaway say that these decisions do not assist the appellant. In the case before us it is not necessary to do any guess work as the appellants wants us to do. The appellant has filed statements showing how it has calculated the amount of Reserves utilized as working capital and we have to find out whether the calculations made by it are correct. In fact, Mr. Malhotra has not been able to point out from the balance sheets, as to what amount, according to the appellant, can be considerd to have been used as working capital. In the two decisions,, relied on by him, the company concerned was able to refer to the figures in the balance sheets from which this Court was able to draw a conclusion regarding the approximate amount that would have been utilized as working capital. The position before us is entirely different. On the other hand, Mr. Puri" learned counsel for the respon dents, referred us to the balance sheets for the years in question regarding the share capital of the company being shown as Rs. 12750000/ . The counsel further pointed out that the said share capital must have been sunk in acquiring the fixed assets and for capital works in progress and, therefore, the Tribunal was justified in deducting the amount of fixed assets and capital works in progress shown in Exs. M. 1 (a) and M.2 (a) from the total shown by the appellant in those statements. The counsel further urged that in considering the claim for return on working capital two questions have to be kept in view: (1) Whether the Reserves were available, and if they were (2) whether they were used as working capital and if so what is that amount. The Tribunal in our opinion, has correctly kept these two principles in view in arriving at the amount of Reserves used as working capital and on which a return is to be allowed. We see no error committed by the Tribunal in the calculation made for arriving at the, Reserves which must have been used as working capital, especially as the evidence on the side of the appellant was very unsatisfactory. Even the appellant has deducted the amount of share capital before (1) ; (2) 478 arriving at the final figures mentioned in Exs. M.1(a) and M.2 (a). But the appellant was claiming the whole of the final amount shown in these two statements as Reserves used as working capital, which it was not certainly entitled to in law. We have already pointed out that the Tribunal has held that the working capital cannot include fixed assets nor the capital works in progress as it represents 'the funds required for day to day running of the Company. The, Tribunal has further held that the appellant is entitled to deduct investments, interest accrued on ,investments etc. which have been shown in Exs. M 1 (a) and M.2(a) on the ground that they must be considered to be the amounts available to be used as working capital. These findings have not been challenged by the learned counsel for the appellant. The appellant has also filed details of Reserves employed in the business during the years ended 31st December, 1962 and 1963 as shown in Exs. M. 1 (b) and M.2(b) respectively. Even ,there the appellant has deducted the share capital before giving final figures. Therefore, the contention of Mr. Malhotra that the Tribunal 'has committed a mistake in calculating the amount of Reserves used as working capital for these two years, cannot be accepted. If so, it follows that the amount fixed by the Tribunal as return 'at 4% on Reserves used as working capital for these two years, is correct. The second question that arises for consideration is the claim made by the appellant for provision for rehabilitation for the two years and which claim has been rejected by the Tribunal. The claim made by the appellant for provision for rehabilitation for the year 1962 was Rs. 18030871.00 and for the year 1963 Rs. 18062336.00. Thus the appellant was claiming for each year provision being made of more than a crore of rupees for rehabilitation. The appellant has filed a chart exhibit M.8 giving the calculations for the year 1962, its claim for rehabilitation for Rs. 18030871.00. If the claim for rehabilitation is accepted, then the result will be that there will be no profits at all from and out of which any bonus can be paid for the years in question. The claim of the appellant has been opposed by Mr. I. N. Keshava, learned counsel for the first respondent and his contentions have been adopted by the counsel appearing for the other respondents Unions. The claim of the appellant is opposed mainly on two grounds, namely, (1) that the appellant has no scheme for rehabilitation for the relevant years and (2) in any event there were huge Reserves available from which the, claim for rehabilitation can be easily met. The Tribunal has rejected the claim for rehabilitation both on the grounds that the appellant 479 has no scheme for rehabilitation and that the rehabilitation claim can be adequately met with from the huge Reserves of nearly four crores of rupees that the appellant had. It must be noted that Rehabilitation Reserve is a substantial item which goes to reduce the available surplus and as a result affects the right of the employees to receive the bonus. Hence the employer will have to place all relevant materials and the Tribunal will have to scrutinize them carefully and to be satisfied that the claim is justified. It is no doubt true that it is but proper in the larger interest of the industry as well as the employees that proper rehabilitation Reserve should be built up taking into consideration the increase in price in plant and machinery which has to be replaced at a future date and by determination of multiplier and its deviser. It is also clear from the decisions of this Court that if a Company has no scheme for rehabilitation, then of course, its claim on that head must be rejected. [vide Azam Jahi Mills, Ltd. vs Their Workmen(1)]. Further, since it is the employer who seeks replacement costs, it is for him to satisfy the Tribunal as to what will be the overall cost of replacement and in doing so, it is he who has to discharge, this burden by adducing proper evidence and giving other party an opportunity to test the correctness of that evidence by cross examination. [vide National Engineering Industries Ltd. vs Its Workmen(2)]. It is also now well settled that in determining the claim of the employer for rehabilitation, two factors are essential to be ascertained, namely, (1) the, multiplier, and that has to be done by reference to the purchase price of the machinery and the price which has to be paid for rehabilitation or replacement; and (2) the determination of the deviser and that has to be done by deciding the probable life of the machinery. [vide The Honorary Secretary, South India Millowners ' Association and others v The Secretary Coimbatore District Textile Workers ' Union(3) and M/s Gannon Dunkerley and Co. Ltd. and another vs Their Workmen(4)]. Mr. Malhotra, learned counsel for the appellant, very strongly relied on the statement exhibit M.S. as well as the evidence of M.W. 2, the Mill Manager and M.W. 3, the Assistant Officer, Efficiency Section of the Mill, in support of his contention that the appellant has a scheme for rehabilitation and that the claim made by the appellant for making provision for rehabilitation is proper. The counsel also pointed out that the evidence of these two witnesses clearly establishes that most of the items of machinery have long out lived, their normal age of 25 years and (1) (2) [1968]1 S.C.R. 779. (3) [1962] Supp. 2 S.C.R (4) A.I.R. 1971 S.C. 2567. 480 therefore they require replacement in order to ensure proper production. The counsel further pointed out that the rejection by the Tribunal of the claim made by the appellant, on the basis that the life of the textile machinery is only 25 years, is not correct and that the view of the Tribunal that the normal age is more than 25 years is opposed to the decisions of this Court. So far as the age of the machinery is concerned, it is no doubt true that in The Honorary Secretary, South India Millowners ' Association and others vs The Secretary Coimbatore District Textile Workers ' Union(1), this Court, after a reference to the evidence adduced confirmed the findings of the Tribunal that the estimated life of the textile machinery in question should be taken to be 25 years, but in the said decision itself it is observed ,is follows "We are not prepared to accept either argument because, in our opinion, the life of the machinery in every case has to be determined in the light of evidence adduced by the parties. " But it is unnecessary for us to pursue this aspect further as we are disallowing the entire claim for rehabilitation. Mr. Malhotra, also criticized the view of the Tribunal that in this case the evidence of the witnesses on the side of the appellant clearly shows that the machines are working very efficiently though they have been running for over 50 years. On the other hand, the counsel urged that the principle to be borne in mind, when considering the claim far rehabilitation, is that the life of the machinery is the period during which it is estimated to work with reasonable efficiency and not the period during which it has actually been operated, that is, till it becomes too deteriorated for use. No doubt the last proposition enunciated by the counsel in the abstract is correct; but the question is whether the appellant has discharged its burden of satisfying the Tribunal that it had a scheme for rehabilitation and whether it had placed the necessary mate rials for the purpose of working out the multiplier and the deviser. Mr. Keshava, learned counsel for the first respondent, referred us to the written statement filed by one of the Unions, Benny Mills Labour Association, wherein it has specifically stated that the plant and machinery owned by the Mills are amongst the most modem, machineries and that no provision for rehabilitation is necessary. The appellant, it is pointed out, in its reply statement did not controvert these averments. EN en in the statements Exs. M. 1 and M. 2, filed by the appellant, no claim for rehabilitation has been made. He also referred to the evidence or (1) [1962] Supp. 2. S.C. R. 926. 481 M.Ws. 2 and 3 and pointed out that their evidence does not show that the Company had any scheme for rehabilitation. On these grounds, the counsel pointed out that the appellant has not placed sufficient materials before the Tribunal to sustain its claim for rehabilitation. It must be emphasized that in dealing with the claim of an employer for rehabilitation, as pointed out earlier, the onus of proof is on the employer. He has to prove the price of the plant and the machinery, its age, the period during which it requires replacement, the cost of replacement, the amount standing in the Debentures and Reserve Funds and to what extent the funds at its disposal would meet the cost of replacement. If the, employer fails lo lead satisfactory evidence on these points, the result will be that the claim for rehabilitation will have to be totally rejected. It is no doubt true that a chart exhibit M. 8 has been filed by the appellant and M.W. 3, the Assistant Officer, Efficiency Section, has spoken regarding the same. But he has admitted that the original quotations received from the dealers regarding the price of new machinery for the purpose of replacement have not been produced before the Tribunal. He has further admitted that the appellant has not produced the letters written by it calling for quotations regarding the price of the machinery. He has further admitted that no charts have been produced to show the value of the machineries in 1962. The multipliers, according to this witness, have been adopted as advised by the appellant 's Legal Adviser. It is clear from the above answers of the witness that there is no material placed before the Tribunal by the appellant from which the multiplier and deviser can be properly worked out for the purpose of considering the claim for rehabilitation. In fact the Mill Manager, M.W. 2 has stated that the company has floated a debenture for 1 1/2 crore for buying new machinery. This clearly shows that the appellant had no scheme for rehabilitation and that explains the reason why it had not made any provision for rehabilitation. Mr. Malhotra, then urged that at any rate the Tribunal itself has proceeded on the basis that some amount for rehabilitation is necessary to be provided for each year. Based on this observation of The Tribunal, the counsel pointed out that the appellant should be allowed at least the amount that it has actually spent for replacement of machineries in the years 1962 and 1963. According to him a sum of Rs. 2619608 and Rs. 2124102 have been spent in the years 1962 and 1963 respectively for machinery and plant installed in those years. In this connection he referred us to the balance sheet and profit and loss accounts for these two years and stressed that the Tribunal has committed an error in not 482 allowing at least these amounts by way of provision for rehabilitation. it is no doubt true that these amounts are shown in the schedules to the balance sheets for the years concerned. Admittedly, there is, no such claim made in the written statement filed by the appellant before the Tribunal. When the Unions were contesting the claim of the appellant on the ground that it has no, scheme for rehabilitation and that it has not spent any amount by way of replacement of old machinery, it was the duty of the appellant to have made a proper claim and it should have adduced evidence regarding that aspect before the Tribunal. Mere production of balance sheet and profit and loss accounts by themselves will riot entitle the appellant to sustain its claim for rehabilitation. For all the reasons given above, it is clear that the Tribunal was justified in holding that the appellant has not been able to make out its claim for making provision for rehabilitation. In this view the Tribunal was justified in rejecting this claim of the appellant. We may also state that the Tribunal is also of the view 'that the appellant has large Reserves with which it can meet rehabilitation expenses of the machinery. In this connection the Tribunal has also referred to the evidence on the side of the appellant, that even according to the appellant rehabilitation will have to be completed only within eight years from 1962 and that only a sum of rupees eighty lakhs will be required for each year. On 'this reasoning the tribunal has held that this amount of rupees eighty lakhs can be easily met with from the large Reserves available with the appellant. It is not necessary for us to consider this aspect further because we have already agreed with the findings of the Tribunal that the appellant has no scheme for rehabilitation and that it has not placed any satisfactory evidence before the Tribunal in support of its claim. The last point that arises for consideration is regarding the available surplus for the years 1962 and 1963 as calculated by the Tribunal and the award by it of 1/3rd of the amount as additional bonus for the two years after deducting the bonus already paid by the appellant. The Tribunal, after rejecting the appellant 's claim for rehabilitation and also allowing return on Reserves used as working capital in the manner, already referred to, had arrived at the available, surplus for the year 1962 in the sum of Rs. 2635914 and for the year 1963 at Rs. 4904987. The appellant filed a statement exhibit M. 4 showing the Amount of bonus already paid for the years 1962 and 1963 to all employees drawing a total of Rs. 500/ and less per mensem. From that statement it is seen that for the year 1962 it had paid a sum of Rs. 1441455 and for the year 1963 a sum of Rs. 1960795. On the basis of the available surplus worked out for the years 1962 and 1963, the balance 483 available surplus after deducting bonus already paid will be as follows: 1962 Rs. Available surplus as worked out by the Tribunal2635914 Amount already paid as bonus by the appellant1441455 Balance . . 1194459 1963 Available surplus as worked out by the Tribunal4904987 Amount already paid as bonus by the appellant1960795 Balance . . 2944192 What the Tribunal has done is to distribute 1/3rd of the, amount shown as balance above, for each of the years as additional bonus. That results in the workmen getting Rs. 398153 representing 25 days basic wages as additional bonus for the year1962. Similarly, the workmen get Rs. 981397 representing two months basic wages as additional bonus for the year 1963. Therefore, it will be seen that the total bonus thatthe workmen will get for each of the years will be as follows 1962 Rs. 1. Amount already paid by the appellant 1441455 2. Additional amount awarded by the Tribunal 398153 TOTAL . . 1839608 From the available surplus of Rs. 2635914 in 1962, the work men will get a total sum of Rs. 1839608 as bonus for that year which works out to more than 60% of the available surplus. Similarly for the year 1963 the figures are as follows 1963 Rs. 1. Amount already paid by the appellant 1960795 2. Additional amount awarded by the Tribunal981397 TOTAL . 2942192 From the available surplus of Rs. 4904987 in1963, the workmen will get a sum of Rs. 2942192 for that year which works out more or less about 60% of the available surplus, falling short by a sum of Rs. 800/ . 484 Mr. Malhotra, learned counsel for the appellant attacked the method of calculation adopted by the Tribunal. According to him the Tribunal should not have fixed more than 60% of the available surplus as bonus payable for a year. On the other hand, the amounts of bonus now awarded by the Tribunal and already paid by the appellant exceed 60%. In our opinion, there is considerable force in the contention of the learned counsel. The available surplus, as found by the Tribunal for the year 1962 is Rs. 2635914. Working out roughly 60% of this surplus to be distributed as bonus to the workmen, the amount of bonus will be about Rs. 1581600. The appellant has admittedly paid a sum of Rs. 1441455. The balance that the workmen will be entitled to will be Rs. 140145.00, whereas the Tribunal has directed the appellant to pay for this year by its Award a sum of Rs. 398153. The award of this amount is not .justified. So far as 1963 is concerned, the available surplus as found by the Tribunal is Rs. 4904987. 60% of this available surplus, to which the workmen will be entitled to will be Rs. 2942992. On the other hand, the total amount that the workmen will get as per the award including the amount already paid by the appellant as bonus is Rs. 2942192. The appellant will have to pay only an additional sum of Rs. 800/ to make up 60%. There is no appeal by the Unions and therefore, the bonus awarded for the year 1963 does not require any interference. In allocating the available surplus between the company and the workmen, it has been held by this Court that it will be equitable if roughly 60% of the surplus is distributed as bonus to the workmen and the Company is left with the remaining 40%. The Company will get in addition to this 40%, the benefit of the Income tax rebate on the 60% bonus payable to the workmen. [vide M/s. Gannon Dunkerley and Co. Ltd. and another vs Their workmen(1)]. We have 'adopted the same principle in the case on hand. To conclude the Award of the Industrial Tribunal in A.I.D. No. 6 of 1966 is set aside and Civil Appeal No. 1291 of 1967 is allowed. There will be no order as to costs. The Award of the Industrial Tribunal in A.I.D. No. 8 of 1966 is modified to the following extent: For the year 1962 the appellant will be liable to pay as additional bonus only a sum of Rs. 140145 instead of a sum of Rs. 398153 as directed by the Tribunal in the Award. To this extent Civil Appeal No. 1292 of 1967 is allowed in part. In other respects, it is dismissed. There will be no order as to costs.

The appellant company was making two payments of bonus every year one for the half year ending 30th June and the other for the half year ending 31st December. The payment was on the basis of profits earned by it and the payment was not a condition of service and had nothing to do with any custom or festival. When the came into force, the appellant issued a circular that as bonus was payable under law only within a period of 8 months from the end of the, accounting year (the appellant 's accounting year was the calendar year), no bonus was payable for the accounting year 1965 until the accounts for the year are closed, and the announced payment of one month 's basic wages as advance against wages for the half year ending 30th June 1965. The questions, (1) whether the appellant was justified in announcing the payment as advance against wages instead of as advance bonus, and (2) whether the respondents were justified in claiming bonus for the years 1962 and 1963, in addition to what had already been paid by the appellant were referred to the Industrial Tribunal. On the first question the Tribunal held. that the appellant was not justified in announcing the payment towards advance wages and directed the appellant to pay profit bonus in two installments one as advance against the final declaration of bonus, and the balance, if any, as the second instalment. On the second question the Tribunal held that the question of bonus payable was to be calculated in accordance with the Labour Appellate Tribunal Full Bench Formula approved in Associated Cement Companies Ltd. vs Workmen, r 19591 S.C.R.25; that in calculating the return on Reserves the claim of the appellant to include in the working capital the amounts sunk in (a) fixed assets and (b) capital work in progress should be disallowed; and that the claim of the appellant for a provision for rehabilitation should be rejected. In appeal to this Court. HELD : (1) (a) Under the Act, bonus for a particular accounting year will have to be computed in accordance with the provisions of the Act on the basis of the gross profits determined at the close of the accounting year. The Act makes provision as to how the gross profits, available and allocable surplus are to be calculated, and section 19 prescribes 8 months from the close of the accounting year as the period within which the bonus was to be normally paid. The scheme of the Act shows that a claim for bonus can be made only after the close of the accounting year, because., gross profits and the available and allocable surplus can be worked out only at the end of the accounting year and not earlier, whereas the direction given by the Tribunal requires the employer to make two computations at the end of each half year. [469 E H; 470 A B] 463 (b) The direction given by the Tribunal making it obligatory on the management to make half yearly payments of bonus apart from being opposed to the scheme of the Act, runs counter to section 19. Under the section, whether it is the minimum bonus of 4% under section 10 or the maximum bonus of 20% under section 11, they have to be paid only within a period of 8 months from the closing of the accounting year. [470 C E] (c) Section 17(b) is an enabling section in favour of the employer in that it visualizes a situation when he may have paid during the accounting year a part of the bonus payable under the Act, before the date on which such bonus becomes payable. If the payment was by way of profit bonus, he is entitled to deduct it from the final amount that may be payable under the Act. But that provision does not give a right to an employee to claim payment of bonus by way of part payment during the currency of the accounting year. Therefore, the mere fact that the appellant has been making payments on previous occasions half yearly, does not confer a right on the employee to have such payments by way of bonus in the same manner after the Act has come into force. Hence, the Tribunal had no jurisdiction to give a direction to the appellant to, pay bonus at the end of each half year. [471 A C] (2) (a) In considering the claim for return on working capital two questions have to be kept in view : (i) whether Reserves were available, and (ii) whether they were used as working capital, and if so, what was, the amount used. 1477 GI In the present case, the Tribunal has correctly kept the two principles in view in arriving at the amount of Reserves used as working capital and on which a return is to, be allowed. The balance sheets of the appellant do not have any figures from which the Tribunal would be able to, draw a conclusion. The Tribunal, therefore, while accepting the statements. of account filed by the appellant for the two years, for showing how it had calculated the amount of Reserves utilized as working capital, held, that the two items should be deducted; because, working capital represents the funds required for day to day Work of the company and cannot include,, fixed assets, and the capital works in progress. [477 G H; 478 A C] Workmen of M/s. Hindustan Motors Ltd. vs M/s. Hindustan Motors Ltd. & Anr. ; and M/s. Aluminium Corpn. of India vs Workmen, , referred to. Therefore, the contention that the Tribunal had committed a mistake in calculating the amount of Reserves used as working capital cannot be accepted. [478 D E] (b) A company should build up rehabilitation reserve taking into consideration the increase in price in plant and machinery which has to be replaced at a future date. But since it is a substantial item which goes to reduce the available surplus and as a result, affects the right of the employees to bonus, the employer will have to place all relevant material, before the Tribunal for its scrutiny. The burden of proof is on the employer to prove the price of the plant and machinery, its age, the period during which it requires replacements, the cost of replacement, the amount standing in the Debenture and Reserve Funds and to what extent the funds at its disposal would meet the cost of replacement. If the employer fails to lead satisfactory evidence on these points his claim for rehabilitation will be rejected. Also, if a company has no scheme for rehabilitation then its claim on that bead must be rejected. [479 A E; 481 B C] 464 Azam Jahi Mills Ltd. vs Workmen, and National Engineering Industries Ltd. vs Workmen, ; , referred to. in the present case, the averment in the written statement of the respondents, that the appellant 's machinery was among the most modern and no provision for rehabilitation was necessary, was not controverted by the appellant. The balance sheets for the two years showed that some amounts were spent on machinery. But when the respondents were contesting the claim of the appellant on the ground that it had no scheme of rehabilitation and that it had not spent any amount by way of replacement, it was the duty of the appellant to have made a proper claim and to adduce evidence regarding that aspect. Mere production of balance sheets and profit and loss accounts and adding a note in the statements, of account filed that the figure is 'subject to claim for rehabilitation ' will not entitle the appellant to sustain its claim for rehabilitation. Moreover, the appellant had large Reserves to meet rehabilitation expenses. It had also 'Boated a debenture for buying new machinery. [481 G H; 482AC, D] Further, in determining the claim of an employer far rehabilitation, two, factors are essential to be ascertained, namely, (i) the multiplier, which has to be done by reference to the purchase price of the machinery and the price which has to be paid for replacement; and (ii) the divisor, which has to be done by deciding the probable life of the machinery. [479 E F] Honorary Secretary, South India Millowners ' Assn. vs Secretary Coimbatore District Textile Workers ' Union, [1962] Supp. 2 S.C.R. 926 and M/s. Gannon Dunkerley & Co. vs Their Workmen, A.I.R. 1971 S.C. 2567, referred to. In the present case no material was placed before the Tribunal by the appellant from which the multiplier and divisor can be properly worked out. [481 E F] Therefore, the Tribunal was justified in holding that the appellant had not made out its claim for making provision for rehabilitation. [482 C D] (c) The equitable method of allocating the available surplus between the company and its workmen is to distribute 60% as bonus to the workmen leaving the remaining 40% to the company. In the present case, the method of calculation adopted for 1962, by the Tribunal, shows that the amount of bonus awarded by the Tribunal together with the amount already paid by the appellant exceeded 60% and the award of the excess was not justified. [484 A C] M/s. Gannon Dunkerley & Co. vs Their Workmen, A.I.R. 1971 S.C. 2567. referred to.

minal Appeal No. 157 of 1962. Appeal by special leave from the judgment and order dated February 9, 1962, of the Punjab 584 High Court (Circuit Bench) at Delhi in Criminal Revision Application No. 281 D of 1961. J.P. Goyal, for the appellant. B.K. Khanna and R.N. Sachthey, for the respondent. November 29, 1963. The Judgment of the Court was delivered by GAJENDRAGADKAR, J. The appellant, Dr. Yash Pal Sahi, and his wife Dr. Susheela Sahi, are the proprietors, of a homoeopathic hospital at Jangpura in New Delhi. They also run a journal called the "Homoeopathic Doctor". It appears that on May 15, 1958 Misri Singh wrote to the appellant that the medicines manufactured by him were proving effective, and he therefore requested the appellant to send him his magazine "Homoeopathic Doctor" from January 15, 1958 up to the date of the letter. In this letter, Misri Singh also requested the doctor to send him a list of medicines that might have been printed by him and he promised to pay the requisite prices and suggested that the same should be sent by V.P.P. Thereupon, a packet containing Exhibits P 1 to P 6 which are copies of the "Homoeopathic Doctor" and exhibit P 7, which is a list of medicines was sent to Misri Singh on May, 24, 1958. Misri Singh had written to the appellant under the instructions of Mr ' Seth, who is an officer in the Delhi Administration. That is why when the packet was received by Misri Singh it was opened by him in the presence of Mr. Seth and other witnesses and the packet was found to contain Exs. P 1 to P 7. The prosecution alleged that by sending this packet to Misri Singh both the appellant and his wife had committed an offence under section 3 read with section 7 of the Drugs and Magic Remedies (Objectionable Advertisement) Act of 1954. Later, the complaint against Dr. Susheela Sahi was withdrawn and the case proceeded only against the appellant. At the trial, evidence was given by Mr. Seth, Misri Singh and Dr. Anant Parkash, with whom 585 Misri Singh works as a clerk. The appellant was questioned by the learned Magistrate, who tried the case, and he admitted that Exs. P 1 to P 7 had been sent to Misri Singh. On these facts, the learned Magistrate held that the appellant 'was guilty of the offence charged and sentenced him to pay a fine of Rs. 1,000. The appellant challenged the correctness of this order by an appeal before the Additional Sessions Judge at New Delhi. The learned additional ' Sessions Judge considered the evidence, and confirmed the findings recorded by the trial Magistrate. In the result, the order of conviction passed against the appellant was affirmed; but in regard to the sentence the learned Additional Sessions Judge took the view that a fine of Rs. 500 would meet the ends of justice. The findings made by the appellate Court show that the parcel containing Exs. P 1 to P 7 had been sent by the appellant to Misri Singh. Exhibits P 1 to P 6 which are the numbers of the publication "Homoeopathic Doctor" did not come within the mischief of the Act, but exhibit P 7, which is 'Fehrist i Mujarabat ' did come within the mischief of the Act. It is a list of medicines, and it purports to advertise the said medicines by describing their effect, and prices of the medicines are also printed. Inasmuch as it was found by the learned Additional Sessions Judge that the appellant had sent exhibit P 7 to Misri Singh, his conviction was held to be justified under section 3 read with section 7 of the Act. The appellant then took this matter before the High Court by a revisional application It was urged before the High Court on his behalf that in deciding the question as to whether the appellant was guilty under section 3 read with section 7 the effect of the provisions contained in section 14(1)(c) had not been properly appreciated. The High Court was not impressed by this argument. Accordingly, the revisional application filed by the appellant was dismissed. It is against this order that the appellant has come to this Court by special leave. On his behalf, Mr. Goyal has contended that the conviction of the appellant is not justified, because 586 the case of the appellant falls under section 14 (1)(c) of the Act. In deciding the merits of this argument it is necessary to refer to the relevant provisions of the Act. This Act has been passed to control the advertisment of drugs in certain cases, to prohibit the advertisement for certain purposes of remedies alleged to possess magic qualities and to provide for matters connected therewith. Section 2 contains the definitions. Section 2(d) defines 'taking any part in the publication of any advertisement ' as including (i) the printing of the advertisement, (ii) the publication of any advertisement outside the territories to which this Act extends by or at the instance of a person residing within the said territories. It would be noticed that the definition of the expression 'taking any part in the publication of any advertisement ' is an inclusive definition, and the two clauses bring out clearly the main postulate of the definition that if the prohibited article is sent, it would amount to publication within the meaning of the Act. The printing of the prohibited article or advertisement is included in publication. But publication does not mean printing alone; publication means sending out the said advertisement outside India under cl. (ii), and so, if sending out the advertisement outside India is brought within the purview of the inclusive definition, it is difficult to resist the conclusion that sending out the same advertisement within the territories of India to which the Act applies would amount to publication. Therefore it seems to us that the definition prescribed by section (2d) is wide enough to take in the printing of the advertisement and the sending of it to any part of India. That takes us to section 3 of the Act. Sections 3 (c) and (d) are the provisions with which we are concerned. They provide that: "3. Subject to the provisions of this Act, no person shall take any part in the publication of any advertisement referring to any drug in terms which suggest or are calculated to lead to the use of that drug for 587 (c)the correction of menstrual disorder in women; or (d)the diagnosis, cure, mitigation, treatment or prevention of any venereal disease or any other disease or condition which may be specified in rules made under this Act. " It has been found and cannot be now disputed that the list of advertisements (exhibit P 7) contains medicines which fall within the scope of sections 3(c) and (d). Section 7 provides for the penalty, and it lays down that: "Whoever contravenes any of the provisions of this Act shall, on conviction, be punishable (a)in the case of a first conviction, with imprisonment which may extend to six months, or with fine, or both; (b)in the case of a subsequent conviction, with imprisonment which may extend to one year, or with fine, or with both. " This section shows that before a person is penalised it is not necessary to show that the contravention brought home to him is in the nature of a habitual contravention. A single contravention proved against a person would make him guilty under section 7. That is why the scheme adopted by the penal section is that it provides for a lesser punishment for the first offence and a relatively more serious penalty for sub sequent offences. Mr. Goyal contends that in considering the question as to whether the appellant is guilty under section 3 and section 7 read together it is necessary to consider whether this case falls under section 14 or not. He argues that section 3 begins with the clause "Subject to the provisions of this Act", and he urges that if the appellant 's case can fall under the provisions of section 14, section 3 cannot be invoked against him. This contention is no doubt right. Section 14 provides for exceptions, and it lays down that nothing in the Act shall apply to the cases falling under the clauses prescribed by it. Mr. Goyal relies upon section 14 (1)(c), which provides that: 588 "Nothing in this Act shall apply to any advertisement relating to any drug sent confidentially in the prescribed manner only to a registered medical practitioner or to a wholesale or retail chemist for distribution among registered medical practitioners or to a hospital or laboratory;" His argument is that if Misri Singh wrote to the appellant and invited him to send the list of medicines it was not expected that the appellant should make an enquiry as to whether Misri Singh was a registered medical practitioner or not. In this connection, he has invited our attention to the fact that Misri Singh is in fact working as a clerk with Dr. Anant ]Parkash, and this fact is pressed into service by Mr. Goyal to show that it may be that the appellant thought that Mr. Misri Singh was a registered medical practitioner. Such a plea has, however, not been made in any of the Courts below. In fact, the record does not show that the appellant knew any thing about Misri Singh or his employment. Therefore, the point sought to be made by Mr. Goyal for the first time before us that the appellant might have bona fide believed that Misri Singh was a registered medical practitioner cannot avail him. It has been proved as a fact that Mr. Misri Singh is not a registered medical practitioner, and so, the question arises whether the appellant can claim that his case falls under section 14(1)(c) at all. It is true that in order to bring home to the appellant the offence charged the prosecution may have to show that the person to whom the list was sent was not a registered medical practitioner. Once that fact is established, it is for the appellant to satisfy the Court that his case falls under section 14(1)(c). It is in that connection that Mr. Goyal relied upon r. 6 of the Rules framed under the Act. Rule 6 prescribes that: "All documents containing advertisements re lating to drugs, referred to in clause (c) of sub 589 section (1) of section 14, shall be sent by post to a registered medical practitioner or to a whole sale or retail chemist". The Rule further adds that "Such documents shall bear at the top. printed in indelible ink in a conspicuous manner, the words 'For the use only of registered medical practitioners or a hospital or a laboratory It is common ground that the list sent by the appellant to Misri Singh does bear printed in indelible ink the statement that it was meant for the use of registered medical practitioners alone. Mr. Goyal suggests that once it is shown that the list complied with this part of the requirement of R. 6 it should be held that the case of the appellant falls under section 14(1)(c). We are not prepared to accept this argument. Rule 6 prescribes some conditions which have to be complied with by a person who sends lists of medicines to Which the Act applies so as to bring his case within section 14 (1)(c). One requirement is that the list should have printed in indelible ink the statement to which we have just referred. The other requirement to which it refers is that the list should be sent to a registered medical practitioner or wholesale or retail chemist. In relation to this requirement, we have the statutory provision prescribed by section 14 (1)(c) itself that it must be sent confidentially to a registered medical practitioner. The fact that one of the conditions prescribed by R. 6 has been complied with does not lead to the inference that the other conditions prescribed either by section 14(1)(c) or by R. 6 have also been complied with. Therefore, we do not think that Mr. Goyal is justified in contending that his case falls under section 14(1)(c). Mr. Goyal has also invited our attention to the fact that this was a case in which the appellant was virtually tempted to send exhibit P 7 to Misri Singh, and he argues that as soon as Mr. Misra Singh found that that Est contained in indelible ink the statement that it was meant for registered medical practitioners he need not have bothered to look into it, and in fact should have sent it back to the appellant. This 590 argument, in our opinion, is not well conceived. The whole object of the Act is to save ignorant people from being duped to purchase medicines just because their effect is advertised in eloquent terms. That is why the Act provides that lists of medicines describing the qualities and attributes of different medicines should be sent only to registered medical practitioners or hospitals. That being so, it would not be a fair argument to urge that even though the appellant might have sent the list to a person who was not a registered medical practitioner, the recipient of the list should have been out on his guard and should not have looked into the list. We are, therefore, satisfied that the High Court was right in holding that the offence charged against the appellant has been duly proved. In regard to the sentence, the learned Additional Sessions Judge has reduced the sentence of Rs. 1,000 fine imposed on the appellant by the learned trial Magistrate to Rs. 500 and that we think is a fair order to make. In the result, the appeal fails, and is dismissed. Appeal dismissed.

The appellant is the proprietor of a Homoeopathic hospital in New Delhi. He runs a journal called the "Homoeopathic Doctor". 583 On the request of one Misri Singh the appellant sent copies of the said journal and a list of medicines by V.P.P. Misri Singh was neither a registered medical practitioner nor a wholesale or retail Chemist even though he was working with a registered medical practitioner as his clerk. The list of medicines sent by the appellant to Misri Singh bore in printed indelible ink the statement that it was meant for the use of medical practitioners alone. The appellant was prosecuted under section 3 read with section 7 of the Drugs and Magic Remedies (Objectionable Advertisement) Act, 1954. The trial Magistrate found him guilty of the offence charged and sentenced him to a fine of Rs. 1000. On appeal the Additional Sessions Judge confirmed the conviction but reduced the fine to Rs. 500. The appellant 's revision petition was dismissed by the High Court The present appeal is on special leave granted by this Court. On behalf of the appellant it was contended that section 3 is subject to the other provisions of the Act and therefore it is subject to section 14 which provides that any advertisement sent confidentially in the prescribed manner to a registered medical practitioner or wholesale or retail chemist is exempted from the other provisions of the Act. Relying on this section it was argued that since the appellant requested in writing to send the offending articles the appellant had no duty to enquire whether that person is a registered medical practitioner or chemist. Further the appellant relied on rule 6 of the Rules framed under the Act and contended that inasmuch as the list sent by him bore the words printed in indelible ink "For the use only of registered medical practitioners" he has complied with the provisions of law. Held. (i) The definition of "taking any part in the publication of any advertisement" contained in section 2(d) of the Act is wide enough to include the printing of the advertisement and the sending of it in any part of India. Before a person is penalised it is not necessary to show that the contravention brought home to him is in the nature of habitual contravention. A single contravention will make a person guilty under section 7. (ii)Section 3 is subject to the provisions of section 14 and if the appellant 's case falls under section 14, section 3 cannot be invoked against him. The prosecution has to show that the person to whom the list was sent is not a medical practitioner. Once this is established it is for the appellant to satisfy the court that his case falls under section 14(1)(c). The fact that the appellant has complied with one of the conditions prescribed under r. 6 will not bring the case of the appellant under section 14(1)(c).

ivil Appeal Nos. 954 959 of 1978. Appeals by Special leave from the Judgment and Order dated the 22nd November, 1976 of the Andhra Pradesh High Court in Second Appeal Nos. 76, 83, 84, 91, 100 and 152 of 1975. A. Subba Rao for the Appellant. A. K. Ganguli, L. K.Gupta and Somnath Mukherjee for the Respondent. 1029 The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J. M/s M.G.Brothers Lorry Service, the appellant is a firm, which carried on at the relevant time trans port business and on the 1st of May, 1969 under a Way Bill, the plaintiff firm, M/s Prasad Textiles, the respondent herein had consigned one bale of yarn worth about Rs. 5,000 from their head office at Guntur to Vijayawada, at which place there was a branch office consigned "to self". The Way Bill and the invoice were in the usual course delivered to the State Bank of India with the instructions to deliver the same to the plaintiff respondent M/s Prasad Textiles at Vijayawada. It appears that the defendant appellant M/s. M.G. Brothers Lorry Service failed to deliver the said goods to the respondent plaintiff at Vijayawada. The appellant 's case was that the said goods had actually arrived at Vijayawada on the very next day. but the same were, however, not taken delivery of at Vijayawada for some time. and that between 16th and 20th of May, 1969 there was a cyclone at Vijayawada as a result of which the said goods were damaged in their godown and when the said goods were opened on 20th May, 1969 in the presence of the representative of the appellant at Vijayawada, that the damage was discovered. On 20th June, 1969, the plaintiff firm gave a notice of claim to the defendant firm and thereafter instituted six suits for recovery of various sums of money as claims on the ground that the plaintiff had entrusted the said consignment to the lorry service of the defendant firm to be delivered at Vijayawada and they had failed to do so and hence the plaintiff was obliged to file those suits. All these suits were tried together by the learned trial Judge on the ground that common issues arose in each of those suits and the question to be considered was the same. The lower court gave a common finding. We are not concerned, in view of the points arising in these appeals before us, to consider all the points For our purposes it is sufficient to note that the trial Court held that the defendant being the appellant before us had failed to prove that the non delivery of the six consignments was not due to the negligence of the defendant or his men and the defendant was liable for the damages of Rs. 2,220 in each of the suits towards the value of the consignment which was not delivered by the defendant and it was also held that the plaintiff would be entitled to claim interest on the amount so decreed. The trial Court, however, ultimately held that the suits were barred by 1030 virtue of Condition 15 of the Way Bill. The goods were consigned under terms and conditions mentioned in the Way Bill. Thereafter all the suits were dismissed. Being aggrieved by the said decision, the defendant went up in appeal before the court of Sub ordinate Judge, Vijayawada. The only point which is material for us to note is that the contention was that the consignment was accepted for transport by the appellant herein which was defendant in the original suit, at Guntur subject to special conditions printed on the reverse of the Way Bill. Condition 15 which is material for our purpose is as follows: "No suit shall lie against the firm in respect of any consignment without a claim made in writing in that behalf and preferred within thirty days from the date of booking or from the date of arrival at the destination by the party concerned. " The trial Court 's dismissal of the plaintiff 's suit on the ground that these were barred because of Condition 15 was confirmed by the Lower Appellate Court. There was second appeal to the High Court before learned Single Judge of the High Court of Andhra Pradesh, Hyderabad. The High Court held that if Condition 15 of the Way Bill was given effect to it would clearly defeat the provisions of section 10 of the Carriers Act and as such would be void. It, therefore, allowed the appeal. Thereafter the question arose as to whether further appeal would lie from the decision of a single Judge of the High Court in second appeal to the Division Bench of the Andhra Pradesh High Court. In that view of the matter, special leave application was filed before this Court. This Court was of the view, that whether under Section 100A of Civil Procedure Code, any appeal would lie to the Division Bench of the High Court, should be decided by the High Court itself. The special leave application was adjourned for a period of four months pending disposal of this question by the Division Bench of the High Court. The Division Bench of the High Court held subsequently that Letters Patent Appeal was no longer maintainable after coming into operation of Section, 100A of the Code of Civil Procedure. In those circumstances 1031 special leave to appeal was granted by this Court on 20th April, 1978. Thus this appeal comes up before us. In view of the contentions raised before the trial Court and the High Court, the only question that falls for our consideration in this appeal, is, whether clause or condition 15 of the Way Bill as set out hereinbefore under which the goods were carried by the carrier in this case, was contrary to section 10 of the Carriers Act, 1865 and as such the said condition 15 was void in view of section 23 of the Contract Act. Section 10 of the Carriers Act, 1865 provides as follows: "No suit shall be instituted against a common carrier for the loss of, or injury to, goods entrusted to him for carriage, unless notice in writing of the loss or injury has been given to him before the institution of the suit and within six months of the time when the loss or injury first came to the knowledge of the plaintiff. " The section was added by Act 10 of 1899. The original section was repealed by Act 9 of 1890. In order to consider the contentions urged in this case, it is therefore necessary to bear in mind the provisions of the Carriers Act, 1865 and the purpose of the same and to determine whether in fact by Condition 15 of the Way Bill, the liability of the carrier was limited, and if so to what effect. The Carriers Act, 1865, as the preamble states, was enacted because it was thought expedient not only to enable common carriers to limit their liability for loss of or damage. to property delivered to them to be carried but also to declare their liability for loss of or damage to such property occasioned by the negligence or criminal acts of themselves, their servants or agents. Therefore it is important to keep in the background that the Act was passed for both the purposes; to limit the liability of the carriers, as well as to declare the liability of the carriers. Section 6 of the Act stipulates that the liability of any common carrier for the loss of or damage to any property delivered to him to be carried, not being of the description contained in the Schedule to the Act, (and in this connection it may 1032 be stated that the goods in question with which we are concerned in this appeal are not type of goods described in the schedule) shall not be deemed to be limited or affected by any public notice. It further provides that such carrier may, by special contract, signed by the owner of such property so delivered or by some person duly authorised in that behalf by such owner, limit his liability in respect of the same. Section 8 of the Carriers Act provides inter alia, that common carrier shall be liable for loss and damage to any property when such loss or damage shall have arisen from the criminal act of the carrier or any of his agents or servants. As we have noted before the liability of a common carrier can be limited by agreement under the provisions noted hereinbefore but that must be limitation of the liability. This position was highlighted by the Privy Council in the case of The India General Navigation and Railway Co. Ltd. vs The Dekhari Tea Co. Ltd, and Ors.(1) the Privy Council reiterated on the construction of Section 6 of the Carriers Act that what was required in the case of a person who answered the definition under the Indian Carriers Act, viz., was that the nature of the contract entered into must either have the limitation of the liability under the Indian Carriers Act made expressly and in writing or the facts must be such that for the contract in question the contractor was departing from his usual business and engaging in a different type of business from that of common carrier. In this connection, it appears to us that on the construction of condition 15 of the Way Bill that there was no limitation of liability expressed or intended but what was provided was that no suit shall lie against the firm unless a particular claim was made in a particular manner within a particular time. In this case there was neither any extinguishment of liability or contracting out of liability but only a special period of limitation of notice was provided other than section 10 of the Carriers Act, 1865. Section 10 of the Carriers Act, as we have noted before, provides that unless notice in writing of the loss or injury has been given to him before the institution of the suit and within six months of the time when the loss or injury first came to the knowledge of the plaintiff no suit shall be instituted. Condition 15 of the Way Bill in the 1033 instant case makes it imperative to give notice either within 30 days from the date of the booking or from the date of the arrival of the goods at the destination by the party concerned, to sustain a suit. The date of arrival of the goods at the destination by the party may not be known to the party concerned for long time. No claim can be made without the loss of the goods and therefore 30 days from the date of booking would become irrelevant unless loss or damage, occurs. Therefore, it appears to us that condition 15 of the Way Bill was designed to avoid the liability contemplated under section 10 of the Carriers Act, 1865 and that too in a situation where the parties had not by express contract limited their liability as contemplated under section 6 of the Carriers Act. It appears to us, therefore, that the learned Judge of the Andhra Pradesh High Court was right in the view he took. The trial court and the first appellate court had held that condition 15 of the Way Bill was not violative of section 28 of the Indian Contract Act, That view of the lower courts has not been challenged before the High Court in the second appeal. Before us also that view was not seriously challenged. It also appears to us that neither there is restriction absolutely from enforcing rights by the usual legal proceedings nor limitation of time within which such rights might be enforced in the instant case but condition 15 was only intended to defeat or by pass the provisions of section 10 of the Carriers Act. Section 23 of the Indian Contract Act provides that the consideration or object of agreement was lawful, unless, inter alia, it was of such a nature, that, if permitted, would defeat the provisions of any law. In the instant case, it appears to us that if condition 15 be permitted then it will defeat the provisions of section 10 of the Carriers Act, even in a case where notice in writing of the loss or injury has been given to given to him before the institution of the suit and within six months of the time when the loss or injury first came to the knowledge of the plaintiff. Even in a case where the plaintiff was unaware of the arrival of the goods at the destination or was unaware of a loss or damage, the plaintiff would not have any right to institute a suit if no claim was made and could not have been made within 30 days as stipulated in condition 15 of the Way Bill. In that view of the matters, we are of the opinion that condition 15 must be held to be void in view of section 23 of the Indian Contract Act because its object was to defeat the provisions of section 10 of the Carriers Act. This conclusion, in our opinion, follows from the construction of the section and condition 15 of the Way Bill. It was contended before the courts below and it was reiterated before us that Carriers Act was essentially enacted for the benefit of 1034 the common carriers and section 10 of the Act should be so construed. It was, therefore, urged that it could not be construed as precluding notice for a shorter period than a period of six months from the date of loss specified therein. But the preamble as we have noted before indicates that the Act was passed, not only to limit the liability of the carriers, but also to declare the liability of the carriers. Therefore, any contract or bargain which seeks to defeat the liability of the carriers as enacted by law, would, in our opinion, defeat the provisions of the Act. Furthermore, as we have noted hereinbefore in essence condition 15 is to impose additional obligation upon the owner or consignee because it stipulates giving of the notice either from the date of the arrival of the goods at the destination which more often than not, is not known to the owner of the goods, or from the date of booking, which again is useless because unless loss or damage occurs no liability arises. In the decision of the Privy Council in the case of Home Insurance Company of New York vs Victoria Montreal Fire Insurance Company,(1) to which our attention was drawn, there was a contract of re insurance which was engrafted on an ordinary printed from of fire insurance policy, and incorporated all its terms, there was a clause which purported to prohibit an action thereon unless commenced within twelve months next after the fire. It was held by the Judicial Committee that having regard to the true construction of the contract, which had carelessly purported to include many conditions inapplicable to reinsurance, the above clause must also be regarded as inapplicable. Such a clause is reasonable in the original policy where the assured can sue immediately on incurring loss, it cannot apply where the insured was unable to sue until the direct loss was ascertained between the parties over whom he had no control. Though the facts of the instant case and the condition with which we are concerned are different, the observations of Lord Macnaghten at page 64 are of some relevance that the clause prescribing legal proceedings after a limited period was a reasonable provision in a policy of insurance against direct loss to specific property, in such a case the insured was master of the situation, and he could bring his action immediately, but in a case of re insurance against liability the insured was helpless, would throw light on the 1035 present condition 15 in the instant case as we have noted hereinbefore. In the instant case as we have noted hereinbefore, the arrival at the destination of the goods may not be known to the owner or the consignee for a considerable period of time. Learned advocate for the appellant also drew our attention to the decision of the Court of Appeal in England in the case of Bank of Australasia and Others vs Clan Line Steamers Limited.(1) In the facts of this case, in our opinion, the said decision is not relevant for the controversy before us. Our attention was also drawn to a decision in the case of India General Steam Navigation Company (Defendants) vs Joykristo Shaha and Others (Plaintiffs)(2) where the point on which the Court rested its decision was that the contract in question was a divisible one. No such problem arises here. So it is not necessary to discuss the decision. In the case of Haji Shakoor Gany vs H.E. Hinde & Co., Ltd.,(3) the plaintiffs under a bill of lading incorporating the provisions of the English Carriage of Goods by Sea Act, had shipped sugar on defendant 1 's ship. One of the provisions of the Act on the bill of lading was as follows : "In any event the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit was brought within one year after delivery of the goods or the date when the goods should have been delivered. " The ship arrived in Bombay on 4th May, 1929 and was completely discharged on 8th May, 1929. The plaintiffs had sued on 27th June, 1930 to recover the value of the sugar short delivered to them from defendants 1 and 2 who were the Bombay agents of defendant 1 and who gave a declaration to the customs authorities that they were answerable for the discharge of all claims for damage or short delivery which might be established by the owner of any goods comprised in the import cargo in respect of such goods. It was held that the effect of the incorporation of the provisions in the bill of lading was that the rights of the plaintiffs were extinguished in respect of the claim made after one year, As we have mentioned hereinbefore, if under a particular bargain the rights of the parties were extinguished that would be 1036 permissible, that will not hit the provisions of section 28 of Contract Act and as such would not be violative of section 23 of the said Act. But if rights are not extinguished but only the remedies are barred different consideration would apply. As in the cases of The Ruby General Insurance Co. Ltd. vs The Bharat Bank, Ltd. and others,(1) Dawood Tar Mahomed Bros. and others vs Queensland Insurance Co. Ltd.,(2) Pearl Insurance Co. vs Atma Ram,(3) Baroda Spinning and Weaving Co. Ltd. vs Satyanarayan Marine and Fire Insurance Co. Ltd.,(4) Assam Roadways vs National Insurance Co. and others,(5) M/s Indian Drugs and Pharmaceuticals Ltd. Hyderabad vs M/s Savani Transport P. Ltd., Hyderabad,(6) Rivers Steam Navigation Co. Ltd., and another vs Bisweswar Kundu(7) and Vulcan Insurance Co Ltd. vs Maharaj Singh and another,(8) the points decided and views expressed were different from the present controversy, it is not necessary to refer to those decisions or express any opinion on those. For the reasons we have mentioned hereinbefore, we are of the opinion that the decision of the learned single Judge of the Andhra Pradesh High Court on appeal must, therefore, be upheld. These appeals accordingly fail and are dismissed with costs. H.L.C. Appeals dismissed.

The respondent entrusted a consignment of goods to the appellant on May 1, 1969 under a Way Bill for being transported from Guntur to Vijawada. As the appellant failed to deliver the goods at Vijayawada, the respondent gave a notice of claim on June 20,1969 and thereafter instituted suits for recovery of damages from the appellant. The trial court held that the suit were barred by Condition. 15 of the Way Bill which stipulate that no suit shall lie against the firm in respect of any consignment without a claim made in writing in that behalf and preferred within 30 days from the date of booking or from the date of arrival at the destination by the party concerned. The lower appellate court confirmed the dismissal of the suits but the second appeal preferred by the respondent was allowed by the High Court which held that if Condition 14 of the Way Bill was given effect to, it would defeat the provisions of section 10 of the Carriers Act. Dismissing the appeals, ^ HELD: (a) Section 10 of the Carriers Act, 1865 provides that unless notice in writing of the loss or injury has been given to him before the institution of the suit and within 6 months of time when the loss or injury first came to the knowledge of plaintiff, no suit shall be instituted against a common carrier. In the instant case, in order to sustain the suit, Condition 15 of the Way Bill makes it imperative on the party concerned to give notice either within 30 days from the date of the booking or from the date of the arrival of the goods at the destination. The date of arrival of the goods at the destination may not be known to the party concerned for a long time. No claim can be made without the loss of the goods and therefore 30 days from the date of booking would become irrelevant unless loss or damage occurs. Even in a case where the plaintiff was unaware of the arrival of the goods at the destination or was unaware of the loss or damage, the plaintiff would not have any right to institute a suit if no claim was made and could not have been made within 30 days. Condition 15 of the Way Bill, therefore, was designed to avoid the liability contemplated under section 10 of the Carriers Act and that too in a situation where the parties had not by express contract limited their 1028 liability as contemplated under section 6 thereof. Condition 15 must therefore, be held to be void in view of section 23 of the Indian Contract Act because its object was to defeat the provisions of section 10 of the Carriers Act. [1032 H,1033 A H] Home Insurance Company of New York vs Victoria Montreal Fire Insurance Co.,[1907] Law Reports A.C. 59, referred to. (b) The liability of a common carrier can be limited by agreement as provided under section 6 of the Carriers Act but that must be limitation of the liability. The nature of the contract entered into must either have the limitation of the liability under the Carriers Act made expressly and in writing or the facts must be such that for the contract in question the contractor was departing from his usual business and engaging in a different type of business from that of common carrier. In the instant case it is clear from Condition 15 of the Way Bill that there was no limitation of liability expressed or intended but what was provided was that no suit shall lie against the firm unless a particular claim was made in a particular manner within a particular time. Their was neither any extinguishment of liability, nor contracting out of liability but what was provided was only, a special period of limitation, other than the one in section 10 of the Carriers Act, for issue of notice. [1032 D G] The India General Navigation and Railway Co. Ltd. vs The Dekhari Tea Company ltd. and Ors., AIR 1924 P.C., 40 referred to. (c) The Contention that the Carriers Act was essentially enacted for the benefit of the common carriers and therefore s.10 should not be construed as precluding notice of a period shorter than 6 months from the date of loss cannot be accepted. From the preamble to the Act it is clear that the Act was passed not only to limit the liability of the but also to declare their liability. Therefore, any contract or bargain which seeks to defeat the liability of the carriers as enacted by law would defeat the provisions of the Act. [1034 A C]

s Nos. 630 32 of 1984 Under Article a2 of the Constitution of India. M.K. Ramamurthy, Shanti Bhushan, U.R. Lalit, M.R. Shar ma, S.K. Mehta, B.R. Agarwala, N.D. Garg, E.M.S. Anam, P.D. Sharma, C.V. Subba Rao, I.S. Goel, Dr. K.S. Tiwari, P.H. Parekh, Sohail Dutt, Uma Datta and V.P. Goel for the appear ing parties. The Judgment of the Court was delivered by SEN, J. These petitions upder article 32 of the Constitu tion assail the constitutional validity of a notification issued by the State Government of Haryana in the Public Works Department (Irrigation Branch) dated June 22, 1984 purporting to amend r.6(b) of the Punjab Service of Engi neers, Class I, PUblic Works Department (Irrigation Branch) Rules, 1964 (for short 'the Class I Rules ') with retrospec tive effect from July 10, 1964 as violative of articles 14 and 16(1) of the Constitution and also ultra vires the State Government by reason of the proviso to s.82(6) of the . The purport and effect of the impugned notification is to nullify the decision of this Court in A.S. Parmar vs State of Haryana, [1984] 2 SCR 476, holding 589 that a degree in Engineering was not essential for such promotion. By the impugned notification, a degree in Engi neering is made an essential qualification for promotion of Assistant Engineers in the Irrigation Branch, a Class II service under r.6(b) of the Class I Rules and thereby the petitioners have been rendered ineligible for promotion to the post of Executive Engineer in Class I service. The circumstances which led to the issuance of the impugned notification are these. A controversy had arisen on the construction of r.6 of the Class I Rules as to whether a degree in Engineering was necessary when the post of Execu tive Engineer, which is a post in Class I service, was to be filled by promotion by members of Class II service and this was settled by the decision of this Court in A.S. Parmar 's case, supra. The Court on a consideration of the relevant rules came to the conclusion that a member of Class II service, namely, Assistant Engineer or Sub Divisional Offi cer did not require to have a University degree for promo tion to the post of Executive Engineer in Class I service. On February 24, 1984, the Additional Solicitor General gave an undertaking on behalf of the State Government that it would consider the cases of all eligible persons including the petitioners for regular appointment to the Class I service in accordance with the rules and complete the proc ess within four months from that day. The Court, according ly, in Civil Appeal No. 149 of 1981 (Ashok Gulati & Ors. vs State of Haryana) and the connected matters as also in these petitions under article 32 of the Constitution passed an order to the effect: "Mr. K.G. Bhagat, learned Additional Solicitor General says that the State Government will consider the cases of all the eligible persons including the appellants/petitioners and respondents for regular appointments to Class I Service in accordance with the law and complete the process of appointments within 4 months from today. The Government is permitted to do so. But all appointments made pursuant to this order will be subject to the final result of these cases. In the meanwhile the appellants will continue in the posts held by them. These matters will stand adjourned for a period of 6 months from today. " 590 Just two days before the expiry of the period within which promotion of eligible persons including the petitioners was to be completed, the State Government purported to effect an amendment of r.6(b) retrospectively w.e.f. July 10, 1964. The impugned notification was in these terms: "HARYANA GOVERNMENT PUBLIC WORKS DEPARTMENT (IRRIGATION) NOTIFICATION The 22nd June, 1984. No. G.S.R. 47/Cons./Art. 309/Amend. (1) 84 Inexercise of the powers conferred by the proviso to Article 309 of the Constitution of India and all other powers enabling him in this behalf, the Governor of Haryana, hereby makes the following rules further to amend the Punjab Service of Engineers, Class I, P.W.D. (Irrigation Branch) Rules, 1964, namely: 1. (1) These rules may be called the Punjab Service of Engineers, Class I, P.W.D. (Irrigation Branch), Haryana, (Second Amend ment) Rules, 1984. (2) 'These rules shall be deemed to have come into force with effect from the 10th July, 1964. In the Punjab Service of Engineers, Class I, P.W.D. (Irrigation Branch) Rules, 1964, in rule 6, in clause (b), after the words "eight years service", the words, "in addition to the qualifications prescribed in clause (a)" shall be inserted. " Presumably, the State Government adopted this unfortu nate course of action taking cue of the observations made by this Court in the concluding part of the judgment in A.S. Parmar 's case saying that if the Government wish to appoint only persons having a degree in Engineering to Class I service, it was free to do so by promulgating appropriate rules and that the power to frame such a rule was beyond question. But the Court never laid down that such a rule may be framed under article 309 of the Constitution with retrospec tive effect so as to render ineligible Class II officers like the petitioners who were Diploma holders for further promotion as Executive Engineers in Class I service. In view of the clear formulation of law interpreting 591 r.6(b) of the Class I Rules holding that a degree in Engi neering was not an essential qualification for promotion of Class II Officers to the cadre of Executive Engineers in Class I service, there was no occasion for the State Govern ment to issue the impugned notification unless it was with the object of nullifying the decision of this Court in A.S. Parmar 's case. In order to appreciate the points involved, it is neces sary to state a few facts. The three petitioners T.R. Kapur, Mohinder Singh and V.D. Grover who are Diploma holders hold the posts of Sub Divisional Officers, Public Works Depart ment (Irrigation Branch), Haryana, a Class II service, governed by the Haryana Service of Engineers, Class II P.W.D. (Irrigation Branch) Rules, 1970. They joined Class III service as Overseers in the Irrigation Branch on Septem ber, 18, 1953, October 6, 1949 and November 8, 1952 respec tively in the erstwhile State of Punjab. At the time when they were appointed to the Overseers Engineering Service, Punjab, r.3(c) of the Punjab Service of Engineers, Class II P.W.D. (Irrigation Branch) Rules, 1941 enjoined that no person shall be appointed to the service unless he possessed one of the University degrees or other qualifications pre scribed in Appendix 'A ' to the Rules. Note beneath cl.(c), however, provided that the requirements of cl.(c) could be waived in the case of members of the Overseers Engineering Service (Irrigation Branch) Punjab to be promoted in the service under the proviso to r.5 of the Rules. The term 'service ' was defined in r. 1(2)(g) to mean the Punjab Service of Engineers, Class II (Irrigation Branch), Proviso to r.5 of Part II Appointments Rules, reads as follows: "Provided that this rule may be relaxed by Government on the recommendations of the Chief Engineers in order to admit the promotion of a member of an Overseer Engineering Service (Irrigation Branch), Punjab of outstanding merit who may not possess the qualifications specified in In due course, the petitioners were promoted as Offg. Sub Divisional Officers in the Class II service in November 1969, July 1966 and January 1964 respectively. Subsequent ly, by notification dated October 27, 1985, the petitioners were appointed as Sub Divisional Officers on a regular basis w.e.f. December 25, 1970. Under the unamended r.6(b) of the Class I Rules, the petitioners were eligible for promotion as Executive Engineers in Class I service despite the fact that they did not possess a degree in Engineering. Rule 6 of Class I 592 Rules insofar as relevant may be reproduced: "6. Qualifications: No person shall be ap pointed to the service unless he (a) possesses one of the University Degrees or other qualifications prescribed in Appendix B of these rules; Provided that Government may waive this qualification in the case of a particular officer belonging to the Class II Service. (b) In case of appointment by promotion from Class II Service, has completed in that Class of Service for a period of ten years from the commencement of these rules, six years service and after that period eight years service." Shri Shanti Bhushan, learned counsel for the petitioners has put forward a three fold contention. First of these submissions is that the impugned notification which purport ed to amend r.6(b) of the Class I Rules with retrospective effect from July 10, 1964 making a degree in Engineering essential for promotion to the post of Executive Engineer in Class I service constitutes a variation in the conditions of service applicable to officers belonging to Class II service who are diplomaholders like the petitioners prior to the appointed day i.e. November 1, 1966 to their disadvantage as it renders them ineligible for promotion to the post of Executive Engineer in Class I service and was ultra vires the State Government having been made without the previous approval of the Central Government as enjoined by the provi so to s.82(6),of the . It is urged that any rule which affects the promotion of a person relates to his conditions of service, although mere chances of promotion may not be. The contention, in our opinion, must prevail. The second is that it was not permissible for the State Government to amend r.6(b) of the Class I Rules with retrospective effect under the proviso to article 309 of the Constitution so as to render ineligible for promotion to the post of Executive Engineer in Class I service, the members of Class II service who are diploma holders although they satisfy the condition of eligibility of eight years ' experience in that class of service. It is said that the unamended r.6(b) conferred a vested right on persons like the petitioners which could not be taken away by retrospec tive amendment of r.6(b). The third and the last submission is that the action of the State Government in issuing the impugned notification making retrospective 593 amendment of r.6(b) of the Class I Rules was wholly arbi trary, irrational and mala fide and thus violative of articles 14 and 16(1) of the Constitution. It is submitted that the impugned notification was calculated to circumvent the direction given by this Court in its order dated February 24, 1984 on the basis of the undertaking given by the learned Additional Solicitor General that the State Govern ment would consider the cases of all eligible officers belonging to Class II service for promotion to the Class I service. Sub s.(6) of s.82 of the provides: "82(6). Nothing in this section shall be deemed to affect on or after the appointed day the operation of the provisions of Chapter I of of the Constitution in relation to the determination of the conditions of service of persons serving in connection with the affairs of the Union or any State: Provided that the conditions of service applicable immediately before the appointed day to the case of any person re ferred to in sub:section (1) or sub section (2) shall not be varied to his disadvantage except with the previous approval of the Central Government. " It is quite clear that the proviso to section 82(6) of the is in the nature of a fetter on the power of the Governor under the proviso to article 309 of the Constitution to alter the conditions of service applicable to all persons serving in connection with the affairs of the State. It interdicts that the conditions of service applicable to persons referred to in sub section (1) or sub section (2) thereof i.e. members of civil services affected by the reorganisation of the State. The conditions of serv ice of any persons who immediately before the appointed day were serving in connection with the affairs of the existing State of Punjab and are as from that date allocated for service in connection with the affairs of the successor State i.e. allocated Government servants can not be varied to their disadvantage. There is a long fine of decisions starting from Mohammad Bhakar vs Y. Krishan Reddy, down to Mohammed Shujat Ali & Ors. vs Union of India & Ors. , ; while construing the analogous provision contained in the proviso to section 115(7) of the laying down that any rule made 594 under the proviso to article 309 of the Constitution which seeks to vary or alter the conditions of service without the previous approval of the Central Government would be void and inoperative being in violation of the proviso to sub section (7) of section 115 of the Act. , It is a trite proposition that any rule which affects the right of a person to be consid ered for promotion is a condition of service, although mere chances of promotion may not be. As laid down by this Court in A.S. Parmar 's case, the petitioners like other members of Class II service who are diploma holders and satisfy the eligibility test of eight years ' service in that class, were eligible for being considered for promotion to the post of Executive Engineer in Class I service without having a degree in Engineering. Admittedly, the impugned notification which seeks to amend r.6(b) with retrospective effect from July 10, 1964 clearly operates to their disadvantage as its purports to make them ineligible for promotion being diplo ma holders. In Mohammad Bhakar 's case, the Court speaking through Mitter, J. said: "A rule which affects the promotion of a person relates to his conditions of service". It was held that a rule which made the passing of certain departmental examinations a pre requisite for promotion having been made without the previous approval of the Central Government was void by reason of sub section (7) of section 115. In Mohammad Shujat Ali 's case, a Constitution Bench of this Court speaking through Bhagwati, J. observed: "A rule which confers a right of actual promotion or a right to be considered for promotion is a rule prescribing a condition of service." Under the Class I Rules as they existed immediately prior to the appointed day i.e. before November 1, 1966, a member of the Overseers Engineering Service in the Irrigation Branch, Punjab having a diploma was eligible for being promoted as Sub Divisional Officer in the Class II Service and then in due course to the post of Executive Engineer in the Class I service within the quota prescribed for them without having a degree in Engineering. It was not necessary to possess a degree in Engineering as held by this Court in A.S. Parmar 's case for purposes of promotion under the unamended r.6(b) of the Class I Rules, as in the case of promotion to the post of Executive Engineer in Class I service under r.6(b) what was essential was eight years ' service in that class and not a degree in Engineering. The impugned notification which purports to amend r.6(b) with retrospective effect, however, renders members of the Class II service like the 595 petitioners who are diploma holders ineligible for promotion by making a degree in Engineering an essential qualification for such promotion which amounts to alteration of the condi tions of service applicable to them to their disadvantage without the previous approval of the Central Government and is thus void by reason of the proviso to sub s.(6) of s.82 of the . Faced with the difficulty, learned counsel for the respondents strenuously contends that the proviso to s.82(6) of the Act is not attracted in the present case. It is argued that on the appointed day i.e. November 1, 1966 the petitioners were not members of Class II service. It is said that the petitioners on the appointed day being Supervisors belonged to the Class III service and therefore were not governed by the unamended r.6(b). Reliance is placed on the notification issued by the State Government dated October 27, 1985 constituting the Class II service w.e.f. December 25, 1970 and it is said that the petitioners are not shown as belonging to Class II service. It was then contended that under r.3(c) of the Punjab Service of Engineers, Class II P.W.D. (Irrigation Branch) Rules, 1941, a degree in Engi neering was essential till the Punjab Service of Engineers, Class II, P.W. D. (Irrigation Branch) Rules, 1970 brought about a change. Inasmuch as none of the petitioners had the requisite qualifications, they could not become members of the Class II service. We are unable to accept this line of reasoning. Undoubtedly, at the time when the petitioners were recruited as Supervisors in the Irrigation Branch, a Class III service, r.3(c) of the Punjab Service of Engineers, Class II, P.W.D. (Irrigation Branch) Rules, 1941 laid down that no person shall be appointed to the service unless he possessed one of the university degrees or other qualifica tions prescribed in Appendix 'A ' to the Rules. Note beneath r.3(c) however provided that the requirements of cl. (c) could be waived in the case of members of the Overseers Engineering Service, Irrigation Branch, Punjab for promotion to the service under the proviso to r.5 of the Rules. The term 'service ' as defined in r. 1(2)(g) meant the Punjab Service of Engineers, Class II (Irrigation Branch). Proviso to r.5 of the Rules, however, empowered the State Government to relax the condition. It is clear from the terms of the proviso to r.5 quoted above that the State Government could relax the requirements of r.3(c) on the recommendation of the Chief Engineer in order to admit the promotion of a member of the Overseers Engineering Service, Irrigation Branch, Punjab if he was an officer of outstanding merit although he did not possess the qualifications specified in r.3(c) i.e. a 596 degree in Engineering. Presumably, the petitioners were officers of outstanding merit and they were promoted as Offg. Sub Divisional Officers in Class II service in January 1964, July 1966 and November 1969. Eventually, the State Government by notification dated October 27, 1985 appointed them on a regular basis in that post, w.e.f. December 25, 1970. 'Further, it is wrong to suggest that on the appointed day i.e. on November 1, 1966 they were all Overseers belong ing to the Class III service and were therefore not governed by the unamended r 6(b). Two of them V.D. Grover and Mohin der Singh had already been ' promoted as Offg. Sub Divisional Officers prior to the appointed day i.e. in January 1964 and July 1966 and were therefore governed by the unamended r.6(b) of the Class I Rules and the third petitioner T.R. Kapur was also promoted to that post. subsequently in Novem ber 1969. Upon such promotion to the post of Offg. Sub Divisional Officers they had not only the legitimate expec tation that they would in due course be considered for confirmation but also had the right on such confirmation to be considered for promotion. It is also not quite accurate to say that the petitioners were not shown as belonging to the Class II service. A bare look at the notification dated October 27, 1985 would show that the petitioners figure at Sr. Nos. 246, 254 and 369. It is not suggested that the State Government ever moved the Central Government seeking its prior approval to the proposed amendment of r.6(b) of the Class I Rules. In that connection, it is necessary to recall that prior to the reorganisation of the States under the , a conference of the Chief Secretaries of the States that were to be affected was held at Delhi on May 18 and 19, 1956 for the purpose of formulation of the princi ples upon which integration of services was to be effected. The Government of India by its circular dated May 11, 1957 to all the State Governments stated inter alia that it agreed with the views expressed on behalf of the States ' representatives that it would not be appropriate to provide any protection in the matter of departmental promotion. This circular has been interpreted as a prior approval of the Central Government in terms of the proviso to sub s.(7) of section 115 of the Act in the matter of change of the conditions of service relating to departmental promotions. These con siderations however do not arise in the present case. Admit tedly, there was no Chief Secretaries Conference as was held prior to the reorganisation of the States under the . Nor Was there any communication issued by the Central Government conveying its previous approval of the changes in service conditions which the States of Punjab and Haryana might 597 make in terms of the proviso to s.82(6) of the Punjab Reor ganisation Act, 1966. Under the so also under the , the power of the Governor to make rules under the proviso to Art.309 of the Constitution had been controlled by the proviso to section 115(7) of the former Act and s.82(6) of the latter. It follows that the conditions of service applicable immediately before the appointed day to the case of any person referred to in sub s.(1) or (2) of s.82 of the Act could not be varied to his disadvantage except with the previous approval of the Central Government. That being so, the impugned notification issued by the State Government purporting to amend r.6(b) of the Class I Rules w.e.f. July 10, 1964 which rendered members of Class II Service who are diploma holders like the petitioners ineligible for promo tion to the post of Executive Engineer in Class I Service making a degree in Engineering essential for such promotion, although they satisfied the condition of eligibility of 8 years ' experience in that class of service, must be struck down as ultra vires the State Government being contrary to s.82(6) of the . ' On the view that we take, there is no need for us to deal in detail with the other points raised. We shall only touch upon them. One should have thought that the controversy whether a degree in Engineering was an essential qualification for promotion of Sub Divisional Officers in Class II Service to the post of Executive E ngineer in Class I Service under r. 6(b) of the Class I Rules had ended with the decision of this Court in A.S. Parmar 's case. Curiously enough, learned counsel for the respondents strenuously contends that the decision of this Court in A.S. Parmar 's case was incorrect. He presses into service for our acceptance the decision of the High Court in o. P. Bhatia vs State of Punjab, ILR taking a view to the contrary. It is urged that in the erstwhile State of Punjab a degree in Engineering was essential for recruitment of Assistant Engineers in Class II Service under r. 3(c) of the 1941 Rules as held by the High Court in O.P. Bhatia 's case and that view was in consonance with the departmental instructions of the relevant rules in the State of Punjab and the State of Haryana as also in the erstwhile State of Punjab that r.6(b) required the promotees to have the essential qualification of a degree in Engineer ing. We do not think that it is open to question the cor rectness of the decision in A.S. Parmar 's case which ex pressly overrules the view taken by the High Court in O.P. Bhatia 's case. That apart, the proviso to r.5 of the 1941 Rules conferred power on the State Government to relax the requirement of r.3(c) on the recom 598 mendation of the Chief Engineer in order to admit the promo tion of a member of the Overseers Engineering Service (Irrigation Branch), Punjab if he was an officer of out standing merit although he did not possess the qualification prescribed in r.3(c) i.e. the educational qualification of a degree in Engineering. The requirement of a degree in Engi neering for recruitment to the Class II Service was done away with in the 1970 Rules. The contention also fails to take note of the fact that the requirement of a degree in Engineering which was an essential educational qualification for purposes of direct recruitment of Assistant Executive Engineers in Class I Service under r. 6(a) of the Class I Rules could not be projected for promotion of Sub Divisional Officers belonging to Class II Service to the posts of Executive Engineers in Class I Service under r. 6(b) as they form two distinct sources from which the appointments to the posts of Executive Engineers could be made. As laid down in A.S. Parmar 's case, what was of the essence for purposes of promotion of Sub Divisional Officers who were members of Class II Service to the post of Executive Engineer under r.6 (b) of the Class I Rules was not a degree in Engineering, but 8 years ' experience in that class of service i.e. Class II Service. More fundamental is the contention that the impugned notification issued by the State Government purporting to amend r.6(b) with retrospective effect from July 10, 1964 which rendered members of Class II Service who are diploma holders like the petitioners. ineligible for promotion to the post of Executive Engineer although they satisfied the condition of eligibility of 8 years ' experience in that class of service was unreasonable, arbitrary and irrational and thus offended against articles 14 and 16(1) of the Consti tution. It is urged that they were eligible for promotion under the unamended r.6(b) of the Class I Rules and had a fight to be considered for promotion to the post of Execu tive Engineer, and a retrospective amendment of r.6(b) seeking to render them ineligible was constitutionally impermissible. It is said that the reason for this was obvious inasmuch as immediately prior to the reorganisation of the State of Punjab i.e. prior to November 1, 1966 even a member of the Overseers Engineering Service, a Class III Service, having only a diploma was eligible for being pro moted as Executive Engineer in Class I Service in due course since in the matter of promotion under the unamended r.6(b) it was not necessary to possess a degree in Engineering as held by this Court in A.S. Parmar 's case. It follows there fore that every member of the Overseers Engineering Service was eligible for promotion first as Assistant Engineer or Sub Divisional Officer in Class II Service and thereafter, 599 in due course, to the post of Executive Engineer in Class I Service even without the educational qualification of a degree in Engineering. In substance, the submission is that a retrospective amendment of r.6(b) by the impugned notifi cation which seeks to take away the eligibility of members of Class II Service who are diploma holders for purposes of promotion to the posts of Executive Engineers in Class I Service from a back date ranging over 20 years and thereby renders invalid the promotions already made is constitution ally impermissible. It is well settled that the power to frame rules to regulate the conditions of service under the proviso to article 309 of the Constitution carries with it the power to amend or alter the rules with a retrospective effect: B.S. Vadhera vs Union of India, ; , Raj Kumar vs Union of India, , K. Nagaraj & Ors. vs Sate of A.P. & Anr. , ; and State Of J & K vs Triloki Nath Khosla & Ors., ; It is equally well settled that any rule which affects the right of a person to be considered for promotion is a condition of service although mere chances of promotion may not be. It may further be stated that an authority competent to lay down qualifica tions for promotion, is also competent to change the quali fications. The rules defining qualifications and suitability for promotion are conditions of service and they can be changed retrospectively. This rule is however subject to a well recognised principle that the benefits acquired under the existing rules cannot be taken away by an amendment with retrospective effect, that is to say, there is no power to make such a rule under the proviso to article 309 which affects or impairs vested rights. Therefore, unless it is specifi cally provided in the rules, the employees who are already promoted before the amendment of the rules, cannot be re verted and their promotions cannot be recalled. In other words, such rules laying down qualifications for promotion made with retrospective effect must necessary satisfy the tests of articles 14 and 16(1) of the Constitution: State of Mysore vs M.N. Krishna Murty & Ors., ; B.S. Yadav & Ors. vs State of Haryana & Ors. , ; State of Gujarat & Anr. vs Ramanlal Keshavlal Soni & Ors., ; and Ex Captain K.C. Arora & Anr. vs State of Haryana & Ors. , ; A Constitution Bench of this Court in State of Gujarat & Anr. vs Ramanlal Keshavlal Soni & Ors. (supra) had to con sider the constitutional validity of the proviso to section 102 (1)(a) of the Gujarat Panchayat Act, 1961 as introduced by the Gujarat Panchayat (Third Amendment) Act, 1978 with retrospective effect and sought to extinguish the status of secretaries, officers and servants of the Gram and Nagar 600 Panchayats who became members of a service under the State on being allocated to the panchayat service. The Court speaking through Chinnappa Reddy, J. observed: "Now, in 1978 before the Amending Act was passed, thanks to the provisions of the Prin cipal Act of 1961, the ex municipal employees who had been allocated to the Panchayat Serv ice as Secretaries, Officers and Servants of Gram and Nagar Panchayats, had achieved the status of government servants. Their status as Government servants could not be extinguished, so long as the posts were not abolished and their services were not terminated in accord ance with the provisions of Art.311 of the Constitution. Nor was it permissible to single them out for differential treatment. That would offend article 14 of the Constitution. " The learned Judge observed that the Amending Act was sought to be given retrospective effect to get over the constitu tional safeguards of articles 311 and 14 by reverting to a situation that existed some 17 years ago. He said that there was no power to do so and observed: "The legislation is pure and simple, self deceptive, if we may use such an expression with reference to a legislaturemade law. The legislature is undoubtedly competent to legis late with retrospective effect to take away or impair any vested fight acquired under exist ing laws but since the laws are made under a written Constitution, and have to conform to the do 's and don 'ts of the Constitution nei ther prospective nor retrospective laws can be made so a to contravene Fundamental Rights. The law must satisfy the requirements of the Constitution today taking into account the accrued or acquired rights of the parties today. The law cannot say, twenty years ago the parties had no fights, therefore, the requirements of the Constitution will be satisfied if the law is dated back by twenty years. We are concerned with today 's rights and not yesterday 'section A legislature cannot legislate today with reference to a situation that obtained twenty years ago and ignore the march of events and the constitu tional rights accrued in the course of the twenty years. That would be most arbitrary, unreasonable and a negation of history. " The learned Judge relied with approval on the following observations 601 of Chandrachud, CJ. speaking for a Constitution Bench in B.S. Yadav & Ors. vs State of Haryana & Ors. (supra): "Since the Governor exercises the legislative power under the proviso to article 309 of the Constitution, it is open to him to give retro spective operation to the rules made under that provision. But the date from which the rules are made to operate, must be shown to bear either from the face of the rules or by extrinsic evidence, reasonable nexus with the provisions contained in the rules, especially when the retrospective effect extends over a long period as in this case. ' ' and summed up: "Today 's equals cannot be made unequal by saying that they were unequal twenty years ago and we will restore that position by making a law today and making it retrospective. Consti tutional rights, constitutional obligations and constitutional consequences cannot be tempered with that way. A law which if made today would be plainly invalid as offending constitutional provisions in the context of the existing situation cannot become valid by being made retrospective. Past virtue (consti tutional) cannot be made to wipe out present vice (constitutional) by making retrospective laws. We are, therefore, firmly of the view that the Gujarat Panchayats (Third Amendment) Act, 1978 is unconstitutional, as it offends articles 311 and 14 and is arbitrary and unrea sonable. " Following the view the Court in K.C. Arora 's case re ferred with approval to the observations of the Punjab & Haryana High Court in Harbhajan Singh vs State of Punjab, to the effect: "Now the rule making authority must have been aware that a competitive examination for appointment to the service had been held under the old rules and appointments were yet in the offing. Surely, the rule making authority did not intend to exclude from appointment candi dates who were eligible under the old rules but became ineligible by reason of an amend ment of the rules made after the process of selection had almost reached a final stage." 602 And then queried: "Are they to be penalised "by barring their entry into the Punjab Civil Service (Judicial Branch) because they accepted employment at a time when acceptance of such employment was not a bar to appointment to the service? We do not think that we will be justified in at tributing such an unreasonable intention to the rule making authority. In our view, the only reasonable interpretation of the amended rule, consistent with the prevailing situa tion, is to hold that only those persons who having joined the service of the Union or the State or a post under the Union or the State previously continued to hold the post on the date of the coming into force of the rule, are excluded from appointment to the Punjab Civil Service (Judicial Branch). The expression 'joined or joins ' must be given a reasonable interpretation in the context of the situation and we think that our interpretation does not strain the language or attributes unreasona bleness to the rule making authority. In that view, the petitioner cannot be said to be ineligible for appointment. " The view expressed by the High Court has received the impri matur of the Court in K.C. Arora 's case. That appears to be the present trend. In the result, the petitions must succeed and are al lowed with costs. The impugned notification dated June 22, 1984 issued by the State Government of Haryana purporting to amend r.6(b) of the Punjab Service of Engineers, Class I, Public Works Department (Irrigation Branch) Rules, 1964 with retrospective effect from July 10, 1964 is declared to be ultra vires the State Government. P.S.S. Petitions allowed.

The proviso to sub s.(6) of s.82 of the Punjab Reorgani sation Act, 1966 mandates that the conditions of service applicable to any person referred to in sub s.(1) or sub s.(2) shall not be varied to his disadvantage except with the previous approval of the Central Government. Rule 6(b) of the Punjab Service of Engineers, Class I, Public Works Department (Irrigation Branch) Rules, 1964, as it stood at the relevant time, provided that in case of appointment by promotion from Class II Service no person shall be appointed unless he has completed in that Class of Service for a period of ten years from the commencement of these ,Rules, six years service and after that period eight years service. The Governor of Haryana by a notification dated 22nd June, 1984 amended the above Rules by inserting the words 'in addition to the qualifications prescribed in clause (a) ' after the words "eight years service" in cl(b) of r.6 with retrospective effect from July 10, 1964 thereby making a degree in Engineering essential for promotion to the post of Executive Engineer in Class I service. Rule 3(c) of the Punjab Service of Engineers, Class II P.W.D. 585 (Irrigation Branch) Rules, 1941 had enjoined that no person shall be appointed to the service unless he possessed one of the University degrees or other qualifications prescribed. The proviso to r.5 however, laid down that that rule may be relaxed by Government on the recommendations of the Chief Engineers in order to admit the promotion of a member of the Overseers Engineering Service of outstanding merit who may not possess the qualifications specified in rule 3. The petitioners, who are Engineering Diploma holders, were appointed to Class 11I Overseers Engineering Service (Irrigation Branch) in the erstwhile State of Punjab in the year 1953, 1949 and 1952 respectively. In due course they were promoted as Sub Divisional Officers in Class II service and were eligible for promotion to the post of Executive Engineer in Class I service under the unamended rule 6(b) having more than eight years ' service in Class II service. In A.S. Parmar vs State of Haryana, [1984] 2 SCR 476 this Court interpreting the unamended rule 6(b) had held that a degree in Engineering was not an essential qualification for promotion of Class II Officers to the cadre of Executive Engineer in Class I service. But just before they were about to be promoted the State of Haryana issued the impugned notification rendering them inelligible. Aggrieved by the said notification they filed these writ petitions under Art.32 of the Constitution. It was contended for them that the impugned notification purporting to amend r.6(b) of Class I Rules with retrospective effect was ultra vires the State Government being contrary to the proviso to s.82(6) of the , that the unamended r.6(b) had conferred a vested right of promotion on them which could not be taken away by retrospective amendment under the proviso to article 309 of the Constitution, that a retrospective amendment taking away eligibility for promotion from a back date ranging over 20 years and thereby rendering invalid the promotions already made was constitu tionally impermissible, and that the action of the Govern ment in making such retrospective amendment to nullify the decision in Parmar 's case was wholly arbitrary, irrational and mala fide and thus violative of articles 14 and 16(1) of the Constitution. For the respondents it was contended that the proviso to section 82(6) was not attracted to the facts of the case since on the appointed day, that is, November 1, 1966 the petitioners were not members of Class II Service. They were then Super visors belonging to Class 111 Service, and, therefore, were not governed by the unamended r.6(b). It was further con tended that under r.3(c) of the Punjab Service of Engineers, Class II 586 P.W.D. (Irrigation Branch) Rules, 1941 a degree in Engineer ing was essential till the 1970 Rules brought about a change. Inasmuch as none of the petitioners had the requi site qualifications, they could not become members of Class II Service. It wag strenuously contended that the decision in A.S. Parmar vs State of Haryana was incorrect. Allowing the writ petitions, the Court, HELD: 1.1 The impugned notification dated June 22, 1984 issued by the State Government of Haryana purporting to amend r.6(b) of the Punjab Service of Engineers, Class I, Public Works Department (Irrigation Branch) Rules 1964, with retrospective effect from July 10, 1964 is declared ultra vires the State Government being contrary to s.82(6) of the . [602EF, S97CD] 1.2 The proviso to s.82(6) of the is in the nature of a fetter on the power of the Gover nor under the proviso to article 309 of the Constitution not to alter the conditions of service applicable to members of civil services affected by the reorganisation of the State to their disadvantage without the previous approval of the Central Government. [593E, 597B] In the Instant case, the State Government never moved the Central Government seeking its prior approval to the proposed amendment of r.6(b) of the said Class I Rules. There was no Chief Secretaries Conference as was held prior to the reorganisation of the States under the States Reor ganisation Act, 1956. Nor was there any communication issued by the Central Government conveying its previous approval of the changes in the service conditions which the States of Punjab and Haryana might make in terms of the proviso to s.82(6) of the . The amend ment, therefore, must be struck down. [596E,G, 597C] Mohammad Bhakar vs Y. Krishan Reddy, ; Mohammdd Shujat Ali & Ors. vs Union of India & Ors. , ; and A.S. Parmar vs State of Haryana, [1984] 2 SCR 476, referred to. I The decision in Parmar 's case is not open to ques tion. What was of the essence for purposes of promotion of Sub Divisional Officers who were members of Class II Service to the post of Executive Engineer under r.6(b) of the Class I Rules was not a degree in Engineering, but eight years ' experience in Class II Service. [597G, 598CD] 587 2.2 The petitioners like other members of Class II Service who are diploma holders and satisfy the eligibility test of eight years ' service in that Class were, therefore, eligible for being considered for promotion to the post of Executive Engineer in Class I service without having a degree in Engineering. [594B] A.S. Parmar vs State of Haryana, [1984] 2 SCR 476, referred to. The requirement of a degree in Engineering which was an essential educational qualification for purposes of direct recruitment of Assistant Executive Engineers in Class I Service under r.6(a) of the Class I Rules could not be projected for promotion of Sub,Divisional Officers belonging to Class II Service to the posts of Executive Engineers in Class I. Service under r.6(b) as they form two distinct sources from which appointments to the posts of Executive Engineers could be made. [598B] 4. The proviso to r.5 of the 1941 Rules conferred power on the State Government to relax the requirement of r.3(c) on the recommendation of the Chief Engineer in order to admit the promotion of a member of the Overseen Engineering Service (Irrigation Branch), Punjab if he was an officer of outstanding merit although he did not possess the qualifica tion prescribed in r.3(c), i.e. a degree in Engineering. Presumably, the petitioners were officers off outstanding merit as they were promoted as Offg. Sub,Divisional Officers in Class II Service in January 1964, July 1966 and November 1969. [597H 598A, 596A] 5. It cannot be said that on the appointed day i.e. on November, 1, 1966 the petitioners were Overseers belonging to the Class III Service and were therefore not governed by unamended r.6(b). Two of them had already been promoted as (Mfg. SUb,Divisional Officers prior to the appointed day, i.e. in January 1964 and July 1966 and were, therefore, governed by the unamended r.6(b). The third petitioner was also promoted to that post subsequently in November 1969. Upon such promotion to the post of Offg. Sub Divisional Officers they had not only the legitimate expectation that they would in due course be considered for confirmation but also had the right on such confirmation to be considered for promotion. It is also not quite accurate to say that the petitioners were not shown as belonging to the Class 11 Service. A bare look at the notification dated October 27, 1985 would show that the petitioners figure at Sr. Nos. 246, 254 and 369. [596B D] 6. The power to frame rules to regulate the conditions of service 588 under the proviso to article 309 of the Constitution carries with it the power to amend or alter the rules with a retro spective effect. This rule is, however, subject to a well recognised principle that the benefits acquired under the existing rules cannot be taken away by an amendment with retrospective effect. Therefore, unless it is specifically provided in the rules, the employees who were already pro moted before the amendment of the rules, cannot be reverted and their promotions cannot be recalled. In other words, such rules laying down qualifications for promotion made with retrospective effect must necessarily satisfy the tests of articles 14 and 16(1) of the Constitution. They do not, in the instant case. [599B F] B.S. Vadhera vs Union of India, ; , Raj Kumar vs Union of India, ; K. Nagaraj & Ors. vs State of A.P. & Anr. , ; ; State of J & K vs Triloki Nath Khosla & Ors., ; ; State of Mysore vs M.N. Krishna Murtv & Ors., ; ; B.S. Yadav & Ors., vs State of liaryana & Ors.; , ; State of Gujarat & Anr. vs Ramanlal Keshavlal Soni & Ors., ; and Ex Captain K.C. Arora & Anr. vs State of Haryana & Ors. , ; , referred to.

etition (Criminal) No. 8061 of 1981. (Under article 32 of the Constitution of India.) Dr. N.M. Ghatate for the Petitioner. O.P. Rana and R.N. Poddar for the Respondent. The Judgment of the Court was delivered by SEN, J. By this petition under article 32 of the Constitution, one Ashok Kumar seeks issuance of a writ of habeas corpus challenging the validity of the order of detention dated August 11, 1981, passed by the Commissioner of Police, Delhi under sub section (2) of section 3 of the (for short 'the Act ') on being satisfied that his detention was necessary with a view to preventing him from "acting in any manner prejudicial to the maintenance of 710 public order". The main issue is as to whether the activities of the petitioner fall within the realm of 'public order ' or 'law and order '. It appears that on August 12, 1981 while the detenu was held at the Central Jail, Tihar in connection with some of the offences committed by him, he was served with the aforesaid order of detention passed a day earlier i.e. on August 14, 1981. Two days later i.e. on August 14, 1981 he was furnished with the grounds of detention as well as with copies of documents and statements relied upon in the grounds of detention. It seems that the Commissioner of Police forthwith made a report to the Administrator about the passing of the detention order together with the grounds of detention and all other particulars bearing on the same. The said report and the other particulars were considered by the Administrator and he, by his order dated August 20, 1981, approved of the detention order under sub section (4) and sent a report to the Central Government as required under sub section (5) of section 3 of the Act. The Administrator by his order dated August 20, 1981 informed the petitioner that his order of detention had been approved by him and that he had a right to make a representation. The case of the petitioner was placed before the Advisory Board who was of the opinion that there was sufficient cause for the detention of the petitioner and accordingly the Administrator by his order dated September 15, 1981 confirmed the aforesaid detention order under sub section (1) of section 12 and further directed under section 13 of the Act that the petitioner be detained for a period of 12 months from the date of his detention i.e. w.e.f. August 12, 1981. In support of the petition, four points are canvassed. First of these is that there was a denial of the constitutional imperatives of article 22(5) read with section 8 of the Act which cast a duty on the detaining authority to afford the detenu "the earliest opportunity of making a representation against the order of detention" inasmuch as there was unexplained delay of two days in furnishing the grounds of detention; secondly, there was a failure on the part of the Commission of Police as well as the Administrator to apply their mind and specify the period of detention while making the order of detention under sub section (2) of section 3 of the Act and therefore the impugned order of detention is invalid; thirdly, the grounds of detention served on the detenu are not connected with "maintenance of public order", but they relate to "maintenance of law and order" and fourthly, the facts as set out in the grounds of detention did not 711 furnish sufficient nexus for forming the subjective satisfaction of the detaining authority and further they were vague, irrelevant and lacking in particulars. We are afraid, none of these contentions can prevail. There is no substance in the contention that there was denial of the constitutional imperatives of article 22(5) read with section 8 of the Act, because there was unexplained delay of two days in furnishing the grounds of detention and it was imperative that the detenu should be furnished with the grounds of detention along with the order of detention. It is said that delay even for a day, if it remains unexplained ' means deprivation of liberty guaranteed under article 21, and this is impermissible except according to procedure established by law. The contention that the constitutional safeguards in article 22(5) were not complied with merely because the detenu was not 'simultaneously ' furnished with the grounds of detention along with the order of detention and was thereby deprived of the right of being afforded 'the earliest opportunity of making a representation against the order of detention ' as enjoined by article 22(5) read with with section 8 of the Act, cannot be accepted. The language of article 22(5) itself provides that where a person is detained in pursuance of an order made under any law providing for preventive detention, the authority making the order shall, "as soon as may be", communicate to such person the grounds on which the order has been made and shall afford him the earliest opportunity of making a representation against the order. Sub section (1) of section 8 of the Act which is in conformity with article 22(5) provides that when a person is detained in pursuance of a detention order made under sub section (1) or sub section (2) of section 3 of the Act, the authority making the order shall, as soon as may be, but ordinarily not later than five days and in exceptional circumstances and for reasons to be recorded in writing, not later than ten days from the date of detention, communicate to him the grounds on which the order has been made. Parliament has thus by law defined the words "as soon as may be" occurring in article 22(5) as meaning normally a period of five days. The matter is no longer res integra. Chandrachud, C.J. in A.K. Roy vs Union of India observed : "This argument overlooks that the primary requirement of section 8(1) is that the authority making the order of 712 detention shall communicate the grounds of detention to the detenu "as soon as may be". The normal rule therefore is that the grounds of detention must be communicated to the detenu without avoidable delay. It is only in order to meet the practical exigencies of administrative affairs that the detaining authority is permitted to communicate the grounds of detention not later than five days ordinarily and not later than 10 days if there are exceptional circumstances. If there are any such circumstances, the detaining authority is required by section 8(1) to record its reason in writing. We do not think that this provision is open to any objection. " Under our constitutional system, therefore, it is not the law that no person shall be detained in pursuance of an order made under a law providing for preventive detention without being informed of the grounds for such detention. The law is that the detaining authority must, as soon as may be, i.e. as soon as practicable, communicate to the detenu the grounds on which the order of detention has been made. That period has been specified by section 8 of the Act to mean a period ranging from five to ten days depending upon the facts and circumstances of each case. Admittedly, the detenu here was served with the grounds of detention within a period of two days i.e. within the period allowed by section 8 of the Act and that was "as soon as practicable". This is not a case where the detenu alleges that his detention was for non existent grounds. Nor does he attribute any mala fides on the part of the detaining authority in making the order. The order of detention is therefore not rendered invalid merely because the grounds of detention were furnished two days later. We find it difficult to conceive of any discernible principle for the second submission. It is submitted by learned counsel appearing for the detenu that the right to make a representation under article 22(5) of the Constitution read with section 8 of the Act means what it implies, "the right to make an effective representation". It is urged that unless the period of detention is specified, there can be no meaningful representation inasmuch as the detenu had not only the right of making a representation against the order for his detention but also the period of detention. On this hypothesis, the contention is that the impugned order of detention is rendered invalid. The 713 entire submission rests on the following observations of Chandrachud, C.J. in A.K. Roys case, supra : "We should have thought that it would have been wrong to fix a minimum period of detention, regardless of the nature and seriousness of the grounds of detention. The fact that a person can be detained for the maximum period of 12 months does not place upon the detaining authority the obligation to direct that he shall be detained for the maximum period. The detaining authority can always exercise its discretion regarding the length of the period of detention. " The majority decision in A.K. Roys case, supra, as pronounced by Chandrachud, C.J. is not an authority for the proposition that there is a duty cast on the detaining authority while making an order of detention under sub section (1) or (2) to specify the period of detention. The learned Chief Justice made the aforesaid observations while repelling the contention advanced by learned counsel for the petitioner that section 13 of the Act was violative of the fundamental right guaranteed under article 21 read with article 14 as it results in arbitrariness in governmental action in the matter of life and liberty of a citizen. The challenge to the validity of section 13 of the Act was that it provides for a uniform period of detention of 12 months in all cases, regardless of the nature and seriousness of the grounds on the basis of which the order of detention is passed. In repelling the contention, the learned Chief Justice observed that there was no substance in that grievance because, any law of preventive detention has to provide for the maximum period of detention, just as any punitive law like the Penal Code has to provide for the maximum sentence which can be imposed for any offence. In upholding the validity of section 13 the learned Chief Justice observed : "We should have thought that it would have been wrong to fix a minimum period of detention, regardless of the grounds of detention". And then went on to say : "It must also be mentioned that under the proviso to section 13, the appropriate government has the power to revoke or modify the order of detention at any earlier point of time. " 714 It would thus be clear that the Court was there concerned with the validity of section 13 of the Act and it is not proper to build up an argument or by reading out of context just a sentence or two. There is no doubt in our mind that the Court has not laid down that the detaining authority making an order of detention under sub section (1) or sub section (2) of section 3 of the Act or the authority approving of the same, must specify the period of detention in the order. It is plain from a reading of section 3 of the Act that there is an obvious fallacy underlying the submission that the detaining authority had the duty to specify the period of detention. It will be noticed that sub section (1) of section 3 stops with the words "make an order directing that such person be detained", and does not go further and prescribe that the detaining authority shall also specify the period of detention. Otherwise, there should have been the following words added at the end of this sub section "and shall specify the period of such detention". What is true of sub section (1) of section 3 is also true of sub section (2) thereof. It is not permissible for the courts, by a process of judicial construction, to alter or vary the terms of a section. Under the scheme of the Act, the period of detention must necessarily vary according to the exigencies of each case i.e. the nature of the prejudicial activity complained of. It is not that the period of detention must in all circumstances extend to the maximum period of 12 months as laid down in section 13 of the Act. The most crucial question on which the decision must turn is whether the activities of the detenu fall within the domain of 'public order ' or 'law and order '. The contention is that the grounds of detention served on the detenu are not connected with 'maintenance of 'public order ' but they relate to 'maintenance of law and order ' and therefore the impugned order of detention purported to have been passed by the detaining authority in exercise of his powers under sub section (2) of section 3 of the Act is liable to be struck down. It is urged that the facts alleged in the grounds of detention tend to show that he is engaged in criminal activities and it is an apparent nullification of the judicial process if, in every case where there is a failure of the prosecution to proceed with a trial or where the case ends with an order of discharge or acquittal, the Executive could fall back on its power of detention because the verdict of the Court goes against it. Put differently, the contention is that resort cannot be had to the Act to direct preventive detention of a person under sub section (2) of section 3 of the Act for the Act is not a law for the 715 preventive detention of gangsters and notorious bad characters. The detention here, it is said, is not so much for the "maintenance of public order" but as a measure for the past criminal activities of the detenu. It is further urged that the grounds of detention have no rational connection with the object mentioned in the Act for which a person may be detained. Further, that there is no sufficient nexus between the preventive action and the past activities of the detenu which are not proximate in point of time but are too remote. There is no substance in any of these contentions advanced. The true distinction between the areas of 'public order ' and 'law and order ' lies not in the nature or quality of the Act, but in the degree and extent of its reach upon society. The distinction between the two concepts of 'law and order ' and 'public order ' is a fine one but this does not mean that there can be no overlapping. Acts similar in nature but committed in different contexts and circumstances might cause different reactions. In one case it might affect specific individuals only and therefore touch the problem of law and order, while in another it might affect public order. The act by itself therefore is not determinant of its own gravity. It is the potentiality of the act to disturb the even tempo of the life of the community which makes it prejudicial to the maintenance of public order. That test is clearly fulfilled in the facts and circumstances of the present case. Those who are responsible for the national security or for the maintenance of public order must be the sole judges of what the national security or public order requires. Preventive detention is devised to afford protection to society. The object is not to punish a man for having done something but to intercept before he does it and to prevent him from doing. Justification for such detention is suspicion or reasonable probability and not criminal conviction which can only be warranted by legal evidence. It follows that any preventive measures, even if they involve some restraint or hardship upon individuals, do not partake in any way of the nature of punishment, but are taken by way of precaution to prevent mischief to the State. It is a matter of grave concern that in urbanised areas like cities and towns and particularly in the metropolitan city of Delhi the law and order situation is worsening everyday and the use of knives and firearms has given rise to a new violence. There is a constant struggle to control the criminal activities of the persons engaged in such organised crimes for the maintenance of public 716 order. It is difficult to appreciate the argument that the detention here is with a view to punish the detenu for a series of crimes that he is alleged to have committed, but which the law enforcement agency is not able to substantiate. There is no reason why the Executive cannot take recourse to its power of preventive detention in those cases where the Court is genuinely satisfied that no prosecution could possibly succeed against the detenu because he is a dangerous person who has overawed witnesses or against whom no one is prepared to depose. The prejudicial activities of the detenu leading to public disorder, as revealed in the grounds of detention, consist of a consistent course of criminal record. Although the criminal activities of the detenu in the past pertained mostly to breaches of law and order, they have now taken a turn for the worse. From the facts alleged it appears that the detenu has taken to a life of crime and become a notorious character. His main activities are theft, robbery and snatching of ornaments by the use of knives and firearms. The area of operation is limited to South Delhi, such as Greater Kailash, Kalkaji and Lajpat Nagar. A perusal of the F.I.Rs. shows that the petitioner is a person of desperate and dangerous character. This is not a case of a single activity directed against a single individuals. There have been a series of criminal activities on the part of the detenu and his associates during a span of four years which have made him a menace to the society. It is true that they are facing trial or the matters are still under investigation. That only shows that they are such dangerous characters that people are afraid of giving evidence against them. To bring out the gravity of the crimes committed by the detenu, we would just mention four instances. On November 19, 1979 Smt. Anupam Chander of B 5/10, Safdarjang Enclave reported that she was robbed of her gold chain near East of Kailash and on investigation the petitioner along with his associates was arrested for this high handed robbery and there is a case registered against them which is pending trial. Just a month after i.e. on December 11, 1979, one Munna of Lajpat Nagar reported that he was robbed of his wrist watch and cash by three persons who were travelling in a three wheeler. On investigation, the petitioner and his associate Rajendra Kumar were arrested and the police recovered the stolen property. They are facing trial in these cases. On July 18, 1981 717 Kumari G. Radha reported that she had been robbed of her gold chain and a pair of tops in Lajpat Nagar at the point of knife by persons in the age group of 21/22 years. On investigation, the petitioner and his associate Rajendra Kumar were arrested and the entire booty was recovered. The case is still under investigation. It appears that the detenu was enlarged on bail and two days after i.e. on July 20, 1981, he was again arrested on the report of Smt. Ozha that she was robbed of her gold chain near Shanti Bazar, Khokha Market, Lajpat Nagar by two persons in the age group of 21 25 years at the point of knife. On investigation, the petitioner and his companion Rajendra Kumar were arrested and she identified them to be the culprits and the booty was recovered from them. The case is under investigation. There have been similar incidents of a like nature. What essentially is a problem relating to law and order may due to sudden sporadic and intermittent acts of physical violence on innocent victims in the metropolitan city of Delhi result in serious public disorder. It is the length, magnitude and intensity of the terror wave unleashed by a particular act of violence creating disorder that distinguishes it as an act affecting public order from that concerning law and order. Some offences primarily injure specific individuals and only secondarily the public interest, while others directly injure the public interest and affect individuals only remotely. The question is of the survival of the society and the problem is the method of control. Whenever there is an armed hold up by gangsters in an exclusive residential area like Greater Kailash, Kalkaji or Lajpat Nagar and persons are deprived of their belongings like a car, wrist watch or cash, or ladies relieved of their gold chains or ornaments at the point of a knife or revolver, they become victims of organised crime. There is very little that the police can do about it except to keep a constant vigil over the movements of such persons. The particular acts enumerated in the grounds of detention clearly show that the activities of the detenu cover a wide field and fall within the contours of the concept of public order. The contention that the facts alleged in the grounds of detention did not furnish sufficient nexus for forming the subjective satisfaction of the detaining authority and further that they were vague, irrelevant or lacking in particulars, cannot be accepted. A bare perusal of the grounds of detention along with the particulars 718 of the 36 cases furnished in the accompanying chart, shows that the grounds furnished were not vague or irrelevant or lacking in particulars or were not adequate or sufficient for the subjective satisfaction of the detaining authority. In the result, the petition must fail and is dismissed. N.V.K. Petition dismissed.

The petitioner who was held at the Central Jail in connection with some of the offences committed by him, was served with an order of detention passed by the Commissioner of Police, under sub section (2) of section 3 of the , stating that his detention was necessary with a view to preventing him from "acting in any manner prejudicial to the maintenance of public order." Two days later he was served with the grounds of detention and copies of documents and statements relied upon in the grounds of detention. The Commissioner made a report to the Administrator about the passing of the detention order together with the grounds of detention. The Administrator approved the detention order and sent the report to the Central Government, and also informed the petitioner that the order of detention had been approved by him and that he had a right to make a representation. The case of the petitioner was placed before the Advisory Board who was of the opinion that there was sufficient cause for his detention. The Administrator confirmed the detention order under sub section (1) of section 12 and further directed under section 13 of the Act that the petitioner be detained for a period of 12 months from the date of his detention. In his petition under Article 32 of the Constitution the petitioner contended that: (1) the unexplained delay of two days in furnishing the grounds of detention was a denial of the constitutional imperatives of article 22(5) read with section 8 of the Act which cast a duty on the detaining authority to afford the detenu "the earliest opportunity of making a representation against the order of detention", (2) there was a failure on the part of the Commissioner as well as the 708 Administrator to apply their minds and specify the period of detention while making the order of detention under sub section (2) of section 3 of the Act, and (3) the grounds of detention served were not connected with "maintenance of public order", but relate to "maintenance of law and order". Dismissing the petition, ^ HELD: 1. (i) Sub section (1) of section 8 of the Act which is in conformity with Article 22(5) provides that where a person is detained in pursuance of a detention order made under sub section (1) or sub section (2) of section 3 of the Act, the authority making the order shall, "as soon as may be", but ordinarily not later than five days and in exceptional circumstances and for reasons to be recorded in writing not later than ten days from the date of detention, communicate to him the grounds on which the order has been made. Parliament has thus by law defined the words "as soon as may be" occurring in article 22(5) as meaning normally a period of five days. [711 F] (ii) The law is that the detaining authority must, as soon as may be, i.e. as soon as practicable, communicate to the detenu the grounds on which the order of detention has been made. That period has been specified by section 8 of the Act to mean a period ranging from five to ten days depending upon the facts and circumstances of each case. [712 D] In the instant case, the petitioner was served with the grounds of detention within a period of two days i.e. within the period allowed by section 8 of the Act and that was "as soon as practicable. " The order of detention is therefore not rendered invalid merely because the grounds of detention were furnished two days later. [712 E F] (iii) In A.K. Roy vs Union of India, [1982] 1 S.C.C. 271 this Court has not laid down that the detaining authority making an order of detention under sub section (1) or sub section (2) of section 3 of the Act or the authority approving of the same, must specify the period of detention in the order. [714 B] 2. Under the scheme of the Act, the period of detention must necessarily vary according to the exigencies of each case i.e. the nature of the prejudicial activity complained of. It is not that the period of detention must in all circumstances extend to the maximum period of 12 months as laid down in section 13 of the Act. [714 E] 3.(i) The true distinction between the areas of 'public order ' and 'law and order ' lies not in the nature or quality of the act, but in the degree and extent of its reach upon society. The distinction between the two concepts of 'law and order ' and 'public order ' is a fine one but this does not mean that there can be no overlapping. Acts similar in nature but committed in different contexts and circumstances might cause different reactions. In one case it might affect specific individuals only and therefore touch the problem of 'law and order ' while in another it might affect 'public order '. The act by itself therefore is not determinant of its own gravity. It is the potentiality of the act to disturb the even 709 tempo of the life of the community which make it prejudicial to the 'maintenance of public order. ' [715 C E] (ii) Preventive detention is devised to afford protection to society. The object is not to punish a man for having done something but to intercept before he does it and to prevent him from doing. Justification for such detention is suspicion or reasonable probability and not criminal conviction which can only be warranted by legal evidence. It follows that any preventive measures, even if they involve some restraint or hardship upon individuals, do not partake in any way of the nature of punishment, but are taken by way of precaution to prevent mischief to the State. [715 F G] (iii) The Executive can take recourse to its power of preventive detention in those cases where the Court is genuinely satisfied that no prosecution could possibly succeed against the detenu because he is a dangerous person who has overawed witnesses or against whom no one is prepared to depose. [716 B] (iv) What essentially is a problem relating to 'law and order ' may due to sudden sporadic and intermittent acts of physical violence on innocent victims in a metropolitan city result in serious 'public disorder '. It is the length, magnitude and intensity of the terror wave, unleashed by a particular act of violence creating disorder that distinguished it as an act affecting 'public order ' from that concerning 'law and order '. Some offences primarily injure specific individuals and only secondarily the public interest, while others directly injure the public interest, and affect individuals only remotely. [717 D E] In the instant case the particular acts enumerated in the grounds of detention clearly shows that the activities of the detenu cover a wide field and fall within the contours of the concept of 'public order '. [717 G]

l Appeals Nos. 1682 to 1691 of 1967. Appeals by special leave from the judgment and order dated November 30, 1962 of the Allahabad High Court in Misc. Sales Tax Reference Nos. 144, 134, 143, 148, 124, 104, 105, 112 and 113 of 1958 respectively. M.C. Chagla and section section Shukla, for the appellants (in all the appeals). C. B. Agarwala and 0. P. Rana, for the respondents (in all appeals) The Judgment of the Court was delivered by Ramaswami, J. These appeals are brought, by special leave from the judgment of the Allahabad High Court dated November 30, 1962 in Miscellaneous Sales Tax Reference No. 144 of 1958 and other connected references. The appellants are manufacturers and dealers of oil in the Province of Uttar Pradesh and they have their own depots outside the Province. For the financial year 1948 49 and the subsequent period from April 1, 1949 to January 25, 1950 the appellants had sent their goods to their depots outside the Province of Uttar Pradesh, for example, to Calcutta in the State of West Bengal before any contract of sale in respect of the goods was made. 514 After the goods had reached the depots outside the Province of Uttar Pradesh, they were sold to various parties. The Sales Tax Officers of Uttar Pradesh assessed the outside sales of all the appellants to sales tax under the Uttar Pradesh Sales Tax Act 15 of 1948, hereinafter called the Act. It appears that this category of sales roughly amounted to more than one crore of rupees in the case of the appellants and the sales tax was levied at the rate of 3 pies per rupee subject to a rebate under section 5 of the Act and certain other adjustments. Aggrieved by the assessments, the appellants took the matter in appeal under section 9 of the Act. The appeals were heard by various Appellate Officers called Judge, Appeals. Some of the Appellate Officers held that the assessment was properly made, while some others took the view that the assessments made for outside sales were improper and the assessment order should be quashed. The parties aggrieved by the appellate orders filed revisions before the revising authority called Judge, Revisions under section 10 of the Act. By his judgment dated July 10, 1957 the Judge, Revisions held that the out of State sales would be taxable (1) if the goods were in existence in the Province of Uttar Pradesh at the time when the contracts for sale were made, and (2) if the goods were manufacturer after the contracts for sale were made in respect of them and were subsequently appropriated towards those contracts. He further held that sales of goods which were not only manufactured but also exported before any contracts for sale were made would not be taxable. Under section II of the Act, the Commissioner of Sales Tax applied to the Revising Authority for making a reference of the case to the High Court, By its order dated January 23, 1958 the Revising Authority drew up a statement of the case and referred to the Allahabad High Court the following two questions of law for determination : "(1) Whether clause (ii) of the Explanation 11 to Section 2 (h) U.P. Sales Tax Act provides for taxing sales in which goods were manufactured or produced in U.P. but for which the contract for sale was made after the goods had left the State ? (2) If the reply to the above is in affirmative, whether this provision is ultra vires ?" By its judgment dated November 30, 1962, the High Court ans wered the first question in the affirmative and the second question in the negative. It is necessary at this stage to refer to the relevant statutory provisions which were in force during the material period. Section 99 of the Government of India Act, 1935 authorised a Provincial Legislature, subject to the provisions of that Act, to make laws for the Province or for any part thereof. Section 515 100(3) of that Act provided that, subject to the two preceding sub sections, the Provincial Legislature had, and the Federal Legislature had not, power to make laws for any Province or any part thereof with respect to any of the matters enumerated in List 11 of the Seventh Schedule to that Act. The matter enumerated in Entry 48 in List 11 was "Taxes on the sale of goods and on advertisements. " It was in exercise of this legislative power that the Uttar Pradesh State Legislature enacted Act 15 of 1948 which came into force on April 1, 1948. Section 3 of the Act Provides as follows "3. Liability to tax under the Act Subject to the provisions of this Act, every dealer shall pay on turnover in each assessment year a tax at the rate of 3 pies a rupee : Provided that (i) the Provincial Government may, by notification in the official Gazette, reduce the rate of tax on the turnover of any dealer or class of dealers or on the turnover in respect of any goods or class of goods; (ii) a dealer whose turnover in the previous year is less than Rs. 12,000/ or such larger amount as may be prescribed shall not be liable to pay the tax under this Act for the assessment year; Section 2(c) defines a "dealer" to mean "any person or association of persons carrying on the business of buying or selling and supplying goods in the United Provinces, whether for commission, remuneration or otherwise and includes any firm or Hindu joint family and any society, club or association which sells or supplies Goods to its members but does not include any department of the Provincial Government or of the Indian Union (hereinafter called the 'Dominion Government ')". Section 2(h) is to the following effect " 'sale ' means, with its grammatical variations and cognate expressions, any transfer of property in goods for cash or deferred payment or other valuable conside ration and includes forward contracts but does not include a mortgage, hypothecation, charge or pledge Explanation II Notwithstanding anything. in the Indian , or any other law for the time being in force, the sale of any goods 516 (i)which are actually in the United Provinces at the time when in respect thereof, the contract of sale as defined in section 4 of that Act is made, (ii)or which are produced or manufactured in the United Provinces by the producer or manufacturer thereof, shall, wherever the delivery or contract of sale is made, be deemed for the purposes of this Act to have taken place in the United Provinces. Section 10 states "Power of revision (1)The Provincial Govern ment shall appoint as Revising Authority a person qualified under subsection (3) of section 220 of the Government of India Act, 1935, for appointment as Judge of a High Court. (2) The appellate authority appointed under section 9 shall be under the superintendence and control of the Revising Authority. (3) The Revising Authority may in its discretion at any time suo motu or on being moved by the Commissioner of Sales Tax or on the application of any person aggrieved, call for and examine the record of any order made or proceedings recorded by any appellate or assessing authority under this Act for the purpose of satisfying itself as to the legality or propriety of such order or as to the regularity of such proceedings and may pass such order as he thinks fit. (4) The Revising Authority shall not pass any order under sub section (3) adversely affecting any person unless an opportunity has been given to such person to be heard. (5) If the amount of assessment is reduced by the Revising Authority under sub section (3) it shall order the excess amount of tax if already realized to be refunded. " Section 11 is to the following effect "Statement of case to High Court (I) Within sixty days from the passing by the Revising Authority of any order under sub section (3) of section 9 or subsection (1) of section 10 affecting any liability of any dealer to pay tax under this Act, such dealer may, by application in writing accompanied by a fee of one hundred rupees, require the Revising Authority 517 to refer to the High Court any question of law arising out of such order. (2) If, for reasons to be recorded in writing, the Revising Authority refuses to make such reference, the applicant may, within thirty days of such refusal, either (a) withdraw his application (and if he does so, the fee shall be refunded, or (b) apply to the High Court against such refusal. (3) If upon the receipt of an application under clause (b) of sub section (2),the High Court is not satisfied that such refusal was Justified, it may require the Revising Authority to state a case and refer it to the High Court and on receipt of such requisition the Revising Authority shall state and refer the case accordingly. (4)If the High Court is not satisfied that 'the statement in a case referred under this section is sufficient to enable it to determine ' the question raised thereby, it may refer the case back to the Revising Authority to make such additions thereto or alterations therein as the High Court may direct in that behalf. By the Amending Act of 1954 (U.P. Act VIII of 1954) which came into force on April 1, 1954 the following provisions were substituted in place of sub sections (1), (3) and (4): "(1) Within one hundred and twenty days from the date of service of the order under sub section (3) of section 10, the person aggrieved, may, by application in writing require the Revising Authority to refer to the High Court any question of law arising out of such order (3) The provisions of subsection (1) shall also be applicable to the Commissioner of Sales Tax with the modification that it shall not be necessary for him to deposit any fee. (4) If on any application, being made under subsection (1) or (3) the Revising Authority refuses to state the case the person aggrieved or the Commissioner of Sales Tax as the case may be, may . . apply to the High Court . . " It was argued by Mr. Chagla in the first place that cl. (ii) of Explanation II to section 2(h) of the Act means that the goods should have been manufactured and produced in Uttar Pradesh for sale 518 to the person who had contracted to buy them. In other words, there must be a contract for the sale before manufacture or produce. It was pointed out that in the present case the contract was entered into after the goods were manufactured and exported out of Uttar Pradesh. It was contended that as a matter of construction Explanation II does not cover these sales and the deeming provision will not make the appellants liable to pay sales tax in regard to such sales. We are unable to accept this argument as correct. There is nothing in the language or context of Explanation II to suggest that the goods should be produced or manufactured in Uttar Pradesh after the contracts for sale had been entered into. There is hence no warrant for the argument that for attracting the tax liability the goods must have been manufactured or produced after and not before the agreement for sale. In other words, it is only necessary for the application of Explanation 11 that the goods must have been sold by the person who produced or manufactured them but there is no requirement that he must have manufactured or produced them after the agreement for sale. It is the admitted position in these appeals that the goods were manufactured or produced in Uttar Pradesh by the appellants carrying on business in Uttar Pradesh in those goods and therefore the appellants are liable to pay the tax on their sales irrespective of where and when the contracts for sale were entered into and also irrespective of the fact that the contracts were entered into after the goods had been exported out of Uttar Pradesh. We accordingly hold that the first question was rightly answered by the High Court. We proceed to consider the next, and more important, ques tion arising in these appeals, namely, whether the deeming provision contained in section 2(h) Explanation II(ii) of the Act was ultra vires the Government of India Act, 1935. It was argued by Mr. Chagla that the doctrine of nexus was not applicable to sales tax legislation, because such legislation was concerned with the tax on the transaction of sale, that is to say, a completed sale and to break up a sale into its component parts and to take one or more such parts and to apply the theory to it would mean that the State would be entitled to impose tax on one or more of the ingredients or constituent elements of the transaction of sale which by itself will not amount to a sale. An identical question has been the subject matter of consideration by this Court in The Tata Iron & Steel Co., Ltd. vs The State of Bihar( '). It was held in that case that the provisions of section 4(1) read with section 2(g) second pro viso, of the Bihar Sales Tax Act, 1947 as amended by the Bihar Sales Tax Amendment Act, 1949 were within the legislative competency of the Provincial Legislature of Bihar. The second proviso added by the amending Act did not extend the meaning (1) ; 519 of the expression "sale" so as to include a contract of sale : what it actually did was to lay down certain circumstances in which a sale, although completed elsewhere, was to be deemed to have taken place in Bihar. The circumstances mentioned in the proviso to section 2(g) of the Bihar Sales Tax Act, namely, the presence of the goods in Bihar at the date of the agreement of sale or their production or manufacture there must be held to constitute a sufficient nexus between the taxing Province and the sale wherever that might take place. It is manifest that a transaction of sale is a composite transaction and consists of legal ingredients like agreement of sale, passing of title and delivery of goods but it is not necessary for the purpose of legislative jurisdiction that all legal ingredients of sale or even the transfer of title should have taken place inside the Province. It is sufficient if there is a proper territorial nexus or connection between the taxing authority and the transaction sought to be, taxed. The fact that the goods are manufactured in the Province constitutes a real and pertinent nexus or connection which confers jurisdiction upon the Provincial Legislature to impose the tax. In dealing with the question whether the production or manufacture of goods constituted a sufficient nexus to the subject matter of taxation, section R. Das, C.J., observed as follows : "For the purpose of the present case it is sufficient to state that in a sale of goods the goods must of necessity play an important part, for it is the goods in which, as a result of the sale, the property will pass. In our view the presence of the goods at the date of the agreement for sale in the taxing State or the production or manufacture in that State of goods the property wherein eventually passed as a result of the sale wherever that might have taken place, constituted a sufficient nexus between the taxing State and the sale. In the first case the goods are actually within the State at the date of the agreement for sale and the property in those goods will generally pass within the State when they ' are ascertained by appropriation by the seller with the assent of the purchaser and delivered to the purchaser or his agent. Even if the property in those goods passes outside the State the ultimate sale relates to those very goods. In the second case the goods, wherein the title passes eventually outside the State, are produced or manufactured in Bihar and the sale wherever that takes place is by the same person who produced or manufactured the same in Bihar. The producer or manufacturer gets his sale price in respect of goods which were in Bihar at the date when the important event of agreement for sale was made or which were produced or manufactured in Bihar. These are relevant facts on which the State could well fasten its tax. " 520 The principle of this decision was reiterated by this Court in a subsequent case Bharat Sugar Mills Ltd. vs The State of Bihar( '). In The Tata Iron & Steel Co. Ltd. vs The State of Bihar( '), the course of dealing between the manufacturers and the purchasers was described as follows : "The intending purchaser has to apply for a permit to the Iron and Steel Controller I at Calcutta, who forwards the requisition to the Chief Sales Officer of the assessee working in Calcutta. The Chief Sales Officer thereafter makes a 'works order ' and forwards it to Jamshedpur. The 'works order 'mentions the complete specification of the goods required. After the receipt of the 'works order ' the Jamshedpur factory initiates a 'rolling ' or 'manufacturing ' programme. After the goods are manufactured, the Jamshedpur factory sends, the invoice to the Controller of Accounts who prepares the forwarding notes, and on the basis of these forwarding notes, railway receipts are prepared. The goods are loaded in the wagons at Jamshedpur and despatched to various stations, but the consignee in the railway receipt is the assessee itself and the freight also is paid by the assessee. The railway receipts are sent either to the branch offices of the assessee or to its bankers, and after the purchaser pays the amount of consideration, the railway receipt is delivered to him. These facts are admitted and the correctness of these facts are not disputed by the State of Bihar. " In our opinion, the ratio of this decision applies to the present case and it must be accordingly held that Explanation II to section 2(h) of the Act is not ultra vires as being outside the legislative competence of the State of Uttar Pradesh. Reference was made in he course of argument to the recent decision of this Court in K. section Venkataraman & Co. vs State of Madras(3) in which it was held by the majority judgment that an authority created by a statute cannot question the vires of the statute or any of the provisions thereof under which it functions. The authority must act under the Act and not outside it and if it acts on the basis of a provision of that statute which is ultra vires, to that extent it would be acting outside the Act. In that event, a suit to question the validity of such an order made outside the Act would lie in a civil court. In this context it was pointed out by the majority judgment that the reasoning of the Judicial Committee in Raleigh Investment Co ' (4) case was based upon the as sumption that the question of ultra vires can be canvassed and finally decided through the machinery provided under the Income (1) 11 S.T.C. 793. (3) ; (2) ; (4) 74 I. A. 50. 521 tax Act. The Judicial Committee held that section 67 of the Income tax Act, 1922 was a bar to the maintainability of the suit. The argument on behalf of the assessee in that case was that an assessment was not an assessment "made under the Act" if the assessment gave effect to a provision which was ultra vires the Indian Legislature; that in law such a provision, being a nullity, was nonexistent; and 'that an assessment justifiable in whole or in part by reference to, or by such a provision was more aptly described as an assessment not made under the Act than as an assessment made under the Act. The argument was negatived by the Judicial Committee for the reason that the circumstance that the assessing officer had taken into account an ultra vires provision of the Act was immaterial in determining whether the assessment was "made under the Act". The main reason that persuaded the Judicial Committee to accept the construction they placed on section 67 of the Income tax Act may be stated in their own words as follows: "The absence of such machinery would greatly assist the appellant on the question of construction and, indeed, it may be added that, if there were no such machinery and if the section a effected to preclude the High Court in its ordinary civil jurisdiction from considering a point of ultra vires, there would be a serious question whether the opening part of the section, so far as it de barred the question of ultra vires being debated fell within the competence of the legislature. " It was held by this Court in K. section Venkataraman & Co. vs State of Madras( ') that the assumption underlying the reasoning of the Judicial Committee was not correct and it was not open to the Income tax Officer the Appellate Assistant Commissioner and the Appellate Tribunal to decide any question as to the ultra wires character of any provision of the Income tax Act. In other words, the question of ultra vires could not be deemed to arise out of the Tribunal 's order and if an assessee raises such a question, the Tribunal can only reject it on the ground that it has no jurisdiction to entertain the objection or to decide upon it. The High Court also cannot possibly give any decision on the question of ultra vires, because its jurisdiction under section 66 is a special advisory jurisdiction and its scope is strictly limited. On behalf of the appellants it was suggested that in the present. case the Revising Authority, under the Act cannot, on a similar line of reasoning, refer to the High Court any question regarding the constitutional validity of Explanation 11 of section 2(h) of the Act. It was, however, pointed out on behalf of the respondents that in a number of cases in which proceedings relating to taxation have reached the High Courts by way of a reference, appeal or revision, the question of constitu (1) [1966] 2 S.C.R.229. 522 tional validity of the statute under which the authority functioned was raised, entertained and decided. For instance, in Tata Iron & Steel Co. Ltd. vs State of Bihar(1) a reference was made by the Board of Revenue raising questions as to the validity of certain provisions of the Bihar Sales tax Act and decided by the High Court, and ultimately by this Court. Similarly, in Sardar Baldev, Singh vs C.I.T., Delhi '& Ajmer(2) in an appeal from the order of the Income tax Appellate Tribunal with special leave, the constitutional validity of section 23A of the Indian Income tax Act, 1922 was permitted to be challenged. Again, in Navinchandra Mafatlal vs The C.I.T., Bombay City(3) in a refrence under section 66(1) of the Indian Income tax Act, 1922 a question as to the vires of section 12 B of the Indian Income tax Act was raised before the Income tax Appellate Tribunal and was referred to the Bombay High Court. This Court in appeal from the opinion expressed by the High Court on on the reference also considered that question. Also, in Gannon Dunkerley & Co. vs State of Madras(4), the proceeding reached the High Court of Madras in a revision petition under section 12 B of the Madras General Sales Tax Act, 1939 and the High Court entertained the plea of ultra vires and decided it in favour of the tax payer. It is, however, not necessary in the present case for us to decide the question as to whether the principle laid down in K. section Venkataraman 's case(5) is applicable. The reason is that the apellants did not challenge the jurisdiction of the High Court to examine the question of law regarding the constitutional validity of Explanation 11 to section 2 (h) of the Act. Nor was any such challenge made in the Special Leave Petition to this Court or in the statement of the case. On the contrary, the appellant has itself applied to the Judge, Revisions under section 10 of the Act contending the Explanation II to section 2(h) was ultra vires. It is not therefore open to the appellants to deny the jurisdiction of the Revisional Authority to decide the question or to challenge the jurisdiction of the High Court to examine the question of law referred to it under section I 1 of the Act and to pronounce upon the constitutional validity of the impugned section. In other words, it must be taken that the appellants had voluntarily submitted to the jurisdiction of the Revisional Authority and of the High Court on the matter in issue and having submitted to the jurisdiction and having taken the chance of judgment in its favour, it is not right that the Appellants should take exception to the jurisdiction of the High Court when the judgment has gone against it. We cannot therefore permit the appellants to canvass in this Court for the first time the question whether it was competent for the (1) ; (2) ; (3) [1955] 1 S.C.R. 829. (4) I.L.R. (5) [1966] 2 S.C.R.229. 523 High Court to decide the question of law referred to it under section 11 of the Act. We accordingly reject the, argument of the appellants on this aspect of the case. It was lastly submitted by Mr. Chagla that a reference to the High Court under section II of the Act at the instance of the Commissioner of Sales tax was incompetent as the Commissioner was neither a dealee nor 'a person aggrieved within the meaning of the section as it originally stood and the amendment effected in sub section (3) of section I 1 by U.P. Sales tax Act 8 of 1954 which came into force on April 1, 1954 was not retrospective in character and could not apply to proceedings which had been initiated earlier before Sales tax authorities as well as before the Revising Authority. It was pointed out that the appellate order was made on January 4, 1952 and the revision application was filed before the amending Act of 1954 came into force. It further appears that the revision application was disposed of on July 8, 1957 by the Revising Authority. The contention put forward on behalf of the appellants was that the Commissioner had no power to apply for a reference at the time the appellants had made the application for revision. It was conceded by Mr. Chagla that at the time the Commissioner applied for a reference under section 11 of the Act the amending Act 1954 had already come into force and under the amended section the Commissioner was empowered to ask for a reference. The point taken was that the material date was the date on which the appellants made the application for revision and not the date on which the application was actually decided by the Revising Authority. We are unable to accept this argument as correct. The right to apply for a reference is conferred upon a person aggrieved by an order passed under section 10 and this right exists regardless of when the application for revision was made. Only the existence of an order under section 10 is required for the accrual of the right to make an application for a reference. It was suggested by Mr. Chagla that the Commissioner did not have the right to apply for a reference because the right did not exist when the appellants had made the application for revision. But the right did exist on the date on which the Commissioner applied for a reference and there is nothing in the language or context of section II to suggest that the Commissioner could exercise the right only if it existed on the date on which the application for revision had been made. On behalf of the appellants Mr. Chagla referred to the well recognised rule that a statute should be interpreted, as far as possible, so as to respect vested rights. But this rule has no application to the present case for we do not think that amendment of section 1 1 of the Act by enabling the Commissioner also to ask for a reference of a question to the High Court alters any vested or substan tive right of the assessee. On the contrary, we consider that the L7Sup. C.1168 9 524 amendment is merely a procedural matter and the present case falls within the general principle that the presumption against a retrospective construction has no application to enactments which affect only the procedure and practice of courts. For "it is perfectly settled that if the legislature forms a new procedure, that, instead of proceeding in this form or that, you should proceed in another and a different way, clearly there bygone transactions are to be sued for and enforced according to the new form of procedure. Alterations in the form of procedure are always retrospective, unless there is some good reason or other why they should not be." (Gardner. vs Lucas) (1). We, are accordingly of the opinion that Mr.Chagla is Unable to make good his argument on this aspect of the case. ' For 'these reasons we hold that there is no merit in these appeals which are accordingly dismissed with costs there will be one hearing fee. V.P.S Appeals dismissed. (1) ,603.

For the period 1st April 1948 to 25th January 1950, goods (oil) were manufactured produced in the State of Uttar Pradesh by the appellants who were carrying on business in the State in those goods. Part of the goods were sent to their depots outside the State before any contract of sale in respect of them was made, and thereafter, sold to various parties. those outside sales were also assessed to sales tax under the U.P. sales Tax Act, 1948. The matter was taken to the Appellate Authority and thereafter to the Revising Authority constituted under the Act. Though the revision was filed before last April 1954 when the Amending Act of 1954 came into force, it was disposed of in 1957, in favour of the appellants. On the application of the commissioner of Sales Tax two questions of law were referred to the High Court one of which related to the constitutional validity of Explanation II (ii) to section 2(h) of the Act, according to which, the sale of any goods 'which are produced or manufactured in U.P. by the producer or manufacture thereof, shall, wherever the delivery 'or contract of We is made, be deemed for the purposes of this Act to ,have taken place in U.P ' The High Court decided both questions in favour of the Commissioner. In appeal to this Court it was contended that : (1) For attracting tax liability the Explanation requires that the goods should have been manufactured or produced in U.P. after the contract of sale was entered into , (2) the Explanation was ultra vires as being outside legislative competence, because, Wes tax legislation was concerned with tax on the transaction of a completed sale, and a State could not impose sales tax on the basis that one of the component parts of sale constitutes sufficient nexus between the taxing state and the sale; (3) the Revising Authority could not refer to the High Court and the High Court could not decided on such reference, any question regarding the constitutional validity the Explanation; and (4) the Revising Authority could not make a reference to the High Court under section 11, at the instance of the Commissioner, as the Commissioner had no power to apply when the revision was filed before the Authority but was empowered to do so only by the amending Act of 1954 which had no retrospective operation. HELD : (I) For the application of the Explanation and attracting tax liability, it is only necessary that the goods must have been sold by the person who produced or manufactured them, but there is no requirement that he must have manufactured or produced them after the contract of sale and not before. (518 C] (2)To confer jurisdiction upon the 'State Legislature to impose sales tax, 'it is sufficient if there is a proper territorial nexus or connection 512 513 between the taxing authority and the transaction sought to be taxed. and, the fact that goods were manufactured in the State constitutes a real and pertinent nexus. [519 C] The Tata Iron and Steel Co. Ltd. vs State of Bihar, ; and Bharat Siigar Mills vs The State of Bihar, 11 S.T.C. 793, followed (3) The appellants did not challenge the jurisdiction of the High Court to examine the constitutional validity of the Explanation; nor was any such challenge made in the special leave petition to this Court or in the statement of case. On the contrary, the appellants contended in the revision before the Revising Authority that the Explanation was ultra vires. Therefore, having voluntarily submitted to the jurisdiction of the Revising Authority it is not open to the appellants to challenge the. jurisdiction Of the Revising Authority to refer the question of the constitutional validity of the Explanation to the High Court, or of the High Court to decide it. [522 E G] (4) The Commissioner had the power to apply for a reference on the date he applied for a reference, as the amending Act had by then come into force. There is nothing in the language or in the context of section 1 1 to suggest that he could exercise the right only if it existed on the date on which the revision was filed before the Revising Authority. The rule that a statute should be interpreted, as far as possible, so as to respect vested rights has no application because,, the amendment does not affect any vested right of the appellants, but only deals with a procedural matter. [523 E H] Gardner vs Lucas, , 603, applied.

Writ Petition (Crimi nal) No. 2 16 of 1989 (Under Article 32 of the Constitution of India) Surya Kant and M.C. Mehta for the Petitioner. Anil Dev Singh, Girish Chandra, Ms. A. Subhashini and Dalveer Bhandari for the Respondent. 777 The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J. This is a petition under Article 32 of the Constitution filed by one Madhu Mehta, who is the National Convenor of Hindustani Andolan. This petition seeks a writ of Habeas Corpus or an appropriate direction with regard to one Shri Gyasi Ram, S/o Shri Param aged above 60 years, who, it is claimed, has been waiting decision on his Mercy Petition pending before the President of India for about 8 or 9 years. The said Gyasi Ram was at all relevant time lodged in "DEATH CELL, CENTRAL JAIL" JHANSI having been convicted for an offence punishable under section 302 of Indian Penal Code and sentenced to death by the learned Sessions Judge, Jhansi on October 19, 1978. It appears that Gyasi Ram was convicted and sentenced to death by the learned Sessions Judge, Jhansi on 19th October, 1978 for committing murder, which has been described by the Under Secretary (Judicial), Ministry of Home Affairs, Govt. of India, as the 'cold blooded murder ' of a Government servant, namely, Bhagwan Singh, who was the resident of Mauranipur Tehsil, in District Jhansi, Uttar Pradesh. There then were arrears of land revenue due from Gyasi Ram and also one Mool Chand. For the purpose of realising the said arrears of land revenue, their property was attached by Amin Bhagwan Singh and the same was put to sale by auction. The auction took place on 26th December, 1976 and after the auction while the said Amin was returning along with his Peon Sripat from village Kakwara after delivering the sale certificate to the auction purchaser, they were way laid by Daya Ram (son of Mool Chand) and Gyasi Ram, the convicts involved in this case. In the evidence, it was stated that Daya Ram who was armed with pistol fired at the deceased Amin Bhagwan Singh who fell down from his cycle. While Daya Ram held down Amin Bhagwan Singh, Gyasi Ram, the person about whom this peti tion is concerned, cut Bhagwan Singh 's throat with the sword he was carrying and inflicted other injuries also. After this incident, both Daya Ram and Gyasi Ram, it has been stated, escaped. Gyasi Ram was, however, arrested, tried, convicted and sentenced to death, as mentioned hereinbefore. The death sentence was passed on Gyasi Ram by the learned Sessions Judge on 19th October, 1976. The Allahabad High Court confirmed this death sentenced on 28th February, 1979. This Court dismissed his Criminal Appeal No. 362/79 on 17th March, 1981. Mercy Petition was filed by the wife of the convicted to the President of India on 18th December, 1981. It appears that Mercy Petition has still not been disposed of. Daya Ram had absconded and could not be put on trial along with Gyasi Ram. It appears further that Gyasi Ram 's Mercy Petitions dated 6th October, 778 1981 and 26th November, 1981 were rejected by the Governor of Uttar Pradesh on the 26th November, 1981 and were re ceived in the Ministry of Home Affairs on the 5th December, 1981 for the consideration of the President of India. From the affidavit filed on behalf of the Government of India, it appears that after processing the case, the matter was put up before the President of India on 21st April, 1983 for his orders on the Mercy Petitions and that the President after examining the case file, returned the file on 30th July, 1983 for further consideration. While the Ministry of Home Affairs was processing the case of Gyasi Ram further, the intimation was received from this Court on 13th November, 1984 that Daya Ram, son of Mool Chand had also filed a Special Leave Petition against the judgment date 17th Octo ber, 1984 of the Allahabad High Court by which the sentence of death was confirmed on him. It appears from the order of this Court dated 18th February, 1985 dismissing Daya Ram 's Special Leave Petition that this Daya Ram was the same person who was Gyasi Ram 's partner in the crime as mentioned hereinbefore. Subsequently, .two Mercy Petitions were filed on behalf of Daya Ram which were forwarded for the consider ation of the Governor of Uttar Pradesh in the first instance by the Ministry of Home Affairs dated 9th April, 1984 and 9th August, 1985 respectively. These still remain undisposed of. It has been asserted on behalf of the Government of India in the half yearly return dated 8th August, 1985 submitted by the Government of Uttar Pradesh that it was reported that they had received a Mercy Petition from Daya Ram. Thereafter, in successive half yearly reports, the last of these being dated 16th January, 1989, the State Govern ment had been saying that the Mercy Petition of Daya Ram was still under consideration. It is the version of the Govern ment that in view of the implications of Daya Ram and Gyasi Ram in the same crime, it was considered, it is stated, that the decision on the Mercy Petition of Daya Ram by the Gover nor of Uttar Pradesh would have a direct bearing on the consideration of the Mercy Petition of Gyasi Ram by the President of India. It was, accordingly, felt, so it is .asserted, that it was desirable to await the decision of the Governor of Uttar Pradesh on Daya Ram 's Mercy Petition. But it was only on 18th January, 1989 that by a Wireless Message, the Central Government asked the State Government to let the Ministry of Home Affairs know the decision of the Governor on Daya Ram 's Mercy Petition and to send it immedi ately for consideration of the President of India so that the cases of Gyasi Ram and Daya Ram could be submitted together to the President. But the Government did not move. It is further stated that in reply to the Wireless Message of 18th January, 1989 the State Government through its letter dated 1st February, 1989 intimated that the Mercy Petition of 779 Daya Ram was still under consideration. Thereafter, there was another request to the Chief Secretary by demi official letter of the Ministry of Home Affairs dated 3rd February, 1989 to expedite consideration of Daya Ram 's Mercy Petition. And upon this, it is stated that by a telex message dated 15th March, 1989, the State Government had intimated that the Governor of Uttar Pradesh had rejected the Mercy Peti tion and that formal letter of State Government would fol low. It was stated on behalf of the Government of India that Mercy Petition of Daya Ram was received by the Ministry of Home Affairs on 21st March, 1989 along with the letter. In the affidavit, it is stated that after collecting certain further information from the Supreme Court Registry, the Ministry of Home Affairs "was now ready to process the Mercy Petitions of Gyasi Ram and Daya Ram and submit the same to the President of India for consideration". The deponent was good enough to state in the affidavit that the delay factor would be kept in view while taking a final decision in the case of Gyasi Ram and he was fully aware of the agony of Gyasi Ram and members of his family. It was stated that in view of the reasons stated above, it was not possible to avoid the delay. The learned District and Sessions Judge, Jhansi had, in the meantime, visited the said convict Gyasi Ram in jail on 22nd May, 1988 and had sent a report to the Inspector Gener al of Prisons stating "Gyasi 's mental state is such that he might commit suicide by hanging his head on the iron grill of his cell if a decision on his petition is not taken soon. If he is to be hanged, it should be done without any delay or he should be released". The Inspector General 's Office further sent an official to Delhi to expedite the case. Thereafter, this petition was filed for the condemned pris oner. Gyasi Ram, until the orders of this Court passed in these proceedings on the 3rd May, 1989, was kept in the Death Cell and it is only pursuant to the orders of this Court that the prisoner was allowed to stay in the Ordinary Cell during the day time. The petitioner moved this Court on 11th April, 1989 and the notice was issued returnable on 19th April, 1989. Time was taken to file affidavit and the order of this Court dated 3rd May, 1989 was passed. The matter was adjourned for three months. Affidavits have been filed but his Mercy Petition still remains undisposed of. The question is: what is to be done? This question of delay in these matters has been examined by this Court from time to time, and how far delay in execution of death sentence necessitates the commutation of the death sentence or re lease of the condemned prisoner, has been a matter of some controversy and debate. In T.V. Vatheeswaran vs State of Tamil Nadu, , a bench of two learned Judges considered this 780 aspect. Speaking for this Court, Chinnappa Reddy, J. stated in that decision that Article 21 of the Constitution enjoins that any procedure, which deprives a person of his life or liberty must be just, fair and reasonable. It implies humane conditions of detention, preventive or punitive. 'Procedure established by law ' does not end with the pronouncement of sentence; it includes the carrying out of sentence. Pro longed detention to await the execution of a sentence of death is an unjust, unfair and unreasonable procedure and the only way to undo the wrong is to quash the sentence of death. Reddy, J. was of the view that the sentence of death is one thing; sentence of death followed by lengthy impris onment prior to execution is another. A period of anguish and suffering is an inevitable consequence of sentence of death, but a prolongation of it beyond the time necessary for appeal and consideration of reprieve is not. And it was no answer to say that the man would struggle to stay alive. It was, therefore, found in that case that a delay exceeding two years in the execution of a sentence of death should be considered sufficient to entitle the person under sentence of death to invoke Article 21 and demand the quashing of the sentence of death. This Court did so and substituted the sentence of imprisonment in that case. That decision was rendered on 16th February, 1983. The validity of that deci sion did not last long. On 24th March, 1983, in Sher Singh & Ors. vs The State of Punjab, ; , a bench of three learned Judges of this Court held that the prolonged delay in the execution of a death sentence is unquestionably an important consideration for determining whether the sentence should be allowed to be executed. But no hard and fast rule that 'delay exceeding two years in the execution of a sentence of death should be considered sufficient to entitle the person under sentence of death to invoke Article 21 and demand the quashing of the sentence of death ' can be laid down as has been done in Vatheeswaran 's case (supra). It is not necessary, therefore, to go into the aspect of this matter any more. Chief Justice Chandrachud observed that a self imposed rule should be followed by the executive authority rigorously that every mercy petition should be disposed of within a period of three months from the date on which it was received. Long and interminable delay in the disposal of these petitions, it was observed, are serious hurdles in the dispensation of justice and indeed, such delays tend to shake the confidence of the people in the very system of justice. The learned Chief Justice stated that undoubtedly, the executive has the power, in appropri ate cases, to act under the aforesaid provisions but, all exercise of power is preconditioned by the duty to be fair and quick. Delay defeats justice, it was observed. In this background, we have to consider the reasons given in the affidavit in this case. We have set out the 781 reasons advanced on behalf of the Government. They are self explanatory. These do not, in our opinion, indicate any justifiable ground for keeping the Mercy Petitions of Daya Ram and Gyasi Ram pending for such a long time. Indeed, it is not disputed from the affidavit of the Under Secretary, Ministry of Home Affairs, Government of India that in the half yearly return dated 8th October, 1985 and thereafter in the successive half yearly returns of the Uttar Pradesh Government upto 16th January, 1989 year after year, the Mercy Petitions of Daya Ram remained unattended and undis posed of and consequently the Mercy Petition made to the President of India by Gyasi Ram was also undisposed. The time and the manner in which the Mercy Petition has been dealt with in this case in respect of Gyasi Ram make sad reading and speak of the deplorable lack of speed and promp titude which in these matters should be there. In the mean time, there is no denying the fact that Gyasi Ram has suf fered a great deal of mental pain and agony. His condition has been described by the learned Sessions Judge as indicat ed hereinbefore. Whether death sentence is the appropriate punishment for the crime of murder, cold blooded in certain cases, is another debate. This Court in Bachan Singh vs State of Punjab; , at page 221 of the report, observed as follows: "To sum up, the question whether or not death penalty serves any penological purpose is a difficult, complex and intractable issue. It has evoked strong, divergent views. For the purpose of testing the constitutionality of the impugned provision as to death penalty in Section 302, IPC on the ground of reasonable ness in the light of Articles 19 and 21 of the Constitution,, it is not necessary to express any categorical opinion, one way or the other, as to which of these two antithetical views, held by the Abolitionists and Retentionists, is correct. It is sufficient to say that the very fact that persons of reason, learning and light are rationally and deeply divided in their opinion, on this issue, is a ground among others, for rejecting the petitioners ' argument that retention of death penalty in the impugned provision is totally devoid of reason and purpose. If, notwithstanding the view of Abolitionists to the contrary, a very large segment of people, the world over, including sociologists, legislators, jurists, judges and administrators still firmly believe in the worth and necessity of capital punish ment for the protection of society, if in the perspective of prevailing crime conditions in India, contemporary public 782 opinion channelised through the people 's representatives in Parliament, has repeatedly in the last three decades, rejected all at tempts, including the one made recently, to abolish or specifically restrict the area of death penalty, if death penalty is still a recognised legal sanction for murder or some types of murder in most of the civilised countries in the world, if the framers of the Indian Constitution were fully aware . of the existence of death penalty as punishment for murder, under the Indian Penal Code, if Thirty fifth Report and subsequent reports of the Law Commission suggesting retention of death penalty, and recommending revision of the Criminal Procedure Code and the insertion of the new sections 235(2) and 354(3) in that Code providing for pre sentence hearing and sentencing procedure on conviction for murder and other capital offences were before the Parliament and presumably considered by it when in 1972 73 it look up revision of the Code of 1898 and replaced it by the Code of Criminal Procedure, 1973, it is not possible to hold that the provision of death penalty as an alternative punishment for murder, in section 302, Penal Code is unreasonable and not in the public interest. We would, there fore, conclude that the impugned provision in section 302, violates neither the letter nor the ethos of Article 19. " In that decision, Bhagwati, J. (as the learned Chief Justice then was), dissented. He held that death sentence was bad morally as well as constitutionally. It is no longer necessary in view of the majority judgment to deal with these views in detail. This aspect was examined in several cases and a bench of five learned Judges considered this question again in Smt. Triveniben vs State of Gujarat, ; , where Oza, J. speaking for the majority analysed the trend and observed at p. 688 that it was not necessary to go into the jurisprudential theories of punish ment deterrent or retributive in view of what has been laid down in Bachan Singh 's case (supra) with which learned Judges therein agreed. It is well settled now that undue long delay in execution of the sentence of death would entitle the condemned person to approach this Court or to be approached under Article 32 of the Constitution, but this Court would only examine the nature of delay caused and circumstances that ensued after sentence was finally con firmed by the judicial proces and will have no jurisdiction to reopen the conclusions reached by the Court while finally maintaining the sentence of death. But the court is entitled and indeed obliged to 783 consider the question of inordinate delay in the light of all circumstances of the case to decide whether the execu tion of sentence should be carried out or should be altered into imprisonment for life. No fixed period of delay can be considered to be decisive. It has been emphasised that Article 21 is relevant in all stages. Speedy trial in crimi nal cases though may not be fundamental right, is implicit in the broad sweep and content of Article 21. Speedy trial is part of one 's fundamental right to life and liberty. This principle is no less important for disposal of mercy peti tion. It has been universally recognised that a condemned person has to suffer a degree of mental torture even though there is no physical mistreatment and no primitive torture. See the 'observations of Shetty, J. in Triveniben 's case (supra) at p. 7 13 7 14 of the report, where it has been observed that as between funeral fire and mental worry, it is the latter which is more devastating, for funeral fire burns only the dead body while the mental worry burns the living one. In the instant case, Gyasi Ram has suffered a great deal of mental agony for over eight years. It is not disputed that there has been long delay. We do not find reasons sufficiently commensurate to justify such long delay. The convict has suffered mental agony of living under the shadow of death for long, far too long. He should not suffer that agony any longer. In the aforesaid facts and the circumstances of the case, therefore, we direct that the death sentence should not be carried out and the sentence imposed upon him be altered to imprisonment for life. We order accordingly. This Writ Petition is disposed of with the aforesaid direc tion. Y. Lal Petition dis posed of.

This Petition under Article 32 of the Constitution has been filed by one Madhu Mehta National Convenor of Hindusta ni Andolan and a Social worker praying for a writ of Habeas Corpus or an appropriate direction in regard to one Gyasi Ram s/o Param aged 60 years, who, is stated to be waiting for a decision on his mercy petition by the President of India for about 8 or 9 years. He is stated to be confined in the Death Cell, Central Jail, Jhansi. The Circumstances under which the Writ Petition has been filed may be stated thus: Gyasi Ram was convicted under Section 302, IPC. and sentenced to death by Sessions Judge, Jhansi on October 19, 1978 for committing the Cold blooded murder of one Bhagwan Singh, a Government servant. One Daya Ram was also associat ed with him for the Commission of the said Crime, who had escaped. The death sentence awarded to Gyasi Ram was con firmed both by the High Court as also by this Court. On 18.12.1981, the wife of Gyasi Ram filed a mercy Petition before the President of India which remained undis posed till the filing of this Writ Petition. It appears that mercy petitions presented by Gyasi Ram on 6.10.1981 and 26.11.1981 were rejected by the Governor of the State and were received in the Ministry of Home Affairs on 5.12.1981 for consideration by the President of India. On 21.4.1983, the mercy petitions were put up for orders before the President, and the President returned the file for further consideration. In the meantime, information was received by the Govern ment from the Registry of this Court that Daya Ram s/o Moolchand had also 775 filed a Special Leave Petition against the Judgment dated 17.10.1984 of the Allahabad High Court whereby the death sentence imposed upon him was confirmed. Subsequently two mercy petitions were filed on his behalf which were forward ed to the Governor of the State for consideration in the first instance on 9.4.84 and 9.8.85, which remained undis posed. In the Counter affidavit filed on behalf of the Union of India attempt has been made to explain this long delay occurred in the disposal of the mercy petitions the main reason, amongst others, that is attributed to the long delay in 'disposing of the mercy petitions of Gyasi Ram, is the pendency of the mercy petitions filed by Daya Ram, with the Governor of the State, in regard to which the Union is stated to be in touch and Correspondence with the State Government. It is said that the decision on the mercy Peti tion moved on behalf of Daya Ram has a direct bearing to the decision to be taken on the petitions moved on behalf of Gyasi Ram. It was only on 15.3.89, the Union Government had been informed on telex that the mercy petition of Daya Ram has since been disposed of. The Sessions Judge, Jhansi had visited the said convict in Jail on 22.5.88 and had sent a report to the effect "Gyasi 's mental state is such that he might commit suicide by hanging his head on the iron grill of his ceil if a decision on his mercy petition is not taken soon. " Thereafter the instant Petition has been filed. The question that arose for determination by this Court, in the facts and Circumstances, of the case was whether by reason of the long delay in the execution of the death sentence awarded to Gyasi Ram, he was entitled to any commutation, alteration in his sentence in view of this Court 's Judgments in T.V. Vatheeswaran vs State of Tamil Nadu, and Sher Singh & Ors. vs The State of Punjab, ; Allowing the Writ Petition, this Court, HELD: Undue long delay in execution of the sentence of death would entitle the condemned person to approach this Court or to he approached under Article 32 of the Constitu tion but this Court would only examine the nature of delay caused and circumstances that ensued after the sentence was finally confirmed by the Judicial process and will have no jurisdiction to re open the conclusions reached by the Court while finally maintaining the sentence of death. [782G] The Court is entitled and indeed obliged to consider the question 776 of inordinate delay in the light of all circumstances of the case to decide whether the execution of sentence should he carried out or should he altered into imprisonment for life. No fixed period of delay can he considered to be decisive. [782H 783A] Speedy trial in Criminal cases though may not he a fundamental right, is implicit in the broad sweep and con tent of Article 21. Speedy trial is part of one 's fundamen tal right to life and liberty. [783B] There is no justifiable ground for keeping the mercy petition of Daya Ram and Gyasi Ram pending for such a long time. In the half yearly return dated 8th October, 1985, and thereafter in the successive half yearly returns of the Uttar Pradesh Government upto 16th Jan., 1989, year after year, the Mercy Petitions of Daya Ram were shown to have remained unattended and undisposed and consequently the Mercy Petition made to the President of India by Gyasi Ram was also undisposed. [781B] The time and the manner in which the Mercy Petition has been dealt with in this case in respect of Gyasi Ram make sad reading and speak of the deplorable lack of speed and promptitude which in these matters should he there. In the meantime, there is no denying the fact that Gyasi Ram has suffered a great deal of mental pain and agony. [781C] The Convict has suffered mental agony of living under the shadow of death, for long far too long. He should not suffer that agony any longer. [783D] The Court directed that the death sentence imposed on Gyasi Ram be altered to imprisonment for life. [783E] Bachan Singh vs State of Punjab, and Smt. Triveniben vs State of Gujarat, ; , referred to.

Civil Appeal No.4 of 1958. Appeal by special leave from the decision dated September 19, 1956, of the Labour Appellate Tribunal of India, Calcutta, in Appeal No. Cal. 235/56. B. Sen, section N. Mukherjee and B. N. Ghose, for the appellants. Sukumar Ghose, for the respondents. 46 1959. October 16. The Judgment of the Court was delivered by WANCHOO J. This appeal is directed against the decision of the Labour Appellate Tribunal of India in an industrial matter. The appellant is a partnership concern carrying on business in the manufacture of pharmaceutical products. There was a gratuity scheme in force in the appellant concern for a long time. This scheme was modified by an award of the industrial tribunal dated August 18, 1952 (hereinafter called the Award), and since then the modified scheme has been in force. The financial condition of the appellant deteriorated and consequently, it was compelled to retrench a number of workmen. It, therefore, applied to the Appellate Tribunal under section 22 of the Industrial Disputes (Appellate Tribunal) Act (No. XLVIII of 1950), for permission to retrench 89 workmen. The Appellate Tribunal granted permission for retrenchment of 75 workmen only. Consequently, after obtaining such permission, the appellant retrenched the workmen and paid them compensation as provided in section 25F of the (hereinafter called the Act). Thereupon a dispute was raised by the retrenched workmen through the union in existence in the appellant concern for gratuity on retrenchment under the award. This dispute was referred to the Second Industrial Tribunal, West Bengal, on March 23, 1956, for adjudication in the following terms: " Whether the seventy five retrenched employees (as per attached list) are entitled to gratuity in addition to retrenchment benefits ?" There was another matter included in the reference, but we are not concerned with that in the present appeal. The Industrial Tribunal came to the conclusion that the retrenched workmen were only entitled to relief as provided under section 25F of the Act and were not entitled to any gratuity under the Award over and above the compensation payable to them under the Act. Then followed an appeal by the workmen to the Appellate Tribunal which was allowed. The Appellate Tribunal held that the workmen were entitled to gratuity 47 under the Award, as gratuity benefit therein was not a retrenchment benefit. The appellant then applied for special leave to appeal, which was granted; and that is how the matter has come up before us. The general question has been considered by this Court in The Indian Hume Pipe Company Limited vs Its Workmen (1), judgment which is being delivered today. As the penultimate paragraph in that judgment shows, special considerations may arise on the terms of agreements or awards in particular cases and it is this aspect which falls to be considered in the present appeal. The sole question, therefore, for determination in this appeal is whether the retrenched workmen are entitled under the Award to gratuity provided therein in addition to retrenchment benefit under section 25F of the Act. We may therefore reproduce here the relevant part of the Award, which is in these terms: " The following gratuity scheme shalt be for cases of retrenchment or termination of service by the company for any reason other than misconduct or for cases of resignation with the consent of the management. The gratuity will be paid up to a maximum of 15 months ' basic pay at the following rates. The period of service to qualify for the gratuity shall be one year. Consistently with the modification about the maximum qualifying service, the basic pay for the purpose of gratuity shall be the average of the last 12 months ' basic pay drawn by the workmen concerned. " Then followed the rates; and it was also provided that no gratuity would be payable before the completion of one year of service and that persons discharged for misconduct would not be entitled to any gratuity. Finally, it was provided that in case of death of an employee, his widow or children or other dependents would be granted gratuity on the above basis. It will be seen that the Award is a composite scheme providing for what is termed gratuity therein under three conditions, namely, (1) where there is retrenchment, (ii) where there is termination of service for any (1) 48 reason other than misconduct, and (iii) where there is resignation with the consent of the management. Though the word " gratuity " has been used to cover all these three cases, it is clear that cases of retrench ment as such are also covered by the Award and payment to workmen retrenched has been called "gratuity". The name given to the payment is, however, not material and it is the nature of the payment that has to be looked into. Now, under this Award, it is obvious that this payment on retrenchment though called gratuity is really nothing more nor less than compensation on account of retrenchment. Further it is obvious from the terms of the Award that a retrenched workman could claim gratuity under the Award only oil account of retrenchment and could not claim it under the other two conditions therein. In other words, on a fair and reasonable construction of the Award, what the retrenched workman got is only compensation for retrenchment and not any amount by way of gratuity properly so called. This brings us to the provisions of the Act with respect to retrenchment. " Retrenchment " is defined under section 2 (oo) and means " 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, but does not include (a) voluntary retirement of the workman; or (b) retirement of the workman on reaching the age of superan nuation if the contract of employment between the employer and the workman concerned contains a stipulation in that behalf; or (c) termination of the service of a workman on the ground of continued illhealth ". If this definition is compared with the provisions of the Award, it will be found that the Award provides payment not only for retrenchment as such but also for other termination of service which is specifically excepted from the definition of " retrenchment ". Clauses (a) and (b) of section 2 (oo) are provided in the Award by the words "cases of resignation with the consent of the management ". Similarly, clause (c) of section 2 (oo) is provided for by the words " termination of service by the company for any reason other 49 than misconduct ". It is, therefore, obvious that the Award provides not only for payment on retrenchment but also for payment on termination of service for any reason other than misconduct and on retirement. It is thus a composite scheme; and merely because the payment is called gratuity even where it is payable on account of retrenchment, it cannot be anything other than compensation so far as the part of the Award relating to retrenchment is concerned. Chapter VA, containing sections 25F and 25J, with which we are concerned, was added in the Act by Act 43 of 1953, with effect from October 24, 1953. The reason for this addition was that though there were schemes in force in many concerns for payment to workmen on ,retrenchment, there were many other concerns where no such schemes were in force and the workmen got nothing on retrenchment unless there was an award by a Tribunal. Besides, where schemes were in force or awards were made rates of payment on retrenchment varied. The legislature, therefore, thought it fit by enacting Chapter VA to provide by section 25F a uniform minimum payment to workmen on retrenchment. This payment was called compensation. Section 25F provides that no workman employed in any industry who has been in continuous service for not less than one year under an employer shall be retrenched without payment of compensation which shall be equivalent to fifteen days ' average pay for every completed year of service or any part thereof in excess of six months. Then comes section 25J, sub section (1) whereof provides that the provisions of Chapter VA shall have effect notwithstanding anything inconsistent therewith contained in any other law including standing orders. There is, however, a proviso to sub section (1), which says that nothing contained in the Act shall have effect to derogate from any right which a workman has under any award for the time being in operation or any contract with the employer. This clearly means that if by any award or contract a workman is entitled to something more as retrenchment compensation than is provided by section 25F, the workman will be entitled to get that and the provisions of section 25F will not derogate 7 50 from that right of the workman, i.e., will not reduce the compensation provided under the award or contract to the level provided under section 25F. It is obvious that it was not the intention of the legislature that a work man on retrenchment should get compensation twice,i.e., once under the Act and once under the scheme in force providing for retrenchment compensation, by whatever name the payment might have been called. We cannot agree with the Appellate Tribunal that the payment of gratuity in the event of retrenchment has nothing to do with the compensation payable to a workman under section 25F of the Act. The Appellate Tribunal seems to have been carried away by the word " gratuity " used in the Award and it seems to think that gratuity on retrenchment is something different from compensation on retrenchment. We are of opinion that this is not correct. Whether it is called "gratuity " or ,compensation " it is in substance a payment to the workman on account of retrenchment; and if a scheme like the present specifically provides payment for retrenchment as defined in section 2(00), we see no justification for compelling that payment twice over, once under section 25F and again under the scheme in force in the concern. The matter would be different if the scheme in force in any concern or any award provides gratuity which is different in nature from the retrenchment compensation under section 25F. We also cannot agree with the Appellate Tribunal that this gratuity under the Award in this case is not a retrenchment benefit. We have already analysed the Award above and shown that it deals with three contingencies, and one of them is payment due on retrenchment. On the terms, therefore, of the Award in this case it must be held that gratuity provided therein on retrenchment is nothing more nor less than retrenchment compensation provided under section 25F of the Act, and the workmen are only entitled to one or the other, whichever is more advantageous to them in view of section 25J. In the circumstances we are of opinion that the Industrial Tribunal was right in holding that the scheme of the Award in this case providing for gratuity on retrenchment was exacty the same as compensation 51 provided under section 25F, and as the provisions of section 25F are better than the provisions of the Award in respect of retrenchment the workmen would be entitled to compensation provided under section 25F only, and not both under that section and under the Award. The appellant has already paid the compensation provided under section 25F; the workmen therefore are not entitled to anything more under the Award. We therefore allow the appeal, set aside the decision of the Appellate Tribunal and restore that of the Industrial Tribunal in this matter. As this question has come up to this Court for the first time, we order the parties to bear their own costs. Appeal allowed.

The retrenched workmen of the appellant concern who were paid compensation as provided in s 25F of the , claimed that they were entitled to be paid in addition gratuity under the gratuity scheme in force in the appellant concern as modified by the award of the industrial tribunal dated August 18, 1952. The award provided: " The following gratuity scheme shall be for cases of retrenchment or termination of service by the company for any reason other than misconduct or for cases of resignation with the consent of the management". The Appellate Tribunal took the view that gratuity provided under the award was different from compensation on retrench ment payable to a workman under section 25F of the Act. Held, that on a proper construction of the award the amount payable thereunder to the workmen on retrenchment though called gratuity was really compensation on account of retrenchment as provided under section 25F of the Act, and that the workmen were only entitled to one or the other, whichever was more advantageous to them in view of section 25J of the Act. It was not the intention of the legislature that a workman on retrenchment should get compensation twice, i.e., once under the Act and once again under the scheme in force providing for retrenchment compensation, by whatever name the payment might have been called.

: Criminal Appeal No. 411 of 1976. Appeal by Special Leave from the Judgment and Order dated the 22nd April, 1975 of the Delhi High Court in Crimi nal Revision No. 258 of 1974. Frank Anthony and D. Gobrudhan for the Appellant. R.N. Sachthey `(Not present) for Respondent No. 1. G.S. Vohra, S.K. Gambhir and K.L. Taneja for Respondent No. 2. The Judgment of the Court was delivered by SHINGHAL, J. This appeal of Smt. Parmeshwari Devi, by special leave, arises from the judgment of the Delhi High Court dated April 22, 1975 dismissing her application for revision of the order of the Additional Sessions Judge of Delhi dated August 29, 1974, confirming the order of a Metropolitan Magistrate of Delhi dated August 8, 1974. The facts giving rise to the appeal are quite simple and may be shortly stated. A complaint was filed by respondent N.L. Gupta on behalf of Smt. Patashi Devi for the commission of offences under sections 181, 182, 193, 197, 199, 200, 465, 466 and 471 of the Indian Penal Code by Nand Kishore, Ghanshyam Das and Sanwar Mal. It was alleged that Smt. Patashi Devi had one fifth share in the firm of M/s Gupta Electric and Machinery. Stores of which Smt. Parmeshwari Devi (the present appellant), Smt. Dropadi Devi and Madan Lal Gupta were the other partners. According to the complaint, the business of the firm was mainly looked after by Smt. Parmeshwari Devi 's husband Mohan Lal and accused No. 1 who was here brother. Patashi Devi and two other partners "retired" from the business on April 1, 1968 without settling the accounts. Patashi Devi asked Mohan Lal and accused No. 1 who was her brother Smt. Patashi settling accounts. Accused No. 2 filed an attested copy of a deed of dissolution, alleged to be signed by Smt. Patashi Devi, in the office of the Registrar of Firms on November 14, 1968, along with an intimation of the dissolution of the firm which also purported to be signed by her. The complainant filed an application under section 94 of the Code of Criminal Procedure, 1898, hereinafter. referred to as the Code, for a direction to the accused to file the original deed of dissolution. The accused however stated in the court that they were employees of the firm and the document was not in their possession. The complainant then made another application on .March. 28, 1974 under section 94 with a prayer that Smt. Parmeshwan Devi may be directed to produce the document. The court made an order on March 28, 1974 summoning Smt. Parmeshwan Devi, with the document. She stated in her reply that she did not know anything about the document and that after her husband 's death the com plainant had taken away all the records of the firm. She stated further that she was a 'Pardanashin ' 12 1458SCI/76 162 lady living in Calcutta and need not be summoned in the court. The Metropolitan Magistrate thereupon made order dated August 8, 1974 as follows, "In my view when a person is summoned to attend the Court it is desirable that such summoned person attends and made statement on oath that he is not in the possession of the documents summoned, so that the court may take further steps to secure the production of the documents as envisaged u/s 96 Cr. P.C. Merely sending a reply through an Advt. that the document is not in his possession is not sufficient compliance of the order. The request of the Ld. counsel for Parmeshwari Devi that a commission may be issued for recording the statement of Smt. Parmeshwari Devi cannot be granted as the case is already getting old and issuance of a commission would mean undesirable delay of the case. The counsel for Smt. Parmeshwari Devi Shri C.L. Mala is now requested to intimate Smt. Parmeshwari Devi forthwith to attend this court and produce the document if in her possession on 30th August, 1974. The Ld. counsel for Parmeshwari Devi has also stated that Smt. Parmeshwari Devi is prepared to file an affidavit even to say that she is not in the possession of the documents summoned but in my view this also does not serve the purpose as calling of Smt. Parmeshwari Devi in the court and recording her statement on an oath will give a chance to the court to put her a few questions for satisfying itself regarding the whereabouts of the document in question. " As has been stated, Smt. Parmeshwari Devi 's applications for revision of this order have been dismissed by the Additional Sessions Judge and the High Court and this is how she has come in appeal to this Court. It will be recalled that it was the complainant who made an application under section 94 of the Code stating that as the deed of dissolution of the partnership was essential for the trial of the case, Smt. Parmeshwari Devi may be directed to produce it. Parmeshwari Devi was not a party to the case, and no reason whatsoever was given in the application why the document was likely to be in her possession or power beyond stating that the accused had stated in their reply the earlier application under section 94 that they were employees of the firm and were not in possession of the document, and she was the widow of the late Mohan Lal Gupta. The Magistrate therefore "summoned" her "with the document" by his order dated March 28, 1974 which is not, however, the subject matter of controversy before us. The question is whether the subsequent order of the Magistrate dated August 8, 1974 is according to law by which Smt. Parmeshwari Devi has been directed to attend the court so that if she made a "statement on oath" that she is not in possession of the document, the court may get a chance to "put her a few questions for satisfying itself regarding the whereabouts of the documents ? 163 Chapter VII of the Code deals, inter alia, with process to compel the production of documents. Sub section (1 ) of section 94, which deals with summons to produce any docu ment, merely authorises the court to issue a summons to the person in whose possession or power such document is be lieved to be, requiring him to "attend and produce it, or to produce, it, at the time and place stated in the summons." According to sub section (2) a person required under the section merely to produce a document shall be deemed to have complied with the requisition if he "causes such document . to be produced instead of attending person ally to produce the same". There is nothing in the chapter to provide that the person who appears in the court, in pursuance of its summons under sub section (1) of section 94, thereby becomes a witness and can be examined and cross examined by the court although he has not been cited as a witness in the proceedings. Even if a person produces the document for which a summons has been issued to him, section 139 of the Evidence Act clearly provides that he does not thereby become a witness by the mere fact that he produces it, and he cannot be cross examined unless and .until he is called as a witness. So when Smt. Parmesh wari Devi filed a reply to the application of the complain ant under section 94 of the Code stating that she did not know anything about the deed of dissolution and it was not in her possession, the utmost that the Magistrate could do was to issue a search warrant under sub section (1 ) of section 96 if he had reason to believe that she will not or would not produce the document as required by the summons. It was also permissible for the Magistrate to order a search of Smt. Parmeshwari Devi 's house under section 98 of the COde if it appeared to him that the requirements of that section had been fulfilled. But there is no provision in the Code under which the court could record her statement on oath, on her inability to produce the document, or "put her a few questions for satisfying itself regarding the where abouts of the document. " In the facts and circumstances of the case, no further action is in fact called for against the appellant. The Additional Sessions Judge and the High Court went wrong in taking a contrary view. It has been argued that the order of the Magistrate dated August 8, 1974 was an interlocutory order and the power of revision conferred by sub section (1) of section 397 of the Code of Criminal Procedure, 1974, could not be exercised in relation to it by virtue of sub section (2). The Code does not define an interlocutory order, but it obviously is an intermediate order, made during the prelimi nary stages of an enquiry or trial. The purpose of sub section (2) of section 397 is to keep such an order outside the purview of the power of revision so that the enquiry or trial may proceed without delay. This is not likely to prejudice the aggrieved party for it can always challenge it in due course if the final order goes against it. But it does not follow that if the order is directed against a person who is not a party to the enquiry or trial, and he will have no opportunity to challenge it after a final order is made affecting the parties concerned, he cannot apply for its revision even if it is directed against him and adverse ly affects his rights. 164 A somewhat similar argument came up for consideration before this Court in Mohan Lal Magan Lal Thacker vs State of Gujarat(1). The controversy there centred round the meaning of article 134(1) (c) of the Constitution and the Court examined the meaning of the words "final" and "interlocuto ry". It was held that the meaning "had to be considered separately in relation to the particular purpose for which it is required" to be interpreted. No single test can be applied ' to determine whether an order is final or interloc utory. Then it has been held by this Court in that case as follows ' "An interlocutory order, though not conclusive of the main dispute may be conclusive as to the subordinate matter with which it deals.". It may thus be conclusive with reference to the stage at which it is made, and it may also be conclusive as to a person, who is not a party to the enquiry or trial, against whom it is directed. As has been shown, the order of the Magistrate dated August 8, 1974 was not according to law and it adversely affected the appellant, who was not a party to the enquiry or trial, as it was solely directed against her. As is obvious, she could have no opportunity to challenge it after the making of the final order, and such a belated challenge would have been purposeless for it would have given her no relief. So in so far as the appellant is concerned, the order of the Magistrate could not be said to be an interlocutory order and the revisional courts erred in raising the bar of sub section (2) of section 397 against it. We have gone through Dhola and others vs State(2) and The Central Bank of India Ltd. vs Gokal Chand(3) cited by Mr. Vohra. Dhota 's case related to the grant of ball, and Gokal Chand 's case related to a right of appeal under sec tion 38(1) of the Delhi Rent Control Act against an order made inter partes. They cannot therefore avail the respond ent in this case. For the foregoing reasons, the appeal is allowed and the impugned orders of the High Court dated April 22, 1975 and of the Metropolitan Magistrate dated August 8, 1974 are set aside. V.P.S. Appeal al lowed. (1) ; (2) (1975) Crl. L.J. (1) 1274.

Section 94(1), Cr. P.C., 1898, which deals with summons to produce any document, authorises the court to issue a sum mons to the person in whose, possession or power such docu ment is believed to be, requiring him to attend and produce it. or to produce it at the time and place stated in the summons. According to sub s.(2) a person required merely to produce a document shall be deemed to have complied with the requisition if he causes such document to be produced in stead of attending personally to produce it. In the present case, during a criminal trial, the complain ant flied art application under section 94, for a direction to the accused to produce a document. The accused stated that the document was not in their possession. The complainant then made another application under the section praying that the appellant may be directed to produce the document. The appellant was not a party to the case and no reason .whatso ever was given by the complainant in the application why the document was likely to be in appellant 's possession or power. The Magistrate then passed an order summoning the appellant with the document. The appellant, in her reply, professed ignorance of the document and stated that as she was a "pardanashin" lady she may not be sumoned to court. The Magistrate thereupon passed another order directing her to attend the Court so that if she made a 'statement on oath ' that she was not in possession of the document, the Court may get a chance to put her a few questions for satis fying itself regarding the whereabouts of the document. The appellant 's revision petitions against the order to the District Court and High Court were dismissed. Allowing the appeal to this Court, HELD: (1) There is nothing in the Criminal. Procedure Code providing that the person who appears in Court, in pursuance of a summons under section 94(1), becomes a witness and can be examined and cross examined even though he has not been cited as a witness. Section 139, Evidence Act, also pro vides that if a person produces the document for which a summons has been issued to him, he does not thereby become a witness and that he cannot be cross examined until he is called as a witness. All that the Magistrate could do was to issue search warrants under section 96(1) or section 98 if the, requirements of those sections were satisfied. The Court could not therefore record the appellant 's statement on oath on her inability to produce the document, or put her a few questions for satisfying itself regarding its whereabouts. [163C E] (2) The order, which was thus not according to law adversely affected the appellant who was not a party to the enquiry or trial. Obviously she could have no opportunity to challenge it at the end of the trial, and such belated challenge would also be purposeless. Therefore, the order could not be said to be an interlocutory order and the revisional courts erred in raising the bar of section 397(3), Cr. P.C. 1974. [164C D] Mohan Lal Magan Lal Thacker vs State of Gujarat ; , followed.

ion No. 1 of 1967. Election Petition under Presidential and Vice Presidential Elections Act, 1952. R.V.S. Mani, for the petitioners. M.C. Setalvad, J.M. Mukhi and A.S. Nambiar, for respondent No. 1. E. Udayaratnam, for respondent No. 6. Janardan Sharma, for respondent NO. 10. O.P. Varma, for respondent No. 12. C.C. Patel and M.V. Goswami, for respondent No. 14. Bhimsena Rao and R.A. Gupta, for respondent No. 17. C.K. Daphtary, Attorney General, R.H. Dhebar and S.P. Nayar, for Election Petition of India and Returning Officer. Presidential Election, New Delhi. C.K. Daphtary, Attorney General, N.S. Bindra and R.H. Dhebar, for Attorney General for India. The Judgment of the Court was delivered by Wanchoo, C.J. The presidential election in India was held in May 1967. In that election, 17 candidates were nominated. The result of the election was declared on May 9, 1967, and Dr. Zakir Husain was declared elected. The present petition is against 137 The election of Dr. Zakir Husain as President and has been filed under article 71 of the Constitution read with the Presidential and Vice Presidential Elections Act, No. 31, 1952 (hereinafter referred to as the Act) by 13 members of Parliament. The attack on he validity of the election of Dr. Zakir Husain has been made on two grounds. The first ground is that no oath was taken by Dr. zakir Husain before his nomination as required by article 84 read with article 58 of the Constitution. In consequence he was not eligible for election as President and his election is liable to be set aside. Curiously enough, however, the petitioners pray for a declaration that Sri Subba Rao, who received the second highest number of votes should be declared elected, though he (like Dr. Zakir Husain) also did not take the oath before his nomination. The second ground on which the election of Dr. Zakir Husain s challenged is that the result of the election has been materially affected by reason of undue influence, thereat and in this connection reliance is placed on four matters to which reference will be made later. The petition has been opposed on behalf of Dr. Zakir Husain. It has been urged in reply that no oath was necessary under article 84 read with article 58 of the Constitution, and as such he was eligible to stand. It has also been said on behalf of Dr. Zakir Husain that in case his nomination is invalid on that ground, Sri Subba Rao 's nomination is equally invalid as he also did not take the oath. As to undue influence it is urged that no undue influence was exercised, nor was the result of the election materially affected by any exercise of undue influence. Of the four matters urged in support of the attack on the ground of undue influence, the truth of one of them was not accepted. But it is urged in the alternative that even accepting all that has been said by the petitioners in support of their case of undue influence, the allegations made by the petitioners do not in law amount to. undue influence and therefore there could be no question of the result of the election being materially affected by the exercise of any undue influence. On the pleading of the parties, the following issues were framed : 1. Whether the acceptance of the nomination papers of respondents Nos. 1 to 17 by the Returning Officer was illegal and contrary to law for the reason that Respondents Nos. 1 to 17 did not subscribe to the oath required under Article 84(a) of the Constitution read with Article 58(1)(c) thereof; 2. Whether the result of the election has been materially affected; L10Sup.(CI)/168 10 138 3. Whether the acts and conduct alleged in para 12 of the petition and set out under heads A, B, C and D thereof amount to undue influence within the meaning of section 18(1)(b) of the Act. Whether the allegations made under heads A, B, C and D in para 12 of the petition in so far as they are not admitted arc true; 5. Whether the petition is entitled to any relief, and if so, to what relief. It will be seen that issues Nos. 1 and 3 raise pure questions of law. We made it clear to learned counsel that we would try this petition in two parts. We shall first deal with the two issues of law, and then, if necessary, set the petition down for further hearing on evidence. We also indicated that if issue No. 1 is decided in favour of the petitioners, the election would have to be set aside and then there would be no question of any further hearing on evidence. We further indicated that if issue No. 3 is decided in favour of 1he petitioners, the petition would have to be set down for further hearing on evidence on matters of fact which were in dispute. Lastly, we indicated that if both these issues were decided against the petitioners, the petition would fail and it would not be necessary then to set it down for further hearing on evidence. We propose now to consider the two issues of law. Issue No. 1. In order to decide this issue, we have to see what the Constitution provided, before the Constitution (Sixteenth Amendment) Act, 1963 (hereinafter referred to as the Amendment Act). This Act was passed on October 5. Before that amendment article 58 (1) with which we are concerned in the present petition was in these terms : "(1) No person shall be eligible for election as President ', unless he (a) is a citizen of India, (b) has completed the age of thirty five years, and (c) is qualified for election as a member of the House of the People. " Article 84, which is also relevant read thus "A person shall not be qualified to be chosen to fill a seat in Parliament unless he (a) is a citizen of India; (b) is, in/he case of d seat in the Council of States, not less than thirty years of age and, in the ease 139 of the House of the People, not less than twenty five years of age; (c) possesses such other qualifications as may be prescribed in that behalf by or under any law made by Parliament. " The Representation of the People Act, No. 43 of 1951 provided some qualifications for membership of the House of the People, by section 4. Besides that article 102 of the Constitution provided for certain disqualifications for membership of either House of Parliament and thus indirectly provided for qualifications necessary for being a member of either House of Parliament, and these were (1) that the person should not hold any office of profit under the Government of India or the Government of any State, other than an office declared by Parliament by law not to disqualify its holders; (2) the person should not be of unsound mind and should not have been so declared by a competent court; (3) the person should not be an undischarged insolvent; (4) the person should not have voluntarily acquired the citizenship of a foreign State, or be under any acknowledgement of allegiance or adherence to a foreign State; and (5) the person should not be disqualified by or trader any law made by Parliament. A perusal of these provisions show that there was no requirement of taking an oath at the time of nomination by the presidential candidate in article 58. Nor was there any requirement of taking any oath at the time of nomination by a candidate for election to the House of the People under article 84. There were however provisions in the Constitution for taking an oath after election. The oath of the President and its form was provided in article 60 while the oath for a member of the House of the People after 'election was provided in Schedule III to the Constitution. which a member of Parliament had to take before taking his scat in the House of the People or the Council of States, as the case may be. It is not disputed on behalf of the petitioners that this was the undoubted position in law before the Amendment Act. Then came the Amendment Act, which came into force from October 5, 1963. By that amendment, no change was made in article 58. which stood as it was: a change was however made in Cl. (a) of article 84, which after the Amendment Act read thus: "84. Qualification for membership of Parliament A person shall not be qualified to be chosen to fill a seat in Parliament unless he (a) is a citizen of India, and makes and subscribes before some person authorised in that behalf by the Elec 140 tion Commission an oath or affirmation according to the form set out for the purposes in the Third Schedule;" The Third Schedule was also amended and provided the following form of oath to be taken by a member of Parliament who stands for election to Parliament, namely "I, A. B, having been nominated as a candidate to fill a seat in the Council of States do House of the People swear in the name of God that I will bear true solemnly affirm faith and allegiance to the Constitution of India as by law established and that I will uphold the sovereignty and integrity of India. " At the same time amendment was made in the form of oath to be taken after election, the change being that the words "I will uphold the sovereignty and integrity of India" were added to the already existing oath to be taken by a member of Parliament after his election before he took his seat in the House of the People or the Council of States. The contention on behalf of the petitioners is that because of this change in cl. (a) of article 84 by which it became necessary to take. oath for a person standing for election to either House of Parliament in the form prescribed in the Third SChedule, a person standing for election as President had also to take a similar oath because article 58(1)(c) requires that a person to be eligible for election as President must be qualified for election as a member of the House of the People. It is urged that no one is qualified, after the amendment of cl. (a) of article 84, for election as a member of the House of the People unless he makes and subscribes an oath in the form set out for the purpose in the Third Schedule, and therefore this provision applied to a person standing for election as President, for without such oath he would not be qualified to stand for election to the House of the People. The argument looks attractive prima facie but must in our opinion be rejected. The qualifications for eligibility to stand for election as President are to be found in article 58(1). The main reliance on behalf of the petitioners is placed on cl. (c) of article 58 (1), which lays down that a candidate standing for election as President has to be qualified for election as member of the House of the People. A comparison however of article 58 with article 84 as it stood before amendment shows that el. (a) of article corresponded to cl. (a) of article 58(1), as both provided that the respective candidates should be citizens of India. It was therefore not necessary to go to cI. (a) of article 84 for the purpose of finding out whether a person was eligible for election as President for 141 the purpose of citizenship for that part of cl. (a) of article 84 was specifically provided for in cl. (a) of article 58 (i). Similarly, cl. (b) of article 84 corresponded to cl. (b) of article 58(1), with this difference that it provided a special qualification as to age and therefore one would not have to go to cl. (b) of article 84 for the purpose of finding out the qualification as to age Cl. (c) of article 38 (1) clearly corresponded to cl. (c) of article 84 and reading them together it would follow that a person standing for election as President would require such qualifications as may be prescribed in that behalf by or under any law made by Parliament. Further as cl. (c) of article 58(1) lays down that a person standing for presidential election has to be qualified for membership of the House of the People, article 102 (which lays down disqualifications for members of Parliament) would also be attracted except in so far as there is a special provision contained in article 58(2). Thus cl. (c) of article 58(1) would bring in such qualifications for members of the House of the People as may be prescribed by law by Parliament, as required by article 84(c). It will by its own force bring in article 102 of the Constitution, for that Article lays down certain disqualifications which a presidential candidate must not have for he has to be eligible for election as a member of the House of the People. But it is clear to us that, what is provided in clause (a) and (b) of article 58(1) must be taken from there and we need not travel to cls. (a) and (b) of article 84 in the matter of citizenship and of age of the presidential candidate. Clauses (a) and (b) of article 58(1) having made a specific provision in that behalf in our opinion exclude cls. (a) and (b) of article 84. This exclusion was there before the Amendment Act and we are of opinion that there is nothing in the Amendment Act which makes. any difference to that position. The Sixteenth Amendment was introduced on the recommendation of the Committee on National Integration and Regionalism, which was greatly concerned over the preservation and maintenance of the integrity and sovereignty of the Union. It therefore recommended that every candidate for the membership of a State legislature or Parliament, should pledge himself to uphold the Constitution and to preserve the integrity and sovereignty of the Union and for that forms of oath in the Third Schedule to the Constitution should be suitably amended. It also recommended that every candidate for the membership of Parliament or State Legislature, Union and State Ministers, Members of Parliament and State Legislatures, Judges of the Supreme Court and High Court and the Comptroller and Auditor General of India should take oath to. uphold the sovereignty and integrity of India. In consequence of these recommendations, the sixteenth amendment was made and article 84 (a) as well as article 173 which provides for qualifications for membership of State legislature were suitably 142 amended. Further two new forms were added in the Third Schedule, one relating to oath to be taken by candidates for elector to Parliament and the other relating to oath to be taken by candidates for election to State legislatures. Further other forms of oath in the Third Schedule were also amended by adding therein the words "I will uphold the sovereignty and integrity of India. " Now if the intention of Parliament was that an oath similar in form to the oath to be taken by persons standing for election 10 Parliament had to be taken by persons standing for election to the office of the President there is no reason why a similar amendment was not made in article 58(1)(a). Further if the intention of Parliament was that a presidential candidate should also take an oath before standing for election, the form of oath should also have been prescribed either in the Third Schedule or by amendment of article 60, which provides for oath by a person elected as President before he takes his office. But we find that no change was made either in article 58(1)(a) or in article 60 or in the Third Schedule prescribing the form of oath to be taken by the presidential candidate before he could stand for election. This to our mind is the clearest indication that Parliament did not intend, when making the Amendment Act, that an oath similar to the oath taken by a candidate standing for election to Parliament had to be taken by a candidate standing for election to the office of the President. So there is no reason to import the provision of article 84(a) as it stood after the Amendment Act into article 58(1)(a), which stood unamended. That is one reason why we are of opinion that so far as the election to the office of the President is concerned, the candidate standing for the same has not to take any oath before becoming eligible for election as President. Another reason which leads to the same conclusion is this. We have already indicated that no change was made in article 60 by introducing the form of oath 'to be taken by a person standing for election as President; nor was there any change made m the Third Schedule by the introduction of a form of oath to be taken by a person standing for election as President. In the absence of such a form, we fail to see how an oath would be necessary before a person could stand for election. as President. It is not as if a person standing for election as a member of Parliament can take any oath that he likes or that may be administered to him. The particular oath which a person standing for election as a member of Parliament has to take has been prescribed in the Third Schedule to the Constitution, and it is only that oath which such a person has to take. However no form of oath is prescribed for a person standing for election as President anywhere in the Constitution and in the absence of such form, it is impossible to hold that taking of oath before standing for election as President is a 143 necessary ingredient of eligibility for such election. Further a comparison of the form of oath under article 60 for the President with form III B of the Third Schedule which prescribes the oath for a member of Parliament before he takes his seat shows that even after election the President is not required to swear that he will uphold the sovereignty and integrity of India. The oath he takes is to preserve, protect and defend the Constitution and that he will devote himself to the service and well being of the people of India. Clearly therefore the form of oath introduced by the sixteenth amendment for persons standing for election to Parliament and even after election was not considered suitable for a person standing for election as President or elected as President and that is why we find no form prescribed by Parliament. It has been urged on behalf of the petitioners that, though no form of oath may be prescribed it was open to the Election Commission to prescribe an oath by making changes mutatis mutandis in form III A of the Third Schedule relating to candidates for election to Parliament, and that it was the duty of the Election Commission to appoint somebody to administer the oath in the form to be evolved by him by changing form III A in the Third Schedule mutatis mutandis. Reliance in this connection has been placed on article 324 of the Constitution. We are of opinion that there is no force in this contention. Article 324 inter alia provides for "the superintendence, direction and control of the preparation of the electoral rolls for, and the conduct of, all elections to Parliament and to the Legislature of every State and of elections to the offices of President and Vice President". These words do not in our opinion give any power to the Election Commission to introduce a form of oath to be taken by a candidate for election whether it be for election as President or as a member of Parliament or of a State legislature. If an oath has to be taken by any.such person it has to be provided by law and the form thereof has also to be prescribed by law (we are using the word "law" in its broadest sense, including constitutional provisions) and that is what was done by the Sixteenth Amendment so far as election to Parliament and State legislatures was concerned. But as already observed, Parliament did not think it fit when it brought in the Amendment Act to make any change in article 58 (1) (a) or to introduce a form in article 60 or in, the Third Schedule to the Constitution with reference to candidates standing for election as President. If Parliament did not choose to do so, the Election,Commission cannot do so under the power it has been given under article 324 to superintendent, direct and control the preparation of the electoral rolls and the conduct of all elections. That power is very different from the power to prescribe, an oath before a candidate can stand for election. Such prescription can only be by law as indicated above. The Amendment Act having not made any such provision with 144 respect to those standing for election to the office of the President, it cannot be open to the Election Commission to prescribe a form of oath for such persons by changing form III A mutatis mutandis. Such power cannot be spelt out of article 324 on which reliance has been placed on behalf of the petitioners. It follows therefore that no form whatsoever having been prescribed by Parliament when it made the sixteenth amendment for taking an oath by a presidential candidate, article 84 (a) when it prescribed for taking an oath for candidates for election to the. House of the People has no application to candidates standing for election to Presidentship. So far as these candidates are concerned we must look to article 58 (1) (a) only and need not go to article 84(a). Another reason for coming to the same conclusion is that when article 58 (1) (c) lays down that a person standing for election as President has to be qualified for election as a member of the House of the People it only brings in qualifications other than those= which are specifically mentioned in article 58 (1) itself. Now specific qualifications provided in article 58 (1) are that a candidate for presidential election has to be a citizen of India and he must have completed the age of 35 years. So far as these qualifications are concerned, we need not go anywhere else in order to search for eligibility to contest election as President. For example, the specific qualification in cl. (b) of article 58.(1) is that the person concerned should have completed the age of 35 years. On the other Hand, el. (b) of article 84 lays down the age of 25 years for membership of the House of the People. Therefore when one has to look for the qualification of age one must only go to article 58 (1) (b) for the purpose of presidential election and need not look elsewhere. What is specifically provided for by article 58 (1) must be accepted as it stands and no addition can be made to that provision and no subtraction can be made therefrom. It will be seen therefore that though there may be some qualifications which may be necessary for election to the House of the People, they need not necessarily apply to the election for the office of the President, where there is a specific provision in article 58 (1) itself. We are therefore clearly of opinion that in view of the specific provision in article 58 (a) and (b) we cannot and should not apply clauses (a) and (b) of article 84, to persons standing for election as President. This conclusion is reinforced if we look at article 58 (2) and compare it with article 102 (1) (a). It is clear that when there is a specific provision with respect to an office of profit in article 58 (2); it is that provision which will apply and not article 102 (1) (a). We therefore hold that the acceptance of the nomination papers of respondents 1 to 17 by the Returning Officer was neither illegal nor contrary to law on the ground that these respondents did not subscribe to an oath under article 84 (a) read with article 58(1)(c). The issue is decided against the petitioners. 145 ISSUE No. 3. The petitioners rely on four allegations on the question of undue influence. Before we deal with those allegations it is necessary to understand what undue influence is in the context of the Act. Section 18 (1 ) (b) lays down that if the result of the election has been materially affected by reason of undue influence at the election committed by any person other than the returned candidate or a person acting in connivance with the returned candidate, the election will be liable to be declared void. Sub section (2) of section 18 lays down that undue influence would have the same meaning as in Chapter IX A of the Indian Penal Code. Section 171 C of the Indian Penal Code defines what "undue influence" is in these terms : "(1) Whoever voluntarily interferes or attempts to interfere with the free exercise of any electoral right commits the offence of undue influence at an election. (2) Without prejudice to the generality of the provisions of sub section (1), whoever (a) threatens any candidate or voter, or any person in whom a candidate or voter is interested, with injury of any kind, or (b) induces or attempts to induce a candidate or voter to believe that he or any person in whom he is interested will become or will be rendered an object of Divine displeasure or of spiritual censure, shall be deemed to interfere with the free exercise of the electoral right of such candidate or voter, within the meaning of sub section (1). (3) A declaration of public policy or a promise of public action, or the mere exercise of a legal right without intent to interfere with an electoral right, shall not be deemed to be interference within the meaning of this section. " It will be seen from the above definition that the gist of undue influence at an election consists in voluntary interference or attempt at interference with the free exercise of any electoral right. Any voluntary action which interferes with or attempts to interfere with such free exercise of electoral right would amount to undue influence. But even though the definition in sub section (1) of section 171 C is wide in terms it cannot take in mere canvassing in favour of a candidate at an election. If that were so, it would be impossible to run democratic elections. Further sub section (2)ors. 171 C shows what the nature of undue influence is though of course it does not cut down the generality of the provisions contained in sub section (1). Where any threat is. held out to any candidate or voter or any person in whom a candidate or voter is interested and 146 the threat is of injury of any kind, that would amount to voluntary interference or attempt at interference with the free exercise of electoral right and would be undue influence. Again where a person induces or attempts to induce a candidate, or voter to believe that he or any person in whom he is interested will become or will be rendered an object of Divine displeasure or of spiritual censure, that would also amount to voluntary interference with the free exercise of the electoral right and would be undue influence. What is contained in sub section (2) of section 1771 C is merely illustrative. It is difficult to lay down in general terms where mere canvassing ends and interference or attempt at interference with the free exercise of any electoral right begins. That is a matter to be determined in each case; but there can be No. doubt that if what is done is merely canvassing: it would not be undue influence. As sub section (3) of section 171 C shows, the mere exercise of a legal right without intent to interfere with an electoral right would not be undue influence. We may in this connection refer to section 123(2) of the Representation of the People Act 1951 which also defines "undue influence". The definition there is more or less in the same language as in section 171 C of the Indian Penal Code except that the words "direct or indirect" have been added to indicate the nature of interference. It will be seen that if anything, the definition of "undue influence" in the Representation of the People Act may be wider. It will therefore be useful to refer to cases under the election law to see how election tribunals have looked at the matter while considering the scope of the words "undue influence". The earliest case to which reference may be made is R.B. Surendra Narayan Sinha vs Amulyadhone Roy & 43 Others.(1) There the question raised before the Election Tribunal was whether by issuing a whip on the day of election requesting members to cast their preferences in a particular order, the leader of a Party, who was also the Chief Minister, could be said to have exercised undue influence. The Election Tribunal held that the leader the party was entitled to use his influence as a leader and he could not be deprived of that right because he happened to. be a minister. The issue of a whip of that kind was thus held to be no more than canvassing in. favour of the candidates of the party to which the leader or the Chief Minister belonged. In Linge Gowda vs Shivananjappa(2), the Election Tribunal held that a leader of a political party was entitled to declare to the public the policy of the party and ask the electorate to vote for his party without interfering with any electoral right and such declarations on his part would not amount to undue influence under (1) 1940 Indian Election Cases by Sen and Poddar, Case No. XXX at p. 188. (2) (1953) VI E.L.R. 288. 147 the Representation of the People Act. The fact of that such a leader happened to be a Minister or Chief Minister of the State would make no difference. It was further observed in that case that "the law cannot strike at the root of due influence and under the law of election, only undue influence is forbidden, and the leaders of ' a party will be deemed to exercise their due influence if they ask the electorate to vote for their party candidate, even if they happen to be Ministers." In Amirchand vs Surendra Lal Jha(1) it was held by the Election Tribunal that Ministers were prominent members. of their party and in that capacity they were entitled to address meetings and to tell people what their party had done, and what its programme was and to ask them to vote for the candidate set up by their party, and such action of the Ministers could not be held amount to exercising undue influence. It merely amounted to canvassing by the Ministers in favour of candidates belonging to their party. In Mast Ram vs section Iqbal Singh(2) it was held by the Election Tribunal that the legitimate exercise of influence by a political party or an association should not be confused with "undUe influence". It was further held that "Ministers in their capacity as members of their party are entitled to address meetings and to tell people what their party had done and what its. programme was and to ask them to vote for the candidate set up by their party. Such action of the Ministers cannot be held to amount to 'exercising undue influence ' ". It was further held ' that "if ' a political ' party passes a resolution of support to a candidate and asks its members to vote for him, it will be only a legitimate exercise of influence". In Radhakrishna Shukla vs Tara Chand Maheshwar.(3) the Election Tribunal held that even where Ministers conducting an electioneering campaign promised people, who put their grievances before them during the campaign, generally to redress their grievances, it could not be held that there was exercise of undue influence and their promise merely amounted to a promise of public action, which would not be for the benefit of merely those who voted for candidates of their party but for the public as a whole. The next case to which reference may be made is N. Sankara Reddi vs Yashoda Reddi(4). In that case the Election Tribunal held that "a political party is entitled to issue a manifesto to the ' voters requesting them to vote only for the candidate, set up by the party. The fact that the leader of the Congress Legislature Party who was also the Chief Minister of the State had written (1)(1954) X E L R 57. (2) (1955) XII E.L.R.34 (3)(1956) XII E.L.R. 378. (4) (1957) XIII E.L.R. 34. 148 letters to the members of the Congress Party to support the candidates set up by the party would not amount to undue influence within section 123(2) of the Representation of the People Act. " It was added that it was only where a Minister abused his position for furthering the prospects of the candidate belonging to his party that undue influence might arise; but where a leader merely used his influence in the form of canvassing for candidates of his party there would be no question of undue influence. In Dr. Y.S. Parmar vs Hira Singh Pal(1), the Judicial Commissioner of Himachal Pradesh held that "a leader of a political party is entitled to. declare to the public the policy of the party, and ask the electorate to vote for his party without interfering with any electoral right and such declarations on his part would not amount to undue influence under section 123(2) of the Representation. of the People Act. " In Triloki Singh vs Shivrajwati Nehru(2) it was held by the Election Tribunal that "the right to canvass must be conceded to Ministers as leaders of a political party Just as they have a right to vote and to stand as a candidate, they also have a right to canvass for themselves and for the other candidates set up by their party. " It was further held that though a Minister occupied a high position and commanded great influence, if he only solicited votes and tried to persuade the electors to vote for a candidate of his party and asked them not to vote for any other candidate or to remain neutral and did nothing more, he could not be said to interfere with the free exercise of the electoral right of the voters. The last case to which reference may be made is Jayalakshmi Devamma vs Janardhan Reddi(3). In that case the Andhra Pradesh High Court held that in a democratic set up where candidates contested elections on the basis of their affiliation to a particular political party, there was nothing intrinsically wrong in Ministers canvassing support for their party candidates. It was further held that a Minister merely by reason of his office did not suffer from any disability in this behalf and had the same rights and obligations as any other citizen in the matter of canvassing. It was also held that in their capacity as leaders of their party. they had to explain to the electors the policies and programmes which they sought to enforce and one way of doing that was to ask the electors to vote for those who were pledged to support them and their policies. It will be seen from the above review of the cases relating to undue influence that it has been consistently held in this country that it is open to Ministers to canvass for candidates of their party (1) (1958) 16 E.L.R.4 (2) (1958) XVI.E.L.R 234. (3) (1959) XVII E.L.R. 302. 149 standing for election. Such canvassing does not amount to undue influence but is proper use of the Minister 's right to ask the public to support candidates belonging to the Minister 's party. It is only where a Minister abuses. his position as such and goes beyond merely asking for support for candidates belonging to his party that a question of undue influence may arise. But so long as the Minister only asks the electors to vote for a particular candidate belonging to his party and puts forward before the public the merits of his candidate it cannot be said that by merely making such request to the electorate the Minister. exercises undue influence. The fact that the Minister 's request was addressed in the form of what *is called a whip, is also. immaterial so long as it is clear that there ' is no compulsion on the electorate to vote in the manner indicated. It is in the light of these principles that we have to see whether the four allegations made in this case, assuming them to be correct, make out a case of undue influence. The first allegation is that Shrimati Indira Gandhi, the Prime Minister, addressed a letter to all the electors in which she commended Dr. Zakir Husain and requested the electors to vote for him. A copy of that letter has been produced, and we have been taken through it. In our opinion there is nothing in that letter which may even remotely amount to undue influence. Most of the letter is concerned with commending the qualities of Dr. Zakir Husain and it ends by saying that Dr, Zakir Husain 's long and meritorious service in the cause of national freedom and national re construction after Independence makes him a candidate richly deserving universal support. It has been urged that the Prime Minister is a person of great influence and therefore Shrimati Indira Gandhi should not have written this letter because she was Prime Minister and the mere fact that she wrote this letter commending Dr. Zakir Husain 's election amounted to undue influence i.e. interference with the free exercise of the electoral right. We can not agree with this contention. Shrimati Indira Gandhi is certainly the Prime Minister, but she is also one of the leaders of the party to which Dr. Zakir Husain belonged. As a leader of party she was entitled to ask the electors to vote for Dr. Zakir Husain and the fact that she is the Prime Minister makes no difference to her right to make an appeal of this nature. It is said that the office of the President is a no party office and therefore an appeal of this nature should not have been made and must amount to undue influence. It is true that the office of the President is not a party office meaning thereby that after his election the President is no longer a party man. But that cannot take away the fact that in a democratic system, like ours, persons who stand for election are candidates sponsored by parties for without such support no one would have a chance of being elected, for the. electors are mostly members of one party or other. We have given 150 our earnest consideration to the letter written by Shrimati Indira Gandhi and have come to the conclusion that there is nothing in that letter which can be said to be improper or which can even remotely amount to interference with the free exercise of the electoral rights. It cannot therefore be said that Shrimati Indira Gandhi even though she is the Prime Minister exercised any undue influence in this presidential election. The next allegation is based on two letters written by Sri Ram Subhag Singh. In these letters. Sri Ram Subhag Singh signed himself as Chief Whip and they were addressed to all members of the Congress Party in Parliament. The fact that he signed the letters as Chief Whip is in our opinion of no consequence; even if he had not done so all members of the congress party in Parliament must be knowing that he was the Chief Whip. Just as a Minister has a right to canvass for support so has in our opinion the Chief Whip. In the first letter he pointed out that the Presidential and Vice Presidential elections were to be held on May. 6, 1967. He also pointed out that members of Parliament could vote for the presidential election at New Delhi or at State capitals but they had to come to Delhi in connection with the election of the Vice President. He therefore added that as the two elections were to be held on the same day and voting for the Vice Presidential election could only be at Delhi, every member of the party must be present in Delhi to participate in the elections. He finally requested the members of his party to reach New Delhi by May 4, 1967 and contact him on reaching. New Delhi. This letter merely explains to members of his party the situation with respect to the two elections which were to be held simultaneously and requested the members to come to Delhi, as otherwise they could not vote in the Vice Presidential election. The fact that he asked the members to contact him after reaching Delhi could only be to know who had come and who had not and cannot give rise inference of undue influence from that fact alone. In the second letter, Sri Ram Subhag Singh pointed out that the election to the office of the President would be in accordance with the system of proportional representation by means of single transferable vote. He also invited the attention of the members of the Congress Party in Parliament to r. 19 of the Election Rules. He then went on to say that it was their desire, i.e., of the congress party, that Dr. Zakir Husain should be returned with a thumping majority. He therefore requested the members to place figure '1 ' opposite the name of Dr. Zakir Husain. He also advised them not to mark the second or any other preference in favour of any other candidate. As we read this letter we only find in it a request to members of the party to vote for Dr. Zakir Husain There is nothing in that letter to show that undue influence was being exercised thereby. The two letters read together merely show 151 that Sri Ram Subhag Singh who happened to be the Chief Whip of the congress party was canvassing in favour of Dr. Zakir Husain. It is however urged that his advice to the members not to mark their second or any other preference in favour of any other candidate amounted to interference with the free exercise of their electoral right. We cannot agree with this contention. Sri Ram Subhag Singh asked the members of his party to give the first preference to Dr. Zakir Husain. He also asked them not to mark their second or any other preference, and that is a method to ensure that the candidate to whom the first preference is given should be in a strong position in case there is not a majority in the first counting. In the present election there was apparently a majority in the first counting and therefore the marking of the second or any other preference was immaterial. Apart from it. we see nothing improper in members of the party being told in the course of canvassing that it would be better if they only marked their first preference and no other preference in a system where voting is by single transferable vote. Such a request or advice does not in our opinion interfere with the free exercise of their electoral right for the electors still would be free to do what they desired in spite of the advice. We cannot agree. after going through the two letters written by Sri Ram Subhag Singh that there was any interference with the exercise of the electoral right by the electors. The third allegation is that the Prime Minister had deputed certain senior members of her cabinet to the various States to make doubly certain that Dr. Zakir Husain was elected. In consequence, Shri Fakhruddin Ali Ahmed was sent to Assam, Shri Y. B. Chavan to Bombay, Sri Jagjivan Ram to Bihar, Sri I.K. Gujral to Calcutta and Sri Dinesh Singh to Uttar Pradesh. It is further urged that sending of the Ministers to various States was to influence the members of the electoral college there to vote for Dr. Zakir Husain or attempt to do so. Such action it is urged. would amount to undue influence. We cannot agree with this contention. Assuming that these Ministers were asked to go to various States it was obviously to canvass support for Dr. Zakir Husain so that he may be certain to be elected. Even assuming that these Ministers canvassed support for Dr. Zakir Husain in various State capitals, their action cannot be said to amount to undue influence, for all that they can be said to have done was to canvass support for Dr. Zakir Husain and mere canvassing cannot possibly be; held to be undue influence. There is nothing 'in the allegation in para 12 C of the petition to show that there was any interference with the free exercise of electoral right by the electors. even if these Ministers were sent to. the various State capitals to canvass support for Dr. Zakir Husain ,red did so. Mere canvassing of support for a candidate can never amount to undue 152 influence, and all that para 12C shows is that there was mere. canvassing in favour of Dr. Zakir Husain. No case of undue influence can be made out on the basis of the allegations contained in para 12C of the petition. The last allegation in support of the case of undue influence is that the Chief Minister of Maharashtra had briefed members of the Legislative Assembly on May 5, 1967 on how to vote and whom to vote for. It is, urged that even if the leader of the party in the Maharashtra legislature could indicate the manner of voting the members of his party, he could not indicate to them whom they were to vote for, as that interfered with the free exercise of their electoral right. It is said that such a request amounted to a command from a person in authority, like the Chief Minister, and would be exercise of undue influence. We are of opinion that there is no substance in this contention either. There can possibly be no objection if the leader of the party indicates to the members of his party how to vote in order to ensure that votes may not become invalid for want of knowledge of the procedure of voting. Further if the leader of the party indicates to members of his party for whom to vote he is merely canvassing with his own party men to support the candidate of the party. The mere fact that the person who, canvasses is a Chief Minister does not mean that he is exercising undue influence in the sense of interfering with the free exercise of the electoral right. Once canvassing is permissible, and we have no doubt that in a democratic set up where ' parties put up candidates for election it is not only permissible but necessary, it follows that if a leader of the party asks members of his party for whom. to vote he is merely canvassing. The voting is after all secret and every elector is free to vote for whomsoever he likes, even though he may have been asked by the leader to vote for a particular candidate. There is nothing in para 12 (D) of the petition to suggest that anything improper was. done by the Chief Minister of Maharashtra, which could give rise to an inference that t.he free exercise of the electoral right was being interfered with. On a careful consideration of paragraphs 12(A) to 12(D) of the petition we have come to the conclusion that there is nothing in those paragraphs which even remotely suggests that there was any undue influence exercised by anybody in connection with the Presidential election of May 6, 1967. Our finding on the issue in question is that the acts. and conduct alleged in paragraph 12 of the petition and set out in sub paras A to D thereof do not amount to undue influence within the meaning of section 18(1 )(b) of the Act. The issue is decided against the petitioners. As we have indicated already if both these issues of law are decided against the petitioners as we do decide them the petition 153 must fail and it is unnecessary to set it down for hearing on evidence with respect to other issues. The petition is hereby dismissed but in the circumstances of the case we pass no order as to costs. Y.P. Petition dismissed.

As a result of the Presidential election held in May, 1967, respondent No. 1 was declared elected. The petitioners challenged the election on the following two grounds, namely (i) article 58(1)(c) required that a person to be eligible for election as President must be qualified for election as a member of the House of People. After the Sixteenth Amendment, under article 84(a), it was necessary for a person standing for election to either House of Parliament to take an oath in the form prescribed in the Third Schedule. Therefore, a person standing for election as President had also to take a similar oath; since the respondent had not taken the oath he was not eligible for election. (ii) As (a) the Prime Minister addressed a letter to all electors commending respondent No. 1 and requesting them to vote for him; '(b) the, Prime. Minister deputed Ministers 1 various State Capitals to make doubly certain that respondent No. 1 was elected; (c) a Minister who was also the chief whip of the Congress party wrote two letters to all members of his party in Parliament and signed them as Chief Whip, explaining the situation with respect to the election and requesting them to come to Delhi and contact him and also requesting them to give the first preference to respondent No. 1 and not to mark the second or any other preference in favour of the candidates; and (d) the Chief Minister of Maharashtra had briefed members of the Legislative Assembly as to how and for whom to vote, the result of the election has materially been affected by undue influence. HELD: The petition must be dismissed. (i) The candidate standing for election to the office of the President had not to take any oath before becoming eligible for election as President. A comparison of article 58 with article 84 as it stood before the amendment shows that el. (a) of article 84, corresponded to el. (a) of article 58(1), as both provided that the respective candidates should be citizens of India. It was therefore, not necessary to go to cl. (a) of article 84 for the purpose of finding out whether a person woks eligible for election as President for the purpose of citizenship for that part of el. (a) of article 84 was specifically provided for in el. (a) of article 58(1). Similarly, el. (b) of article 84 corresponded to el. (b) of article 58(1). with this difference that it provided a special qualification as to age and therefore 134 one would not have to go to cl. (b) of article 84 for the purpose of finding out the qualification as to age. Clause (c) of article 58(1) clearly corresponded to el. (c) of article 84 and reading them together it would follow that a person standing for election as President would require such qualifications as may be prescribed in that behalf by or under any law made by Parliament. Further as el. (c) of article 58(1) lays down that a person standing for Presidential election has to be qualified for membership of the House of the People, article 102 (which lays down disqualifications for members of Parliament) would also be attracted except in so far as there is a special provision contained in article 58(2), Thus cI. (c) or article 58(1) would bring in such qualifications for members of the House of the People as may as prescribed by law by Parliament, as required by article 84(c). It will by its own force bring in article 102 of the Constitution, for that Article lays down certain disqualifications which a presidential candidate must not have for he has to be eligible for election as a member of the House of the People. But it clear that what is provided in cl. (a) and (b) of article 58(1) must be taken from there and it is not necessary travel to cls. (a) and (b) of article 84 in the matter of citizenship and of age of the presidential candidate. Clauses (a)and (b) of article 58(1) having made a specific provision in that behalf exclude cls. (a) and (b) of article 84. There is nothing in the Amendment Act which makes any difference to that position, for. if the intention of Parliament was that an oath similar in form to the oath for membership of Parliament had to be taken by persons standing for election to the office of the President there is no reason why a similar amendment was not made in article 58(1) (a) and why the form: of oath not also prescribed either in the Third Schedule or by amendment of article 60. which provides for oath by a person elected as President before he takes his office. [140H 141E; 142B C] The particular oath which a person standing for election as a member of Parliament has to take has been prescribed in the Third Schedule to the Constitution, and it is only that oath which such a person has to take. However, no form of oath is prescribed for a person standing for election as President anywhere in the Constitution and in the absence of such form. it is impossible to hold that taking of oath before standing for election as President is a necessary ingredient of eligibility for such election. The Amendment Act having not made any such provision with respect to those standing for election to the office of the President, it cannot be open to the Election Commission to prescribe a form of oath for such persons by changing form III A mutatis mutandis. Such power cannot be spelt out of article 324 under which the Election Commission is conferred power to superintend direct, and control the preparation of the Electoral Rolls and the conduct of elections. [143G 144B] Further. a comparison of the form of oath under article 60 for the President with form III B of the Third Schedule which prescribes the oath for a member of Parliament before he takes his seat. shows that even after election the President is not required to swear that he will uphold the sovereignty and integrity of India. The oath he takes is to preserve. protect and! defend the Constitution and that he will devote himself to the service and well being of the people of India. the form of oath introduced by the sixteenth amendment for persons standing for election to Parliament and even after election was not considered suitable for a person standing for election as President or elected as President and that is why no form is prescribed by Parliament. [143A C] (ii) Any voluntary action which interferes with or attempts to interfere with the free exercise of electoral right would amount to undue 135 influence. It cannot take in mere canvassing in favour of a candidate at an election. If that were so, it would be impossible to run democratic elections. It is difficult to lay down in general terms where mere canvassing ends and interference or attempt at interference to with the tree exercise of any electoral right begins. That is a matter to be determined in each case; but there can be no doubt that if what is done is merely canvassing it would not be undue influence. [145G 146C] (a) There was nothing in the fetter of the Prime Minister which even remotely amounted to undue influence. As a leader of the party she was entitled to ask the electors to vote for respondent No. 1 and the fact that she is the Prime Minister makes no difference to her right make an appeal of this nature. It is. said that the office of the President is a no party office and therefore an appeal of this nature should not have been made and must amount to undue influence. It is true that the office of the President is not a party office meaning thereby that after his election the President is no longer a party man. But that cannot take away the fact that in a democratic system, persons who stand for election are candidates sponsored by parties for without such support no fine would have a chance of being elected. for the electors are mostly members of one party or other. [149G 1SOB] (b) Mere canvassing of support for a candidate can never amount to undue influence. There was no interference with the free exercise of electoral right by the electors, even if the Ministers were sent to the various Sate capitals to canvass support for respondent, No 1. [148H] (c) The fact that the Minister signed the letters as Chief Whip was of no consequence; even if he had not done so all members of the Congress party in Parliament must be knowing that he was the Chief Whip. Just as a Minister has a right to canvass for support, so has the Chief Whip. The fact that he asked the members to contact him after reaching Delhi could only be to know who had come and who had not and could not give rise to any inference of undue influence from the fact alone. There was nothing in the second letter also to show that undue influence was being exercised thereby. The two letters read together merely show that the Chief Whip of the Congress party was canvassing in favour of respondent No. 1. There was nothing improper in members of the party being told in the course of canvassing that it would be better if they only marked their first preference and no other preference in a system where voting is by single transferable vote. Such a request of advice does not interfere with the free exercise of their electoral for the electors still would be free to do what they desired inspite of the advice. [150B 151D] (d) There can be no objection if the leader of the party indicates to the members of his party how to vote in order to ensure that votes may not become invalid for, want of knowledge of the procedure of voting. Further if the leader of the party indicates to members of his party for whom to vote he is merely canvassing with his own party men to support the candidate of the party. The mere fact that the person who canvasses is a Chief Minister does not mean that he is exercising undue influence in the sense of interfering with the free exercise of the electoral right. Once canvassing is permissible, and in a democratic set up where parties put up candidates for election it is not only permissible but necessary. it follows that if a leader of the party asks members of his party for whom to vote he is merely canvassing. The voting is after all secret and every elector is free to vote for whomsoever he likes, even though he may have been asked by the leader to vote for a particular candidate. [152C F] 136 It is open to Ministers to canvass for candidates of their party standing for election. Such canvassing does not amount to undue influence but is proper use of the Minister 's right to ask the public to support candidates belonging to the Minister 's party. It is only where a Minister abuses his position as such and goes beyond merely asking for support for candidates belonging to his party that a question of undue influence may arise. But so long as the Minister only asks the electors to vote for a particular candidate belonging to his party and puts forward before the public the merit of his candidate it cannot be said that by merely making such request to the electorate the Minister exercises undue influence. The fact that the Minister 's request was addressed in the form of what it called a whip is also immaterial so long as it is clear that there is no compulsion on the electorate to vote in the manner indicated [ 149A C] R.B. Surendra Narayan Sinha vs Amulyadhone Ray & 43 Ors. 1940 Indian Election Cases by Sen and Poddar, Case No. XXX at p. 188. Linge Gowda vs Shivananjappa. (1953) VI E.L.R. 288, Amirchand vs Surendra Lal Jha, (1954) X E.L.R. 57, Mast Ram vs section lqbal Singh, (1955) XII E.L.R. 34, Radhakrishna Shukla vs Tara Chand Maheshwar, (1956) XII E.L.R. 378, N. Sankara Reddi vs Yashoda Reddi (1957) XIII E.L.R. 34, Dr. Y.S. Parmar vs Hira Singh Pal. (1958) XVI E.L.R. 45. Triloki Singh vs Shtvrajwati Nehru, (1958) XVI E.L.R. 234 and Jayalakshmi Devamma vs Janardhan Reddi, (1959) XVII E.L.R. 302, referred to

Criminal Appeal No. 461 of 1987. From the Judgment and Order dated 20.5.1987 of the Delhi High Court in Criminal Revision No. 105 of 1987. Ashok Desai, Additional Solicitor General, P.K. Chaube, G. Venkatesh Rao, Ms. A. Subhashini and P.K. Choudhary for the Appellant. R.K. Garg, J.P. Pathak and P.H. Parekh for the Respondent. The Judgment of the CoUrt was delivered by section RATNAVEL PANDIAN, J. The State represented by C.B.I., New Delhi has directed this appeal against the Order dated 20.5.1987 of the High Court of Delhi passed in Criminal Revision No. 105 of 1987 dismissing the petition of the petitioner in limine. The relevant facts which have given rise to this appeal can be stated thus: The respondent, S.J. Choudhary is taking his trial before the Additional Sessions Judge, New Delhi for the offences under Section 302 I.P.C. and Sections 3 and 4 of the Explosive Substances Act in Sessions Case No. 36 of 1983. According to the prosecution that on 2.10.1982 at about 5.45 p.m., the deceased in this case, namely, Krishan Sikand received a parcel addressed to him. The deceased being unaware of the camouflaged contents opened the parcel which on opening exploded resulting in the instantaneous death of the deceased. Relating to this incident, a case was registered at Hazrat Nizamuddin Police Station as FIR No. 305 dated 2.10.1982. The investigation was taken up by the police of the said police station. Thereafter, the investi gation was transferred to Crime Branch, Delhi on the very next day i.e. on 3.10.1982 and finally in March 1983 to the Central Bureau of Investigation where it was registered as case RC 3/83 CBI/DSPE/CIUI(P)/New Delhi. The respondent/accused was arrested by the C.B.I. on 1.8.83. Under the orders of Court, the 126 custody of the respondent was handed over to the CBI for sometime. After completing the investigator the CBI laid the charge sheet on 28.10.1983. Presently, the case is pending trial before the Addi tional Sessions Judge, Delhi. While the petitioner in the SLP, filed in August, 1987 would state that as many as 63 prosecution witnesses have been examined and PW 64 is in the witness box, the respondent in his affidavit dated 21.2. 1990 has stated that so far 67 witnesses have been examined. Be that as it may, according to the prosecution the cover of the device parcel containing camouflaged live hand grenade was found pasted with a typewritten name and address of the deceased, Krishan Sikand on a white slip and the explosion of the hand grenade resulted in the shattering of the materials into pieces inclusive of the said slip. The police collected from the scene of incident the typewritten pieces of the paper in which the grenade had been wrapped amongst the debris and remanents which were sent to the Central Forensic Science Laboratory for examination and expert opinion. In the laboratory, the parcel sent by the Investigating Agency for examination was opened by PW 61, Dr. G.R. Prasad, Head of the Ballistic Division on 12.10.1982. He while examining the contents of the parcel succeeded in partially reconstructing the typewritten name and address of the deceased from the shattered pieces of the slip. It is the version of the prosecution that on 5.8.83, while the respondent was in the custody of the CBI pursuant to the order of the Court, he made a voluntary confession which led to the discovery of the fact that the address on the aforesaid parcel was got typed by him from a commercial college namely, Janta Commercial College at I 43, Lajpat Nagar II, New Delhi. The Investigating Agency took the specimen of typing prints from the 13 English typewriters found in the said college. The re constructed typed address and the specimen type prints were examined by Sh. S.K. Gupta. Head of Document Division in the Central Forensic Science Laboratory. Mr. S.K. Gupta gave his opinion that on balance of similarities and dissimilarities, it is a asona ble to conclude that the typescripts found on the slip pasted on the wrapper of the parcel collected from the scene have been typed from one of the machines of the Janta Com mercial College as both the impressions are identical. Now, the prosecution wants to examine Mr. S.K. Gupta as an expert to prove the above fact. This request of the prosecution to examine Mr. S.K. Gupta was stoutly resisted by the learned counsel of the accused on the ground that the evidence of such typewriting expert is 127 inadmissible under Section 45 of the Indian Evidence Act as it does not fall within its ambit. It seems from the. im pugned order that several decisions were cited at the Bar by both the parties but the Trial Court on the strength of certain observations made by this Court in Hanumant & Anr. vs State of Madhya Pradesh, [1952] SCR 1091 dismissed the prayer of the prosecution holding thus: "It shows that Hon 'ble Judges of the Supreme Court meant that such evidence cannot be brought on record and be evaluated by the Court. It is well settled that if their Lordships of the Supreme Court clearly intended to declare the law on a particular point then even though the observa tions may be 'obiter dictum ', they are nevertheless binding upon the High Court and subordinate Courts. Under these circumstances, I uphold the objections raised by the counsel of the accused and order that Sh. S.K. Gupta, who is sought to be examined as an expert on type written documents cannot be examined to give evidence on this point. " On being dissatisfied with the above order of the High Court, this criminal appeal is filed by the State. For proper understanding and appreciation of the ques tion involved in this case, the relevant portion of the observation of this Court in Hanurnant 's case on the strength of which the High Court has passed the impugned order may be reproduced hereunder: "Next it was argued that the letter was not typed on the office typewriter that was in use in those days, viz. article B and that it had been typed on the typewriter article A which did not reach Nagpur till the end of 1946. On this point evidence of certain experts was led. The High Court rightly held that opinions of such experts were not admissible under the Indian Evidence Act as they did not fail within the ambit of Section 45 of the Act. This view of the High Court was not contested before us. It is curious that the learned Judge in the High Court, though he held that the evidence of the experts was inadmissible, proceeded nevertheless to discuss it and placed some reliance on it." Though a lengthy argument was advanced by the respective 128 counsel for both the parties by citing a series of decisions in support of their respective contentions, we are not adverting to all those contentions except to the relevant one, as we are of the view that the matter requires an in depth analysis and examination by a larger Bench in view of the observation in Hanumant 's case. The learned Solicitor General has submitted that the words Science or Art ' occurring in Section 45 of the Indian Evidence Act should be given wide and liberal construction so as to cover all ranches of specialised knowledge to the formation of opinion, that by the march of science, the evidence of expert regarding type script has assumed impor tance, that such expert evidence on type script needs to be considered at par with the evidence of other experts brought within the ambit of Section 45 of the Evidence Act, and therefore, the expert opinion of Mr. S.K. Gupta cannot be shut out as being inadmissible. According to him, the brief observation of this Court in Hanumant 's case (supra) cannot be construed as ratio decidendi binding on this Court or even obiter dictum but it is only a passing observation as there was no issue in that case as to whether the expert 's testimony on type script was admissible or not under the Evidence Act and consequently there was no discussion of law on that subject and in fact, there was no contest on the question of the admissibility of the evidence of an expert regarding typed documents. He would reiterate that the judgment in Hanumant 's case has not declared the law in regard to the admissibility of the testimony of an expert in regard to typescript and that the learned Judges have pro nounced no independent opinion upon the same. In support of this submission, firstly he drew our attention to the fol lowing passage appearing in Woodrofee and Ameerali 's Law of Evidence, which reads thus: "The Supreme Court has held in Hanumant v, State of M.P. that the opinion of an expert that a particular letter was typed on a particular typewriting machine does not fall within the ambit of section 45 of the Evidence Act and it is not admissible. It is respectfully submitted it may require consideration in the light of the modern knowledge indicated to some extent by the research materials which show that detection of forgeries of typewritten documents has become an integral part of the science of questioned documents. " Secondly, he brought to the notice of this Court the opinion expressed by the Law Commission in its 69th Report (Vol. IV) in Chap 129 ter 17 captioned 'Opinion of Expert ' wherein the Law Commis sion after referring to the decision in Hanumant 's case stated thus: "17.26 One could regard these observations as not laying down a definite view on the subject. But the words "rightly held" could be construed as approving the negative view. 17.31. We, therefore, recommend that Section 45 should be amended so as to include identity of typewriting". According to the learned Solicitor General, as viewed by Woodrofee and Arneerali in 'Law of Evidence ' and by the Law Commission in its 69th Report, the word 'science ' occurring in Section 45 should be held comprehensive enough to include the opinion of an expert in regard to the transcript as well. But the acceptability or otherwise of an expert testi mony on typewritten documents would depend upon the satis faction of the Court about the specialised skill and experi ence of that expert on that subject. Finally, he requested that this Court notwithstanding the passing observation in Hanurnant 's case be pleased to examine in detail the ques tion of the admissibility or otherwise of an expert testimo ny on type script and lay down the law on this subject. Mr. R.K. Garg, senior counsel appearing on behalf of the respondent vehemently urged that the observation in Hanu mant 's case cannot be discarded or brushed aside as a pass ing observation and if that argument is to be accepted by treating the view expressed by this Court as gratis dicta and to declare law on the subject ignoring the view in Hanumant 's case it would be tantamount to saying that the view expressed by the learned three Judges in that case as having been wrongly held and therefore, the argument of the learned Solicitor General has to be discountenanced. The proceeding of the trial which has already been considerably delayed on this issue which is only academic so far as this case is concerned and so the respondent should not be sub jected to immeasurable hardship. According to him, the High Court has passed this impugned order only on the strength of the observation in Hanumant 's case and rejected the plea of the prosecution to permit it to examine Sh. S.K. Gupta as an expert and, therefore, the impugned order can neither said to be incorrect nor it calls for any interference. He adds that this Court should not dissent lightly from the previous decision of this Court merely on the ground that the con trary view appears to be preferable and that the power of review must be exercised with due care and caution and that too only for advancing the public well being in the light of the surrounding cir 130 cumstances. In support of this submission, he places reli ance in The Bengal Immunity Company Ltd. vs The State of Bihar & Ors., at 630. He continues to state that this Court should exercise its discretionary jurisdic tion under Article 136 of the Constitution of India only in cases where there is violation of the principles of natural justice, causing substantial and grave injustice to parties or which raise important principles of law requiring eluci dation and final decision of this Court or which disclose such of the exceptional or special circumstances which merit the consideration of this Court on a particular issue. He cites the decision of this Court in Bengal Chemical & Phar maceutical Works Ltd. Calcutta vs Their Workmen, ; at 140 in support of his later submission. Finally, he states that the facts and circumstances of the case on hand do not warrant examination of the request made by the appellant. After bestowing our anxious consideration on the ques tion of law involved, we without expressing any view at this stage on the observation made in Hanumant 's case feel that the question with regard to the admissibility of the opinion of an expert on type script should be examined in detail and decided. Needless to say that by the march of time, there is rapid development in the field of forensic science and, therefore, it has become imperative to match the said march of modern vistas of scientific knowledge, the question whether the opinion of an expert in regard to type script would fall within the ambit of Section 45 of the Evidence Act has to be decided. In fact, when the SLP in this matter came up for admission, the Bench considering the importance of the question involved made the following order: "Special leave granted. Since the question involved is important and is involved in many cases, it is desirable that it should be heard as early as possible and the matter be mentioned to Hon 'ble the Chief Justice for appropriate directions. " Taking the overall view of this matter, we feel that this important question of law involved in this case is to be examined in detail and decided by a larger Bench as the judgment in Hanumant 's case was rendered by three learned Judges of this Court. Since the matter is urgent, it may be posted for hearing at an earliest point of time so that the trial of the case may not be further delayed.

A device parcel containing camouflaged live hand grenade exploded in the hands of the addressee resulting in his instantaneous death. The police collected from the scene of incident the typewritten pieces of the paper in which the grenade had been wrapped and sent them to the Central Foren sic Science Laboratory where they succeeded in partially reconstructing the name and address of the deceased. These were then examined by the Head of the Document Division in the said Laboratory with reference to the specimen of typing prints taken from the commercial college where they were alleged to have been got typed. He opined that on balance of similarities and dissimilarities it was reasonable to con clude that the type scripts found on the slip pasted on the wrapper of the parcel had been typed from one, of the ma chines of the college as both the impressions were identi cal. At the trial the prosecution wanted to examine the said expert to prove the fact. This was resisted by the defence on the ground that the evidence of such typewriting expert was inadmissible under section 45 of the Indian Evidence Act as it did not fall within its ambit. The trial court relying on the observations to that effect in Hanumant & Anr. vs State of Madhya Pradesh, [1952] SCR 1091, dismissed the prayer. The High Court dismissed the State 's revision petition in limine. In the appeal by the State it was submitted that the word 'science ' occurring in section 45 of the Evidence Act should be held comprehensive enough to include the opinion of an expert in regard to transcript as well in view of the march of science. Referring the matter to the larger Bench, the Court, HELD: By the march of time, there is rapid development in the 125 field of forensic science and it has become imperative to match the said march of modern vistas of scientific knowl edge. The question in the instant case whether the opinion of an expert in regard to type script would fall within the ambit of section 45 of the Evidence Act should, therefore, be examined in detail and decided by a Large Bench as the judgment in Hanumant 's case was rendered by a Bench of three Judges. [130D, G]

Appeal No. 315/1958. Appeal by special leave from the judgment and order dated February 5, 1957, of the Bombay High Court in I.T.R. No. 34/1956. 372 R. J. Kolah, and I. N. Shorff, for the appellant. A. N. Kripal and D. Gupta, for the respondent. January 6. The Judgment of the court was delivered by KAPUR, J. This is ail appeal against the judgment and order of the High Court of Judicature at Bombay in Income tax Reference No. 34 of 1956. The appellant is a non resident Bank incorporated under the National Bank Act of the United States of America with its head office in that country and with branches all over the world including some branches in India. It was assessed under the Business Profits Tax Act (Act XXI of 1947), hereinafter termed the " Act ", in respect of the chargeable accounting periods: 1 4 1946 to 24 12 1946, 25 12 1946 to 24 12 1947, 25 12 1947 to 23 12 1948, and 24 12 1948 to 31 3 1949 and the sole question for decision in this appeal is the meaning of the word " reserves " in R. 2(1) of Schedule 2 of the Act and how the capital of the appellant during the above mentioned chargeable accounting periods has to be computed for the purpose of allowing the " abatement " under the Act. The appellant contended that in computing the amount for the purpose of abatement it was entitled to include what is termed in the United States " Undivided Profits ", the contention being that this item falls within the word " reserves" in R. 2(1) of Schedule 11 of the Act which provides: "Where the company is one to which rule 3 of Schedule I applies, its capital shall be the sum of the amounts of its paid up share capital and of its reserves in so far as they have not been allowed in computing the profits of the company for the purpose of the Indian Income tax Act, 1922 (XI of 1922), diminished by the cost to it of its investments or other property the income from which is not includable in the profits, so far as that cost exceeds any debt for money borrowed by it. " 373 It is not necessary to give the details of all the years; but it will be sufficient as an illustration if we: were to confine ourselves to the " Undivided Profits " in the Balance Sheet as on December 31, 1946, wherein the relevant entries were as follows : Capital . $ 77,500,000 00 Surplus . $ 152,500,000.00 Undivided Profit . $ 29,534,614.21 The Report of the Directors dated January 14, 1947, was as follows: " At the year end, Capital of the Bank remains at $ 77,500,000 surplus has increased to $ 152,500,000 by the transfer of Rs. 10,000,000 from Undivided Profits. After this transfer, Undivided Profits are $ 29,534,614 an increase of $ 240,376 from a year ago. The Trust Company has Capital of $ 10,000,000 surplus of s 10,000,000 and Undivided Profits of $ 8,097,020. The two institutions thus show total capital funds, that is Capital, Surplus and Undivided Profits of $ 287,631,634 or $ 46 39 per share compared with $ 44.60 per share at the end of 1945. " According to the Balance Sheet of 1948, capital funds since 1939 had increased from $ 169,768 thousands to $ 320,795 thousands in the year 1948 and there had been a progressive increase both in what is called " Surplus " as well as " Undivided Profits ", the former increased from $ 62,500 thousands to $ 182,500 thousands and the latter from $ 19,768 thousands to $ 50,795 thousands. The question in this case is whether this large sum of money shown as " Undivided Profits " is a part of the Reserves or is equivalent to the unallocated amount carried forward at the end of a year of account in the balance of Profit & Loss Account as we know it. It was the sum of $ 29,534,614.21 and similar sums for the other chargeable Accounting Periods which are the subject matter of controversy in this appeal. Both the Income tax Officer and the Appellate Assistant Commissioner excluded these amounts in determining the capital of the Bank under R. 2(1) of Schedule II on the ground that they were not a part of the reserves of the Bank. 374 The appellant took an appeal to the Income tax Appellate Tribunal which was dismissed on the ground that " Undivided Profits " meant nothing more than the " Balance of the profits and loss account" and that no distinction could be drawn merely because in the nomenclature used in the United States, the amount was shown as " Undivided Profits" and not balance of the profit and loss account. At the instance of the appellant the following question of law was referred to the High Court. " Whether on the facts and in the circumstances of the case I Undivided Profits ' of $ 29,534,614.21 shown in the condensed statements of conditions as of December 31, 1946, can be treated as reserves and added to the capital, as required by rule 2(1) of Schedule II to the Business Profits Tax Act for the chargeable accounting period 25 12 1946 to 24 12 1947?" In its order the Tribunal said that the Treasury Rules in United States divided capital account into four different heads, Capital, Reserve, Surplus and the Undivided Profits. The reserves are really reserves for liabilities including the reserves for dividends. " The general reserves as shown by the balance sheet in India is equivalent to the Surplus. The undivided profits is equivalent to the balance of profit and loss account. " In the statement of the Case submitted to the High Court, the Appellate Tribunal stated that the question whether the Undivided Profits meant the same thing as balance of the profit and loss account was a question of fact and it did not matter what name was given to it. But this was the very question which was referred to the High Court. The High Court after referring to the Directors ' Report to the shareholders held that the Undivided Profit of $ 29,534,614.21 did not constitute " reserves " because no direction had been given in regard to it, it had never been transferred to any reserve and had never been earmarked for any particular purpose and that the only act of volition on the part of the Directors of the Bank was the transfer of 10 million 375 dollars to the Surplus. In its judgment the High Court said : "It is true that these large amounts (of Un divided Profits) remain with the Bank, that the Bank uses them, that business is carried on with the help of those funds and that they are as much capital of the Bank as capital in the strict sense of the term. " The High Court however held that they did not satisfy the test laid down by the Supreme Court in Century Spinning & Manufacturing Co. Ltd. vs C.I.T., Bombay (1) as the amount was not transferred to any reserve and there being no act of volition on the part of the Directors this could not be regarded as Reserve. The correctness of this view is challenged before us. The Directors ' report dated January 14, 1947, shows that the surplus increased as a result of the allocation made by the Directors, by 10 million Dollars, which was taken from Undivided Profits and the Undivided Profits themselves increased to $29,534,614.21 which was an increase of $240,376 in the year 1946 and therefore the Capital Funds of the company which included Capital, Surplus and Undivided Profits along with similar items from the Trust Company had increased considerably which was reflected in per share increase, i.e., 44.60 per share at the end of 1945 to 46.39 per share at the end of 1946 thus showing that it was the result of an act of the Directors that Surplus was increased and a particular sum was left in the Undivided Profits. It was contended that no sum could be treated as 'Reserves ' unless the Directors recommended it to be so allocated and it was so adopted by the shareholders. But this argument ignores the evidence placed by the appellant. Under the Treasury Rules of the United States of America containing " Instructions for Preparation of Reports of Condition by National Banking Associations ", certain sums had to be specifically allocated under section 5211 of the revised Statute of the United States (Title Items 25 to 28, according to these instructions, deal (1) ; 376 with Capital Account. Item 26 deals with 'Surplus ' and item 27 with 'Undivided Profits ' and item 28 with ' Reserves ' (and retirement account for preferred stock). The following Reserves come under item 28: (a). Reserve for dividends payable in Common stock. (b) Reserves for other undeclared dividends. (c) Retirement account for,preferred stock. (d) Reserves for contingencies, etc. Item 29 was as follows " Total capital accounts ". This item is the sum of items 25 to 28, inclusive. Along with this the appellant has placed a copy of the letter from the Deputy Controller of Currency, Washington, the relevant portion of which is as follows : " In connection with this matter we wish to assure you that your position as stated is in complete accord with that of the Office of the Comptroller of the Currency. In the United States, the 'Undivided Profits ' as reflected in the accounting of a bank actually represents a part of its capital funds. All of the other bank supervisory agencies in the United States consider the 'Undivided Profits ' of a bank as a part of its capital funds. In any calculation for the purpose of determining the adequacy of capital in a: commercial bank in the United States, the supervisory authorities include 'Undivided Profits ' as an integral part of the capital structure as it would not be possible otherwise to make an accurate computation. When losses occur in banks, it is the usual practice in many banks to charge them against the 'Undivided Profits ' account which by any reasoning would be inappropriate if the account were regarded as ' Undistributed Profits '. In commercial banks in the United States, it is not customary to maintain any account that could be regarded specifically as 'Undistributed Profits ' in the same. sense as applied to similar accounts in the other corporations in India. The term 'Undivided Profits ' simply follows a bank accounting nomenclature used ill the 'United States to 377 designate profits set aside, after provisions for expenses and taxes, dividends and reserves, for continuous future use in the business of the bank ' and it bears a close, if not identical, relationship to the Earned Surplus Account of an industrial corporation. Balance sheets of three other banks of the United States relied on by the appellant show that Capital Fund comprises three kinds of funds, i.e., Capital, Surplus and Undivided Profits. The documents placed on the record show that these three different kinds of funds put together make up what is called " Capital Fund '. The creation and maintenance of the item known as Undivided Profits is a requirement of the Treasury Rules which are made under the Statute and therefore it cannot be said that the amount of Undivided Profits in the Balance Sheet was not allocated as a result of either a resolution of the Directors, accepted by the shareholders or on account of the requirements of the law. The " Undivided Profits " have to be employed in the manner indicated by the letter of the Deputy Controller of Currency. They are set up for expenses, taxes, dividends and reserves for continuous use in the business of the Bank and are a part of the capital funds and an integral part of the capital structure and without it, it would not be possible to make an accurate computation. The reason for the existence of this fund, as shown by that letter is that when there are losses, they can be charged against "Undivid ed Profits " which expression means profits set apart after provision for expenses and taxes etc. for continuous use in the business of the Bank. There is a difference between the system of accounting of Banking Companies in India and the United States; the failure to appreciate this difference has led the Appellate Tribunal as well as the High Court to arrive at an erroneous conclusion. In India at the end of an year of account the unallocated profit or loss is carried forward to the account of the next year and such unallocated amount gets merged in the account of that year, In the system of accounting in the 48 378 U.S. A. each year 's account is self contained and ,nothing is carried forward. If after allocating the profits to diverse heads mentioned above any balance remains, it is credited to the " Undivided Profits " which become part of the capital fund. If in any year as a result of the allocation there is a loss the accumulated undivided profits of the previous years are drawn upon and if that fund is exhausted the Banking Company draws upon the surplus. In its very nature the Undivided Profits are accumulation of amounts of residue on hand at the end of year of successive periods of accounting and these amounts are by the prevailing accounting practice and the Treasury directions regarded as a part of the capital fund of the Banking Company. The nature of " Undivided Profits" was considered by the Supreme Court of America in Fidelity Title and Trust Co. vs United States (1). In that case a suit was brought by the Fedelity Co. to recover the tax assessed on its whole capital and undivided profits under section 2 of the Spanish War Revenue Act. In the Supreme Court it was contended by the company that the terms "Capital", " Surplus " and " Undivided Profits " have a precise and definite meaning in the business of banking and that Undivided Profits are not surplus and cannot therefore be taxed as " Surplus ". The Government on the other hand contended that the undivided profits were taxable as being a part of Capital or Surplus. The Court held that " Undivided Profits ". were taxable as being a part of the Capital employed. Mr. Justice Brandeis delivering the opinion of the Court said at p. 955: " The Act declares that 'in estimating capital surplus shall be included, ' and that the 'annual tax shall in all cases be computed on the basis of the capital and surplus for the preceding fisical year. . . . . . . " As it is the use or employment of capital in banking, not mere possession thereof by the banker, which determines the amount of tax, the fact that a portion of the capital so used or employed is (1) ; ; 379 designated 'undivided profits ' is of no legal signi ficance." As to what the word " Reserves " as used in the Business Profits Tax Act connotes, was considered by this Court in the Commissioner of Income tax vs Century Spinning & Manufacturing Co. Ltd. (1). It was held that the true nature and character of a sum disputed as reserve was to be determined with reference to the substance of the matter. The amount in dispute in that case was the profits after the deduction of depreciation and tax which amount was carried to the Balance Sheet and was later recommended by the Directors to be appropriated mainly to dividends and balance to be carried forward to the next year 's account. Thus on the crucial date, i.e., April 1, 1946, from which the Chargeable Accounting Period began the sum in dispute had not been declared as reserve; on the other hand the Directors had earmarked it for distribution as dividend and it remained as a mass of undistributed profits available for distribution. At page 209 Ghulam Hassan J. said: "The reserve may be a general reserve or a specific reserve, but there must be a clear indication to show whether it was a reserve either of the one or the other kind. The fact that it constituted a mass of undistributed profits on the 1st January ' 1946, cannot automatically make it a reserve . . . . .A reserve in the sense in which it is used in rule 2 can only mean profit earned by a company and not distributed as dividend to the shareholders but kept back by the directors for any purpose to which it may be put in future. . . . " Applying this test to the disputed sum, it cannot be said that the amount is not "Reserve" within the meaning of the Rules. As is shown by the instruction under section 5211 of the Revised Statute of the United States and the letter of the Deputy Controller referred to above, the appellant bank was required to keep a, certain sum of money under the head " Undivided ,Profits " and that is an integral part of the capital (1) ; 380 structure. Under these circumstances it would be erroneous not to treat the amount of " Undivided Profits " as a part of the capital fund. In our opinion therefore the amount designated as Undivided Profits " is a part of the reserves and has to be taken into account when computing the capital and reserves within R. 2(1) of Schedule 11 of the Act. The question which was referred by the Tribunal should have been decided in the affirmative and in favour of the appellant and the amount should have been added to the capital as allowed by R. 2(1) for the Chargeable Accounting Periods. In the result the appeal is allowed. The appellant will have its costs in this Court and in the High Court. Appeal allowed.

The appellant, a non resident Banker incorporated under the National Bank Act of the United States of America with its Head Office in America, was assessed under Business Profits Tax Act, 147. Under the Treasury Rules of the United States of America and Instructions for preparation of reports of conditions by the National Banking Association certain sums had to be specifically allocated under section 5211 of the Revised Statute of the United States, and the appellant bank was required to keep a certain sum of money under the head " undivided profits " and that was an integral part of tile capital structure. The reason for the existence of this fund was that when losses occurred according to the practice they could be charged against " undivided profits ", i.e., profits set apart after provision for expenses and taxes etc. for continuous use in the business of the Bank. The appellant contended that in computing the amount for the purpose of " abatement " it was entitled to include the undivided profits " which fell within the word " reserves ". The question was whether the large sum of money shown as " undivided profits " was a part of the reserves. Held, that the amount designated as " undivided profits was a part of the reserves and had to be taken into account when computing the capital and reserves within Rule 2(1) of Sch. II of the Business Profits Tax Act, 1947.

os. 67, 87 and 130 of 1959. Petitions under article 32 of the Constitution of India for enforcement of Fundamental Rights. R. section Narula and section section Chadha, for the petitioners. M. C. Setalvad, Attorney General of India, B. Sen and T. M. Sen, for Respondents Nos. 1, 2 and 5 (In 128 petition No. 83 of 1959) 1, 2 and 12 (In Petition No. 67 of 1959) and 1, 2 and 4 (In Petition No. 130 of 1959). W. section Barlingay and A. G. Ratnaparkhi, for respondent No. 3 (In Petn. No. 83 of 1959). Sardari Lal Bhatia, for respondents Nos. 3a, 4, 5, 6 (a, b, c,) and 7 10. J. D. Jain and K. L. Mehta, for the Intervener in Petition No. 67 of 1959 (Phool Chand). April 21. The Judgment of the Court was delivered by AYYANGAR, J. These three petitions have been filed invoking the jurisdiction of this Court under article 32 of the Constitution challenging the constitutionality of section 19 and particularly sub section 3, of the (Central Act 96 of 1956), on the ground that it offends the fundamental right of the petitioners guaranteed to them by articles 14 and 19(1)(f). To appreciate the grounds on which this contention is sought to be sustained it is necessary to set out briefly a few facts. We might however mention that though the constitutional objection, adverted to is common to all the three petitions, it is sufficient to refer to the facts of the case in Writ Petition No. 67 of 1959 which is typical of the cases before us. The petitioner Jyoti Pershad is the owner of a house in Delhi in which respondents 3 to 11 were tenants. Each of these nine individuals occupied a single room in this house. As the petitioner considered the house to be old and required to be demolished and reconstructed, he submitted a plan to the Council of the Delhi Municipal Committee and applied for sanction for the reconstruction of the house. The plan was sanctioned and thereafter the petitioner filed suits against these nine tenants under section 13(1)(g) of the Delhi and Ajmer Rent Control Act 38 of 1952 (which will hereafter be referred to as the Rent Control Act). The suits were resisted by the tenants. Two matters had to be proved under section 13(1)(g) of the Rent Control Act by a plaintiff before he could obtain an order of 129 eviction:(i) that there was a plan which had been sanctioned by the municipal authorities which made, provision for the tenants then in occupation of the house being accommodated in the house as reconstructed, and (ii) that the plaintiff had the necessary funds to carry out the reconstruction. The plan which had been approved by the Delhi Municipal Committee made provision for the construction of a double storeyed building with twelve rooms which was, therefore, more than ample for the nine tenants for whom accommodation had to be provided. The plaintiff also established that he had deposited cash in the State Bank of India sufficient for reconstructing the house as sanctioned in the plan. On December 8, 1956 the Civil Court in Delhi passed decrees in favour of the petitioner for the eviction of respondents 3 to 11. Section 15 of the Rent Control Act enacted: "15. (1) The Court shall, when passing any decree or order on the grounds specified in clause (f) or clause (g) of the proviso to sub section (1) of section 13, ascertain from the tenant whether he elects to be placed in occupation of the promises or part thereof from which he is to be evicted and if the tenant so elects, shall record the fact of the election in the decree or order and specify therein the date on or before which he shall deliver possession so as to enable the landlord to commence the work of repairs or building or re building as the case may be. (2)If the tenant delivers possession on or before the date specified in the decree or order, the landlord, shall, on the completion of the work of repairs or building or re building place the tenant in occupation of the premises or part thereof (3)If, after the tenant has delivered possession on or before the date specified in the decree or order the landlord fails to commence the work of repairs or building or re building, within one month of the specified date or fails to complete the work in a reasonable time or having completed the work, fails to place the tenant in occupation of the premises in 17 130 accordance with sub section (2), the Court may, on the application of the tenant made within one year from the specified date, order the landlord to place the tenant in occupation of the premises or part thereof on the original terms and conditions or to pay to such tenant such compensation as may be fixed by the Court. " The tenants, however, refused to give up possessession within the three months time granted to them by the decrees to vacate the premises but went up in appeal against the orders of eviction under section 34 of the Rent Control Act to the Senior Sub Judge, Delhi. These appeals were finally disposed of against the tenant appellants, some on the merits and some by reason of abatement, by the end of October, 1957. Under the rules governing the construction of houses on plans sanctioned by the Delhi Municipal Com mittee, the sanctioned building had to be completed within a period of one year from the date of sanction. As a result of this rule the sanction obtained by the petitioner lapsed and he had, therefore, to obtain fresh sanction if in consequence of his success in the appeals before the Senior Sub Judge he still desired to demolish and reconstruct the building. Meanwhile, two changes came about in the law governing matters relevant to the present case: The first was that the 96 of 1956, which will be hereafter referred to as the Act, was enacted by Parliament and came into force in the Delhi area. Section 19 of that Act which is impugned in these petitions runs: "19. (1) Notwithstanding anything contained in any other law for the time being in force, no person who has obtained any decree or order for the eviction of a tenant from any building in a slum area shall be entitled to execute such decree or order except with the previous permission in writing of the competent authority. (2) Every person desiring to obtain the permission referred to in sub section (1) shall make an application in writing to the competent authority in such form and containing such particulars as may be prescribed. 131 (3) On receipt of such application the competent authority, after giving an opportunity to the tenant of being heard and after making such summary inquiry into the circumstances of the case as it thinks fit, shall by order in writing either grant ' such permission or refuse to grant such permission. (4) Where the competent authority refuses to grant the permission it shall record a brief statement of the reasons for such refusal and furnish a copy thereof to the applicant. " The other change in the law was that due to the enactment of rules and regulations providing for a coordinated development and planning of buildings in the Delhi Area the type of constructions that could be sanctioned by the Delhi Municipal Committee underwent a radical alteration as a result of which in the area now in question double storeyed buildings were not permitted to be constructed and that if the petitioner 's house had to be reconstructed it could only have three living rooms making allowance for the size of the rooms and the free space that had to be left on either side of the building in accordance with the revised municipal regulations. It would have been noticed that the right of the tenants to insist on the landlord providing accommodation for them in the reconstructed building guaranteed to them by section 15 of the Rent Control Act, had ceased by reason of their failure to quit and deliver vacant possession of the tenements occupied by them within 3 months fixed by the order of the Civil Court (vide section 15) and hence they had no statutory right under the Rent Control Act to be provided with accommodation by the landlord. Thus freed from obligation to the tenants the petitioner filed on the strength of these decrees for eviction nine applications under section 19 of the Act before the competent authority for the eviction of the tenants from the nine rooms in the building on the ground that the building had to be reconstructed as it was in a dilapidated condition. These petitions were dismissed by the competent authority by his order dated January 13, 1958 on the ground that the sanction to 132 reconstruct the building which the petitioner had obtained from the municipality in 1956 had expired. The order recited: "since it may take some time for the petitioner to obtain fresh sanction for reconstruction and there is also the possibility of sanction not being given at all, it would be no use continuing with these proceedings until it is definitely known that the landlord has obtained sanction for reconstruction. These nine applications are accordingly filed with the option to the petitioner to have them revived without payment of extra fee in case he is able to obtain sanction. " Thereafter the petitioner applied to the municipal authorities for sanctioning a building plan. As stated earlier, the building plan approved by the municipality could permit only a building consisting of one floor in which there were three living rooms and sanction for the construction of a building with such accommodation was granted. With this sanctioned plan, the petitioner renewed his application under section 19 for permission to execute the decree of the Civil Court and evict the tenants. By order dated July 30, 1958 all these applications were dismissed. The reason assigned for the order was stated in these terms: "If the decree is allowed to be executed they will be thrown out and it will be impossible for them to get accommodation in the reconstructed building. They are old tenants and as stated above also very poor. The execution of the decree will involve very real hardship to them. They are all occupying only one Kothri each and paying rent at Rs. 3 per mensem, and they have no complaint to make about the condition of their Kothries. The landlord has four or five other houses which he has let out on rent. The case has a human aspect and I disallow the execution of the decree against the tenants. " The petitioner preferred appeals against this order to the Administrator of the Union Territory, Delhi to whom appeals lay under section 20 of the Act. The appeals were dismissed, the appellate authority saying : 133 "I would have allowed the appellant permission to evict the tenants, if the property itself was dilapidated and declared unfit for human habitation by a competent authority. This is not so. The land lord naturally desires to get a better return from land in the congested areas of the city by rebuilding on it to better specifications, so that he can get higher rent from it. But if this tendency is permitted to have an unrestricted play, then the result will be the eviction of a large number of poor people from slum areas. In the circumstances, the appellant should wait until either his property is declared dangerous by the Municipal Corporation, or under a Slum Clearance Scheme he is asked by the competent authority itself to demolish it or rebuild it in a particular manner. " In these circumstances the petitioner has moved this Court for the issue of a writ of certiorari to quash these orders on the ground already adverted to, viz., that section 19 of the Act is invalid and unconstitutional as violative of the petitioner 's rights guaranteed by articles 14 and 19(1)(f) of the Constitution. In passing we may observe that we are not concerned with the validity of the particular orders passed in the case but only with the general question as to the constitutionality of the impugned section 19 of the Act. Before setting out the points urged by Mr. Narula learned Counsel for the petitioners in support of his submission that section 19 of the Act" was, in so far as it enabled the competent authority to withhold permission to those who had obtained decrees for eviction from executing their decrees, unconstitutional, it would be necessary to read the material provisions of the Rent Control Act, 1952, which imposes a restriction on the right of landlords, inter alia to evict tenants from the premises occupied by them. Chapter III of that Act imposes a control over the eviction of tenants. A tenant is defined (Vide section 2(j)) as meaning "any person by whom or on whose account rent is payable for any premises including such sub tenants or others who have derived title under the tenant 134 under the provisions of any law before the commencement of the Act. " Section 13(1) enacts: "Notwithstanding anything to the contrary con tained in any other law or any contract, no decree or order for the recovery of possession of any premises shall be passed by any Court in favour of the landlord against any tenant (including a tenant whose tenancy is terminated):". This blanket protection is, however, subject to the conditions enumerated in the proviso which reads: "Provided that nothing in this sub section shall apply to any suit or other proceeding for such recovery of possession if the Court is satisfied " Then follow ten grounds the existence of one or other of which enables a landlord to obtain a decree from a Civil Court for the recovery of possession from tenants. Among the grounds thus enumerated it is sufficient to refer to grounds (f), (g) and (1), ground (g) being the ground upon which the petitioner in the present case obtained the decrees for eviction and these run: " (f) that the premises have become unsafe or unfit for human habitation and are bona fide required by the landlord for carrying out repairs which cannot be carried out without the premises being vacated; or (g) that the premises are bona fide required by the landlord for the purpose of re building the premises or for the replacement of the promises by any building or for the erection of other buildings, and that such building or rebuilding cannot be carried out without the premises being vacated; or (1) that the landlord requires the premises in order to carry out any building work at the instance of the Government or the Delhi Improvement Trust in pursuance of any improvement scheme or development scheme. " The right of the landlord, however, who obtains an order for eviction under either cl. (f) or (g) above set out is subject to the provisions of section 15 whose terms have already been set out, The result, therefore, 135 would be that in the cases covered by these two clauses the tenants would be entitled, if they conform to the terms of these provisions, to be reinstated in the newly constructed premises after the reconstruction. It might be pointed out that under section 38 of the Rent Control Act the provisions of the Act and the Rules made thereunder are to have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force. The argument of the learned Counsel was that the restriction upon the rights of landlords to the enjoyment of the property imposed by section 13 of the Rent Control Act could not be open to any objection, legal or constitutional because the Legislature has set out with precision the grounds upon which possession could be recovered, the defenses that might be set up by the tenants and the conditions subject to which the rights either of the landlord or of the tenant could be exercised. It is the super imposition of the provisions of section 19 of the Act on the rights of a landlord decreeholder who had satisfied the requirements of the Rent Control Act before obtaining his decree that was stated as amounting to an unreasonable restriction on the right to hold property guaranteed by article 19(1)(f). This will be a convenient stage at which we might set out in brief outline the argument urged by learned Counsel for the petitioner. They were mainly three: (1) Section 19(3) of the Act vests an unguided, unfettered and uncontrolled power in an executive officer to withhold permission to execute a decree which a landlord has obtained after satisfying the reasonable requirements of the law as enacted in the Rent Control Act. Neither section 19 of the Act nor any other provision of the Act indicates the grounds on which the competent authority might grant or withhold permission to execute decrees and the power conferred is, therefore, arbitrary and offends article 14 of the Constitution. (2) The same point was urged in a slightly different form by saying that the Power conferred on the "competent authority" by section 19(3) of the Act was an excessive delegation of legislative power and was, therefore, unconstitutional. (3) The 136 vesting of a power in an executive authority to override at his sweet will and pleasure rights to property without any guidance from the Legislature con stituted an unreasonable restraint on the petitioner 's right to hold property, a right which in the case of the property of the type now in question would include a right to obtain possession from the tenant in order either to improve it by reconstruction or for the purpose of his own use. Apart from the objection regarding the vesting of an unguided power in an executive authority which is, the common ground of objection urged in regard to points (1) and (2), learned Counsel submitted that the right vested in an executive authority to prevent for an indefinite and indeterminate period of time the right to enjoy his property was for this further reason excessive and an unreasonable restraint which could not be justified under article 19(5) of the Constitution. We shall proceed to consider these points in that order. The first ground alleged is that section 19 of the Act is constitutionally invalid as violative of the equal protection of the laws conferred under article 14 of the Constitution, in that an unguided and arbitrary discretion is vested in the "competent authority". The import, content and scope of article 14 of the Constitution has been elaborately considered and explained in numerous decisions of this Court and it is, therefore, unnecessary for us to embark on any fresh investigation of the topic, but it would be sufficient to summarise the principles, or rather the rules of guidance for the interpretation of the Article which have already been established, and then consider the application of those rules to the provisions of the enactment now impugned. It is only necessary to add that the decisions of this Court laying down the proper construction of article 14 rendered up to 1959 have been summarised in the form of 5 propositions by Das C. J. in Ramakrishna Dalmia vs Justice Tendolkar (1), but we are making a summary on slightly different lines more relevant to the enquiry regarding the provision with which we are concerned in the present case. (1) ; , 299, 301 137 (1) If the statute itself or the rule made under it applies unequally to persons or things similarly situated, it would be an instance of a direct violation of the Constitutional guarantee and the provision of the statute or the rule in question would have to be struck down. (2) The enactment or the rule might not in terms enact a discriminatory rule of law but might enable an unequal or discriminatory treatment to be accorded to persons or things similarly situated. This would happen when the legislature vests a discretion in an authority, be it the Government or an administrative official acting either as an executive officer or even in a quasi judicial capacity by a legislation which does not lay down any policy or disclose any tangible or intelligible purpose, thus clothing the authority with unguided and arbitrary powers enabling it to discriminate. "The legislature must declare the policy of the law and the legal principles which are to control any given cases and must provide a standard to guide the officials or the body in power to execute the law. The essential legislative function consists in the determination or choice of the legislative policy and of formally enacting that policy into a binding rule of conduct." [Harishankar Bagla vs The State of Madhya Pradesh (1)]. "No rules have been framed and no directions given on these matters to regulate or guide the discretion of the licensing officer. Practically the Order commits to the unrestrained will of a single individual the power to grant, withhold or cancel licences in any way he chooses and there is nothing in the Order which could ensure a proper execution of the power or operate as a check upon injustice that might result from improper execution of the same". [Messrs. Dwarka Prasad Laxmi Narain vs The State of Uttar Pradesh (2)]. (1) , 388. (2) ; 813. 18 138 In such circumstances the very provision of the law which enables or permits the authority to discriminate, offends the guarantee of equal protection afforded, by article 14. possibly the best instance of this type of case is afforded by the legislation under consideration in The State of West Bengal vs Anwar Ali Sarkar (1), the ratio underlying which was thus explained in Kathi Raning Rawat vs The State of Saurashtra (2): "If it depends entirely upon the pleasure of the State Government to make any classification it likes, without any guiding principle at all, it cannot certainly be a proper classification, which requires that a reasonable relation must exist between the classification and the objective that the legislation has in view. On the other hand, if the legislature indicates a definite objective and the discretion has been vested in the State Government as a means of achieving that object, the law itself cannot be held to be discriminatory, though the action of the State Government may be condemned if it offends against the equal protection clause, by making an arbitrary selection. " (3) It is manifest that the above rule would not apply to cases where the legislature lays down the policy and indicates the rule or the line of action which should serve as a guidance to the authority. Where such guidance is expressed in the statutory provision conferring the power, no question of violation of article 14 could arise, unless it be that the rules themselves or the policy indicated lay down different rules to be applied to persons or things similarly situated. Even where such is not the case, there might be a transgression by the authority of the limits laid down or an abuse of power, but the actual order would be set aside in appropriate proceedings not so much on the ground of a violation of article 14, but as really being beyond its power. (4) It is not, however, essential for the legislation to comply with the rule as to equal protection, that the rules for the guidance of the designated authority, (1) ; (2) ; , 461, 462. 139 which is to exercise the power or which is vested with the discretion, should be laid down in express terms in the statutory provision itself. "The Saurashtra case would seem to lay down the A principle that if the impugned legislation indicates the policy which inspired it and the object which it seeks to attain, the mere fact that the legislation does not itself make a complete and precise classification of the persons or things to which it is to be applied, but leaves tile selective application of the law to be made by the standard indicated or the underlying policy and object disclosed is not a suffi cient ground for condemning it as arbitrary and, therefore, obnoxious to article 14." [Kedar Nath Bajoria vs The State of West Bengal (1) ]. "So long as the policy is laid down and a standard established by a statute, no unconstitutional delegation of legislative power is involved in leaving to selected instrumentalities the making of subordinate rules within prescribed limits and the deter mination of facts to which the policy as declared by the Legislature is to apply." [Harishankar Bagla and another vs The State of Madhya Pradesh (1) ]. Such guidance may thus be obtained from or afforded by (a) the preamble read in the light of the surrounding circumstances which necessitated the legislation, taken in conjunction with well known facts of which the Court might take judicial notice or of which it is appraised by evidence before it in the form of affidavits, Kathi Raning Rawat vs The State of Saurashtra (3) being an instance where the guidance was gathered in the manner above indicated, (b) or even from the policy and purpose of the enactment which may be gathered from other operative provisions applicable to analogous or comparable situations or generally from the object sought to be achieved by the enactment. "The policy underlying the Order is to regulate the (1) , 46. (2) , 388. (3) [1052] S.C.R. 435, 461, 462. 140 transport of cotton textile in a manner that will ensure an even distribution of the commodity in the country and make it available at a fair price to all. The grant or refusal of a permit is thus to be govern ed by this policy and the discretion given to the Textile Commissioner is to be exercised in such a way as to effectuate this policy. The conferment of such a discretion cannot be called invalid and if there is an abuse of the power there is ample power in the Courts to undo the mischief." Harishankar Bagla vs The State of Madhya Pradesh (1). In Pannalal Binjraj vs Union of India 's case (2) the purpose of the provision which was administrative convenience for enabling assessments to be made in the manner indicated by the Income tax Act was held to afford a sufficient guidance so as to render the provision immune from attack on the ground of violation of article 14. In the circumstances indicated under the fourth head, just as in the third, the law enacted would be valid being neither a case of excessive delegation or abdication of legislative authority viewed from one aspect, nor open to objection on the ground of violation of article 14 as authorising or permitting discriminatory treatment of persons similarly situated. The particular executive or quasi judicial act would, however, be open to challenge as already stated on the ground not so much that it is in violation of the equal protection of the laws guaranteed by article 14, because ex concessis that was not permitted by the statute but on the ground of the same being ultra vires as not being sanctioned or authorized by the enactment itself. The situation in such cases would be parallel to the tests to be applied for determining the validity of rules made under statutes which enable the rule making authority to enact subsidiary legislation "to carry out the purposes of the Act". The criteria to be applied to determine the validity of such rules could, in our opinion, be appropriately applied to determine the validity of the action under the provisions like the one dealt with under the last two heads. (1) , 388. (2) ; 141 In the light of what we have stated above we have now to consider the point urged by the learned Counsel for the petitioner that the Act has vested in the competent authority the power to withhold eviction in pursuance of orders or decrees of Courts with out affording any guidance or laying down any principles for his guidance on the basis of which he could exercise his discretion. In other words, that the Act lays no fetters and has vested in him an arbitrary and unguided power to pick and choose the decree holders to whom he would permit execution and those to whom he would refuse such relief. On the other hand, the learned Attorney General submitted that the discretion vested in the competent authority was not unguided and that though section 19 of the Act did not in terms lay down any rules for his guidance, the same could be gathered from the policy and purpose of the Act as set out in the preamble and in the operative provisions of the Act itself. We consider that there is considerable force in this submission of the learned Attorney General. The preamble describes the Act as one enacted for two purposes: (1) the improvement and clearance of slum areas in certain Union Territories, and (2) for the protection of tenants in such areas from eviction. These twin objects are sought to be carried out by Chapters II to VI of the enactment. Chapter 11 which consists of one sections. 3 provides a definition of what are "slum areas" and their declaration as such. The tests for determining whether the area could be declared a "slum area" or not briefly are whether the buildings in the area are (a) unfit for human habitation, or (b) are by reason of dilapidation, overcrowding etc. detrimental to safety, health or morals. It is in areas so declared as "slum areas" that the rest of the enactment is to operate. The provisions, however, make it clear that in order that an area may be declared a " slum area" every building in that area need not be unfit for human habitation or that human habitation in every building in such area should be detrimental to the safety, health or morals of the dwellers. We are making this observation because of a suggestion 142 made, that the declared purpose of protecting the tenants from eviction was inconsistent with the policy underlying the declaration of an area as a "slum area" and that thus the Act manifested two contrary or con flicting ideas or principles which would negative each other and thus leave no fixed policy to guide " the competent authority" when exercising his powers to grant or refuse eviction when an application was made to him in that behalf under section 19 of the Act. Chapter III is headed 'Slum Improvement ' and makes provision for two types of orders: (1) to require the improvement of buildings where repairs major or minor would make them reasonably habitable for the slum dwellers (vide sections 4 6), and (2) cases where mere repairs or adjustments would not suffice but what is required is the demolition of the entire building. In the latter case certainly the occupants of the building would have to be evicted and the building vacated and power is conferred for effectuating this purpose vide section 7 (1) and 7 (3). It might be that the whole area might consist of dwellings of the type which require demolition and it is Chapter IV that makes provision for this category of cases which is headed "Slum Clearance and Re development". In such cases the buildings in the entire area are to be ordered to be demolished, and in that event the dwellers would, of course, have to vacate, but it is presumed that alternative accommodation would necessarily have to be provided before any such order is made. The process would have to be carried out in an orderly fashion if the purpose of the Act is to be fulfilled and the policy behind it, viz., the establishment of slum dwellers in healthier and more comfortable tenements so as to improve the health and morals of the community, is to be achieved. Chapter V makes provision for the acquisition of land in order to compass the re development of slum areas into healthy parts of the city, by providing amenities and more substantial and better accommodation for the previous inhabitants. It is after this that we have Chapter VI whose terms we have already set out. This Chapter is headed "Protection of tenants in Slum Areas 143 from Eviction". Obviously, if the protection that is afforded is read in the context of the rest of the Act, it is clear that it is to enable the poor who have no other place to go to, and who if they were compelled, to go out, would necessarily create other slums in the a process and live perhaps in less commodious and more unhealthy surroundings than those from which they were evicted, to remain in their dwellings until provision is made for a better life for them elsewhere. Though therefore the Act fixes no time limit during which alone the restraint on eviction is to operate, it is clear from the policy and purpose of the enactment and the object which it seeks to achieve that this restriction would only be for a period which would be determined by the speed with which the authorities are able to make other provisions for affording the slum dweller tenants better living conditions. The Act, no doubt, looks at the problem not from the point of view of the landlord, his needs, the money he has sunk in the house and the possible profit that he might make if the house were either let to other tenants or was reconstructed and let out, but rather from the point of view of the tenants who have no alternative accommodation and who would be stranded in the open if an order for eviction were passed. The Act itself contemplates eviction in cases where on the ground of the house being unfit for human habitation it has to be demolished either singly under section 7 or as one of a block of buildings under Ch. So long therefore as a building can, without great detriment to health or safety, permit accommodation, the policy of the enactment would seem to suggest that the slum dweller should not be evicted unless alternative accommodation could be obtained for him. In this connection the learned Attorney General brought to our attention the provisions of the Delhi Development Act, 1957 (LXI of 1957) which makes provision for the design of a Master Plan for the city which, if executed, is likely to greatly reduce, if not to eliminate, slums altogether. It was suggested that taken in conjunction with this enactment it would be seen that the power to restrain eviction under section 19 of the 144 Act is one which would not last for ever but to a limited period, though this could not naturally be defined by reference to fixed dates. We see force in this submission as well. In view of the foregoing we consider that there is enough guidance to the competent authority in the use of his discretion under section 19(1) of the Act and we, therefore, reject the contention that section 19 is obnoxious to the equal protection of laws guaranteed by article 14 of the Constitution. We need only add that it was not, and could not be, disputed that the guidance which we have hold could be derived from the enactment, and that it bears a reasonable and rational relationship to the object to be attained by the Act and, in fact, would fulfil the purpose which the law seeks to achieve, viz., the orderly elimination of slums, with interim protection for the slum dwellers until they were moved into better dwellings. We are further of the opinion that the order of the competent authority in the present case is not open to challenge either, because it would be seen that the grounds upon which he has rejected the petitioner 's application for execution is in line with what we have stated to be the policy and purpose of the Act. Before leaving this topic it is necessary to consider a submission of learned Counsel for the petitioner which is of immediate relevance to point under examination. He said that, no doubt, the decisions of this Court had pointed out that it was not reasonable to expect the legislature to lay down expressly precise criteria for the guidance of the authorities who have to administer the law because of the difficulty, if not impossibility, of contemplating every single circumstance and prescribing rules so as to apply to such varying situations, and that was the raison d 'etre of vesting a large discretion in the hands of the administering authorities after indicating the general principles that ought to guide them. He however urged that in the present case there was no such insuperable difficulty, because the restriction provided for by section 19 of the Act was superimposed on those which were 145 enacted by section 13 of the Rent Control Act, and Parliament when enacting the Act, could easily have indicated with reference to the several grounds on which eviction could be had under the Rent Control Act, the additional restrictions, or further conditions which would be taken into account by "the competent authority". If learned Counsel meant by this submission that it was a possible mode of legislation, there is nothing to be said against it, but if he desired us to infer therefrom that because of the failure to adopt that mode, the power conferred by section 19 of the Slum Act contravened the guarantee under article 14, we cannot agree. In regard to this matter we desire to make two observations. In the context of modern conditions and the variety and complexity of the situations which present themselves for solution, it is not possible for the Legislature to envisage in detail every possibility and make provision for them. The Legislature therefore is forced to leave the authorities created by it an ample discretion limited, however, by the guidance afforded by the Act. This is the ratio of delegated legislation, and is a process which has come to stay, and which one may be permitted to observe is not without its advantages. So long therefore as the Legislature indicates, in the operative provisions of the statute with certainty, the policy and purpose of the enactment, the mere fact that the legislation is skeletal, or the fact that a discretion is left to those entrusted with administering the law, affords no basis either for the contention that there has been an excessive delegation of legislative power as to amount to an abdication of its functions, or that the discretion vested is uncanalised and unguided as to amount to a carte blanche to discriminate. The second is that if the power or discretion has been conferred in a manner which is legal and constitutional, the fact that Parliament could possibly have made more detailed provisions, could obviously not be a ground for invalidating the law. The next point argued by learned Counsel for the 19 146 petitioner was that the power conferred on the competent authority by section 19(3) of the Act was an excessive delegation of legislative power. As we have pointed out earlier, this submission is really another form, or rather another aspect of the objection based on the grant of an unfettered discretion or power which we have just now dealt with. It is needless to repeat, that so long as the legislature indicates its purpose and lays down the policy it is not necessary that every detail of the application of the law to particular cases should be laid down in the enactment itself. The reasons assigned for repelling the attack based on article 14 would suffice to reject this ground of objection as well. The last major objection urged by learned Counsel was that the power vested in the competent authority "at its sweet will and pleasure" to refuse permission to execute a decree for eviction violated the right to hold property under article 19(1)(f) of the Constitution and that the same was not saved by article 19(5) of the Constitution for the reason that the restriction imposed on the exercise of the right was not reasonable. If Counsel were right in his submission that the petitioner 's right to obtain possession of his building rested on the "sweet will and pleasure of the competent authority" there could be some substance in the argument. But as we had already had occasion to point out, it is not at the "sweet will and pleasure" of the competent authority that permission to evict could be granted or refused, but on principles gather able from the enactment, as explained earlier. Learned Counsel further urged that the right to hold property under article 19( 1)(f) included the right in the owner of a building to evict a tenant and enter into actual or physical occupation of the property. Counsel is, no doubt, right in this submission but the 'freedom ' to 'hold property ' is not absolute but that, as he himself admitted, is subject, under article 19(5), to treasonable restrictions" being placed upon it "in the interests of the general public". It was not suggested that slum dwellers would not constitute "the general public" and that if a legislation was designed to grant 147 them protection, it could not be justified as one in the interests of the "general public", because obviously the interests of such a vast number of the population in the country, their health, well being and morals, would, apart even from themselves, necessarily impinge upon and influence, for good or evil, the health, safety, well being and morality of the rest of the community as well. The only question that is capable of argument is whether the restriction is reasonable. A considerable part of learned Counsel 's argument on the reasonableness of the restriction was devoted to showing that the vesting of an unfettered or unguided power in the competent authority to permit or not to permit eviction rendered the restriction unreasonable. This, as would be seen, is really a different form of presenting the case of the objection under article 14, and what we have said in dealing with the first point of the learned Counsel would answer this portion of the objection. There are, however, a few more matters which have relevance about the objection on the score of the restriction not being reasonable within article 19(5) and the tests to be applied to determining its reasonableness to which we should refer. It has already been pointed out that the restrictions imposed on the right of the landlord to evict have a reasonable and rational connection with the object sought to be achieved by the Act, viz., the ultimate elimination of slums with protection to the slum dwellers from being meanwhile thrown out on the streets. The question might still remain whether this restriction on the rights of the landlords is excessive in the sense that it invades and trenches on their rights in a manner or to an extent not really or strictly necessary to afford protection to the reasonable needs of the slum dwellers which it is the aim and object of the legislation to subserve. The criteria for determining the degree of restriction on the right to hold property which would be considered reasonable, are by no means fixed or static, but must obviously vary from age to age and be related to the adjustments necessary to solve the problems which communities face from time to time. The tests, therefore, evolved by communities living in sheltered or 148 placid times, or laid down in decisions applicable to them can hardly serve as a guide for the solution of the problems of post partition India with its stresses and strains arising out of movements of populations which have had few parallels in history. If law failed to take account of unusual situations of pressing urgency arising in the country, and of the social urges generated by the patterns of thought evolution and of social consciousness which we witness in the second half of this century, it would have to be written down as having failed in the very purpose of its existence. Where the legislature fulfils its purpose and enacts laws, which in its wisdom, is considered necessary for the solution of what after all is a very human problem the tests of "reasonableness" have to be viewed in the context of the issues which faced the legislature. In the construction of such laws and particularly in judging of their validity the Courts have necessarily to approach it from the point of view of furthering the social interest which it is the purpose of the legislation to promote, for the Courts are not, in these matters, functioning as it were in vacuo, but as parts of a society which is trying, by, enacted law, to solve its problems and achieve social concord and peaceful adjustment and thus furthering the moral and material progress of the community as a whole. Judged in the light of the above, we consider that the restrictions imposed cannot be said to be unreasonable. As we have already pointed out, the ban imposed on evictions is temporary, though learned Counsel is right in saying that its duration is not definite. In the very nature of things the period when slums would have ceased to exist or restrictions placed upon owners of property could be completely lifted must, obviously, be indefinite and therefore the indefiniteness cannot be a ground for invalidity a ground upon which the restriction could be held to be unreasonable. Again, there is an appeal provided from the orders of the competent authority to the Chief Administrator. If learned Counsel is right in his submission that the power of the "competent authority" is unguided and that he had an unfettered 149 and arbitrary authority to exercise his discretion "at his sweet will and pleasure" the existence of a provision for appeals might not impart validity to such legislation. The reason for this is that the appellate power would be subject to the same vice as the power of the original authority and the imposition of one " sweet will and pleasure" over another of a lower authority, would not prevent discrimination or render the restriction reasonable. But if, as we have held earlier, the Act by its preamble and by its provisions does afford a guidance to the "competent authority" by pointing out the manner in which the discretion vested in him should be exercised, the provision as to an appeal assumes a different significance. In such cases, if the "competent authority" oversteps the limits of his powers or ignores the policy behind the Act and acts contrary to its declared intention, the appellate authority could be invoked to step in and correct the error. It would, therefore, be a provision for doubly safeguarding that the policy of the Act is carried out and not ignored in each and every case that comes up before "the competent authority". The procedure laid down by the Act for the hearing by the "competent authority" and the provisions for enquiry, renders the "competent authority" a quasi judicial functionary bound to follow fixed rules of procedure and its orders passed after such an enquiry are to be subject to appeals to the Administrator. We consider these safeguards very relevant for_judging about the reasonableness of the restriction. In considering these matters one has to take into account the fact a fact of which judicial notice has to be taken that there has been an unprecedented influx of population into the capital, and in such a short interval, that there has not been time for natural processes of expansion of the city to adjust itself to the increased needs. Remedies which in normal times might be considered an unreasonable restriction on the right to hold property would not bear that aspect or be so considered when viewed in a situation of emergency brought about by exceptional and unprecedented circumstances. Just as pulling down a building to prevent the 150 spread of flames would be reasonable in the event of a fire, the reasonableness of the restrictions imposed by the impugned legislation has to be judged in the light of actual facts and not on a priori reasoning based on the dicta in decisions rendered in situations bearing not even the remotest resemblance to that which presented itself to Parliament when the legislation now impugned was enacted. Before concluding it is necessary to advert to a few points which were also urged by learned Counsel for the petitioner. First it was said that the impugned section 19 of the Act imposed a double restriction, a restriction super imposed on a restriction already existing by virtue of the provisions of the Rent Control Act, and that this rendered it unreasonable. If by this submission learned Counsel meant that different results as to constitutional validity flowed from whether the impugned section was part of the provisions of the Rent Control Act, or was a section in an independent enactment, the argument is clearly untenable. If, however, that was not meant, but that in the context of the restrictions already imposed by the Rent Control Act section 19 of the Act was really unnecessary and therefore. an unreasonable restraint on the freedom of the landlord, what we have said earlier ought to suffice to repel the argument. Learned Counsel next drew our attention to section 38 of the Rent Control Act which reads: "The provisions of this Act and of the rules made thereunder shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any such law. " If this section stood alone, the argument of learned Counsel that by reason of the width and sweep of its language, even a special legislation, such as the Act was comprehended within the non obstante provision would have required serious consideration, but that has been rendered unnecessary, because even apart from section 19 of the Act which opens with the words: "Notwithstanding anything contained in any other law for tile time being in force", section 39 of the Act also 151 contains a non obstante clause on the same lines as section 38 of the Rent Control Act. The result therefore would be that the provisions of the special enactment, as the Act is, will in respect of the buildings in areas declared slum areas operate in addition to the Rent Control Act. The argument therefore that the Act is inapplicable to buildings covered by the Rent Control Act is without substance, particularly when it is seen that it is only when a decree for eviction is obtained that section 19 of the Act comes into play. We therefore consider that none of the points urged in support of the petition has any substance. The petitions fail and are dismissed. In the circumstances of the case there will be no order as to costs. Petitions dismissed.

The petitioner after a prolonged litigation and having ful filled all the conditions of the Delhi Rent Control Act, obtained decrees of ejectment against the tenants. 126 In the meantime the Slum Areas (Improvement and Clearance) Act, 956, came into force and the petitioner in accordance with section s.9 of the said Slum Areas Act applied to the competent authority for permission to execute the decree, which permission was refused inter alia on the grounds of hardship to the tenants and the human aspect of the case. The appeals therefrom were also rejected. The petitioner moved the Supreme Court for issue of a writ of certioraris to quash the orders on the ground that (1) section 19 of the Act was invalid and unconstitutional as violative of the petitioner 's rights guaranteed by articles 14 and 19(1)(f) of the Constitution, in as much as section 19 of the Slum Areas Act was a super imposition on the rights of the petitioner who had satisfied the requirements of the Rent Control Act before obtaining his decree, which amounted to unreasonable restrictions on the right to hold property guaranteed by the Constitution, and (2) that section 19(3) of the Slum Areas Act vested an unguided, unfettered, and uncontrolled power in an executive officer to withhold permission to execute a decree which the petitioner had obtained after satisfying the reasonable requirements of the law as enacted in the Rent Control Act, (3) The power conferred on the competent authority by section 19(3) of the Slum Areas Act was an excessive delegation of legislative power and therefore unconstitu tional. Held, that section 19 of the Slum Areas (Improvement and Clea rance) Act, 1956, was not obnoxious to the equal protection of laws guaranteed by article 14 of the Constitution. There was enough guidance to the competent authority in the use of his discretion under section 19(1) of the Act. The restrictions imposed by section 19 of the Act could not be said to be unreasonable. The guidance could be derived from the enactment and that it bears a reasonable and rational relationship to the object to be attained by the Act and in fact would fulfil the purpose which the law seeks to achieve, viz., the orderly elimination of slums, with interim protection for the slum dwellers until they were moved into better dwellings. The order of the competent authority in the present case was not open to challenge as it was in line with the policy and purpose of the Act. So long as the Legislature indicated in the operative provi sions of the statute with certainty, the policy and purpose of the enactment, the mere fact that the legislation was skeletal or that every detail of the application of law to a particular case, was not laid down in the enactment itself or the fact that a discretion was left to those entrusted with administering the law, afforded no basis either for the contention that there had been an excessive delegation of legislative power as to amount to an abdication of its functions, or that the discretion vested was uncanalised and unguided so as to amount to a carte blanche to discriminate. If the power or discretion has been conferred 127 in a manner which was legal and constitutional the fact that the Parliament could possibly have made more detailed provi sion, could not be a ground for invalidating the law. The freedom to 'hold property ' was not absolute but was subject, under article 19(5), to "reasonable restrictions" being A placed upon it "in the interests of the general public". The criteria for determining the degree of restriction on the right to hold property which would be considered reasonable, were by no means fixed or static, but must obviously vary from age to age and should be related to the adjustments necessary to solve the problems which communities faced from time to time. If law failed to take account of unusual situations of pressing urgency arising in the country and of the social urges generated by the patterns of thought, evolution and of social consciousness, it would have to be written down as having failed in the very purpose of its existence. Where the legislature enacted laws, which in its wisdom, was considered necessary for the solution of human problems, the tests of "reasonableness", had to be viewed in the context of the issues which faced the legislature. In the construction of such laws and particularly in judging of their validity the courts had to approach it from the point of view of furthering the social interest which it was the purpose of the legislation to promote, for the courts were not, in these matters, functioning as it were in vacuo, but as parts of a society which was trying, by enacted law, to solve its problems and achieve social concord and peaceful adjustment and thus furthering the moral and material progress of the community as a whole. That the provisions of the special enactment, the Slums Areas (Improvement and Clearance) Act, 1956, will in respect of the buildings in areas declared slum areas operate in addition to the Delhi & Ajmer Rent Control Act, 1952. Ramakyishna Dalmia vs justice Tendolkar; , , Harishankar Bagla vs State of Madhya Pyadesh, , M/s. Dwarka Prasad Laxmi Narain vs The State of Uttar Pradesh, ; , State of West Bengal vs Anwar Ali Sarkar; , , Kathi Ratting Rawat vs State of Saurashtra; , , Kedar Nath Bajoria vs State of West Bengal, ; and Pannalal Binjraj vs Union of India, ; , discussed.

ition (Criminal) No 359 of 1989. (Under Article 32 of the Constitution of India). Dr. Shankar Ghosh, Ashok Ganguli, Md. Nizamuddin and Ms. Mridula Ray, for the Petitioner. V.C. Mahajan, A. Subba Rao and P. Parmeshwaran for the Respondents. The Judgment of the Court was delivered by K.N. SAIKIA, J. Mr. Kubic Dariusz, a Polish national, holding a Polish passport arriving Calcutta by air from Singapore via Bangkok was arrested on 29.4.1989 under sec tion 104 of the Customs Act, by the officers of the Customs Department attached to Calcutta Airport, on the ground that he was carrying in his possession foreign gold weighing about 70 tolas. On 30.4.1989, he was produced before the Chief Judicial Magistrate, Barasat who remanded him to jail custody till 15th May, 1989. He was interrogated by Intelli gence officer when he made, corrected and signed his state ments in English. His application for bail was rejected by the Chief Judicial Magistrate. While still in custody, he was served with the impugned detention order dated 16.5.1989 passed under section 3(1) of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, herein after referred to as 'the COFEPOSA Act along with the grounds of detention. On 24.5. 1989 he was granted bail by the Calcutta High Court but the same could not be availed of because of the detention order which is now being challenged in this petition. 102 The detention order was passed with a view to preventing the detenu from smuggling goods; and it stated that the detaining authority, namely, the Additional Secretary to the Government of India in the department of Revenue, Ministry of Finance, was satisfied that the detenu was likely to smuggle goods into and through Calcutta Airport which was an area highly vulnerable to smuggling as defined in Explana tion 1 to section 9(1) of the COFEPOSA Act. In the grounds of detention it was stated, inter alia, that arriving at Calcutta by Thai Airways the detenu opted for the green Channel meant for the passengers not having any dutiable and/or prohibited goods for customs clearance and proceeded towards the exit gate; that he declared that he did not have any gold with him, but on search 7 gold bars weighing 70 tolas valued approximately at Rs.2,71,728 deftly concealed between the inner soles of the left and right sports shoes in specially made cavities were recovered; that in his voluntary statement before the customs officer he admitted the recovery; that he had been able to learn English as he was with some English people during the period of 2nd Ke dardham Expedition or Kedarnath Dham Expedition in the year 1987 and he was also learning English when he was in France in the year 1985; that scrutiny of his passport revealed that he visited Delhi on 6.2.1989 & 21.2. 1989, Trichi on 22.4.1989 and Calcutta on 29.4.1989; that he admitted to have been in India in 1986, 1987 & 1988; and that on chemi cal tests the sample was found to be containing 99.9% of gold. Shankar Ghosh, the learned counsel for the petitioner assails the detention order primarily on two grounds, name ly, that the detenu knew only the Polish language and did not know English wherefore he was unable to read and be informed of the grounds of detention given in English and he was not given the grounds of detention in a language under stood by him so as to enable him to defend himself; and that the representation submitted by him was not considered, acted upon or replied to at all by the detaining authority wherefore the detention order was liable to be quashed as violative of Article 22(5) of the Constitution of India. Mr. V.C. Mahajan, the learned counsel for the respond ents emphatically refutes the first ground submitting that the detenu was conversant with the English language as would appear from the answers to the questions put to him in course of interrogation by the Intelligence authorities and this was clearly stated in the grounds of detention, and consequently, there arose no question of his being furnished with the grounds of detention in Polish and not in English 103 language. Refuting the second submission Mr. Mahajan submits that the so called representation dated 13.6.1989 addressed to the Chairman, Central Advisory Board, COFEPOSA through the Superintendent, Central Jail, Dum Dum, Calcutta was duly sent to and received by the Chairman and the detenu appeared before the Advisory Board which, after hearing the detenu, found sufficient cause for his detention and there was, therefore, no question of the representation being separate ly dealt with by the Central Government. Besides, Mr. Maha jan submits, had the detaining authority accepted the state ment that the detenu did not know English, they would have been in a trap. Counsel would also submit that the so called representation dated 13.6.1989 was not a representation to the appropriate Government against the detention and could not be treated as such. Taking up the first submission, we find that Article 22(5) of the C of India provides that when any person is detained inpursuance of an order made under any law provid ing for preventive detention, the authority making the order shall, as soon as may be, I communicate to such person the grounds on which the order has been made and shall afford him the earliest opportunity of making a representation against the order. It is settled law that the communication of the grounds which is required by the earlier part of the clause is for the purpose of enabling the detenu to make a representation, the right to which is guaranteed by the latter part of the clause. A communication in this context, must, therefore, mean imparting to the detenu sufficient and effective knowledge of the facts and circumstances on which the order of detention is passed, that is, of the prejudi cial acts which the authorities attribute to him. Such a communication would be there when it is made in a language understood by the detenu, as was held in Harikisan vs The State of Maharashtra, ; In Razia Umar Bakshi vs Union of India, , Fazal Ali, J. held that the service of the grounds of detention on the detenu was a very precious constitutional right and where the grounds were couched in a language which was not known to the detenu, unless the contents of the grounds were fully explained and translated to the detenu, it would tantamount to not serving the grounds of detention to the detenu and would thus vitiate the detention ex facie. In Nainmal Partap Mal Shah vs Union of India, the detenu stated that he did not know the English language and, therefore, could not under stand the grounds of detention, nor he was given a copy of the grounds duly translated in 104 vernacular language. In the counter affidavit the detaining authority suggested that as the detenu had signed a number of documents in English, it must be presumed that he was fully conversant with English. Rejecting the contention it was held by this Court that merely because he may have signed some documents, it could not be presumed, in absence of cogent material, that he had working knowledge of English and under those circumstances there had been clear violation of the constitutional provisions of Article 22(5) so as to vitiate the order of detention. Thus what was considered necessary was a working knowledge of English or full expla nation or translation. In Surjeet Singh vs Union of India, ; , the petitioner, being served the detention order and the grounds in English, contended that English was not a language which he under stood and that this factor rendered it necessary for the grounds of detention to be served on him in Hindi which was his mother tongue and that the same having not been done, there was in law no communication of such grounds to him; and it was held that under those facts and circumstances it had not been shown that the petitioner had the opportunity which the law contemplated in his favour of making an effec tive representation against his detention, which was, there fore, illegal and liable to be set aside. Where it is stated that the detaining authority ex plained the grounds of detention to the detenu, Court in sists on adequate proof in the absence of any translation being furnished. Thus in Lallubhai Jogibhai Patel vs Union of India & Ors., ; , the detenu did not know English but the grounds of detention were drawn up in Eng lish and the detaining authority in affidavit stated that the Police Inspector while serving the grounds of detention fully explained the grounds in Gujarati to the detenu. Admittedly, no translation of the grounds of detention into Gujarati was given to the detenu. It was held that there was no sufficient compliance with the mandate of Article 22(5) of the Constitution which required that the grounds of detention must be communicated to the detenu. "Communicate" is a strong word. It requires that sufficient knowledge of the basic facts constituting the grounds should be imparted effectively and fully to the detenu in writing in a language which he understands, so as to enable him to make a purpose ful and effective representation. If the grounds are only verbally explained to the detenu and nothing in writing is left with him in a language which he understands, then that purpose is not served, and the constitutional mandate in Article 22(5) is infringed. This follows from the decisions in Harikisan vs State of Maharashtra, (supra) and Hadibandhu Das vs District Magistrate, [1969] 1 SCR ; 105 Mr. Ghosh relies on the decision in Ibrahim Ahmad Batti vs State of Gujarat, ; , wherein the detenu under the COFEPOSA Act was a Pakistani national to whom the detention order and the grounds of detention were served in English and he contended that as he did not know English and the grounds of detention and the document relied on were not furnished in Urdu within the statutory period the detention was bad. Urdu translation of all the documents and state ments referred to in the grounds for reaching the subjective satisfaction had not been supplied to the detenu in time and translations of quite a few of such documents and statements had not been supplied at all. The petitioner 's mother tongue seemed to be Urdu and a little knowledge of English figured. It was evident that the petitioner knew English figures, understood English words written in capital letters and was also conversant with talking in Hindi and Gujarati and therefore it was argued for the detaining authority that the non supply of Urdu translation of the documents could not be said to have caused prejudice to the petitioner in the matter of making representation against his detention. This Court held that the Explanation was hardly satisfactory and could not condone the non supply of Urdu translation of those documents. In that case with the assistance of counsel of either side the Court had gone through many of those documents and statements and for the Court it was not possi ble to say that most of them were statements of accused containing figures in English with English words written in capital letters. A large number of documents were in Hindi and Gujarati and were material documents which had obviously influenced the mind of the detaining authority in arriving at the subjective satisfaction and those were all in a script or language not understood by the detenu and, there fore, it was held that the non supply of Urdu translation of those documents had clearly prejudiced the petitioner 's right against his detention and hence the safeguards con tained in Article 22(5) was clearly violated. In the instant case the basis of the statement that the detenu did not know English is his representation dated 13.6.1989, that is, nearly one month after his detention. An English rendering of the representation is found at page 75 of the Writ Petition which is attested to have fully corre sponded to its original in Polish language. It is signed by the detenu and is addressed to the Chairman, Central Adviso ry Board (COFEPOSA), High Court of Delhi, through the Super intendent, Central Jail, Dum Dum, Calcutta. It reads: "Ref: Govt. of India, Finance Department and Revenue Department Order No. F No. 673/322/89 CUS VIII dated 16.05. 1989 106 SUPREME COURT REPORTS [1990] 1 S.C.R. Sub: Representation against my detention under COFEPOSA Respected Chairman, 1. I am a Polish national. I do not know any other language except Polish language. I cannot speak, write and read English language and do not know small English letters. I know how to write my name in Block letters. I have received all the documents concerning the above mentioned case in English language and for the fact that I do not know that language the documents were so complicated for me to understand. In view of the above facts, I kindly request your goodself to provide me with the order of detention together with the grounds of detention in my language (Polish lan guage) so that I can effectively present my defence. " While it is the settled law that the detention order, the grounds of detention and the documents referred to and relied on are to be communicated to the detenu in a language understood by him so that he could make effective represen tation against his detention, the question arises as to whether the courts have necessarily to accept what is stated by the detenu or it is permissible for the Court to consider the facts and circumstances of the case so as to have a reasonable view as to the detenu 's knowledge of the language in which the grounds of detention were served, particularly in a case where the detenu is a foreign national. If the detenu 's statement is to be accepted as correct under all circumstances it would be incumbent on the part of the detaining authority in each such case to furnish the grounds of detention in the mother tongue of the detenu which may involve some delay or difficulty under peculiar circum stances of a case. On the other hand if it is permissible to ascertain whether the statement of the detenu in this regard was correct or not it would involve a subjective determina tion. It would, of course, always be safer course in such cases to furnish translations in the detenu 's own language. We are of the view 107 that it would be open for the Court to consider the facts and the circumstances of a case to reasonably ascertain whether the detenu is reigning ignorance of the language or he has such working knowledge as to understand the grounds of detention and the contents of the documents furnished. In the instant case we find that when the detention order and the grounds of detention were served the detenu received them and acknowledged the receipt thereof, as it appears from the records, putting his signature in English. He did not complain that the grounds of detention were not understood by him. On the other hand in the very grounds of detention it was stated that in course of interrogation he answered the questions in English including the questions as to how he happened to learn English. The gist of his answers in this regard was also given in the grounds of detention. We have perused the statements and find that those contained number of informations peculiar to the detenu himself which could not have been communicated by him to the interrogators unless he knew the English language. We also find that in several places he corrected the statements putting appropri ate English words and signing the corrections. While the detention order was passed on 16 5 1989 his representation was admittedly dated only 13 6 1989. In the meantime bail petitions were moved on his behalf before the Chief Judicial Magistrate and the High Court. There is nothing to show that he did not give instructions to his counsel. After all, the detenu is not required to write an essay or pass any lan guage test. A working knowledge of English enabling him to understand the grounds would be enough for making a representation. He could very well send his representation in the language known by him. In Parkash Chandra Mehta vs Commissioner and Secretary, Government of Kerala & Ors., ; , Venilal D. Mehta, his daughter Miss Pragna Mehta and son Bharat Mehta were detained under the COFEPOSA Act by an order dated 19th June, 1984 and the detention order was challenged in this Court under Article 32 of the Constitution of India. They were alleged to have been in possession of 60 gold biscuits of foreign origin. After their arrest the father and his daughter were taken to the Central Excise and Customs De partment, Cochin where statements on their behalf were written in English by the daughter. The father Venilal D. Mehta put his signature in English as Balvant Shah but the daughter told the officers concerned that the correct name of her father was Venilal Mehta. In the writ petition it was the case of the father that he could not understand, read, speak or write English but could only sign his name in English. He was served 108 with the grounds of detention in English language on 20th June, 1984. A Hindi translation of the grounds of detention was served on 30th June, 1984. On 27th May, 1984 the father made a representation in Gujarati to the detaining authority praying that he was unable to read and write either in English or Hindi or 'Malayalam and the grounds of detention may be given to him duly translated in Gujarati. In Court it was contended that the order and grounds should have been communicated to the detenu in the language or languages they understood and Venilal Mehta understood nothing except Gujarati. He did not understand English or Hindi or Malaya lam. The Hindi translation was admittedly furnished beyond a period of 5 days and no exceptional circumstances were stated to exist. Following Harikisan vs State of Maharashtra (supra) and considering the definite case of Venilal Mehta, this Court observed that the facts revealed that the detenu Venilal Mehta was constantly in the company of his daughter as well as son and both of them knew English very well. The father signed a document in Gujarati which was written in English and which was his mercy petition in which he com pletely accepted the guilt of the involvement in smuggling. That document contained a statement "I myself am surprised to understand what prompted me to involve in such activity as dealing in Imported Gold. " On those facts and circum stances this Court observed: "There is no rule of law that common sense should be put in cold storage while considering Constitutional provisions safeguards against misuse of powers by authorities though these Constitutional provisions should be strictly con strued. Bearing in mind this salutary principle and having regard to the conduct of the detenu Venilal Mehta especially in the mercy petition and other communications, the version of the detenu Venilal in feigning lack of any knowledge of English must be judged in the proper perspective. He was, however, in any event given by 30th June, 1984 the Hindi translation of the grounds of which he claimed ignorance. The gist of the annexures which were given in Malayalam language had been stated in the grounds. That he does not know anything except Gujarati is merely the ipse dixit of Venilal Mehta and is not the last word and the Court is not denuded of its powers to examine the truth. He goes to the extent that he signed the mercy petition not knowing the contents, not understanding the same merely because his wife sent it though he was sixty years old and he was in business and he was writing at a 109 time when he was under arrest, his room had been searched, gold biscuits had been recovered from him. Court is not the place where one can sell all tales. The detaining authority came to the conclusion that he knew both Hindi and English. It had been stated so in the affidavit filed on behalf of the respondent. We are of the opinion that the detenu Veni lal Mehta was merely reigning ignorance of English." After referring to the decisions in Hadibandhu Das vs District Magistrate, Cuttack & Anr. (supra), Nainmal Partap Mal Shah vs Union of India & Ors. (supra), and Ibrahim vs State of Gujarat & Ors. (supra) this Court in Prakash Chan dra Mehta (supra) rejected the contention that the grounds of detention were not communicated to Venilal Mehta in a language understood by him. Considering the facts and circumstances of the instant case and in view of the fact that no objection regarding non communication of the grounds in a language understood by the detenu was made within the statutory period for furnish ing the grounds and the fact that the representation was beyond the statutory period, almost a month after the grounds were served, along with the detenu 's statements as to how he learnt English, we have no hesitation in holding that the detenu understood the English language, had working knowledge of it and was reigning ignorance of it, and there was no violation of Article 22(5) of the Constitution on the ground of non communication of the grounds of detention in a language understood by him. The first submission of the detenu has, therefore, to be rejected. Coming to the second submission, in the representation dated 13.6. 1989 the detenu clearly requested that he be provided with the order of detention together with the grounds of detention in his language (Polish language) so that he could effectively present his defence. He called it a "representation" against his detention under COFEPOSA Act. Admittedly, this representation was not disposed of by the appropriate Government and, indeed, has not been disposed of or acted upon till today. Mr. Mahajan submits that it having been addressed to the Chairman, Central Advisory Board it need not have been dealt with by the Central Government and it could not be regarded as representation at all and the Government smarted out of the trap by not admitting that the detenu did not know English. We are not inclined to accept this submission. Admittedly the representation was sent through the Superintendent, Central Jail, Dum Dum, 110 Calcutta. There was no scope to hold that what has been stated to be 'representation ' was not representation at all inasmuch as it only requested for translated copies of the grounds of detention and the annexed documents in Polish language. Supply of translated copies would have surely not affected the detention order ipso facto. In Smt. Shalini Soni vs Union of India, ; 1981(1) SCR 962, it has been held that under Article 22(5) no proforma for representation has been prescribed and a request for release of the detenu, therefore, has to be deemed a representation; so also a request to supply copies of documents etc. Oppor tunity to make a representation comprehends a request for supply of translated copies. Therefore, the detenu 's 'repre sentation ' asking for copies of documents must be held to have amounted to a representation and it was mandatory on the part of the appropriate Government to consider and act upon it at the earliest opportunity and failure to do so would be fatal to the detention order. There has been a catena of decisions of this Court that the representation of the detenu must be considered by the appropriate Government and Article 22(5) does not say which is the authority to whom representation shall be made or which authority shall consider it. But it is indisputable that the representation may be made by the detenu to the appropriate Government and it is the appropriate Government that has to consider the representation as was reiterated in John Martin vs State of West Bengal, ; (3) SCR 211. It is settled law that delay in disposing the represen tation when inordinate and unexplained the detention would be bad and the detenu must be ordered to be released forth with. Chandroo Kundan vs Union of India, AIR 1980 SC 1123; Pabitra N. Rana vs Union of India, ; , Saleh Mohammed vs Union of India, ; Kamla Kanyalal Khusahalani vs State of Maharashtra, ; are some of the decisions settling this proposition of law. In Rattan Singh vs State of Punjab & Ors., ; , it was held that section 11(1) of the COFEPOSA Act confers upon the Central Government the power of revocation of an order of detention made by the State Government or its officer. That power, in order to be real and effective, must imply the right in a detenu to make a representation to the Central Government against the order of detention. The failure of the Jail Superintendent to either forward the representation to the Government concerned or to have for warded the same to the State Government with a request for their onward transmission to the Central Government in that case was held to have 111 deprived the detenu of his valuable right to have his deten tion revoked by the Government. The continued detention of the detenu was. therefore, held illegal and the detenu was set free. In the instant case though the representation was addressed to the Chairman, Central Advisory Board the same was forwarded by the Jail authorities and it must be taken to have been a representation to the appropriate Government which was to consider it before placing it before the Advi sory Board and the same having not been done Article 22(5) has to be held to have, been violated. In Kirit Kumar Chaman Lal Kundaliya vs Union of India & Ors., [1981] 2 SCC 426, a case under the COFEPOSA Act, where the order of detention was made by the Home Minister and the representation made by the detenu had been rejected not by the Home Minister but by the Secretary, this Court held that the representation had been rejected by an authority which had no jurisdiction at all to consider or pass any order on the representation of the detenu and that, therefore, ren dered a continued detention of the petitioner void, follow ing Santosh Anand 's case , where it was held that the representation was not rejected by the detaining authority and as such the constitutional safeguards under Article 22(5) could not be said to have been strictly ob served or complied with. In B. Sundar Rao & Ors. vs State of Orissa, , where the detention was under the Orissa Preventive Detention Act, 1970 and sections 7 & 11 thereof conferred the right on the detenu to make represen tation and have it considered by appropriate authority it was held that such consideration was independent of any action of Advisory Board as there was necessity of Govern ment to form opinion and judgment before sending the case to the Advisory Board. In Vimalchand Jawantraj Jain vs Shri Pradhan & Ors. , ; , it was held by this Court that under Article 22(5) independent of the reference to the Advisory Board, the detaining authority must consider the representa tion at the earliest and come to its own conclusion before confirming the detention order and consideration and rejec tion of the representation subsequent to report of the Advisory Board would not cure the defect. It was clearly held that it is no answer for the detaining authority to say that the representation of the detenu was sent by it to the Advisory Board and the Advisory Board had considered the representation and then made a report in favour of deten tion. Even if the Advisory Board had made a report upholding the detention the appropriate Government is not bound by such opinion and it may still, on considering the represen tation of the 112 detenu and keeping in view all the facts and circumstances relating to the case, come to its own decision whether to confirm the order of detention or to release the detenu; as in that case there was nothing to show that the Government considered the representation before making the order con firming the detention. The Constitutional obligation under Article 22(5) was not complied with. In the instant case there was no consideration before and even after the Adviso ry Board considered the case of the detenu. It can not therefore, be said that the representation was disposed of in accordance with law. Mr. Ghosh faintly submits on merits of the case that a single instance of possessing 70 tolas of gold in gold bars was not enough to genuinely satisfy the detaining authori ties to resort to preventive detention of the petitioner who is a Polish national and not resident in India. It is true that the detention order was passed with a view to prevent ing the detenu from repeating smuggling activities. That the detenu in the particular act indulged in smuggling could not of course be denied. It is stated in the counter that the detention of persons under the COFEPOSA Act serves two purposes: (1) to prevent the person concerned from engaging himself in an activity prejudicial to the conservation of foreign exchange and also preventing him from smuggling activities and thereby to render him immobile by the detain ing authority so that during that period the society is protected from such prejudicial activities on the part of the detenu; and (2) to break the links between the persons so engaged and the source of such activity and from his associates engaged in that activity or to break the continu ity of such prejudicial activities so that it would become difficult, if not impossible, for him to resume the activi ties. There is undoubtedly scope for interpreting that the above two purposes envisage continuous residence of the person engaged in smuggling and as such may be more readily applicable to a resident of the country. But such habitual smuggling activity may not have similarly been envisaged in respect of a foreign national who is not a resident of this country. The customs Act itself makes appropriate provisions for adjudication, confiscation and punishment for smuggling and prevents possible repetition or recurrence. Preventive detention of a foreign national who is not resident of the country involves an element of international law and human fights and the appropriate authorities ought not to be seen to have been oblivious of its international obligations in this regard. The universal declaration of human fights include the fight to life, liberty and security of person, freedom from arbitrary arrest and detention; the right 113 to fair trial by an independent and impartial tribunal; and the right to presume to be an innocent man until proved guilty. When an act of preventive detention involves a foreign national, though from the national point of view the municipal law alone counts in its application and interpre tation, it is generally a recognised principle in national legal system that in the event of doubt the national rule is to be interpretted in accordance with the State 's interna tional obligations as was pointed out by Krishna Iyer, J. in Jolly George Verghese vs The Bank of Cochin, ; There is need for harmonisation whenever possible bearing in mind the spirit of the Covenants. In this context it may not be out of place to bear in mind that the funda mental rights guaranteed under our Constitution are in conforming line with those in the Declaration & The Covenant on Civil and Political Rights and the Covenant, Economic, Social and Cultural Rights to which India has become a party by ratifying them. Crimen Trahit personam. The crime carries the person. The commission of a crime gives the court of the place where it is committed jurisdiction over the person of the offender. Legal relations associated with the effecting of legal aid on criminal matters is governed in the interna tional field either by the norms of multilateral interna tional conventions relating to control of crime of an inter national character or by special treaties concerning legal cooperation. Smuggling may not be regarded as such a crime. The system of extradition of criminals represents an act of legal assistance by one State (the requestee) to another State (the requestor) with the aim of carrying out a crimi nal prosecution, finding and arresting a suspected criminal in order to bring him to court or for executing the sen tence. In concluding such convention the States base them selves on principles of humanitarianism in their efforts to contribute to the more effective achievement of the objec tives of the correction and re education of violators of the law. Where such conventions exist, the citizens of a State who were convicted to deprivation of freedom in another signatory State are in accordance with mutual agreement of States, transferred to the country of which they are citizens to serve their sentences. The transfer of the convicted person may take place only after the verdict has entered into legal force and may be carried out on the initiative of either of the interested States. The punish ment decided upon with regard to a convicted person is served on the basis of the verdict of the State in which he was convicted. On the strength of that verdict the competent court of the State of which the person is a citizen adopts a decision concerning its implementation and determines, in accordance with the law of its own State, the same period of deprivation of freedom as was assigned under the verdict. While such ameliorative practices may be available in case of a foreign 114 national being criminally prosecuted, tried and punished, no such proceedings are perhaps possible when he is preventive ly detained. A preventive detention as was held in Rex vs Holiday, 1917 AC 268 "is not punitive but precautionary measure. " The object is not to punish a man for having done something but to intercept him before he does it and to prevent him from doing it. No offence is proved, nor any charge is formulated; and the justification of such deten tion is suspicion or reasonable probability and there is no criminal conviction which can only be warranted by legal evidence. In this sense it is an anticipatory action. Pre ventive justice requires an action to be taken to prevent apprehended objectionable activities. In case of punitive detention the person concerned is detained by way of punish ment after being found guilty of wrong doing where he has the fullest opportunity to defend himself, while preventive detention is not by way of punishment at all, but it is intended to prevent a person from indulging in any conduct injurious to the society. There may, therefore, be cases where while a citizen and resident of the country deserves preventive detention apart from criminal prosecution, in case of a foreign national not resident of the country he may not be justifiably subjected to preventive detention in the event of which no international legal assistance is possible unlike is case of criminal prosecution and punish ment. Considering the facts and circumstances of the instant case, however, we find sufficient evidence of the detenu having visited this country though on earlier occasions he was not found to have been carrying on such smuggling activ ities. However, in view of our decision in the earlier submissions we do not express any opinion on this submis sion. In the result we find force in the second submission and hold that continued detention of the detenu has been ren dered illegal by nonconsideration of his representation by the appropriate Government according to law resulting in violation of Article 22(5) of the Constitution; and he is to be set at liberty forthwith in this case. R.N.J. Petition allowed.

Mr. Kubic Dariusz a Polish national was arrested on 29.4.89 by the Customs Department on the ground that he was in possession of foreign gold weighing about 70 tolas. On 30.4.89 he was produced before the Chief Judicial Magistrate who remanded him to jail custody till 15th May 89. His bail application was rejected by the Chief Judicial Magistrate. While still in custody he was served with the impugned Detention Order dated 16.5.89 under the COFEPOSA Act along with the grounds of detention. On 24.5.89 he was granted bail by the Calcutta High Court but the same could not be availed of because of the detention order which the peti tioner challenged by preferring the Writ Petition before this Court. The detention order is assailed on two grounds, namely that the detenu did not know English wherefore he was unable to read and be informed of the grounds of detention to enable him to defend himself and secondly that the represen tation submitted by him through the Superintendent of Jail to Central Advisory Board, COFEPOSA was neither considered nor acted upon or replied to at all by the detaining author ity wherefore the detention order was liable to be quashed as violative of Article 22(5) of the Constitution of India. On behalf of the respondent it is contended that the detenu was 99 conversant with the English language as would appear from his replies to the questions put to him in the course of interrogation. Hence there was no question of furnishing the grounds to him in Polish language. Refuting the second contention it was stated that after hearing the detenu the Advisory Board found sufficient cause for his detention. It was also urged by the respondent that the so called repre sentation of the detenu dated 13.6.89 was not a representa tion to the appropriate Govt. against the detention and could not be treated as such. Allowing the Writ Petition and setting at liberty the detenu, this Court, HELD: Continued detention of the detenu has been ren dered illegal by non consideration of his representation by the appropriate government according to law, resulting in violation of Article 22(5) of the Constitution of India. [114F] Where the grounds are couched in a language which was not known to the detenu, unless the contents of the grounds were fully explained and translated to the detenu it would tantamount to not serving the grounds of detention and would thus vitiate the detention ex facie. It is the settled law that the detention order, the grounds of detention and the documents referred to and relied upon are to be communicated to the detenu in a language understood by him so that he can make effective representation against his detention. To ascertain whether the detenu knew the language in which the grounds were served or was reigning ignorance, it is open to Court to consider the circumstances and facts of the case. The detenu is not required to write an essay or pass any language test. A working knowledge of English enabling him to understand the grounds would be enough for making a representation. He could very well send his representation in the language known by him. [103G; 106E H; 107A E] No hesitation there is in the instant case in holding that the detenu understood the English Language, had the working knowledge of it and was reigning ignorance of it. [109E] Though the representation was addressed to the Chairman Central Advisory Board, the same was forwarded by the Jail authorities and it must be taken to have been a representa tion to the appropriate government which was to consider it before placing it before the Advisory Board and the same having been not done, Article 22(5) of the Constitution has to be held to have been violated. Delay in disposing of 100 the representation when inordinate and unexplained the detention would be rendered bad and the detenu must be ordered to be released forthwith. [111A B; 110E] Preventive detention of a foreign national who is not resident of the country involved an element of international law and human rights and the appropriate authorities ought not to be seen to have been oblivious of the international obligation in this regard. The universal declaration of human rights include the right to life, liberty and security of person, freedom from arbitrary arrest and detention; the right to fair trial by an independent and impartial tribunal and the right to presume to be innocent until proved guilty. [112G H; 113A] When an act of preventive detention involves a foreign national, though from the national point of view the munici pal law alone counts in its application and interpretation, it is generally a recognised principle in national legal system that in the event of doubt the national rule is to be interpreted in accordance with the States ' international obligations. [113A B] The fundamental rights guaranteed under our Constitution are in conforming line with those in the Declaration and the Covenant on Civil and Political Rights and the Covenant, Economic, Social and Cultural Rights to which India has become a party by ratifying them. Crimen Trahit personam. The crime carries the person. Smuggling may not be regarded as such a crime. [113C D] There may, therefore, be cases where while a citizen and resident of the country deserves preventive detention apart from criminal prosecution, in the case of a foreign national not resident of the country he may not be justifiably sub jected to preventive detention in the event of which no international legal assistance is possible unlike in cases of criminal prosecution and punishment. [114D E] Harikisan vs The State of Maharashtra, [1962] 2 Suppl. SCR 918; Razia Umar Bakshi vs Union of India, ; Nainmal Partap Mal Shah vs Union of India, ; Surjeet Singh vs Union of India, ; ; Lallubhai Jogibhai Patel vs Union of India & Ors., ; ; Hadibandhu Das vs District Magistrate, ; ; [brahim Ahmad Batti vs State of Gujarat, ; ; Prakash Chandra Mehta vs Commissioner and Secretary, Government of Kerala & Ors., ; ; Smt. Shalini Soni vs Union of India, ; ; John Martin vs State of West 101 Bengal; , ; Chandroo Kundan vs Union of India, AIR 1980 SC 1123; Pabitra N. Rana vs Union of India, ; ; Saleh Mohammed vs Union of India, ; Kamla Kanyalal Khushalani vs State of Maharashtra, ; ; Rattan Singh vs State of Punjab & Ors., ; ; Kirit Kumar Chaman Lal Kundaliya vs Union of India & Ors., [1981] 2 SCC 426; Santosh Anand 's case, ; B. Sundar Rao & Ors. vs State of Orissa, ; Vimalchand Jawantraj Jain vs Shri Pradhan & Ors., ; ; Jolly George Verghese vs The Bank of Cochin, ; and Rex vs Halliday, , referred to.

No. 192 of 1972. (Under Article 32 of the Constitution of India for tile enforcement of fundamental rights.) Hiralal fain for the petitioner. P. K. Chakraborty and G. section Chatterjee for the respondent. (1) and (2) of the Maintenance of Internal Security Act, 26 of 1971 (hereinafter called the Act). The petitioner Borjahan Gorey, who claims to be a laborer working in Gogalbhai Jute Mills was arrested on October 5, 1971 pursuant to the impugned order of detention. The grounds of detention were served on him on the same day. He made a representation to the State Government on October 25. 1971 which was duly considered by the said Government on October 29, 1971. His case was placed before the Advisory Board on November 1, 1971 as required by section 10 of the Act and the said Board made_ its report on December 10, 197 1. As in the opinion of the Board there was sufficient cause for the petitioner 's detention the State Government confirmed the impugned order on December 23, 1971 and communicated this fact to the petitioner on the same day. The grounds for the petitioner 's detention duly communicated to him under section 8(1) of the Act are : "(1) On 7 7 71 after 19.30 hours you and your associates As to Patra, Netai Patra, Habi Khara and 753 others terrorised the members of the public, who assembled in the field of Shri Saraj Ghosal near Fuleswar Rly. Station to decide the actions to be taken against the anti social activities, like snatching away valuables from the passengers from running trains, carried on by you and your associates, by exploding bombs at a distance of 8/10 cubits from the place of meeting. The local people being panicky started running helter and skelter but you and your associates obstructed them by brandishing. swords and iron rods. On 6 8 71 at about 11.45 hours, you and your associates Netai Patra, Asto Patra, Amjed, Habi Khara and 15/20 others being armed with ballam, sword and bombs etc., formed an unlawful assembly in front of the shop _of Pranab Sarkar of Kalsafa market, P. section Uluberia and 'attacked one Basudev Sarkar causing severe injuries on his person. When resisted by the members of the public, you and your associates attacked them causing injuries to some of them and terrorised them by hurling bombs towards them. Being panickstricken, the local people started to run aimlessly and the market was closed instantaneously. You and your associates created a reign of terror and continued your rowdy activities till a police party reached there. " The first point presented by Shri Hiralal Jain, learned counsel appearing as amicus curiae against the petitioner 's detention is that the grounds, on the basis of which the impugned detention order has been made, disclose facts which would squarely fall within the purview of sections 109 and 110 of the Code of Criminal Procedure and, therefore, the petitioner should have been appropriately proceeded against under those sections rather than detained under section 3 of the Act. Our attention was not drawn by the learned counsel to any statutory provision, nor was any precedent or principle cited by him in suport of this contention. Now merely because a detenu is liable to be tried in a criminal court for the commission of a criminal offence or to be proceeded against for preventing him from committing offences dealt with in Chapter VIII of the Code of Criminal Procedure, would not by itself debar the government from taking action for his detention under the Act. The scheme of the Act as disclosed by its clear language does not lend any support to the contention urged by Shri Jain. Besides, the object and purpose of bringing the Act on the statute book also clearly shows that in view of the prevailing situation in the country 754 and the developments across the border in July, 1971 the need was felt for urgent and effective preventive action in the interest of national security and the Act was retrospectively enacted to replace the Maintenance of Internal Security Ordinance, 1971. The preventive detention provided by the Act is apparently designed to deal urgently and effectively with the more serious situation,, inter alia, affecting the security of India and the maintenance of public order as contemplated by section 3 of the Act. The liability of the detenu also to be tried for commission of an offence or to be proceeded against under Chapter VIII of the Code of Criminal Procedure which deals with prevention of less serious disturbances and requires execution of bonds on the basis of the acts disclosed in the grounds do not in any way as a matter of law affect or impinge upon the full operation of the Act. The reason is obvious. Judicial trial for punishing the accused for the commission of an offence as also preventive security proceedings in a criminal court against a person Merely for keeping the peace or for good behavior under Chapter VIII ,of the Code of Criminal Procedure, we may appropriately point out, is a jurisdiction distinct from that of detention under the Act, which has in view, the object of preventing the detenu from acting in any manner prejudicial inter alia to the security of the State or maintenance of public order. The fields of these two jurisdictions are not co extensive nor are they alternative. The jurisdiction under the Act may be invoked, when the available evidence does not come up to the standard of judicial proof but is otherwise cogent enough to give rise to suspicion in the mind of the authority concerned that there is a reasonable likelihood of repletion of past conduct which would be prejudicial inter alia to the security of the State or the maintenance of public order or even when the witnesses may be frightened or scared of coming to a court and deposing about past acts on which the opinion of the authority concerned is based. This jurissdiction is sometimes called the jurisdiction of suspicion founded on past incidents and depending on subjective satisfaction. The jurisdiction for trial or for preventive proceedings under Chapter VIII. Code of Criminal Procedure cannot be successfully invoked in such a situation. In other words a case under the Code of Criminal Procedure whether punitive or preventive depends on the proof of objective facts which have already taken PI ace whereas a case under the Act providing for preventive deten tion depends on the subjective satisfaction of the authorities concerned of the likelihood of the person to be detained to act in future in a manner similar to the one seen from his past acts. The authorities mentioned in section 3(2) which include the District Magistrate are, in our view, best suited, to decide whether it is necessary to proceed under the Act which decision rests on their subjective satisfaction. The grounds of detention relate 755 to the past acts on which the opinion as to the likelihood of the repetition of such or similar acts is based and those grounds are furnished to the detenu to inform him as to how and why the subjective satisfaction has been arrived at so as to enable him to represent against them. The fact, therefore, that a prosecution under the Code could also have been launched is not a valid ground for saying that it precludes the authority from acting under the Act. This contention is thus devoid of merit. We have discussed this aspect somewhat elaborately go as to eliminate any misunderstanding of the True import of our decision and to exclude the possibility of any impression that the Act vests in the authority arbitrary power to select one or the other course dealing,, with the same or exactly similarly situation. The learned counsel then referred us to the petitioner 's denial in his representation of the truth of the allegations contained in the two grounds. According to him on the date on which the incident mentioned in ground No. 1 is alleged to have occurred he was present on duty in the mill and, therefore, he could not have participated in that occurrence. That ground must, therefore, be considered to be false, con . tended Shri Jain. In so far as the second ground is concerned, according to the petitioner, at the time of the alleged incident, i.e., at 11.45 a.m. on August 6, 1971, he was at the dispensary of the doctor appointed by the Employees ' State Insurance for Gogalbbai Jute Mills where he had eone with the object of taking medical 'leave for a couple of days because he was sick and was running temperature. In other words the petitioner ,pleads alibi with respect to both the grounds. On the basis of these contentions, according to Shri Jain, the impugned order should be held to be based on allegations which are not true. The impugned order of detention is accordingly contended to be insupportable being based on non existing facts. We are unable to agree with this submission. The District Magistrate who made the impugned order has, in the counter affidavit, sworn "that the detenu petitioner is one of the notorious rowdies and anti social elements of P.S. Pudubalia, District Howrah. He has further added that after receiving reliable information relating to the alleged anti social and prejudicial activities of the, detenu petitioner relating to the maintenance of public order he passed the order of detention under the Act. In para 7 of the counter affidavit he affirmed both the grounds in express language. We do not find any cogent ground for not accepting the facts affirmed in the counter affidavit. The District Magistrate is expected to know the situation prevailing in the district and to take suitable action for the maintenance of public order. His assessment of facts and his opinion on the 756 propriety of making a detention order must be given due consideration and respect by this Court. The petitioner 's representation was also duly considered by the State Government and rejected. The Advisory Board, after hearing the detenu petitioner in person also expressed the opinion that there was sufficient cause for his detention. In these circumstances, it is not possible for us in habeas corpus proceedings to hold an independent enquiry into the question whether or not the grounds on which the impugned order of detention is passed are false or non existent. Nor can the impugned order be held to be mala fide as suggested by Shri Jain. There being no legal infirmity in the order of the petitioner 's detention and, the facts affirmed by_ the District Magistrate, which must be accepted on the facts and circumstances of this case to be true, being relevant to the object of detention, this petition must fail and is dis missed.

The petitioner was detained by an order of the District Magistrate, Howrah and under the provisions of the Maintenance of Internal Security Act (26 of 1971). He was supplied the grounds of detention. He made a representation which was considered by the authorities under the Act and rejected. A petition under article 32 of the Constitution was then filed and the petitioner urged : (i) that the 'facts mentioned in the grounds of detention came within the purview of sections 109 and 110 of the Code of Criminal Procedure and therefore his detention on those facts under section 3 of the Act was unjustified; (ii) that the facts mentioned in the grounds were not correct and the order of detention was mala fide. Dismissing the petition, HELD : (i) Merely because a detenu is liable to be tried in Criminal Court for the commission of criminal offences or to be proceeded against for preventing him from committing offences dealt with in Chapter VIII of the Code of Criminal Procedure would not by itself debar government from taking action for his detention under the Act. The Act was passed in order to meet a serious situation affecting the security of India and the maintenance of public order as contemplated by section 3 of the Act. Judicial trial for punishing the accused for the commission of an offence as also preventive security proceedings in a criminal Court against a person merely for keeping the peace or for good behaviour is a jurisdiction distinct from that of detention under the Act which has in view the object of preventing the detenu from acting in any manner prejudicial Inter alia to the security of the State or maintenance, of public order. The fields of these two jurisdictions, are not co extensive nor are they alternative ' The jurisdiction under the Act may be invoked when the available evidence does not come up to the standard of judicial proof but is otherwise cogent enough to give rise to suspicion in the mind of the authority concerned that there is reasonable likelihood of repetition of past conduct which would be prejudicial inter alia to the security of the State or the maintenance of public order or even when the witnesses may be frightened or scared of coming to the Court and deposing about past acts on which the opinion of the authority concerned is based. This jurisdiction is sometimes called the Jurisdiction of suspicion founded on past incidents and depending on subjective satisfaction. The authorities mentioned in section 3(2) which include the District Magistrate are best suited to decide whether it is necessary to proceed under the Act, which decision rests on their subjective satisfaction. The grounds of detention relate to the past acts on which the opinion as to the likelihood of the repetition of such or similar acts is based, and those grounds are 'furnished to the detenu to inform 752 him as to how and why the subjective satisfaction has been arrived it so as to enable him to represent against them. The fact, therefore that a prosecution under the Code could have also been launched is not a valid ground for saying that it precludes the authority from acting under the Act. (2) The District Magistrate is expected to know the situation prevailing in the district and to take suitable action for the maintenance of public order. His assessment of facts and his opinion on the propriety of making a detention order must be given due consideration and respect by this Court. The petitioner 's representation was also duly considered by the State Government and rejected. The Advisory Board after hearing the detenu petitioner in person also expressed opinion that there was sufficient cause for his detention. In these circumstances it was not possible for this Court in habeas corpus proceedings to hold an independent inquiry into the question whether or not the grounds on which the impugned order or detention was passed were false or non existent. Nor could the impugned order be held to be mala fide. There being no legal infirmity in the order of the petitioners detention, and the 'facts affirmed by the District Magistrate which must be accepted on the facts and circumstances of the case to be true, being relevant to the object of the detention, this petition must fail.

ivil Miscellaneous 876 Petition No. 1483 of 1987. (In Civil Appeal No. 573 of 1974). From the Judgment and order dated 9.4.1973 of the Allahabad High Court in Special Appeal No. 537 of 1970. P.K. Bajaj and S.K. Bagga for the Appellants. G.S. Chatterjee for the Respondents. The following order of the Court was delivered: O R D E R The appeal was listed on 7.5.1987 before a bench consisting of Hon 'ble Mr. Justice G.L. Oza and Hon 'ble Mr. Justice K.N. Singh. The order recited "Heard learned counsel for the respondent for sufficient time. No one appears for the appellants. The appeal is, there fore, dismissed in default." This C.M.P. was subsequently filed for recalling the order on the ground that the learned counsel was busy in the Delhi High Court on that date. It was further stated there "But when after arguing two cases viz. Company Petition No. 110 of 1983 Ishwar Singh and others vs Dharam Singh and others, (final hearing) and also other regular matter Suit No, 49 of 1976 A.C. Tamra vs Mercury Production (part heard) in the High Court of Delhi at New Delhi he (meaning thereby the counsel for the appellant) came to this Hon 'ble Court, he came to know that this appeal had reached for hearing and was dismissed for default". This petition is signed not by the appellant but by M/s. Bagga & Co., Advocates for the appellant. It is verified by an affidavit of one P.K. Bajaj who state that he had been instructed to appear and argue the appeal. We are not sure as to who is making this application and whether the appellant is at all aware of these events. We find no justification for recalling the order on the plea that the counsel was busy somewhere. We were not inclined to act upon this kind of plea but on the basis that otherwise the appellant would suffer loss for no fault of his, we have decided to hear the counsel. This practice should not be permitted in this Court any further. On perusal of the judgment of the High Court we find no merit in this appeal. By the impugned judgment of the High Court of Allahabad, writ petition was allowed and the order of the Deputy Director of Consolidation dated the 25th October, 1967 was quashed. 877 The learned Judge has recorded that the respondents herein A have been held to be in possession in 1958 when the case started under Section 145 of the Code of Criminal Procedure and their date of occupation could not be later than 8.5.1958 with the result that the sjx years ' period of limitation for a suit for their eviction under Section 209 of the Zamindari Abolition and Land Reforms Act would start to run from 1st July, 1958 and would expire on 30th June, 1964 i.e. before the consolidation operations commenced. It was, however, contended on behalf of the appellants herein that there was a break in the possession of the respondents between 8.5.1958 and 29.1.1960, but it was obvious that though the land was in the custody of the criminal court during that period the court must be deemed to have been holding possession on behalf of the person eventually found to be entitled to possession. We are of the opinion that the learned Judge was right in so holding. It was argued that there was no justification for treating the respondents to be entitled for possession of the land as they had occupied the land as mere trespassers but it was found that they had matured their title by adverse possession and there could be no warrant for denying them the status of rightful owners. The learned Judge did in the absence of any finding by a competent court negativing the respondents claim was of the opinion that they must be deemed to have been in persons entitled to possession of the disputed plots with the result that during the period between 8.5.1958 and 29.1.1960 the criminal court must be held to have been in possession of the land. In that view of the metter there was no break in the possession of the respondents and they must be held to have been in continuous occupation at least from May, 1958. In that view of the matter the other contentions urged before the High Court need not be noticed. In that view of the matter the appeal fails and is dismissed accordingly. No one appears for the respondent. Therefore, there is no question of costs. We, however, direct the Registry to transmit a copy of this order to the appellant directly at the costs of Advocate for the appellant. S.L. Appeals dismissed.

The High Court allowed the writ petition and quashed the order of the Deputy Director of consolidation. The appellants filed appeal in this Court against the order of the High Court. The appeal came up for hearing on May 7, 1987, when it was dismissed for default of appearance, where after an application for restoration was filed on the ground that counsel for the appellants was busy in the High Court at the time of hearing of the appeal. This Court found no justification for recalling its order, dismissing the appeal, but in view of the fact that the appellants would suffer for no fault of theirs, decided to hear the matter, directing that this practice should not be permitted in this Court any further. Dismissing the appeal (on merits), the Court, ^ HELD: There is no merit in the appeal. The High Court was right in holding that the respondents (concerned) were in possession of the land in 1958 when the case started under section 145 of the Cr. P.C. and their date of occupation could not be later than 8.5.1958, so that the six years ' period of limitation for a suit for their eviction under section 209 of the Zamindari Abolition and Land Reforms Act would start running from July 1, 1958 and expire on June 30, 1964 i.e. before the consolidation operations commenced. The appellants contended that there was a break in the possession of the respondents concerned between 8.5.1958 and 29.1.60, but during that period the land was in the custody of the Criminal Court which must be deemed to have been holding possession of the land on behalf of the person eventually found to be entitled to possession. The respondents had matured their title by adverse possession and there could be no warrant for denying them the status of rightful owners. There was no break in the possession of the respondents and they must be held to have been in continuous occupation at least from May, 1958. 1877A F]

ons Nos. 69 and 71 of 1967. Writ Petition under article 32 of the Constitution of India for the enforcement of fundamental rights. R. H. Dhebar, R. Gopalakrishnan and section P. Nayar, for the respondent (in both the petitions). The Judgment of the Court was delivered by Wanchoo, C. J. These two petitions under Art 32 of the Constitution raise common questions of law and will be dealt with together ' The petitioners were detained under, r 30(1)(b) of the Defence of India Rules, 1962 (hereinafter referred to as the Rules), under orders of the Government of Jammu & Kashmir in March, 1965. Their detention was continued from time to time after review under r.30A. One of such reviews was made in February, 1967. At that time the scope of review was governed by judgment dated June 1, 1965 of Shah J. (Vacation Judge) in Sadhu Singh vs Delhi Administration(1). In that case it was held that r.30A re lating to re view did not require, a judicial approach to the question (1) ; 199 of continuance of detention. No opportunity therefore was given to the petitioners to represent their cases when the review was made in February, 1967 and their detention was continued for a further period of six months. Then came the judgment of this Court in P. L. Lakhanpal vs the Union of India.(1) That judgment overruled the decision of Shah J. and held that the function of review under r.30A was quasi judicial and therefore in exercising it, rules of natural justice had to be complied with. In view of this judgment what the respondent did was to hold another review in April, 1967. At that time notice was given to the petitioners and they were given a hearing. Thereafter order was passed in each case on April 27, 1967 by which the State Government directed the continuance of the detention orders for a further period. In the meantime the present petitions had been filed on March 30, 1967 and were based on the judgment of this Court in Lakhanpal 's case(1). It is not disputed on behalf of the respondent that Lakhanpal 's case(1) will apply to the present petitions and the petitioners will be entitled to release because the procedure of a quasi judicial tribunal was not followed when earlier reviews were made from August, 1965 to February, 1967. Reliance is however placed on behalf of the respondent on the review made in April, 1967 and it is urged that that review was in accordance with the view taken by this Court in Lakhanpal 's(1) case and therefore continuance of detention thereafter is justified. Further it is urged that even if this contention is not correct the State Government has power to pass a fresh order of detention on the same facts, and even if we allow the present petitions, we should make it clear that the State Government has such power. It is urged in this connection that the judgment of Bhargava J. in Avtar Singh vs The State of Jammu and Kashmir(1) is not correct. The first question therefore is whether the orders of review dated April 27, 1967 are sufficient for the continuance of detention, even though the earlier orders of review passed from August, 1965 to February, 1967 were not properly made in view of the judgment of this Court in Lakhanpal 's case(1). Reliance in this connection is placed on the judgment of this Court in A. K. Gopalan vs The Government of India.(1) In that case it was held that "it is well settled that in dealing with a petition for habeas corpus the court has to see whether the detention on the date on which the application is made is legal if nothing more has intervened between the date of the application and the date of hearing. " So it is urged for the respondent that as the order passed on review (1) ; (2) W. Ps. 68, 70, 79, 89, 92, of 1967 (decided on June 9, 1967). (3) ; 200 under r.30A continuing detention on April 27, 1967 was in accordance with the judgment of Lakhanpal 's case(,) the earlier orders of review made between August, 1965 and February, 1967 which were improper made no difference. We cannot accept this contention. In Gopalatn 's case(1) what had happened was that a fresh order was made on March 4, 1965 and the detention was under that order. The principle laid down in that case is unexceptionable; but the question is whether that principle applies to the facts of the present case. In Gopalan 's case( ' ') the question that arose was whether the fresh order of March 4, 1965 under which detention was made was legal, and the Court did not look at the earlier order which had been cancelled by the fresh order of March 4, 1965. In the present cases however no fresh order was made on April 27, 1967 and this distinguishes the present cases from Gopalan 's case(1). Rule 30A of the Rules was originally not in the Rules and was introduced some time later. Before the introduction of r.30A the position was that a detention made under r.30 would be of indefinite duration. But r.30A provided for review of detention orders passed under r 30, and such review was to be made at an interval of not more than six months. On such review the Government had to decide whether detention orders should continue or be cancelled. The effect of r.30 along with r.30A (9) would therefore be that the detention order passed under r.30 would be good only for six months and unless there was a review and the detention order was continued the detenu would have to be released. We cannot accept the contention on behalf of the respondent that the detention order would continue even after six months and the detenu may be detained under that order even thereafter without an order under r.30A (9), continuing the order of detention. It is true that r.30A(9) only says that the Government shall decide whether the detention order should be continued or cancelled. That however does not mean that if the Government omits to make a review under r.30A within six months the detention order will still continue and the detenu continue to be detained thereunder. The provisions in r.30A are designed to protect the personal liberty of the citizens of this country and that is why that rule provides that every detention order shall be reviewed at an interval of not more than six months. This is a mandatory provision and if it is not complied with and the Government omits to review the detention order within six months the order must fall and the detenu must be released. of course when the Government actually reviews the order it will either continue that order or cancel that order. That is why r.30A (9) says that on review the Government shall decide whether the order should be continued or cancelled,. But that does not mean that if for any reason (say, by oversight) the Government omits to review an order within the time provided in the first part of r.30A(9), the detention can continue even though there has been (1) ; (2) ; 201 no review. What applies to an omission to review an order under r.3OA(9) applies equally to a case where a review is not in accordance with law as held by this Court in Lakhanpal 's case(1). Where therefore there has been no review under r.30A(9) or a review is not in compliance with the, provisions thereof, as explained in Lakhanpal 's case(1), the result is that the original detention order though it may have been good when it was passed, falls and the detention after the first period of six months becomes illegal. Further if there is no review of the detention order in the manner provided by law, as explained in Lakhanpal 's case(1) the original order falls after six months and there is nothing to continue thereafter. In the present cases the orders were passed in March, 1965 and should have been reviewed after every six months in the manner explained in Lakhanpal 's case(1). That admittedly was not done upto February, 1967, though a number of reviews were made inbetween. Consequently orders of detention passed in March, 1965 fell after six months and there were no orders to continue thereafter. When therefore the State Government ordered the continuance of detention orders on review on April 27, 1967, in accordance with the procedure indicated in Lakhanpal 's case(1), there was no order to be continued because in between the reviews were not proper and the detention had become illegal. In these circumstances, the principle laid down in Gopalan 's case(2) cannot apply to the facts of the present case, for we cannot ignore that between September, 1965 and April, 1967 there was no proper review as required by r.30A(9) and the detention for all that period was illegal and could not be saved by the original order of March,1965 which must be deemed to have come to an end, after six months, in the absence of a proper review under r.30A(9). So there was no order which could be continued on April, 1967, and therefore the petitioners would be entitled to release on that ground. 'This brings us to the next question, namely. whether it is open to the State Government to pass a fresh order in the circumstances of the present cases. In this connection reliance is placed on behalf of the respondent on two cases of this Court Ujagar Singh vs The State of Punjab (3) and Godavari Shamrao Parulekar vs State of Maharashtra and others(4). The first case was under the Preventive Detention Act (IV of 1950). In that case it was held that "if the authority making an order is satisfied that the ground on which a detenu was detained on a former occasion is still available and that there was need for detention on its basis no mala fides can be attributed to the authority from the fact that the ground alleged for the second detention is the same as that of the (1) ; (3) ; (2) ; (4) ; 202 first detention. " In the latter case what had happened was that detenues were first detained under the Preventive Detention Act. Later 'that order was revoked and they were detained under r.30 of the Rules and the order was served in jail. The second order of detention was apparently based on the same facts on which the first order of detention was passed. This Court held that the second order of detention was perfectly valid and its service in jail did not make the detention illegal. These cases certainly show that a fresh order of detention can be passed on the same facts, if for any reason the earlier order of detention has to be revoked by the Government. Further we do not find anything in the Defence of India Act (hereinafter referred to as the Act) and the Rules which forbids the State Government to cancel one order of detention and pass another 'in its place. Equally we do not find anything in the Act or the Rules which will bar the Government from passing a fresh order of detention on the same facts, in case the earlier order of detention or its continuance is held to be defective for any reason. This is of course subject to the fact that the fresh order of detention is not vitiated by mala fides. So normally a fresh order of detention can be passed, on the same facts provided it is not mala fide, if for any reason the previous order of detention or its continuance is not legal on account of some technical defect as in the present cases. This brings us to the consideration of the judgment of our brother Bhargava J. in Avtar Singh 's case(1), to which we have already referred. Our learned brother held that where the original order of detention, as in these cases, was a good order for the first period of six months, it would not be open to the State Government to pass a fresh order of detention on the same facts after cancelling the order on the expiry of six months, for that would be going round the provisions of r.30 A, and that the only way in which detention could be continued after the first period of six months, where a good order was originally passed, was to make a review in a proper manner as indicated in the case of Lakhanpal.(2) Our learned brother also seems to have held that if a review was not made in a proper manner as indicated in Lakhanpal 's case(2), the Government would be completely powerless and could not detain the persons concerned by a fresh order. In effect therefore our learned brother held that if a mistake is made by Government in the matter of review it could not correct it and the detenu must go free. Now there is no doubt that if the Government resorts to the device of a series of fresh orders after every six months and thus continues the detention of a detenu, circumventing the provisions (1) W.Ps. 68, 70, 79, 89, 92, of 1967 (decided on June 9, 1967) (2) ; 203 of r.30 A for review, which, was interpreted by this Court in Lakhanpal 's case(1), gives some protection to the citizens of this country, it would certainly be acting mala fide. Such a fresh order would be liable to be struck down, not on the ground that the Government has no power to pass it but on the ground that it is mala fide exercise of the power. But if the Government has power to pass a fresh order of detention on the same facts in case where the earlier order or its continuance fails for any defect, we cannot see why the Government cannot pass such fresh order curing that defect. In such a case it cannot be said that the fresh order is a mala fide order, passed to circumvent r.30 A. Take the present case itself. The Government passed the original order of detention in March, 1965. That order was good for six months and thereafter it could only continue under r.30 A on orders passed under r.30 A(9). The Government did pass orders under r.30 A (9) and we. cannot say in view of the judgment in Sadhu Singh 's case(2) that the Government went wrong in the procedure for review. It was only after the judgment of this Court in Lakhanpal 's case(1) that the manner of review became open to objection, with the result that the continuance of the order in these two cases failed and the detention became illegal. If in these circumstances the Government passes a fresh order under r.30, it cannot be said that it is doing so mala fide in order to circumvent r.30 A (9). In actual fact the Government had complied with the provisions of r.30 A(9) and what it did was in accordance with the judgment of this Court in Sadhu Singh 's case(2). It is true that after Lakhanpal 's case(1) the manner in which the review was made became defective and therefore the continuation of detention became illegal. Even so, if the Government decides to pass a fresh order in order to cure the defect which has now appeared in view of the judgment of this Court in Lakhanpal 's case(1), it would in our view be not right to say that the Government cannot do so because that would be circumventing r.30 A. We do not think that we should deprive the Government of this power of correcting a defect particularly in the context of emergency legislation like the Act and the Rules. The Courts have always the power to strike down an order passed in mala fide exercise of power, and we agree with Bhargava, J. to this extent that if the Government, instead of following the procedure under r.30 A as now laid down in Lakhanpal 's case(1) wants to circumvent that provision by passing fresh orders of detention on the same facts every six months, it will be acting mala fide and the court will have the power to strike down such mala fide exercise of power. But in cases. like the present, where the continuance became defective after the judgment of this Court in Lakhanpal 's case,(1) we can see no reason to deny power to Government to rectify the defect by passing a fresh order of detention. Such an order in such circumstances (1) ; (2) ; 204 cannot be called mala fide, and if the Government has the power to pass it which it undoubtedly has, for there is no bar to a fresh order under the Act or the Rules there is no reason why such a power should be denied to Government so that it can never correct a mistake or defect in the order once passed or in the continuation order once made. We are therefore of opinion that the view taken in Avtar Singh 's case(1) insofar as it says that no fresh order can be passed even to correct any defect in an order continuing detention under r 30 A(9) is not correct. We therefore allow the writ petitions and order the release of the petitioners. But it will be open to the State Government to pass a fresh order of detention if it considers such a course necessary. Petitions allowed R.K.P.S. (1) W. Pe. 68, 70, 79, 89, 92 of 1967 (decided on June 9, 1967).

The petitioners were detained under r. 30(1) (b) of the Defence of India Rules, 1962, under orders passed by the State Government in March 1965. Their detention was continued from time to time after review under r. 30A. One review was made in February 1967 when the scope of such a review was governed by the judgment of this Court in Sadhu Singh vs Delhi Administration [1966] I S.C.R. 243 to the effect that such review did not require a judicial approach to the question of continuance of detention. Accordingly, at the review in February 1967, no opportunity was given to the petitioners to represent their cases and their detention was continued for a further period of six months. Thereafter, by its judgment in the case of P. L.Lakhanpal vs The Union of India. ; this Court overruled the decision in Sadhu Singh 's case and held that the function of review under r. 30A was quasi judicial and that in exercising it, the rules of natural justice had to be complied with. In view of this judgment the respondent held another review in April 1967, when notice was given to the petitioners and they were given a hearing. Thereafter an order was passed in each case on April 27, 1967, by which the State Goverment directed the continuance of the detention orders for a further period. In the meantime the present petitions under article 32 of the Constitution were filed on March 20, 1967 based on the judgment of this Court in Lakhanpal 's case. It was contended on behalf of the respondent State that as the review made in April 1967 was in accordance with the view taken in Lakhanpalls case, the continuance of the detention thereafter was justified; that the State Government had power to pass a fresh order of detention on the same facts and even if the present petitions were to be allowed, it should be made clear that the State Government had such power and that the decision of this Court in the case of Avtar Singh vs The State of Jammu and Kashmir (de cided on June 9, 1967), was not correct. HELD: (i) The writ petitions must be allowed and the petitioners released. In the Present cases the orders were passed in March 1965 and should have been reviewed after every six months in the manner explained in Lakhanpal 's case. That admittedly was not done upto February 1967, though a number of reviews were made in between. Consequently orders of detention passed in March 1965 fell after six months and there were no orders to continue thereafter. When 198 therefore the State Government ordered the continuance of detention orders upon the review on April 27, 1967, in accordance with the procedure indicated in Lakhanpal 's case, there were no orders to be continued because in between the reviews were not proper and the detention had become illegal. [201 C D). A. K Gopalan vs The Government of India, [1966] 2 S.C.R. 427, distinguished. Although r. 30A (9) only says that the Government shall decide whether the detention order should be continued or, cancelled, that does not mean that if the Government omits to make a review under r. 30A within six months the detention order will still continue and the detenu continue to be detained thereunder. The provision for review in r. 30A is designed, to protect the personal liberty of the citizen and is a mandatory provision; if it is not complied with and ' the Government omits to review the detention order within six months, the order must fall and the detenu must be released. [200 FG] (ii) A fresh order of detention can be passed on the same facts, provided it is not mala fide, if for any reason the previous order of detention or its continuance is not legal on account of some technical or other defect as in the present cases. There is nothing in the Defence of India Act and Rules which forbids the State Government from cancelling one order and passing another in its place. [2O2 C]. Ujagar Singh vs The State of Punjab., ; and Godavari Shamrao Parulekar vs State of Maharashtra and Ora., ; , referred to. The view taken in Avtar Singh vs The State of Jammu and Kashmir, in so far as it says that no fresh order can be passed even to correct any defect in an, order continuing detention under r. 30A(9) is not correct. [204 B].

ivil Appeal No. 1422 of 1973 From the Judgment and Order dated 5.7.1971 of the Calcutta High Court in Civil Order No. 1826 of 1971. T.C. Ray, G.S. Chatterjee and D.P. Mukherjee for the Appel lant. P.K. Chatterjee, Ranjan Mukherjee, N.R. Choudhary, Somnath Mukherjee and P.K. Moitra for the Respondents. The Judgment of the Court was delivered by K. RAMASWAMY, J. This appeal by special leave under article 136 of the Constitution arises against the order dated July 5, 1971 made by the Calcutta High Court in Civil Order No. 1826 of 1971 dismissing the writ petition in limine. The material facts are that the lands of Hal Plot Nos. 2202, 2204, 2206, 2209, 2210, 2212, 2214, 2219, 2220, 2225. 2226, 2228, 2229, 2232, 2233, 2234, 2236 and 2239 of Mouza Kisho rimohanpore, J.L. No. 168, P.S. Jaynagar were recorded in the final Khaitan Nos. 143 and 144 of J.L. No. 168 as "Tank Fishery" (being used for pisciculture) and by operation of section 6(1)(e) of West Bengal Estates Acquisition Act 1 of 1954, for short 'the Act ' stand excluded from its purview. The Asstt. Settlement Officer initiated suo moto proceedings on May 14, 1968 that they have not been properly classified and prima facie require correction of classifications of those lands. Accordingly, he drew up the proceedings under s.44(2A) of the Act, issued notice to the respondents who are brothers, intermediaries. They filed their written objections and 95 appeared through counsel. They also filed the documents, examined three witnesses apart from themselves. On behalf of the State one Mr. Ranjit Kumar Dutta, Revenue Officer. Yadavpur Settlement was examined. The objections raised by the respondents are that the lands originally belong to Smt. Banodamayee Dasi, Superior Landlady, who granted to them dakhilas Nos. 9 and 10 in the year 1359 B.S. i.e. 1952 A.D. Thereafter they have been cultivating pisciculture in the said lands. They got embankment raised around the land. They have been conducting fishery business. In the fields survey the property was recorded in their name as the occupiers. On account of the injunction issued 'by the High Court the attestation in the original settlement was not effected. When they approached the Junior Land Revenue Officer for receipt of the rents, after due enquiry by endorsement dated April 30, 1958 A.D., the Tehsildar made an endorsement on the body of the receipt "for Pisciculture". They were con ducting fishery in a large scale. They had applied to the Chief Minister Dr. B.C. Roy for a loan of Rs.25,000. An endorsement on the application was made by the concerned Secretary. When the miscreants sought to disturb the embark ments, they made a complaint to the police, who initiated action in this regard. Agricultural Income tax Department levied on them income tax relying on pisciculture being done by the respondents. The Asstt. Settlement Officer considered the entire evidence on record in great detail like Civil Court and held that the three witnesses examined in proof of the respond ents conducting pisciculture in the disputed plots of lands are interested and brought up witnesses for the detailed reasons given in support thereof; the respondents did not produce the report of the Junior Revenue Officer who direct ed to accept the rents from the respondents. Admittedly, all the lands stood vested in the year 1955 56 in the State by operation of the notification issued under section 4(1) of the Act. Though the settlement was stated to have been obtained from the Principal Landlady in the year 1952 (1359 B.S.), they did not produce any pre or post settlement records for the period upto 2955 56, the year of vesting, to establish that the disputed lands are recorded as tank fishery. Mr. R.K. Dutta examined on behalf of the State stated that he made local inspection on April 11. 1968 A.D. and found recorded the class of land in 18 days (plots). Serial Nos. 2202, 2204, 2206. 2209, 2210, 2212, 2214, 2219, 2220.2225. 2228, 2229, 2232, 2233, 2236 and 2239 within that Mouza. The present Days (Plots) Nos. 2206, 2239, 2229, 2225, 2212, 2219, 2220 are small Dobas i.e. "ponds" and he did not find any sign of pisciculture in those plots. Plot Nos. 22 10, 2209, 2233 and 2234 are blind canals. There was no connection whatsoever of those plots with river or big canals. 96 He stated that there was water within those days (plots), but he did not find any sign of pisciculture therein. He did not find any water in plot Nos. 2202, 2232, 2204, 2214, 2236, 2239, 2228 and 2226 either existing or drained in those plots. Danga (elevated land) "Layek Jangal Bheter" (like jungle inside). "Layek Jangal" (jungle outside) and there was no water at all. He also made local enquiries from other persons in the neighbourhood and they testified to the same fact. He admitted that adjacent to these plots there were two plots, namely, plot Nos. 2201 and 2235, but outside the disputed lands wherein pisciculture was being carried out in those plots at the time of inspection. He also stated that the people examined by him have stated that till date the lands remained in the same condition. In the settlement plan (map) the plots were not classified as pisciculture. Only two plots i.e. 2201 and 2235 were classified as pisci culture. It may be stated at this juncture that though Mr. Dutta was subjected to gruelling cross examination at great length on the nature of pisciculture and characterstics etc. as regards the existence of the condition of the lands at the time of his inspection and that he did not find any trace of carrying pisciculture, no cross examination was directed nor was suggested to the contrary. The Asstt. Settlement Officer after consideration of the entire evidence found that the respondents claimed to have started fishery after obtaining settlement from landlady in the year 1952, they admitted that Khasra enquiry was conducted in the year 1954 (1361 B.S. ) in their presence and examined witnesses. The Enquiry Officer did not enter in the Khasra record that any pisci culture was being carried on in any disputed plots except plot Nos. 2201 and 2235. On the other hand he noted that there is no fishery in any of those plots except those two specified plots. The vesting of plots under the Act took place in the year 1955 56. Except the receipt issued by the Tehsildar, no documentary evidence of payment of rent has been produced. The Tehsildar had no business to write on the receipt "for pisciculture", nor record of enquiry made by Junior Land Revenue Officer in this regard was produced. It is, therefore, clear that in the Khasra enquiry it was not recorded that the suit plots are fishery and in none of the plots it was recorded that any pisciculture was being con ducted. The attestation took place in July 1959, i.e. after seven years from 1359 B.S. (1952) the year so settlement and three years from the date of starting the so called fishery. No documentary evidence except the solitary receipt which was rejected by the Asstt. Settlement Officer was produced to show that any pisciculture was being conducted. The receipt given by the Tehsildar is obviously to accommodate the respondents. There is no sufficient 97 proof of laying any road to carry the fish from the said plots. Sri Atul Kumar Sahoo, one of the respondents, when was examined as a witness admitted it. Admittedly, fishery was carried out in plot Nos. 2201 and 2235 which are linked up with river Alian Khal with tide but they are not part of lands in dispute. None of the plots which are subject matter of the suit is linked up with river or any big canal with tide. With regard to making an application to the Chief Minis ter the copy has not been produced. There is no evidence whether these plots of lands having been mentioned in that application. Since, admittedly, the respondents are having fishery in plot Nos. 2201 and 2235, it was likely that the loan application would relate to those plots. The total extent of the disputed land is about 550 Bighas. Even ac count books showing income and expenditure of fishery were not produced, though time was allowed to produce the docu ments more than once. Some lands are dry lands and some lands are with the shrubs inside river embankment and out side. So the question of fishery over those plots does not arise. Only to refute this factual situation the respondents tried to patch it up by saying that these plots were dried up for some months in every year. But they have failed to prove the existence of any fishery over those plots by adducing sufficient and reliable evidence. When there is no evidence to show the existence of fishery in any of the disputed plots, it is obvious that plots were wrongly re corded as fishery. Primary authority considered the oral evidence and rejected it for valid reasons and ordered that the classification of plot Nos. 2202, 2239, 2225, 2232, 2204, 22 10, 2234, 22 14. 2236, 2228 and 2226 in. Hal Kha tian Nos. 134 and 144 within Mouza Kishorimohanpore, J.L. No. 168, P.S. Jaynagar as recorded as "Ghert" and piscicul ture in column No. 23 should be deleted and instead the classification of plots Nos. 2202 and 2209 should be record ed as 'Layek Jungle Outside ' plot Nos. 2202, 2204, 2236 and 2228 should be recorded as 'Layek Jungle Outside '. Plot Nos. 2201, 2234 should be recorded as 'pond ', 22 14 and 2226 should be recorded as 'Danga '. Recording in column No. 23 to the effect 'pisciculture ' in plot Nos. 2209, 2229, 2206, 22 12, 22 19, 2233 and 2220 should be deleted. Against this order an appeal was filed before the Tribu nal (IXth Addl. District Judge, Alipore) under section 44(3) of the Act which by Judgment dated March 4, 1971 in E.A. No. 49 of 1968 in one paragraph with cryptic order assuming the role of an administrator reversed the order of the A.S.O. The conclusions, without discussing the evidence recorded by the Appellate Judge are that in the C.S. Khatain he found that these lands were recorded as Layek Jungle Vitar and 98 Bahir, doba pukur and Khal. He had gone through the R.S. Map and from the map he found no sign of jungle as against the disputed lands. One salt manufacturing company was in occu pation of the disputed land before the respondents took settlement from the original landlady. The existence of salt manufacturing company shows that there was salt water on the disputed lands. With a view to develop the land they applied for the loan to the Chief Minister on May 25, 1955. That shows that there exists fishery in the disputed land. The Junior Land Revenue Officer found on May 11, 1958 after inspection the existence of fishery. Therefore, it shows that on the date of vesting there exists fishery in the lands. Local witnesses who were examined support the exist ence of fishery for a pretty long time. Against this there is no rebutting evidence adduced by the State. Accordingly he set aside the order of the Asstt. Settlement Officer and confirmed the original classification. The State filed the writ petition and the High Court, as stated earlier, dis missed the writ petition in limine. Shri Roy, the learned St. Counsel appearing for the State contended that the Asstt. Settlement Officer has carefully assessed the evidence and recorded the findings. The Appellate Tribunal has reversed the findings without considering the validity of the reasons recorded by the Asstt. Settlement Officer. It has taken irrelevant factors or non existing factors into account and thereby the find ings recorded by the Appellate District Judge is based on no evidence. On the other hand it is beset with conjecture and surmises. Shri Chatterji, the learned Sr. Counsel appearing for the respondent 's contended that the appellate authority has recorded the findings of fact that pisciculture was in existence as on the date of vesting. This Court cannot interfere with the findings of fact recorded by the appel late court, in particular, when the High Court did not choose to interfere with the finding. The record in the settlement refers that the lands are used for pisciculture. It is open to the State to establish that the lands are not being used as pisciculture. In its absence the findings recorded by the appellate court is one of fact and this Court cannot interfere with that finding. Admittedly the High Court did not go into any of the questions raised by the appellant in the writ petition. It summarily dismissed the writ petition. Therefore, what we have to read is only the orders of the Appellate Tribunal and the Asstt. Settlement Officer the primary authority together with the record of evidence. Counsel took us through the evidence to show that the findings recorded by the appellate Judge are based on either no evidence or surmises and con 99 jectures. We have given our anxious consideration to the respective contentions and considered the evidence on record once again. It is indisputably true that it is a quasi judicial proceeding. If the appellate authority had appreci ated the evidence on record and recorded the findings of fact, those findings are binding on this Court or the High Court. By process of judicial review we cannot appreciate the evidence and record our own findings of fact. If the findings are based on no evidence or based on conjectures or surmises and no reasonable man would on given facts and circumstances, come to the conclusion reached by the appel late authority on the basis of the evidence on record. certainly this Court would oversee whether the findings recorded by the appellate authority is based on no evidence or beset with surmises or conjectures. Giving of reasons is an essential element of administration of justice. A right to reason is, therefore, an indispensable part of sound system of judicial review. Reasoned decision is not only for the purpose of showing that the citizen is receiving jus tice, but also a valid discipline for the Tribunal itself. Therefore, statement of reasons is one of the essentials of justice. The appellate authority in particular a trained and experienced District Judge is bound to consider the entire material evidence adduced and relied on by the parties and to consider whether the reasons assigned by the primary authority is cogent, relevant to the point in issue and based on material evidence on record. The District Judge has forsaken this salutary duty which the legislature obviously entrusted to him. The question, therefore, is whether the reasons assigned by the appellate tribunal are based on no evidence on record or vitiated by conjectures or surmises. For appreciating this point it is necessary to look into the purpose of the Act and relevant provisions therein. The Act has been made to acquire the estates, all rights. of inter mediaries therein and of certain rights of raiyats and trader raiyats of non agricultural tenants in occupation of the lands comprised in the State. Section 4(1) empowers the State Government to issue notification under the Act from time to time declaring that with effect from the date men tioned in the notification all estates and all rights of every intermediary in each such estate situated in the district or a part of the district specified in the notifi cation "shall vest in the State" free from all incumbrances. The procedure has been provided in this behalf in sub sec tion (2) to (6) of section 4 of the Act, the details of which are not relevant for the purpose of this case. The effect of the notification as adumbrated in section 5 thereof is that all grants of, and confirmation of titles to, estates and rights therein, to which the declaration applies and which were made in favour of the intermediaries shall determine. 100 Thereby, by statutory operation the pre existing rights and all grants of and confirmation of the titles to the estate and the rights therein statutorily have been determined by issuance and publication of the notification under section 4(1) read with section 5 of the Act. Section 6 of the Act employing non obstante clause carved out exceptions to the operation of sections 4 and 5 and preserve the right of intermediary to retain possession and title of certain land in certain circumstances. Sub section (1) postulates thus: "Notwithstanding anything contained in Sections 4 and 5, an intermediary shall, except in the cases mentioned in the proviso to sub section (2) but subject to the other provi sions of that sub section be entitled to retain with effect from the date of vesting (e) tank fisheries; Explanation "tank fishery" means a reservoir or place for the storage of water, whether formed naturally or by excava tion or by construction of embankments, which is being used for pisciculture or for fishing, together with the subsoil and the banks of such reservoir or place, except such por tion of the banks as are included in a homestead or in a garden or orchard and includes any right of pisciculture or fishing in such reservoir or place. " A reading of these provisions clearly indicates that notwithstanding the determination of pre existing rights, titles and interest of the holders of the estate in the notified estate, subject to proviso to subsection (2) and other provisions of sub section, sub section 1(c) retains the rights and possession of intermediary in respect of tank fisheries. Tank fishery means the lands being used for pisciculture or any fishing in a reservoir or storage place whether formed naturally or by artificial contrivance as a permanent measure except such portion of embankment as are included in a homestead or in a garden or orchard to be tank fishery. Such lands occupied by pisciculture or fishing stood preserved to the intermediary. In Chamber 's 20th Century Dictionary at page 829. the word 'pisciculture ' defined to mean "the rearing of fish by artificial methods". In Webster Comprehensive Dictionary, Vol. II 'pisciculture ' means hatching and rearing of fish. In Stroud 's Judicial Dictionary, Vol. II, 4th Edition at page 1051 the term 'several fishery ' 101 is sometimes said to be a right of fishing in public waters, which may be exercisable by many people. Therefore, when by means of reservoir a place for storage of water whether formed naturally or by excavation or by construction of embankment, is being used for pisciculture or for fishing is obviously a continuous process as a source of livelihood. would be 'tank fisheries ' within the meaning of section 6(1)(e). Such tanks stand excluded from the operation of sections 4 and 5. The question, therefore, emerges whether the disputed plots are tank fisheries. Undoubtedly, as rightly contended by Shri Chatterji that if the findings recorded by the appellate tribunal that the disputed plots of land are tank fisheries, are based on evidence on record, after its due consideration in proper perspective certainly that finding is binding on this Court, as being a finding of fact. The finding recorded by the appellate tribunal is based on five grounds, namely nonexistence of the forestry in the map; making application for loan ' revenue receipts produced by the respondent; previous salt cultivation and the oral evidence adduced on behalf of the respondents. Yet another ground is absence of rebuttal evidence by the State. We have already noted the findings recorded by the Asstt. Settlement Officer. They need no reiteration. Mr. Dutta examined on behalf of the State made personal inspection. The contention of Shri Chatterjee is that he inspected the land in the year 1968, but the relevant date is of the year 1952 and there is no evidence contrary to the existence of land in 1952 being used for pisciculture. It is true that the crucial date for establishing, as a fact that the pisciculture was being carried on in the disputed land is the period of vesting, namely, 1955 56. The existence of fishery subsequent to that period is not of any relevance. Admittedly. the respondents did not produce before the Asstt. Settlement Officer either post or pre record till date of vesting to establish that from 1952 to 1955 56 i.e. from the date of obtaining settle ment till date of vesting, the lands were recorded in set tlement records as pisciculture or fishery. Admittedly, in 1954 the Khasra enquiry was conducted in the presence of the respondents. The findings recorded in the relevent columns are that no pisciculture or fishery was being carried on except in two plots i.e. 2201 and 2235 which are not subject matter of enquiry but are situated adjacent to these lands. Those findings were not challenged at any time. The report of the Tehsildar directing payment of the land revenue was not produced. What was produced is only receipt on the body of which an endorsement "for pisciculture" was made by the Tehsildar. The reason given by the Asstt. Settlement Officer in rejecting the receipts was that there was no need for the Tehsildar to write "for pisciculture" and that was not the practice. This finding was 102 not disputed by the appellate Judge. Therefore, there is no documentary evidence to establish that the lands were being used, on the date of settlement or also on the date of vesting, as pisciculture or fishery. The finding recorded by the Asstt. Settlement Officer is based on the evidence given by Mr. Dutta, who on personal inspection, found that the lands remained in the same condition from the date of vest ing till date of his inspection in the year 1968. This finding was also not contradicted in the cross examination of Mr. Dutta, though he was subjected to gruelling cross examination. Therefore, the finding that the State has not produced any rebuttal evidence is palpably wrong on the face of the record. The further findings that the map does not indicate that there exists any forestry, is also a conclu sion reached by the appellate authority without discussing the evidence of Mr. Dutta who had stated in his evidence that there are shrubs outside and inside the lands in dis pute. It is the specific case of the respondents that they made embankment, but Mr. Dutta finds that there was no embankment to any of the plots. That was also a finding recorded by the Asstt. Settlement Officer. There is no discussion by the appellate authority of the evidence given on that count. Though written objections were filed and evidence was adduced by the respondents, neither in the objections nor in the oral evidence tendered by the two respondents or their witnesses it was shown that the lands were used earlier for salt cultivation by erstwhile land holder. Therefore, this is an extraneous factor which the District Judge picked from his hat without any foundation. The solitary revenue receipt produced by the respondents was rejected by the Asstt. Settlement Officer for cogent rea sons. The appellate authority being final authority on facts, is enjoined and incumbent upon it to appreciate the evidence; consider the reasoning of the primary authority and assign its own reasons as to why he disagrees with the reasons and findings of the primary authority. Unless ade quate reasons are given merely because it is an appellate authority, it cannot brush aside the reasoning or findings recorded by the primary authority. By mere recording that Dakhilas (rent receipts) show that lands are used as pisci culture is a finding without consideration of the relevant material on record. The other finding that respondent ap plied to the Chief Minister for loan and that it would establish that the loan amount was utilised for developing fishery is also a surmise drawn by the appellate authority. It is already seen that admittedly the respondents have plot Nos. 2201 and 2235 in which they have been carrying on fishery operations. The application said to have been filed before the Chief Minister has not been produced. The account books of the respondents have not been produced. When the documentary evidence, which being the lust evidence, is 103 available but not produced an adverse inference has to be drawn by the Tribunal concerned against the respondents for non production and had it been produced, it would have gone against the respondents. A police complaint was said to have been made concerning disturbance in the enjoyment of the lands in question. No documentary evidence was produced or summoned. Even if it is done it might be self serving one unless there is a record of finding of possession and enjoy ment by the respondents for fishery. Even then also it is not binding on the State nor relevant in civil proceedings. The contention of Shri Chatterjee that it is the duty of the appellant to produce the record to repudiate the find ings recorded by the appellate authority is without sub stance. In a quasi judicial enquiry is for the parties who relied upon certain state of facts in their favour have to adduce evidence in proof thereof. The proceedings under the Act is not like a trial in a Civil Court and the question of burden proof does not arise. In the absence of abduction of the available documentary evidence, the necessary conclusion drawn by the Asstt. Settlement Officer that the loan appli cation made might pertain to plot Nos. 2201 and 2235 is well justified. The appellate authority is not justified in law to brush aside that finding. The other finding that the witnesses examined on behalf of the respondents support the existence of the fishery for a pretty long time is also without discussing the evidence and assigning reasons in that regard. The Asstt. Settlement Officer extensively considered the evidence and has given cogent reasons which were neither discussed nor found to be untenable by the appellate authority. Thus, we have no hesitation in coming to the conclusion that the Appellate Tribunal disregarded the material evidence on record, kept it aside, indulged in fishing expedition and crashed under the weight of conjec tures and surmises. The appellate order is, therefore, vitiated by manifest and patent error of law apparent on the face of the record. When so much is to be said and judicial review done, the High Court in our considered view, commit ted error of law in dismissing the writ petition in limine. In the facts and circumstances of this case, in particular, when the litigation has taken well over 28 years till now, we find it not a fit case to remit to the High Court or Tribunal for fresh consideration. It is contended that the respondents are entitled to the computation of holding under the Act, since they are pos sessed of some other lands. We direct that if any determina tion of total holding of the lands including plot Nos. 2201 and 2235 and any other lands are to be made under the Act or any other Land Reform Law singly or conjointly it is 104 open to the appropriate authorities to determine the hold ing of the respondents in accordance with law after giving reasonable opportunity to the respondents and the State after excluding the plots of lands in dispute Shri Roy, learned counsel for the State repeatedly asserted that the lands no longer remain to be fishery land and became part of urban area around the Calcutta City and building operations are going on. On the other hand the counsel for the respondents asserted to the contrary. We have no definite evidence on record. Therefore, if the lands are still found to be capable of using for fishery purpose and in case the State intends to lease it out for fishing operations, to any third party, as per rules in vogue, first preference may be given to the respondents. subject to the usual terms. as per the procedure prevalent in the State of West Bengal in this regard. Accordingly, we quash the order of Appellate Tribunal dated March 4. 1971 and restore the order of the Asstt. Settlement Officer elated July 12. The appeal is allowed accordingly and the parties are directed to bear their respective costs. T.N.A. Appeal allowed.

The land belonging to the respondent intermediaries comprising of certain plots stood vested in the State of West Bengal by operation of a Notification issued under Section 4(1) of the West Bengal Estates Acquisition Act, 1953. Since the plots were recorded as 'tank fisheries ' (used as pisciculture), they stood excluded from the purview of the vesting Notification under Section 6(1)(e) of the Act and preserved to the respondent intermediaries. Subsequently the primary authority the Assistant Set tlement Officer initiated suo moto proceedings by issuing notice to the respon 92 dents under Section 44(2a) of the Act for correction of classification of lands on the ground that the plots were wrongly recorded as fishery plots. The respondents objected to reclassification of the lands by contending that in 1952 they were granted Dakhilas to the said land by one `B ', the Principal landlady, and thereafter they have been cultivat ing pisciculture on the said plots of the land and conduct ing fishery business. The Assistant Settlement Officer rejected the claim of the respondents and ordered reclassi fication of the plots. The respondents filed an appeal before the Tribunal (District Judge) under section 44(3) of the Act. The Appellate Tribunal reversed the order of the Assistant Settlement Officer and confirmed the original classification of the plots. Against the decision of the Appellate Tribunal, the State filed a writ petition in the Calcutta High Court which dismissed the petition in limine. In appeal to this Court it was contended on behalf of the State: (i) that the Appellate Tribunal had reversed the findings without considering the validity of the reasons recorded by the Assistant Settlement Officer; (ii) that the Appellate Tribunal had taken irrelevant factor or non exist ing factors into account and thereby its findings were based on no evidence and hence vitiated in law. On behalf of the respondents it was contended that since the Appellate Authority has recorded the findings of fact that pisciculture was in existence as on the date of vesting the Supreme Court cannot interfere with the findings of fact recorded by the Appellate Court, particularly, when the High Court did not choose to interfere with the finding. Allowing the Appeal, this Court, HELD: 1. Giving of reasons is an essential element of administration of justice. A right to reason is, therefore, an indispensable part of sound system of judicial review. Reasoned decision is not only for the purpose of showing that the citizen is receiving justice, but also a valid discipline for the Tribunal itself. Therefore, statement of reasons is one of the essentials of justice. [99C D] 1.1 The appellate authority in particular a trained and experienced District Judge is bound to consider the entire material evidence adduced and relied on by the parties and to consider whether the reasons assigned by the primary authority is cogent, relevant to the 93 point in issue and based on material evidence on record. The appellate authority being final authority on facts, is enjoined and incumbent upon it to appreciate the evidence; consider the reasoning of the primary authority and assign its own reasons as to why it disagrees with the reasons and findings of the primary authority. Unless adequate reasons are given, merely because it is an appellate authority, it cannot brush aside the reasoning or findings recorded by the primary authority. [99D; 102E F] 2. If the appellate authority had appreciated the evi dence on record and recorded the findings of fact, those findings are binding on this Court or the High Court. By process of judicial review this Court cannot appreciate the evidence and record its own findings of fact. If the find ings are based on no evidence or based on conjectures or surmises and no reasonable man would, on given facts and circumstances, come to the conclusion reached by the appel late authority on the basis of the evidence on record, certainly this Court would oversee whether the findings recorded by the appellate authority is based on no evidence or beset with surmises or conjectures. [99A C] 2.1 In the instant case the Appellate Tribunal disre garded the material evidence on record, kept it aside, indulged in fishing expedition and crashed under the weight of conjectures and surmises. The appellate order is, there fore, vitiated by manifest and patent error of law apparent on the face of record. The order of Appellate Tribunal is quashed and the order of Assistant Settlement Officer is restored. [103F G; 104D] 3. Tank fishery means the lands being used for piscicul ture or any fishing in a reservoir or storage place whether formed naturally or by artificial contrivance as a permanent measure except such portion of embankment as are included in a homestead or in a garden or orchard to be tank fishery. Such lands occupied by pisciculture or fishing stand pre served to the intermediaries and thus stands excluded from the operation of sections 4 and 5 of the West Bengal Estates Acquisition Act, 1953. But the crucial date for establish ing, as a fact that the pisciculture was being carried on in the disputed land is the period of vesting. The existence of fishery subsequent to that period is not of any relevance. [100G H; 101E] Chamber 's 20th Century Dictionary, page 829; Webster comprehensive Dictionary, Vol. II and Stroud 's Judicial Dictionary, Vol. II 4th Edn., page 1051, referred to. 94 3.1 In the instant case the respondents did not produce before the Assistant Settlement Officer either post or pre record till date of vesting to establish that from 1952 to 1955 56 i.e. from the date of obtaining settlement till date of vesting, the lands were recorded in settlement records as pisciculture of fishery. Therefore, there is no documentary evidence to establish that the lands were being used, on the date of settlement or also on the date of vesting, as pisci culture or fishery. [101F; 102A] 4. Admittedly the High Court did not go into any of the questions raised by the appellant in the writ petition. It summarily dismissed the writ petition. The High Court com mitted error of law in dismissing the writ petition in limine. [98G; 103F]

Appeals Nos. 262 to 265 of 1970. Appeals by special leave from the judgment and order dated May 1, 1969 of the Allahabad High Court in Sales Tax Reference Nos. 249, 250, 251 and 571 of 1966 and Civil Appeals Nos. 266 and 267 of 1970. Appeals by special leave from the judgment and order dated January 29, 1969 of the Allahabad High Court in Sales Tax Reference Nos. 604 and 603 of 1965. H. R. Gokhale, Gobind Das, D. N. Mishra and B. P. Singh, for the appellant (in all the appeals). C. B. Agarwala and 0. P. Rana, for the respondent (in all the appeals). 732 The Judgment of the Court was delivered by Hegde, J. These are connected appeals by special leave. The only question raised in these appeals is whether 'Sarin Tooth Powder ' manufactured by M/s. Sarin Chemicals Laboratory is "cosmetic" or a "toilet requisite" as held by the High Court of Allahabad or it is an unspecified commodity liable to sales tax at all points of sale as held by the Additional Judge (Revisions) Sales Tax, Agra. The contention of M/s. Sarin Chemical Laboratory who is the appellant in all the appeals is that the turn over relating to the sales of tooth powder is liable to be taxed at the rate of 3 pies per rupee under section 3 of the U.P. Sales Tax Act (to be hereinafter referred to as the Act) whereas Commissioner of Sales Tax, U.P. contends that the said turn over is liable to be taxed at single point under section 3(A) of that Act read with Entry 6 of the notification No. 905/X dated March 31, 1956. The High Court has accepted the contention of the Commissioner. In these appeals the assessee challenges the conclusion reached by the High Court and supports the view taken by the Additional Judge (Revisions) Sales Tax, Agra, who held that the tooth powder is an unspecified commodity liable to tax under section 3 of the Act. Neither the expression 'cosmetic ' nor 'toilet requisite ' has been defined in the Act. The dictionary meaning of the expression 'cosmetic ' (see Webster 's international Dictionary) is "A preparation to beautify or alter appearance of the body or for cleansing, coloring, conditioning or protecting skin, 'hair, nails, eyes or teeth". The same dictionary gives the meaning of the expression "toilet" thus : 'an act or process of dressing, especially formerly of dressing hair and now usually cleansing and grooming of one 's person". The word "toiletry" is explained in the said dictionary as meaning "an article or preparation used in making one 's toilet such as soap, lotion, cosmetic, tooth paste, shaving cream, cologne etc. According to the dictionary meaning tooth powder is regarded both as an item of cosmetic and toilet: but as observed by this Court in Bamavatar Budhaiprasad vs The Asstt. Sales Tax Officer, Akola and another(1), the names of articles, the sales and purchases of which are liable to be taxed given in a statute unless defined in the statute must be construed not in a technical sense but as understood in common parlance. Therein this Court was called ' upon to consider whether 'betel leaves ' could be considered as 'vegetable ' under item No. 6 of Schedule II of the C. P. Berar Sales Tax Act, 1947. In that case this Court observed that the word 'vegetable ' had not been defined in the Act and being a word of every day use, (1) 12, section T. C. 286; 733 it must be construed in a popular sense, meaning "that sense which people conversant with the, subject in matter with which statute is dealing would attribute to it. " Applying that test this Court ruled that betel leaves cannot be considered as 'vegetable '. In common parlance a tooth powder is considered as a toilet. That meaning ,accords with the dictionary meaning, as well. The question whether tooth powder can be considered as a toilet came up before the Madras High Court in V. P. Sanasundara Mudaliar vs State of Madras( ') and before the Bombay High Court in Commissioner of Sales Tax vs Vicco Laboratories(2). Both the courts took the view that the tooth powder is a toilet. The same view has been taken by the Allahabad High Court. We are in agreement with that view In the result these appeals fail and they are dismissed with costs hearing fee one set. Y.P. Appeals dismissed. (1) 14. section T. C. 943. (2) 22. section T. C. 169.

On the question whether tooth powder manufactured by the assessees was "cosmetic" or a "toilet requisite" liable to tax under section 3(A) of the U.P. Sales Tax Act, read with Entry 6 of Notification No. 905/X dated March 31, 1956/or whether it is an unspecified commodity liable to tax under section 3 of the Act, HELD : Tooth powder is a toilet and therefore taxable under section 3(A) of the U.P. Sales Tax Act, read with the Notification. Neither the expression 'cosmetic, nor 'toilet requisite ' has been defined under the Act. The names of articles, the sales and purchases of which are liable to be taxed given in a statute, unless defined in the statute, must be construed not in a technical sense but as understood in a common parlance. In common parlance a tooth powder is considered as a toilet and that meaning accords with the dictionary meaning as well. [732 E, H] Bamavater Budhaiprasad vs The Asstt. Sales Tax Officer, Akola and Another, 12, S.T.C. 286, followed. V. P. Sanasundara Mudaliar vs State of Madras 14, S.T.C. 943; Commissioner of Sales Tax vs Vicco Laboratories, 22 S.T.C. 169, approved.

Appeal No. 658 of 1967. Appeal from the judgment and order dated June 27, 1966 of the Assam and Nagaland High Court in Civil Rule No. 296 of 1964. Naunit Lal, for the appellants. Sarjoo Prasad and section N. Prasad. for the respondent. 307 The Judgment of the Court was delivered by shah, C. J. On October 24, 1957 Rameshwar Agarwala hereinafter called the respondent applied to the Deputy Com missioner, Lakhimpur, for settlement of a tea garden for "special cultivation of tea". By order dated March 11, 1964 the Government of Assam permitted settlement of the tea garden for special tea cultivation on payment of Rs . 3,86,008/ as premium. The respondent failed to pay the amount demanded. The State of Assam then put up the tea garden for auction. The respondent moved a petition in the High Court of Assam for an order declaring that in fixing the amount of the premium at Rs. 3,86,008/the State acted illegally, and that the order was void and unenforceable at law because in fixing the amount of the premium the State acted without jurisdiction and the order directing auction of the tea garden for not depositing the amount demanded was also illegal. The High Court, upheld the contention and ordered the State of Assam not to, give effect to the order dated March 31, 1964 calling upon the respondent to pay the amount due within two months of the order and the order dated November 26, 1964 directing that the tea garden be put up for auction. With certificate granted by the High Court, the State of Assam has appealed .to this Court. The tea garden belonged to the State of Assam. The Govern ment of Assam in the absence of any binding statutory provision, could settle the tea garden on such commercial terms it could reasonably obtain. The respondent applied to the Deputy Commissioner for settlement of the tea garden and requesting the State Government for early fixation of the amount of premium. When the premium was fixed by the Government the respondent protested, contending that the action of the State was illegal Before the High Court it was contended by the Respondent that the power of the State Government to fix the premium for which it could lease the tea garden was restricted by Rule 40 framed under the Assam, Land Revenue Regulations. The Rule reads "In addition to the land revenue payable under rule 17 and value of the timber assessed under rule 37, an applicant to whom a lease for special cultivation is granted shall be liable to pay premium. The rate of premium shall be fixed by the State Government from time to time for each locality. The reasons which persuaded the High to upheld the plea, raised by the respondent may be set out in their own words : "The only power which the Government has got, is to fix the rate of premium under Rule 40 of the Rules 308 under the Land Revenue Regulation and the question for us to consider is whether the order of the Government fixing the premium for settlement of this land for special cultivation is an order in conformity with Rule 40. In our opinion, what Rule 40 provides is to confer upon the Government power to fix the rate of premium in every case which shall be payable for the settlement and it is only the Deputy Commissioner that is authorised to settle the land. The whole purpose, of Rule 40 is to confer power on the Government to fix the rate of premium which will be valid for a particular locality and that the Deputy Commissioner has to make the settlement. He is given the power to realise the premium fixed by the Government from time to time and to see that no document of lease is issued before the premium has been paid by the intending holder. But Rule 40 does empower, in our opinion, the State Government to fix the amount of premium in the case of a particular settlement in a particular locality. . . the rate of premium for a particular locality and the Legislature when framing the rules never intended that the Government should be empowered to fixing the total amount of premium payable by the intending holder. In our opinion, therefore, the order passed by the Government directing the authorities to offer the land for settlement in case the petitioners pay Rs. 3,86,000/ is not in conformity with Rule 40 and this order cannot be given effect to. " The expression "locality" is not defined in the Act or in the Rules. We see no warrant for the assumption made by the High Court that in settling the premium to be fixed in respect of its own property, the Government is bound to fix the premium generally in respect of a region. The Government is by the Act or the Rules not disqualified from fixing the premium to be paid in respect of an individual tea garden. In the absence of any indication to the contrary a tea garden may in our judgment be appropriately regarded as a locality within the meaning of Rule 40. The power to settle a tea garden on payment of land revenue, value of the timber and premium is to be exercised according to the Rules. The rate of premium may be fixed by the State Government according to its commercial value. In the absence of any restriction imposed upon the State Government requiring that a general rate shall be fixed covering a specified area larger 309 than a tea garden there is nothing which prohibits the State Government from fixing the rate of premium having regard to the commercial value of the tea garden. In the present case the Sub Divisional Officer reported that the price of the land of the Dirpai tea garden be valued at Rs.1 500/ per bigha and on that basis the State Government computed the premium to be paid in respect of the entire Jokai Tea Garden. Fixation of a rate of Rs. 5001 per bigha in respect of the entire area of the tea garden may be regarded as a premium fixed for the locality of the tea garden. The matter rested entirely in contract between the Respondent and the State Government. There was an offer by the respondent for settlement of the tea garden. He agreed to pay the land revenue payable under r. 17. He also agreed to pay the value of the timber assessed under r. 37. For settlement of the tea garden for special cultivation the respondent was also liable to pay premium. The quantum of liability to pay land revenue was governed by r. 17 and value of the timber was governed by r. 37. The liability to pay premium had to be fixed by the State Government. In the absence of any restriction placed by the Rules upon the power of the St ate Government, we do not think that the High Court had any jurisdiction to compel the State to enter into a contract to settle the tea garden upon the respondent on payment of premium after determining a general rate for a region larger than the tea garden. The High Court was in error in setting aside the order passed by the Government of Assam and in declaring that the offer to settle the land of the Dirpai Tea Garden on payment of Rs. 3,86,008/ was not in conformity with r. 40. The High Court also erred in directing that auction of the land for nonpayment of the premium shall be set aside. The appeal is allowed and the petition filed by the respondent will be dismissed. The respondent will pay the costs in this Court and in the High Court. R.K.P.S. Appeal allowed.

The first respondent applied to the Deputy Commissioner, Lakhimpur for settlement of a Tea Garden for "special cultivation of tea". In March, 1964 the Government of Assam permitted the settlement on payment of Rs. 3.86 lakhs as premium. Upon the respondent failing to make payment of the amount, the State Government directed the auction of the tea garden. The first respondent thereafter moved a petition in the High Court for a declaration inter alia that the State Government had acted illegally in fixing the amount of premium. The High Court allowed the petition holding that the order fixing the premium was not in conformity with rule 40 framed under the Assam Land Revenue Regulations which required the State Government to fix the rate of premium for a particular locality; it did not empower the Government to fix the premium payable by an intending holder in a particular case. On appeal to this Court, HELD : The High Court was in error in setting aside the order passed by the Government of Assam and in declaring that the offer to settle the tea garden on payment of the amount specified Rs. 3,86,000 was not in conformity with rule 40. There was no warrant for the assumption made by the _High Court that in settling the premium to be fixed in respect of its own property, the Government is bound to fix the premium generally in respect of a region. The Government is by the Act or the Rules not disqualified from fixing the premium to be paid in respect of an individual tea garden. In the absence of any indication to the contrary a tea garden may appropriately be regarded as a locality within the meaning of Rule 40. The rate of premium may be fixed by the State Government acccording to its commercial value.

Civil Appeal No. 2481 of 1978. Appeal by Special Leave from the Judgment and order dated 10 10 67 of the Jammu and Kashmir High Court in Civil First Appeal No 18 of 1966 Lal Narain Sinha, E. C. Agarwala, M. M. L. Srivastava, R. Satish and Altaf Ahmed for the Appellant. section N. Andley, B. P. Maheshwari and Suresh Sethi for the Respondent The Judgment of the Court was delivered by FAZAL ALI, J. This is a plaintiffs ' appeal by special leave against a judgment dated 10th October, 1966 of the Jammu & Kashmir High Court dismissing the plaintiff 's suit. 4 The facts of the case lie within a very narrow compass and after hearing counsel for the parties we propose to decide only one point, viz., the question as to whether or not the plaintiffs were entitled to a decree of ejectment against the defendants in respect of the house in question on the ground of personal necessity, and, therefore, we shall narrate only those facts which are germane for this purpose. The property in suit was a four storeyed building situated at Maisuma Lal Chowk, Srinagar and belonged to one Peer Ali Mohammad, the ancestor of the plaintiffs. This building was leased out to the defendants by a registered lease deed dated 1st December 1947 for a period of 10 years. Under the lease the lessor had provided some furniture and crockery to the lessees. Furthermore, it was clearly stipulated that the building was leased out for the purpose of running a hotel by the lessees, and for this purpose the lessees were given the right to make suitable alterations in the same, but were prohibited from making any alteration which may affect the durability or damage the building. On the expiry of the period of the lease, the appellants demanded possession of the building from the respondents and despite certain notices given by the appellants the respondents failed to give possession of the building. Hence the plaintiff 's suit. The plaintiffs had taken three main grounds in support of their contention for ejectment of the defendants from the suit premises. In the first place, the appellants alleged that they required the building in order to extend their business by running a hotel there themselves; secondly, as the lease had expired by efflux of time, the respondents were legally bound to surrender possession. Thirdly, it was averred by the plaintiffs that the Jammu & Kashmir Houses and Shops Rent Control Act, 1966 (hereinafter referred to as the Act) was wholly inapplicable to the premises in dispute, because the yearly income of the defendants far exceeded Rs. 20,000 and that running a hotel did not fall within the purview of section 2(3) of the Act. The suit was resisted by the respondents who took, inter alia, a number of objections to the grant of the relief to the appellants. In the first place, it was pleaded that tho income of the respondents being less than Rs. 20,000/ per year the suit was clearly covered by the Act. Secondly, it was averred that the definition of the word 'house ' in section 2(3) of the Act was wide enough to include a hotel. It was next averred that the plaintiffs had no personal necessity and had filed the suit merely for the purpose of getting a higher rent. Lastly, it was contended that as the plaintiffs required the house for running a hotel, such a purpose did not fall within the ambit of section ll(h) of the Act which applied only to such a case where the landlord required the house for his occupation and, at any 5 rate, having regard to the comparative advantages or disadvantages of the landlord and the tenant, there was no equity on the side of the plaintiffs. The case was tried by the City Judge, Srinagar who accepted the case of the defendants (respondents) and dismissed the plaintiffs ' suit. The plaintiffs thereupon filed an appeal before the High Court of Jammu & Kashmir which held that the plaintiffs had not proved their personal plaintiffs filed an application for leave to appeal to this Court and the same having been refused, they obtained special leave of this Court and hence the appeal before us. In support of the appeal Mr. Lal Narayan Sinha, counsel for the appellants submitted three points. In the first place, he contended that there was sufficient evidence to indicate that the income of the defendants respondents was more than Rs. 20,000/ a year, and, therefore, the provisions of the Act were not applicable and as the leave has expired due to efflux of time, the plaintiffs were entitled to a decree for ejectment straightway. Secondly, it was argued that the word 'house ' used in section 2(3) of the Act cannot include a hotel, and, therefore, the Act was not applicable. Lastly, it was submitted that the High Court committed a grave error of law in holding that the plaintiffs hold not been able to prove personal necessity" although the High Court gave a clear finding that the plaintiffs had undoubtedly proved that they had a strong desire to occupy the building for running a hotel. It was argued that the finding of the High Court was not based on a discussion of the evidence and circumstances of the case and the High Court has taken an erroneous view of law on the nature of the need of the appellants as also on the question of the comparative advantages or disadvantages of the landlord and the tenant if a decree for eviction followed. After having heard counsel for the parties we are clearly of the opinion that the appeal must succeed on the third point raised by learned counsel for the appellants, i.e., the question of personal necessity and in this view of the matter we refrain from expressing any opinion on the applicability of the Act to the suit premises as averred by the respondents. Learned counsel for the appellants contended that there was sufficient material before the Court to show that the plaintiffs did not merely have a desire to occupy the building, but they actually needed the same and their need is both genuine and reasonable. In this connection, reliance was placed on the evidence of the witnesses for the plaintiffs which does not appear to have been considered by the High Court. We find that the plaintiffs had clearly mentioned in their plaint 6 that they required the house for the purpose of running the hotel business. On behalf of the plaintiffs P.W. Mohd. Yusuf had made it absolutely clear that they required the lease property for their personal need as they wanted to run the hotel themselves. The witness had further explained that this was necessary, because the plaintiffs could not maintain themselves from the income of the leased property. It is true that the plaintiffs were doing a small business, but the witness had made it clear that their income was very low so much so that they paid income tax of only Rs. 70 to Rs. 80/ per annum. These facts have not been demolished either in the cross examination of the witness or in the evidence of rebuttal given by the defendants. The above evidence of the plaintiffs is corroborated by the other witnesses examined by them. P.W. Girdhari Lal has clearly stated that the plaintiffs want to extend their business and want to have the hotel in their own possession to run the same. He has further stated that the plaintiffs are running their business on a small scale, and he categorically stated that he had personally observed that there is very little work at the plaintiff 's shop now a days. That is why they want to run a hotel. The witness is a neighbour of the plaintiffs. shop and was, therefore, competent to depose to the facts mentioned above which have not been shaken in cross examination. P.W. Peer Ahmad Ullah has also stated that now a days people give up other occupations and take up hotel business because hotel business is itself a profitable business. The witness added that the plaintiff also want to extend their business and start a hotel in this building. P.W. Ghulam Nabi Dar also says that although the plaintiffs had a l? Boot shop they also want to run the hotel themselves, because their business has become dull. P W. Ghulam Mohd. whose shop is in front of the shop of the plain tiffs states as follows: "The plaintiffs require the suit property for their own use, as they have been telling me for the last two or four years Previously, the business at Boot shops was running well but now it has become dull. The plaintiffs intend to run the hotel themselves. . . As for plaintiffs I say that they are in need of the hotel. The plaintiffs require the; hotel in order to extend their business". Another neighbour of the plaintiffs P.W. Yash Paul states that the plaintiffs say that they will start a hotel in the suit property. He fur 7 ther deposes that there is little work in the shop of the plaintiffs, and, therefore, they want to start a hotel, P.W. Ghulam Mohd. who is the brother in law of P.W. Pir Ali. Mohd., father of the plaintiffs and was looking after his children on the death of P.W. Pir Ali Mohd. has also stated that the plaintiffs want to start business in the shape of a hotel in the house and they also want to run the shop. It is, therefore, proved by the evidence discussed above ( 1 ) that the plaintiffs required the house for their personal necessity in order to augment their income, (2) that as their income from the Boot shop is very small and they are not able to maintain themselves. so they want to run the hotel business in the suit premises. The High Court has not at all discussed this part of the evidence of the plaintiffs, but at the some time being impressed by the fact that the need of the plaintiffs was genuine the High Court gave a finding to at the plaintiffs had a strong desire to occupy the house and use it for commercial purposes. Thereafter the High Court appears to have lost itself in wilderness by entering into a hair splitting distinction between desire and need. Here the High Court has misdirected itself. If the plaintiffs had proved that their necessity was both genuine and reasonable, that the present premises which belonged to them were required for augmenting their income as the income so far received by them was not sufficient for them to make the two ends meet, there could be no question of a mere desire, but it is a case of real requirement or genuine need. In fact the irresistible inference which could be drawn from the facts is that the plaintiffs had a pressing necessity of occupying the premises for the purposes of conducting hotel business so as to supplement their income and maintain themselves property. The Act is a piece of social legislation and aimed at easing the problem of accommodation, protecting the tenants from evictions inspired by profit hunting motives and providing certain safeguards for the tenants and saving them from great expense, inconvenience and trouble. But the Act does not completely overlook the interest of the landlord and has under certain conditions granted a clear right to the landlord to seek eviction on proof of the grounds mentioned in section 11 of the Act. Thus, the Act appears to have struck a just balance between the genuine need of the landlord on the one hand and great inconvenience and trouble of the tenant on the other. It was also not disputed that the defendants had taken the property on lease only for a period of 10 years and now they have been in possession of the same for over 30 years. If the plaintiffs found that their present business had become dull and was not yielding sufficient income to maintain themselves and, therefore, it was necessary to occupy the house so as to run a hotel business, it cannot by any stretch of imagination be said that the plaintiffs had merely a desire rather than 8 a bonafide need for evicting the tenants. We therefore, disagree with the finding of he High Court that the plaintiffs had not proved that they had a bonafide need for occupation of the building in dispute. Moreover section 11(h) of the Act uses the words 'reasonable requirement ' which undoubtedly postulate that there must be an element of need as opposed to a mere desire or wish. The distinction between desire and need should doubtless be kept in mind but not so as to make even the genuine need as nothing but a desire as the High Court has done in this case. It seems to us that the connotation of the term 'need ' or 'requirement should not be artificially extended nor its language so unduly stretched or strained as to make it impossible or extremely difficult for one landlord to get a decree for eviction. Such a course would defeat the very purpose of the Act which affords the facility of eviction of the tenant to the landlord on certain specified grounds. This appears to us to be the general scheme of all the Rent Control Acts, prevalent in other State in the country. This Court has considered the import of the word requirement and pointed out that it merely connotes that there should be an element of need. In the case of Phiroze Ramanji Desai vs Chandrakant N. Patel & Ors. (1) Justice Bhagwati speaking for the Court observed as follows: The District Judge did not misdirect himself in regard to the true meaning of the word 'requires ' in section 13(1) (g) and interpreted it correctly to mean that there must be an element of need before a landlord can be said to 'require ' premises for his own use and occupation. It is not enough that the landlord should merely desire to use and occupy the premises. What is necessary is that he should need them for his own use and occupation. " Thus, this Court has held that in such cases the main test should be whether it was necessary for the landlords to need the premises for their use or occupation. In the case of B. Balaiah vs Chandoor Lachaiah(2) a Division Bench of the High Court observed as follows: "As long as such requirement is bona fide, the petitioner can certainly claim for a direction for eviction of the tenant". It had become necessary for us to enter into the evidence led by the plaintiffs, because the High Court has in a general way made a sweeping obvervation that although the plaintiffs had a strong desire, they (1) [1974] I S.C.C. 661 (2) A.I.R 1965 A.P 435. 9 were not able to prove reasonable requirement and the High Court came to this finding without at all considering the evidence of competent and important witnesses examined by the plaintiffs on this point which has been discussed above. For these reasons, therefore, we are clearly of the opinion that in the instant case the plaintiffs had proved that the requirement for the house for starting a hotel business was both genuine and reasonable and even imperative, because the scanty income of the plaintiffs was not sufficient to maintain them or to afford them a decent or comfortable living. This brings us to the next limb of the argument of the learned counsel for the respondents regarding the interpretation of section 11 ( 1 ) (h) of the Act. Section ll(l)(h) of the Act runs thus: 11(1)(h) . . . . where the house or shop is reasonably required by the landlord either for purposes of building or re building, or for his own occupation or for the occupation of any person for whose benefit the house or shop is held; Explanation: The Court in determining the reasonableness of requirement for purposes of building or rebuilding shall have regard to the comparative public benefit or disadvantage by extending or diminishing accommodation, and in determining reasonableness of requirement for occupation shall have regard to the comparative advantage or disadvantage of the landlord or the person for whose benefit the house or shop is held and of the tenant". It was submitted by Mr. Andley learned counsel for the respondents that the words used in section ll(l)(h) are "that the house should be required by the landlord for his own occupation or for the occupation of and person for whose benefit the house or shop is held. " It was argued that the words `own occupation ' clearly postulate that the landlord must require it for his personal residence and not for starting any business in the house. We are, however, unable to agree with this argument. The provision is meant for the benefit of the landlord and, therefore, it must be so construed as to advance the object of the Act. The word 'occupation ' does not exclude the possibility of the landlord starting a business or running a hotel in the shop which also would amount to personal occupation by the landlord. In our opinion, the section contemplates the actual possession of the landlord, whether for his own residence or for his business. It is manifest that even if the landlord is running a hotel in the house, he is undoubtedly in possession or occupation of the house in the legal sense of the term. 2 817SCI/78 10 Furthermore, the section is wide enough to include the necessity of not only the landlord but also of the persons who are living with him as members or the same family. In the instant case there can be no manner of doubt that the house was required for the personal residence or occupation of all the three plaintiffs who admittedly were the owners of the house. The fact that the plaintiffs wanted to occupy the property for running hotel would not take their case out of the ambit of personal necessity as already indicated above, occupation of a house may be required by the owner for personal purposes. He may choose to reside himself in the house or run a business in the house or use it as a paying guest house and derive income therefrom. In all these cases even though the owner may not physically reside in the house, the house in law would nevertheless be deemed to be in actual occupation of the owner. Having regard, therefore, to the circumstances mentioned above, we are unable to subscribe to the view that the words 'own occupation 'must be so narrowly interpreted so as to indicate actual physical possession of the landlord personally and nothing short of that. We, therefore, overrule the argument of the respondents on this point. The last argument that was advanced before us by Mr. Andley for the respondents was that taking an overall picture of the various aspects of the present case, it cannot be said that the balance of comparative advantages and disadvantages was in favour of the landlord. In this connection, our attention was drawn to the evidence led by the defendants that the main source of their income is the hotel business carried on by them in the premises and if they are thrown out they are not likely to get any alternative accommodation. The High Court has accepted the case of the defendants on this point, but does not appear to have considered the natural consequences which flow from a comparative assessment of the advantages and disadvantages of a landlord and the tenant if a decree for eviction follows. It is no doubt true that the tenant will have to be ousted from the house if a decree for eviction ii passed, but such an event would happen whenever a decree for eviction is passed and was fully in contemplation of the legislature when section ll(l)(h) of the Act was introduced in the Act. This by itself would not be a valid ground for refusing the plaintiffs a decree for eviction. Let us now probe into the extent of the hardship that may be caused to one party or the other, in case a decree for eviction is passed or is refused. It seems to us that in deciding this aspect of the matter each party has to prove its relative advantages or disadvantages and the entire 11 Onus cannot be thrown on the plaintiffs to prove that lesser disadvantages will be suffered by the defendants and that they were remediable. This matter was considered by this Court in an unreported decision in the case of M/s Central Tobacco Co. vs Chandra Prakash(l) where this Court observed as follows: "We do not find ourselves able to accept the broad pro position that as soon as the landlord establishes his need for additional accommodation he is relieved of all further obligation under section 21 sub section (4) and that once the landlord 's need is accepted by the court all further evidence must be adduced by the tenant if he claims protection under the Act. Each party must adduce evidence to show what hardship would be caused to him by the granting or refusal of the decree and it will be for the court to determine wether the suffering of the tenant, in case a decree was made, would be more than that of the landlord by its refusal. The whole object of the Act is to provide for the control of rents and evictions, for the leasing of buildings etc. and section 21 specifically enumerates the grounds which alone will entitle a landlord to evict his tenant. The onus of proof of this is certainly on the landlord. We see no Sufficient reason for holding that once that onus is discharged by the landlord it shifts to the tenants making it obligatory on him to show that greater hardship would be caused to him by passing the decree than be refusing to pass it. In our opinion both sides must adduce all relevant evidence before the court; the landlord must show that other reasonable accommodation was not available to him and the tenant must also adduce evidence to that effect. It is only after shifting such evidence that the court must form its conclusion on consideration of all the circumstances of the case as to whether greater hardship would be caused by passing the decree than by refusing to pass it". This case was followed in Phiroze Ramanji Desai vs Chandrakant N. Patel & Ors (supra). In the case of Kelley vs Goodwin(2) Lynskey, J. Observed as follows: "The next matter one has to consider is whether there was evidence on which the county court judge could come to the conclusion that there would be greater hardship in mak (1) C.A. 1175 of 1969 decided on 23 4 1969. (2) 12 ing the order than not making the order. He has taken into account, in relation to that question, first, the position of the landlord, and, secondly, the position of the tenant. He has taken into account the financial means of the tenant. It is argued before us that he was wrong in doing that. In my view, he was quite entitled, in considering hardship, to have regard to the financial means of the tenant in considering whether he could obtain other accommodation because, by reason of his means, he was in a position, not merely to rent, but to buy a house. It seems to me also that, on this question cf hardship, the judge was entitled to take into account the fact that the tenant had taken no real steps to try and find other accommodation or no real steps to buy a house". To the same effect is the decision in the case of K. Parasuramaiah vs Pokuri Lakshmamma(1) where a Division Bench of the High Court narrated the mode and circumstances in which the comparative advantages and disadvantages of the landlord and the tenant could be weighed. In this connection, the Court observed as follows: "Thus the hardship of the tenant was first to be found out in case eviction is to be directed. That hardship then has to be placed against the relative advantages which the land lord would stand to gain if an order of eviction is passed . What is however required is a careful consideration of all the relevant factors in weighing the relative hardship which is likely to be caused to the tenant with the likely ad vantage of the landlord on the basis of the available material on record. '. The proviso however should not be read as if it confers a practical immunity on the tenant from being evicted. That would destroy the very purpose of Sec. 10(3)(c). Likewise the requirement of the land lord in accordance with that provision alone cannot be given absolute value, because that would mean to underestimate the value of the proviso to that section. Keeping in view therefore the purpose of the provision and the necessity of balancing the various factors each individual case has to be decided in the light of the facts and circumstances of that case ' '. In view of our findings it has been established that the landlords have not only a genuine requirement to possess the house, but it is necessary for them to do so in order to augment their income and maintain themselves properly. Being the owners of the house they (1) A.I.R. 1965 A.P.220 13 cannot be denied eviction and be compelled to live below the poverty line merely to enable the respondents to carry on their flourishing hotel business, at the cost of the appellants. This shows the great prejudice that will be caused to the plaintiffs if their suit is dismissed. The plaintiffs have already produced material before the court to show that their income does not exceed more than Rs. 8000 to Rs. 9000/ per year as the yearly income tax paid by them is Rs. 70 to Rs. 80 only. There is no other means for them to augment their income except to get their own house vacated by the defendants so as to run a hotel business. It was vehemently contended by Mr. Andley that there is nothing to show that the plaintiff Mohd. Yusuf or his mother had any experience of running the hotel, and, therefore, it is fruitless to allow them to run the hotel by evicting the respondents. Mohd. Yusuf is admittedly doing shoe business, and has got sufficient experience of business. Nothing has been brought on the record to show that he is incapable of running a hotel in the premises. The building belongs to him and there is Do reason for us to think that he cannot establish a hotel business. On the other hand the defendants have been running the hotel for the last 30 years and must have made sufficient profits. To begin with, the defendants had taken the lease only for 10 years which now by virtue of the statute has been extended to 30 years which is a sufficiently long period for which the plaintiffs have been deprived the possession of the house. There is thus no equity in favour of the respondents for continuing in possession any further. It was then submitted by Mr. Andley, counsel for the respondents that if the respondents are evicted they will be thrown out on the road; that hotel is the only source of their sustenance and they are not likely to get any alternative accommodation on being evicted. If the defendants had proved that they will not be able to get any accommodation any where in the city where they could set up a hotel, this might have been a weighty consideration, but the evidence of all the witnesses examined by the defendants only shows that the defendants may not get alternative accommodation in that very locality where the house in dispute is situated. There is no satisfactory evidence to prove that even in other business localities there is no possibility of the defendants getting a house. To insist on getting an alternative accommodation of a similar nature in the same locality will be asking for the impossible. The defendants are tenants and had taken the lease only for 10 years but had overstayed for 20 years and they cannot be allowed to dictate to the landlord that they cannot be evicted unless they get a similar accommodation in the very same locality. 14 G. M. Khan the defendant himself has stated that if he is evicted from the house, he cannot get such a place any where. Great stress is laid that he must get a house of the size of the house in dispute. It was suggested to him that if one of the houses of the plaintiffs is given to him that will be sufficient for him, to which he said that the said house situated in Hari Singh High Street is not suitable because he can not run his hotel business there. The witness has further stated towards the end that the defendants cannot get any place for the purpose of running a hotel in this Ilaqa (locality). D.W. Ghani Hajam also says that the defendants cannot get any other building for the purpose of the hotel at this place like the one under dispute. Similarly, D. W. Ghulam Mohd. Khan, another witness for the defendants says that the defendants will not get such a building in this Ilaqa for running a hotel. D.W. Haji Noor Mohd. also endorses the fact that if the defendants are ejected, it is difficult for them to get such a building in this place. D.W. Mohd, Ramzan deposes that if the defendants are ejected from the building, they will not get such a building in this locality for running a hotel. To the same effect is the evidence of D. W. Rasool Dar who says that it is impossible for the defendants to get a house like the suit house for the purposes of running a hotel at the site or nearabout where the suit house is situated. D. W. Ghulam Mohd. has made a similar statement in his deposition when he says that the defendants will not get such a building nor is there any such building vacant in the locality. It is true that there are some witnesses like D. W. Aslam Khan, Ghulam Hassan, Mohd. Abdullah Pandey who has said that the defendants might not get any other place for running a hotel but the evidence is extremely vague and nebulous. D. W. Abdul Kabir however merely says that he had no knowledge that the defendants could get any other house. Thus, what is established from the evidence of the defendants is that if they are ejected, they might not get a house as big as the house in dispute in the very locality where the disputed house is situated. There is no clear evidence in the first place to show that there is no other business locality in the city at all or that if there is any other business locality attempts were made by the defendants but they Were unable to get any house. Furthermore, as indicated above, the plaintiff necessity is imperative and their requirement is undoubtedly reasonable, because the income which they are receiving including the rent of the house which is in the region of Rs. 5000/ per year, is not sufficient to maintain them. Thus, on a careful comparison and assessment of the relative advantages and disadvantages of the landlord and the tenant it seems to us that the scale is tilted in favour of the plaintiffs. 15 The inconvenience, loss and trouble resulting from denial of a decree for eviction in favour of the plaintiffs far outweigh the prejudice or the inconvenience which will be caused to the defendants. The High Court has unfortunately not weighed the evidence from this point of view. Before closing the judgment we would like to observe that normally this Court does not interfere with concurrent findings of facts but as the High Court as also the Trial Court have made a legally wrong approach to this case and have committed a substantial and patent error of law in interpreting the scope and ambit of the words "reasonable requirement" and "own possession" appearing in section 11 (1) (h) of the Act and have thus misapplied the law and overlooked some of the essential features of the evidence as discussed by us, we had to enter into the merits of the case in order to prevent grave and substantial injustice being done to the appellants. For the reasons given above, the appeal is allowed. The judgment and decree of the High Court are set aside, and a decree for ejectment of the defendants from the house in dispute is hereby passed against the defendants. In the peculiar circumstances of this case, there will be no order as to costs. S.R. Appeal allowed.

The appellants plaintiffs sought the eviction of the respondents defendants from the suit premises which was leased to the latter for a period of ten years only and for running a hotel, on the grounds (a) of personal requirement to run a hotel business themselves and (b) of the failure of the respondents to deliver possession after the expiry of the period of lease despite notices issued. The Trial Court and the High Court in appeal having dismissed the suit, the appellants obtained special leave of this Court. Allowing the appeal, the Court ^ HELD : 1. The Jammu and Kashmir Houses and Shops Rent Control Act, 1966 is a piece of social legislation aimed at easing the problem of accommodation, protecting the tenants from evictions inspired by profit hunting motives and providing certain safeguards for the tenants and saving them from great expense, inconvenience and trouble. But the Act does not completely overlook the interest of the landlord and has under certain conditions granted a clear right to the landlord to seek eviction on proof of the grounds mentioned in section 1. Of the Act. Thus, the Act appears to have struck a just balance between the genuine need of the landlord on the one 'land and great inconvenience and trouble which may be caused to the tenants on the other. In the instant case. the defendants had taken the property on lease only for a period of I O years and now they have been in prossession of the same for over 30 years. If the plaintiffs found that their present business had become dull and was not yielding sufficient income to maintain themselves and therefore, it was necessary to occupy the house so as to run a hotel business, it cannot by any stretch of imagination be said that the plaintiffs had merely a desire rather than a bonafide need for evicting the tenants. The findings of the High court that the plaintiffs had not proved that they had a bonafide need for occupation of the building in dispute is incorrect. [7E H, 8A] 2. Section 11(h) of the Act uses the words 'reasonable requirement ' which undoubtedly postulate that there must be an element of need as opposed to a mere desire or wish. The distinction between desire and need should doubtless be kept in mind but not so as to make even the genuine need as nothing but a desire as the High Court has done in this case. The connotation of the term 'need ' or 'requirement ' should not be artificially extended nor its language so unduly stretched or strained as to make it impossible or extremely difficult for the landlord lo get a decree for eviction. Such a course would defeat the very pur 2 pose of the Act which affords The facility of eviction of the tenant to the landlord on certain specified grounds. 'This is the general scheme of all the Rent Control Acts, prevalent in other States in the country. The word "requirement" merely connotes that there should be an element of need. In such cases the main test should be whether it was necessary for the landlords t() need the premises for their own use or occupation. [8A D, F] In the instant case, the plaintiffs had proved that The requirement for the house for starting a hotel business was both genuine and reasonable and even imperative, because the scanty income of the plaintiffs was not sufficient to maintain them or to afford them a decent or comfortable living. [9A B] Phiroze Ramanji Desai vs Chandrakant N. Patel and Ors ; ; applied. B. Baliah v Chandoor Lachaiah, A.I.R. 1965 A.P. 435 (D.B.) approved. The words "own occupation" in section ll(h) cannot be so narrowly interpreted as to indicate actual physical possession of the landlord personally and nothing short of that. The provision in section ll(h) of the Act is meant for the benefit of the landlord and, therefore, it must be so construed as to advance the object of the Act. The word 'occupation ' does not exclude the possibility of the landlord starting a business or running a hotel in the shop which also would amount to personal occupation by the landlord. The section contemplates the actual possession of the landlord, whether for his own residence or for his business. It is manifest that even, if the landlord is running a hotel in the house, he is undoubtedly in possession or occupation of the house in the legal sense of the term. Furthermore, the section is wide enough/to include the necessity of not only the landlord but also of the persons who are living with him as members of the same family. [9G H, 10A and D] In the instant case there can be no manner of doubt that the house was required for the personal residence or occupation of all the three plaintiffs who admittedly were the owners of the house. The fact that the plaintiffs wanted to occupy the property for running hotel would not take their case out of the ambit of personal necessity and the occupation of a house may be required by the owner for personal purposes. He may choose to reside himself in the house or run a business in the house or use it as a paying guest house and derive income therefrom. In all these cases even though the owner may not physically reside in the house, the house in law would nevertheless be deemed to be in actual occupation of the owners. [10A C] 4. (a) In deciding the aspect of balance of convenience of the parties in an eviction suit each party has to prove its relative advantages or disadvantages and the entire onus cannot be thrown on the plaintiffs to prove that lesser disadvantages will be suffered by the defendants and that they were remediable. [10H, 11A] (b) It is no doubt true that the tenant will have to be ousted from the house if a decree for eviction is passed, but such an event would happen when ever a decree for eviction is passed and was fully in contemplation of the legislature when section ll(l)(h) of the Act was introduced in the Act. This by itself would not be a valid ground for refusing the plaintiffs a decree for eviction. [10F G] 3 M/s. Central Tobacco Co. vs Chandra Prakash, Civil Appeal No. 1175/69 [SC] dated 23 4 1969 and Phiroze Ramanji Desai vs Chandrakant N. Patel and Ors. [1974] I S.C.C. 661; referred to. Kelley vs Goodwin, [1947] All E.R. P. 810; quoted with approval; K Parasuramaiah v Pokuri Lakshmamma AIR 1965 A.P. 220 approved. (c) Being the owners of the house they cannot be denied eviction and be compelled to live below the poverty line merely to enable the respondents to carry on their flourishing hotel business, at the cost of the appellants. This shows the great prejudice that will be caused to the plaintiffs if their suit is dismissed. The plaintiffs have already produced material before the court to show that their income does not exceed more than Rs. 8000 to Rs. 9000/ per year as the yearly income tax paid by them is Rs. 70 to Rs. 80 only. There is no other means for them to augment their income except to get their own house vacated by the defendants so as to run a hotel business. [12H, 13A B] (d ) on a careful comparison and assessment of the relative advantages and disadvantages of the landlord and the tenant, it is clear that the scale is tilted in favour of the plaintiffs in the instant case. The inconvenience, loss and trouble resulting from denial of a decree for eviction in favour of the plaintiffs far outweigh the prejudice or the inconvenience which will be caused to the defendants. The High Court has unfortunately not weighed the evidence from the point of view. [14H, 15A] Observation: Normally Supreme Court does not interfere with concurrent findings of facts but as the High Court as also the Trial Court have made a legally wrong approach to this ease and have committed a substantial and patent error of law in interpreting the scope and ambit of the words "reasonable requirement" and "own possession" appearing in section ll(I)(h) of the Act and have thus misapplied the law and overlooked some of the essential features of the evidence, the merits of the case had to be looked into in order to prevent grave and substantial injustice being done to the appellant. [15B C]

Appeal No. 517 of 1958. Appeal from the judgment and order dated October 31, 1957, of the Kerala High Court in O. P. No. 215 of 1957. G. B. Pai and Sardar Bahadur, for the appellant. Hardyal Hardy and D. Gupta, for the respondents. November 29. The Judgment of the Court was delivered by SHAH, J. C. A. Abraham hereinafter referred to as the appellant and one M. P. Thomas carried on business in food grains in partnership in the name and style of M. P. Thomas & Company at Kottayam. M. P. Thomas died on October 11, 1949. For the account years 1123, 1124 and 1125 M.E. corresponding to August 1947 July 1948, August 1948 July 1949 and August 1949 July 1950, the appellant submitted as a partner returns of the income of the firm as an unregistered firm. In the course of the assessment proceedings, it was discovered that the firm had carried on transactions in different commodities in fictitious names and had failed to disclose substantial income earned therein. By order dated November 29, 1954, the Income Tax Officer assessed the suppressed income of the firm in respect of the assessment year 1124 M.E. under the Travancore Income Tax Act and in respect of assessment years 1949 50 and 1950 51 under the Indian Income Tax Act and on the same day issued notices under section 28 of the Indian Income Tax Act in respect of the years 1949 50 and 1950 51 and 767 under section 41 of the Travancore Income Tax Act for the year 1124 M.E., requiring the firm to show cause why penalty should not be imposed. These notices were served upon the appellant. The Income Tax Officer after considering the explanation of the appellant imposed penalty upon the firm, of Rs. 5,000 in respect of the year 1124 M. E., Rs. 2,O00 in respect of the year 1950 51 and Rs. 22,000 in respect of the year 1951 52. Appeals against the orders passed by the Income Tax Officer were dismissed by the Appellate Assistant Commissioner. The appellant then applied to the High Court of Judicature of Kerala praying for a writ of certiorari quashing the orders of assessment and imposition of penalty. It was claimed by the appellant inter alia that after the dissolution of the firm by the death of M. P. Thomas in October, 1949, no order imposing a penalty could be passed against the firm. The High Court rejected the application following the judgment of the Andhra Pradesh High Court in Mareddi Krishna Reddy vs Income Tax Officer, Tenali (1). Against the order dismissing the petition, this appeal is preferred with certificate of the High Court. In our view the petition filed by the appellant should not have been entertained. The Income Tax Act provides a complete machinery for assessment of tax and imposition of penalty and for obtaining relief in respect of any improper orders passed 'by the Income Tax authorities, and the appellant could not be permitted to abandon resort to that machinery and to invoke the jurisdiction of the High Court under article 226 of the Constitution when he had adequate remedy open to him by an appeal to the Tribunal. But the High Court did entertain the petition and has also granted leave to the appellant to appeal to this court. The petition having been entertained and leave having been granted, we do not think that we will be justified at this stage in dismissing the appeal in limine. On the merits, the appellant is not entitled to relief. The Income Tax Officer found that the appellant had, with a view to evade payment of tax, (1) 768 deliberately concealed material particulars of his income. Even though the firm was carrying on transactions in food grains in diverse names, no entries in respect of those transactions in the books of account were posted and false credit entries of loans alleged to have been borrowed from several persons were made. The conditions prescribed by section 28(1)(c) for imposing penalty were therefore fulfilled. But says the appellant, the assessee firm had ceased to exist on the death of M. P. Thomas, and in the absence of a provision in the Indian Income Tax Act whereby liability to pay penalty may be imposed after dissolution against the firm under section 28(1)(c) of the Act, the order was illegal. Section 44 of the Act at the material time stood as follows: "Where any business,. carried on by a firm. has been discontinued . every person who was at the time of such discontinuance . a partner of such firm,. shall in respect of the income, profits and gain of the firm be jointly and severally liable to assessment under Chapter IV for the amount of tax payable and all the provisions of Chapter IV shall, so far as may be, apply to any such assessment. " That the business of the firm was discontinued because of the dissolution of the partnership is not disputed. It is urged however that a proceeding for imposition of penalty and a proceeding for assessment of income tax are matters distinct, and section 44 may be resorted to for assessing tax due and payable by a firm business whereof has been discontinued, but an order imposing penalty under section 28 of the Act cannot by virtue of section 44 be passed. Section 44 sets up machinery for assessing the tax liability of firms which have discontinued their business and provides for three consequences, (1) that on the discontinuance of the business of a firm, every person who was at the time of its discontinuance a partner is liable in respect of income, profits and gains of the firm to be assessed jointly and severally, (2) each partner is liable to pay the amount of tax payable by the firm, and (3) that the provisions of Chapter, so far as may be, apply to such assessment. The liability declared by section 44 is 769 undoubtedly to assessment under Chapter IV, but the expression "assessment" used therein does not merely mean computation of income. The expression "assessment" as has often been said is used in the Income Tax Act with different connotations. In Commissioner of Income Tax, Bombay Presidency & Aden vs Khemchand Ramdas (1), the Judicial Committee of the Privy Council observed: "One of the peculiarities of most Income tax Acts is that the word "assessment" is used as meaning sometimes the computation of income, sometimes the determination of the amount of tax payable and sometimes the whole procedure laid down in the Act for imposing liability upon the tax payer. The Indian Income tax Act is no exception in this respect. . ". A review of the provisions of Chapter IV of the Act sufficiently discloses that the word "assessment" has been used in its widest connotation in that chapter. The title of the chapter is "Deductions and Assessment". The section which deals with assessment merely as computation of income is section 23; but several sections deal not with computation of income, but determination of liability, machinery for imposing liability and the procedure in that behalf. Section 18A deals with advance payment of tax and imposition of penalties for failure to carry out the provisions there in. Section 23A deals with power to assess individual members of certain companies on the income deemed to have been distributed as dividend, section 23B deals with assessment in case of departure from taxable territories, section 24B deals with collection of tax out of the estate of deceased persons; section 25 deals with assessment in case of discontinued business, section 25A with assessment after partition of Hindu Undivided families and sections 29, 31, 33 and 35 deal with the issue of demand notices and the filing of appeals and for reviewing assessment and section 34 deals with assessment of incomes which have escaped assessment. The expression "assessment" used in these sections is not used merely in the sense of computation of income and there is in our judgment no ground for holding (1) 770 that when by section 44, it is declared that the partners or members of the association shall be jointly and severally liable to assessment, it is only intended to declare the liability to computation of income under section 23 and not to the application of the procedure for declaration and imposition of tax liability and the machinery for enforcement thereof. Nor has the expression, "all the provisions of Chapter IV shall so far as may be apply to such assessment" a restricted content: in terms it says that all the provisions of Chapter IV shall apply so far as may be to assessment of firms which have discontinued their business. By section 28, the liability to pay additional tax which is designated penalty is imposed in view of the dishonest contumacious conduct of the assessee. It is true that this liability arises only if the Income tax Officer is satisfied about the existence of the conditions which give him jurisdiction and the quantum thereof depends upon the circumstances of the case. The penalty is not uniform and its imposition depends upon the exercise of discretion by the Taxing authorities; but it is imposed as a part of the machinery for assessment of tax liability. The use of the expression "so far as may be" in the last clause of section 44 also does not restrict the application of the provisions of Chapter IV only to those which provide for computation of income. By the use of the expression "so far as may be" it is merely intended to enact that the provisions in Ch. IV which from their nature have no application to firms will not apply thereto by virtue of section 44. In effect, the Legislature has enacted by section 44 that the assessment proceedings may be commenced and continued against a firm of which business is discontinued as if discontinuance has not taken place. It is enacted manifestly with a view to ensure continuity in the application of the machinery provided for assessment and imposition of tax liability notwithstanding discontinuance of the business of firms. By a fiction, the firm is deemed to continue after discontinuance for the purpose of assesment under Chapter IV. The Legislature has expressly enacted that the provisions of Chapter IV shall apply to the assessment of 771 a business carried on by a firm even after discontinuance of its business, and if the process of assessment includes taking steps for imposing penalties, the plea that the Legislature has inadvertently left a lacuna in the Act stands refuted. It is implicit in the contention of the appellant that it is open to the partners of a firm guilty of conduct exposing them to penalty under section 28 to evade penalty by the simple expedient of discontinuing the firm. This plea may be accepted only if the court is compelled, in view of unambiguous language, to hold that such was the intention of the Legislature. Here the language used does not even tend to such an interpretation. In interpreting a fiscal statute, the court cannot proceed to make good deficiencies if there be any: the court must interpret the statute as it stands and in case of doubt in a manner favourable to the tax payer. But where as in the present case, by the use of words capable of comprehensive import, provision is made for imposing liability for penalty upon tax payers guilty of fraud, gross negligence or contumacious conduct, an assumption that the words were used in a restricted sense so as to defeat the avowed object of the Legislature qua a certain class will not be lightly made. Counsel for the appellant relying upon Mahankali Subbarao vs Commissioner of Income Tax (1), in which it was held that an order imposing penalty under section 28(1)(c) of the Indian Income Tax Act upon a Hindu Joint Family after it had disrupted, and the disruption was accepted under section 25A(1) is invalid, because there is a lacuna in the Act, submitted that a similar lacuna exists in the Act in relation to dissolved firms. But whether on the dissolution of a Hindu Joint Family the liability for penalty under section 28 which may be incurred during the subsistence of the family cannot be imposed does not fall for decision in this case: it may be sufficient to observe that the provisions of section 25A and section 44 are not in pari materia. In the absence of any such phraseology in section 25A as is used in section 44, no real analogy between the content of that section and section 44 may be assumed. Undoubtedly, (1) 772 by section 44, the joint and several liability which is declared is liability to assessment in respect of income, profits or gains of a firm which has discontinued its business, but if in the process of assessment of income, profits or gains, any other liability such as payment of penalty or liability to pay penal interest as is provided under section 25, sub section (2) or under section 18A sub sections (4), (6), (7), (8) and (9) is incurred, it may also be imposed, discontinuation of the business notwithstanding. In our view, Chief Justice Subba Rao has correctly stated in Mareddi Krishna Reddy 's case (supra) that: "Section 28 is one of the sections in Chapter IV. It imposes a penalty for the concealment of income or the improper distribution of profits. The defaults made in furnishing a return of the total income, in complying with a notice under sub section (4) of section 22 or sub section (2) of section 23 and in concealing the particulars of income or deliberately furnishing inadequate particulars of such income are penalised under that section. The defaults enumerated therein relate to the process of assessment. Section 28, therefore, is a provision enacted for facilitating the proper assessment of taxable income and can properly be said to apply to an assessment made under Chapter IV. We cannot say that there is a lacuna in section 44 such as that found in section 25A of the Act. We are unable to agree with the view expressed by the Andhra Pradesh High Court in the later Full Bench decision in Commissioner of Income Tax vs Rayalaseema Oil Mills (1), which purported to overrule the judgment in Mareddi Krishna Reddy 's case (supra). We are also unable to agree with the view expressed by the Madras High Court in section V. Veerappan Chettiar vs Commissioner of Income Tax, Madras (2). In the view taken by us, the appeal fails and is dismissed with costs. (1) Appeal dismissed.

The appellant who was carrying on business in food grains in partnership with another person submitted the returns of the income of the firm for the accounting years even after his partner 's death. It was found that certain income of the firm was concealed and the Income tax Officer not only assessed the firm to tax for the suppressed income but also imposed penalties for concealing the said income. Appeals to the higher income tax authorities failed and the appellant then applied to the High Court for a writ of certiorari quashing the orders of assessment and imposition of penalty on the ground inter alia that the firm was dissolved by his partner 's death and no penalty could be imposed after dissolution of the firm, The High Court rejected the petition. On appeal with the certificate of the High Court, Held, that by virtue of section 44 and other provisions of the Income Tax Act a partner of a dissolved partnership firm may not only be made liable to assessment for income tax for the accounting years but despite dissolution of the firm he may be made liable to pay penalty for concealing the income of the firm under section 28(1)(c) of the Act. The analogy of dissolution of a Hindu joint Family does not apply to dissolution of a partnership. Mareddi Krishna Reddy vs Income tax Officer, Tenali, , approved. Commissioner of Income tax vs Ravalaseema Oil Mills, and section V. Veerappan Chettiar vs Commissioner of Income tax, Madras, , disapproved. Mahankali Subbarao vs Commissioner of Income tax, , distinguished. The Legislature intended that the provisions of Ch. IV of the Act shall apply to a firm even after discontinuance of its business. In interpreting a fiscal statute the Court cannot proceed to make good deficiencies if there be any. In case of doubt it should be interpreted in favour of the tax payer. The expression "assessment" has different connotations an has been used in its widest connotation in Ch. IV and section 44 97 766 he Act. It is not restricted only to computation of tax but includes imposition of penalty on tax payers found in the process of assessment guilty of concealing income. Commissioner of Income tax, Bombay Presidency and Aden vs Khemchand Ramdas, , referred to. The Income tax Act provided a complete machinery for obtaining relief against improper orders passed by the Income tax Authorities and the appellant could not be permitted to abandon that machinery, and invoke the jurisdiction of the High Court under article 226 of the Constitution against the orders of the taxing authorities.

Civil Appeal No. 608 (NT) of 1975. From the Judgment and Order dated 8.5.1973 in the High Court of Rajasthan in D.B. Civil Estate Duty Reference No. 46 of 1967. G.C. Sharma and P.K. Mukharjee for the Appellant. G. Ramaswami, Additional Solicitor General, Ms. A. Subhashini and K.P. Bhatnagar for the Respondent. The Judgment of the Court was delivered by KANIA, J. This is an appeal against the judgment of a Division 212 Bench of the High Court of Rajasthan rendered on a reference made to the Rajasthan High Court under section 64(1) of . The question referred to the Rajasthan High Court for determination was as follows: Whether on the facts and in the circumstances of the case the provisions of section 10 of the were applicable to this case. The relevant facts are that one Motilal Sanghi (deceased) made a gift of Rs.1 lac on September 1, 1955 in favour of his four sons. Each of the sons was given a gift of Rs.25,000. These amounts were invested by the sons in the firm known as Sanghi Brothers which was constituted by the said Motilal soon after the said gifts were made. Motilal Sanghi was a partner in the said firm and had an 8 annas share in the firm; each of his four sons had a share of 2 annas in the profits and losses of the firm. It was stated by learned counsel appearing for the accountable person before the Rajasthan High Court that the firm was managed not by Motilal Sanghi but it was managed by the eldest son, namely, N.K. Sanghi. Motilal Sanghi died on July 21, 1961. A question arose whether the sum of Rs.1 lac gifted by him as aforesaid was liable to be included in his estate for purposes of computation of estate duty under the provisions of the . The Assistant Controller of Estate Duty took the view that the sum was liable to be included in the estate of the said deceased in view of the provisions of Section 10 of the as that amount was not retained by the donees to the entire exclusion of the donor. An appeal preferred by the accountable person to the Appellant Controller of the Estate Duty was allowed by him holding that Section 10 was not attracted to the circumstances of the case and an appeal preferred by the revenue to the Appellant Tribunal was dismissed. A reference was, thereafter, made to the High Court at the instance of the revenue. After considering the provisions of Section 10 of the , the Division Bench of the High court which decided the reference came to the conclusion that the provisions of Section 10 were attracted and the amount in question was liable to be included in the estate of the deceased for the purpose of assessment of estate duty. The High Court took the view that the said amount gifted by Motilal Sanghi to his sons was brought back into the partnership business of the donor and the donees and hence it was difficult to say that during the continuance of the partnership the donees enjoyed the amounts gifted to the entire exclusion of the donor. The donor, in one sense or the other, had dominion over that property and that property was utilised both for 213 the benefit of the donor and the donees and hence Section 10 of the was attracted. Before considering the arguments of the learned counsel, we may note the relevant portion of Section 10 of the . The said portion runs as follows: "Property taken under any gift, whenever made, shall be deemed to pass on the donor 's death to the extent that bona fide possession and enjoyment of it was not immediately assumed by the donee and thenceforward retained to the entire exclusion of the donor or of any benefit to him contract or otherwise. " In the present case there is no dispute that when the amount of Rs. 1 lac was gifted by way of gifts of Rs.25,000 to each of the four sons of the deceased they immediately assumed bona fide possession and enjoyment thereof but it is contended by Mr. Ramaswamy, learned Addl. Solicitor General, that as the said amounts of Rs.25,000 were immediately thereafter invested in a firm of which the donees and the donors were partners it could not be said that those amounts aggregating to Rs.1 lac were retained by the donees to the entire exclusion of the donor. When the amounts were invested in the partnership in which the donor, namely, the deceased was a partner he got a certain interest and benefit in that amount which was liable to be used for purposes of partnership. The deceased had a certain dominion over that property as a partner in the said firm and hence it could not be said that the amount gifted was retained by the donees to the entire exclusion of the donor and, in these circumstances, the provisions of Section 10 of the were attracted. It was, on the other hand, contended by Mr. Sharma, learned counsel for the accountable person, who is the appellant before us, that when the amounts were invested by the donees in the said firm, the interest which the deceased got in the amounts invested by the donees, as a partner of the firm in which the amounts were invested, was in no way related to the gift and hence, merely by reason of that investment, it could not be said that the donees had not retained the said amount to the entire exclusion of the donor for the purposes of Section 10 of the . It is the correctness of these submissions which has to be examined in the light of the provisions of Section 10 and the decided cases. In George Da Costa vs CED, analysing the Section 10 of the said Act this court observed as follows: 214 "The crux of the section lies in two parts:(1) The donee must bona fide have assumed possession and enjoyment of the property, which is the subject matter of the gift, to the exclusion of the donor, immediately upon the gift, and (2) the donee must have retained such possession and enjoyment of the property to the entire exclusion of the donor or of any benefit to him, by contract or otherwise. As a matter of construction we are of opinion that both these conditions are cumulative. Unless each of these conditions is satisfied, the property would be liable to estate duty under Section 10 of the Act. . The second part of the section has two limbs: the deceased must be entirely excluded, (i) from the property, and (ii) from any benefit by contract or otherwise. It was argued for the appellant that the expression 'by contract or otherwise ' should be construed ejusdem generis and reference was made to the decision of Hamilton J. in Attorney General vs Seccombe, ; 1 EDC 589 (KB). On this aspect of the case, we think the argument of the appellant is justified. In the context of the section, the word 'otherwise ' should, in our opinion, be construed ejusdem generis and it must be interpreted to mean some kind of legal obligation or some transaction enforceable at law or in equity which, though not in the form of a contract, may confer a benefit on the donor. " We may also at this stage very briefly refer to two leading cases decided by the Privy Council on a provision analogous to Section 10 of the . In one of these cases namely, H.R. Munro vs Commissioner of Stamp Duties, ; ; 2 EDC 462 the Judicial Committee held that the property comprised in the transfers was the land shorn of the rights therein belonging to the partnership and was excluded from being dutiable, because the donees had assumed and retained possession thereof, and any benefit remaining in the donor was referable to the partnership agreement entered into earlier than the gifts and not to the gifts. In that case a father, who was the owner of a large plot of land on which he carried on the business of a grazier, entered into a partnership with his six children to carry on the said business. The partnership business was to be managed solely by the father, and each partner was to receive a specified share of the profits. Subsequently, the father transferred by way of gift all his right, title and interest in separate portions of his land to each of his four sons and 215 the trustees of each of his two daughters and their children. This transfer was subject to the partnership agreement and was on the understanding that any of the partners could withdraw and work the portion of the land gifted to him separately. The partnership was an oral one and about six years after these deeds of gifts were executed, a written partnership agreement was drawn up during the lifetime of the father under which no partner was entitled to withdraw from the partnership. On the death of the father, the land which he had transferred by way of gift to his six children was included in his estate in the assessment of death duties under the Stamp Duties Act (N.S.W.) 1920 which contained a provision in pari materia with section 10 of the . On appeal, the Judicial Committee of the Privy Council held that such inclusion was not justified and laid down the principle which we have set out earlier. The other leading case in this connection decided by the Privy Council is the case of Clifford John Chick vs Commissioner of Stamp Duties, ; [1959] 37 ITR (ED) 89; The same provision, namely, Section 102 of the New South Wales Stamp Duties Act, 1920 56, came up for consideration in that case. The facts were that a father transferred, by way of gift, to one of his sons a pastoral property, the gift being made without any reservation or qualification or condition. Some months later, the son to whom the gift was made and another son of the donor entered into an agreement to carry on in partnership the business of graziers and stock dealers. The agreement, inter alia, provided that the father should be the Manager of the business and that his decision would be final and conclusive in matters connected with the conduct of the business. The agreement further provided that the capital of the business would consist of the livestock and plant owned by the respective partners and that the business would be conducted on the respective holdings of the partners and such holdings should be used for the purposes of the partnership only and that all lands held by any of the partners at the date of the agreement should remain the sole property of such partner and should not be deemed to be an asset of the partnership, and such partner should have the sole and free right to deal with it. Each partner brought into partnership inter alia his livestock and plant, and their combined properties were thenceforth used for the depasturing of the partnership stock. On the death of the father, the question arose as to whether the land gifted was liable to be added to his estate for the purpose of assessment of death duty. The Judicial Committee took the view that the land gifted to the son was liable to so included in computation of father 's estate because, although the son has assumed bona fide pos 216 session and enjoyment of the property immediately upon the gift to the entire exclusion of the father, he had not, thenceforth retained the property to the father 's entire exclusion, as under the partnership agreement the partners and each of them were in possession and enjoyment of the property as long as the partnership subsisted, whatever force and effect might be given to that part of the partnership agreement which gave a partner the sole and free right to deal with his own property. For some years, the principles laid down in Munro 's case and in the case of Clifford John Chick vs Commissioner of Stamp Duties, referred to above, were followed by the courts of this country in construing Section 10 of the . However, the decision in Chick 's case came up for consideration before this court in CED vs C.R. Ramachandra Gounder, Two different types of property were gifted in Gounder 's case. The first type of property gifted was a house which the deceased owned and which was let to the firm in which the deceased was a partner as a tenant. He gifted this house to his two sons absolutely. After the deed of gift the firm paid the rent not to the deceased but to the donees by crediting the amount in the donees ' accounts in equal shares. The second type of property gifted consisted of money. This gift was effected by the deceased by directing the firm in which he was a partner to transfer from his account a sum of Rs.20,000 to the credit of each of his five sons in the firm 's books of account with effect from a particular date. He gave intimation of this transfer to his sons. Pursuant to the directions given by the deceased a sum of Rs.20,000 was credited in each of the sons ' account with the said firm. The amounts remained invested with the firm for which the firm paid them interest. The deceased continued as a partner of the firm till dissolution. Within one month of its dissolution, the deceased died. The question arose as to whether value of the house property and the sum of Rs. 1 lac should be included in the property deemed to pass on the death of the deceased under Section 10 of the . The Court held that neither the house property nor the sum of Rs.1 lac could be deemed to pass under Section 10. Jaganmohan Reddy, J. who spoke for the court said (page 452 of the report): "There is no doubt, on the facts of this case, the first two conditions are satisfied because there is an unequivocal transfer of the property and also of the money, in the one case by a settlement deed, and in the other by crediting the amount of Rs.20,000 in each of the sons ' account with the 217 firm which thenceforward became liable to the sons for the payment of the said amount and the interest at 7 1/2 % per annum thereon. " As far as the house property was concerned, it was observed that the donor, on the day when he gifted the property to his sons, which property was leased out to the firm, had two rights, namely, of ownership in the property and the right to terminate the tenancy and obtain the possession thereof. There is no dispute that the ownership had been transferred, subject to the tenancy at will granted to the firm, to the donor 's two sons because the firm from thenceforward had attorned to the donees as their tenant by crediting rent of Rs.300 to the respective accounts in equal moiety. The donor, could, therefore, only transfer possession of the property which the nature of that property was capable of, which in that case was subject to tenancy. What is pertinent to note in the case is that this Court took the view that "the benefit the donor had as a member of the partnership was not a benefit referable in any way to the gift but is unconnected therewith". This decision shows that the principle laid down in Chick 's case was departed from by the Court in cases in which the property gifted was brought into a partnership in which the donor had an interest merely as a partner. The decision in Gounder 's case was followed by this court in CED vs N.R. Ramarathnam, and several other decisions. An analysis the decision of Supreme Court in Gounder 's case, in our opinion, shows that the Supreme Court in that decision referred to Munro 's case and also referred to Chick 's case. It, however, made a certain departure from the principle laid down in Chick 's case. This would appear clear from the decision of this Court in CED vs Kamlavati, [11979] and CED vs Jai Gopal Mehra 's, cases. Both these decisions involved the question of applicability of Section 10 of the . In Kamlavati 's appeal, the facts were that Maharaj Mal, the deceased, was a partner in a firm which carried on business under the firm name and style of M/s Maharaj Mal Mana Raj. Maharaj Mal had one half share in the partnership, and the other two partners had one fourth share each. Maharaj Mal made a gift of Rs.1 lac to his son, Lalit Kumar, and of Rs.50,000 to his wife Kamlavati. In the books of account of the firm the sums of Rs. 1 lac and Rs.50,000 were debited to the account of Maharaj Mal and credited to the accounts of the son and wife respectively. Almost simultaneously the son was taken as a partner in the said firm by giving him one fourth share out of the 218 one half share of Maharaj Mal. On the death of different partners the firm was reconstituted and some other partners admitted. On the death of Maharaj Mal the question arose regarding the applicability of Section 10 of the said Act. In the other appeal, namely Jai Gopal Mehra 's appeal the deceased donor made gifts of Rs.20,000 each in favour of his son and four daughters in law. Thereafter, the donees invested the sums gifted to them in the partnership firm in which the deceased was a partner. The donees were not partners in the firm nor were they taken as partners after the gifts were made in their favour. When the case came up in a reference before a Full Bench of the Punjab and Haryana High Court , it answered the reference in favour of the accountable person, namely, Jai Gopal Mehra. The decision in Kamlavati 's case merely followed the Full Bench decision in Jai Gopal Mehra 's case. In its judgment the Supreme Court first dealt with the appeal in Kamlavati 's case and after referring with approval to the analysis of Section 10 of the in George Da Costa vs CED, it referred to the decision in Chick 's and Munro 's cases. It then turned to the earlier decision of the Supreme Court in Gounder 's case. After setting out the later part of the passage in its judgment in that case, which we have quoted earlier, the Supreme Court observed that: "It should be noticed that, though not explicity but implicitly, some departure was made from the ratio of the Privy Council in Chick 's case (1959) 37 ITR (ED) 89; ; when the principle of Munro 's case ; ; 2 EDC 462 (PV) was applied, it was on the basis that what was gifted by the donor was the whole of the property minus the rights of the partnership which were shared and enjoyed by the donor also; the donor enjoying the same bundle of rights in the partnership which he was enjoying before the gift did not bring the case within the ambit of Section 10. But the implicit departure from Chick 's case was when it was said that the benefit the donor had as a member of the partnership was not a benefit referable in any way to the gift but is unconnected therewith. The departure can be attributed to the very subtle distinction in the facts of the two cases and it is necessary to highlight them. In Chick 's case, the donor as a partner came to share the possession and enjoyment of the property by the partnership firm long after the gift, while in Gounder 's case the benefit which the donor was enjoying as a partner in the property gifted was existing at the time of the gift itself and continued to exist even thereafter. . ." 219 It is important to note that the principle in Munro 's case was applied in the case of Jai Gopal Mehra, although, the donees invested the amounts gifted in the firm in which the donor was a partner after the gifts were made. The same Bench which decided Gounder 's case followed it in the case of CED vs N.R. Ramarathnam. In this case, the facts in relation to the gifts of money by the donor in favour of his three sons and the daughter were materially similar to those of Gounder 's case except that the three sons and daughter were also partners in the firm. Yet applying the ratio in Gounder 's case it was held that the amounts gifted were not chargeable to Estate Duty under section 10. In Kamlavati 's case, this Court referred the decision of this Court in CED vs R.V. Viswanathan, and observed as follows: "In other words, the mere fact that the partnership may make use of the sums of money gifted in which the donor also was a partner did not mean that he was allowed to enjoy or derive any benefit in the money gifted, which could be referable to the gift itself." The Court clarified the position as follows (P463): "When a property is gifted by a donor the possession and enjoyment of which is allowed to a partnership firm in which the donor is a partner, then the mere fact of the donor sharing the enjoyment or the benefit in the property is not sufficient for the application of Section 10 of the Act until and unless such enjoyment or benefit is clearly referable to the gift, i.e. to the parting with such enjoyment or benefit by the donee or permitting the donor to share them out of the bundle of rights gifted in the property. If the possession, enjoyment or benefit of the donor in the property is consistent with the other facts and circumstances of the case, other than those of the factum of gift, then it cannot be said that the donee had not retained the possession and enjoyment of the property to the entire exclusion of the donor in any benefit to him by contract or otherwise. " The court pointed out that distinction between the capital of the 220 partnership and the property of the partnership and that whether an amount forms the part of the capital of the partnership or part of its property, it does not belong to co partner in the sense of his being a co owner. (Page 464 of 120 ITR (1979). Even in the recent decision of this Court in CED vs Godavari Bai, [1986] 158 ITR p. 683 where the decision in the Chick 's case has been cited and discussed at some length, the decisions in Kamlavati 's and Jai Gopal Mehra 's cases have been referred to without any indication that the ratio of the same was not accepted as good law. In fact, that decision has been referred to as one in which the principle in Chick 's case was applied. In the case before us the deceased gifted Rs.25,000 to each of his four sons and almost immediately thereafter the firm of Sanghi Brothers was constituted as aforesaid in which the said four sons invested Rs.25,000 each received from the father. As already pointed out, the father as well as the sons had shares in the said partnership. Applying the decision in the case of Kamlavati and Jai Gopal Mehra, discussed at some length by us earlier, it must be held that the interest which the deceased father retained or obtained in the aggregate sum of Rs. 1 lac invested by the said four sons in the said firm, was an interest merely as a partner in the said firm and was not related to the gifts made by him to his said sons. In these circumstances it cannot be said that by reason of constitution of said partnership and the investment of the said amounts by the sons in the partnership the donees sons had not assumed bona fide possession and the enjoyment of the amounts gifted to them or that they had not retained the same to the entire exclusion of their father. In our opinion, the said amount of Rs.1 lac could not be included in the estate of the said deceased under the provisions of Section 10 of the . In our view the Division Bench of the High Court was in error in applying the ratio of decision in Chick 's case to the present case and holding that the said amount of Rs.1 lac was liable to be included in the estate of the said deceased for the purposes of computation of estate duty in view of the provisions of Section 10 of the said Act. The learned judges of the High Court have, with respect, failed to appreciate the true effect of the decision of this Court in Kamlavati 's case and failed to appreciate that the interest which the donor retained in the amount gifted, and invested by the donees in the partnership in which the donor was a partner is not an interest which can be said to be related to the gift. 221 In the result, the appeal is allowed. In our opinion, the question which was referred to the High Court for determination, which we have set out earlier, must be answered in the negative and in favour of the accountable person (appellant). The respondent must pay the costs throughout. R.S.S. Appeal allowed.

One Motilal Sanghi made a gift of Rs.25,000 each to his four sons, on September 1, 1955. These amounts were invested by the sons in the firm known as Sanghi Brothers which was constituted by the said Motilal soon after the gifts were made. Motilal Sanghi had an 8 annas share in the firm; the four sons had a share of 2 annas each. Motilal Sanghi died on July 21, 1961. The Assistant Controller of Estate Duty took the view that the sum of Rs.1 lac was liable to be included in the estate of Motilal Sanghi in view of the provisions of Section 10 of the Estate Duty Act as that amount was not retained by the donees to the entire exclusion of the donor. The Appellate Controller, however, held that section 10 was not attracted to the circumstances of the case. the Division Bench of the Rajasthan High Court in a reference made to it held that section 10 was attracted. It took the view (1) that the said amount was brought back into the partnership business of the donor and the donees and hence it was difficult to say that during the continuance of the partnership the donees enjoyed the amounts gifted to the entire exclusion of the donor and (2) that the donor, in one sense or the other, had dominion over that property, and the property was utilised both for the benefit of the donor and the donees. Before this Court it was contended by the appellant that when the amounts were invested by the donees in the said firm, the interest which the deceased got in the amounts invested by the donees, as a partner of the firm, was in no way related to the gifts and hence, merely by reason of that investment, it could not be said that the donees had not retained the said amount to the entire exclusion of the donor for the purposes of section 10. It was, on the other hand, contended on behalf of the respondent that as the said amounts were immediately thereafter invested in the firm, it could not be said that the amounts were retained by the donees 211 to the entire exclusion of the donor who had a certain dominion over that property as a partner. Allowing the appeal, this Court, ^ HELD: (1) The interest which the deceased father retained or obtained in the aggregate sum of Rs.1 lac invested by the said four sons in the said firm, was an interest merely as a partner in the said firm and was not related to the gifts made by him to his sons. [220D E] (2) It cannot be said that by reason of constitution of the said partnership and the investment of the said amount by the sons in the partnership, the sons had not assumed bona fide possession and the enjoyment of the amounts gifted to them or that they had not retained the same to the entire exclusion of their father. [220E F] (3) The said amount of Rs.1 lac could not be included in the estate of the said deceased under the provisions of section 10 of the Estate Duty Act. [220G] George Da Costa vs CED, ; H.R. Munro vs Commissioner of Stamp Duties, ; ; 2 EDC 462; Clifford John Chick vs Commissioner of Stamp Duties, ; (1959) 37 ITR (ED) 89; ; CED vs C.R. Ramachandra Gounder, ; CED vs N.R. Ramarathnam, ; CED vs Kamlavati and CED vs Jai Gopal Mehra, ; CED vs R.V. Viswanathan, and CED vs Godavari Bai, referred to.

iminal Appeal No. 30 of 1961. Appeal from the judgment and order dated September 6, 1960 of the Calcutta High Court in Cr. Revision No. 647 of 1960. B. Sen, P. K. Chatterjee and P. K. Bose, for the appellant. D. C. Roy and P. K. Mukherjee, 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 Calcutta quashing the investigation started against the respondent in regard to offences under section 420, Indian Penal Code, and section 120B read with section 420 of the Indian Penal Code. On March 26, 1960, Sub Inspector. B. L. Gbose of Police Inforcement Branch filed a written report before the Officer in charge Chakdha P. section, alleging that the respondent in conspiracy with three others 54 had cheated the Government of West Bengal of a sum of Rs. 20,000. The respondent at the time was an Assistant cum Executive Engineer, Kancbrapara Development Area, Kalyani Division. On the basis of this report a First Information Report was drawn up and the police started investigation. On April 4, 1960, the respondent surrendered in the court of the Judicial Magistrate at Ranaghat and was released on bail for a sum of Rs. 1,000/ . The respondent then on May 9, 1960, filed a petition under sections 439 and 561A of the Criminal Procedure Code and prayed for a rule against the District Magistrate, Nadia, to show cause why the judicial case pending in the court of the Senior Magistrate Ranagaghat arising out of the Chakdah Police Station Case No. 33 dated March 26, 1960, be not quashed. The High Court held : "In our view, the statutory power of investigation given to the police under Chapter XIV is not available in respect of an offence triable under the West Bengal Criminal Law Amendment (Special Courts) Act 1949, and that being so, the investigation concerned is without jurisdiction. In so saying, we are consicious of the observations of their Lord ships of the Privy Council in Nazir Ahmad 's case, 71 Indian Appeals, 203". and therefore quashed the police investigation of the case holding it to be without jurisdiction. It is against this judgment and order that the state has come in appeal to this Court on a certificate granted by the High Court under article 134 (1) (c) At the time the respondent filed the petition in the High Court only a written report was made to the police by the Sub Inspector of police Enforcement Branch and on the basis of that report a :First Information Report was recorded by the 55 Officer in charge of the Police Station and investigation had started. There was no case pending at the time excepting that the respondent had appeared before the Court, had surrendered and had ' been admitted to bail. The powers of investigation into cognizable offences are contained in Chapter XIV of the Code of Criminal Procedure. Section 154 which is in that Chapter deals with information in cognizable offences and section 156 with investigation into such offences and under these sections the police has the statutory right to investigate into the circumstances of any alleged cognizable offence without authority from a Magi strate and this statutory power of the police to investigate cannot be interfered with by the exercise of power under section 439 or under the inherent power of the court under section 561A of Criminal Procedure Code. As to the powers of the Judiciary in regard to statutory right of the police to investigate, the Privy Council in King Emperor vs Khwaja Nazir Ahmad (1) observed as follows: "The functions of the judiciary and the police are complementary, not overlapping, and the combination of individual liberty with a due observance of law and order is only to be obtained by leaving each to exercise its own function, always, a course, subject to the right of the court to intervene in an appropriate case when moved under section 491 of the Criminal Procedure Code to give directions in the nature of habeas, corpus. In such a case as the present, however, the court 's functions begin when a charge is preferred before it, and not until then. It has sometimes been thought that a. 561A has given increased powers to the Court which it did not possess before that section was enacted. But this is not so, the section gives no now powers, it (1)(1944),L. R. 71. 1. A. 203, 212. 56 only provides that those which the court already inherently possesses shall be preserved and is inserted as their Lordships think, lest it should be considered that the only powers possessed by the court are those expressly conferred by the Criminal Procedure Code and that no inherent powers had survived the passing of that Act". With this interpretation, which has been put on the statutory duties and. powers of the police and of the powers of the Court, we are in accord. The High Court was in error therefore in interfering with the powers of the police in investigating into the offence which was alleged in the information sent to the Officer in charge of the police station. We therefore allow this appeal and set aside the order of the High Court. The investigation will now proceed in accordance with law. Appeal allowed.

A Sub Inspcctor of Police, Enforcement Branch, filed a report before the Police Officer in charge of a Police Station alleging that the respondent along with three others committed offences under ss.420, 120B read with s.420 Indian Penal Code. Thereupon a First Information Report was drawn up and investigation was started. The respondent surrendered before the judicial Magistrate and he was released on bail. Subsequently he filed an application in the High Court under sections 439 and 561 A of the Criminal Procedure Code to get the case pending before the judicial Magistrate arising out of the 53 case registered in the Police Station quashed. This appli cation was granted by the High Court. The appellant the State of West Bengal then filed an appeal before the Supreme Court by certificate granted by the High Court under article 134 (1) (c) of the Constitution. Held, that the statutory powers given to the Police under sections 154 and 156 of the Code of Criminal Procedure to investigate into the circumstances of an alleged cognizable offence without authority from a Magistrate cannot be interfered with by the exercise of powers under s.439 of the Code of Criminal Procedure or under the inherent powers conferred by section 561A of the Code of Criminal Procedure. The High Court was therefore in error in allowing the respondent 's application. King Emperor vs Khwaja Nazir Ahmad, (1944) L.R. 71 I.A. 203 allowed.

Appeal No. 38 of 1953. Appeal under article 132(1) of the Constitution of India from the Judgment and Order dated the 13th December, 1951, of the High Court of Judicature, Madras, in Civil Miscellaneous Petition No. 2591 of 1951. 1007 V.K.T. Chari, Advocate General of Madras (B. Ganapathy Iyer, with him) for the appellant. B. Somayya and C.R. Pattabhi Raman (T. Krishna Rao and M.S. K. Sastri, with them) for the respondent. T. N. Subramania Iyer, Advocate General of Travancore Cochin (T. R. Balakrishna Iyer and Sardar Bahadur with him) for the Intervener (State of Travancor,Cochin). March 16. The Judgment of the Court was delivered by MUKHERJIA J. This appeal is directed against a judgment of a Division Bench of the Madras High Court, dated the 13th of December, 1951, by which the learned Judges allowed & petition, presented by the respondent under article 226 of the Constitution, and directed a writ of prohibition to issue in his favour prohibiting the appellant from proceeding with the settlement of a scheme in connection with a Math, known as the Shirur Math, of which the petitioner happens to be the head or superior. It may be stated at the outset that the petition was filed at a time when the Madras Hindu Religion Endowments Act (Act II of 1927), was in force and the writ was prayed for against the Hindu Religious Endowments Board constituted under that Act, which was the predecessor in authority of the present appellant and had initiated proceedings for settlement of a scheme against the petitioner under section 61 of the said Act. The petition was directed to be heard along with two other petitions of a similar nature relating to the temple at Chidambaram in the district of South Arcot and questions were raised in all of them regarding the validity of Madras Act 11 of 1927, hereinafter referred to as the Earlier Act. While the petitions were still pending, the Madras Hindu Religious and Charitable Endowments Act,, 1951 (hereinafter called the New Act), was passed by the Madras Legislature and came into force on the 27th of August, 1951. In view of the Earlier Act being replaced by the new one,, leave was given to all the petitioners to amend their petitions and challenge the validity of the. New Act as well. 1008 Under section 103 of the New Act, notifications, orders and acts under the Earlier Act are to be treated as notifications, orders and acts issued, made or done by the appropriate, authority under the corresponding provisions of the New Act, and in accordance with this provision, the Commissioner, Hindu Religious Endowments, Madras, who takes the place of the President, "Hindu Religious Endowments Board under the Earlier Act, was added as a party to the proceedings. So far as the present appeal is concerned, the material facts may be shortly narrated as follows: The Math, known as Shirur Math, of which the petitioner is the superior or Mathadhipati, is one of the eight Maths situated at Udipi in the district of South Kanara and they are reputed to have been founded by Shri Madhwacharya, the well known exponent of dualistic theism in the Hindu Religion. Besides these eight Maths, each one of which is presided over by a Sanvasi or Swami, there exists another ancient religious institution at Udipi, known as Shri Krishna Devara Math, also established by Madhwacharya which is supposed to contain an image of God Krishna originally made by Arjun and miraculously obtained from a vessel wrecked at the coast of Tulava. There is no Mathadhipati in the Shri Krishna Math and its. affairs are managed by the superiors of the other eight Maths by turns and the custom is that the Swami of each of these eight Maths presides over the Shri Krishna Math in turn for a period of two years in every sixteen years. The appointed time of change in the headship of the Shri Krishna Math is the occasion of a great festival, known as Pariyayam, when a vast concourse of devotees gather at Udipi from all parts of Southern India, and an ancient usage imposes a duty upon the Mathadhipati to feed every Brahmin that comes to the place at that time. The petitioner was installed as Mathadhipati in the year 1919, when he was still a minor, and he assumed management after coming of age some time in 1926. At that time the Math was heavily in debt. Between 1926 and 1930 the Swami succeeded in clearing off a large portion of the debt. In 1931, however, came the 1009 turn of his taking over management of the Shri Krishna Math and he had had to incur debts to meet the heavy expenditure attendant on the Pariyayam ceremonies, The financial position improved to some extent during the years that followed, but troubles again arose in 1946, which was the year of the second Pariyayam of the Swami. Owing to scarcity and the high prices of commodities at that time, the Swami had to borrow money to meet the expenditure and the debts mounted up to nearly a lakh of rupees. The Hindu Religious Endowments Board, functioning under the Earlier Act of 1927, intervened at this stage and in exercise of its powers under section 61 A of the Act called upon the Swami to appoint a competent manager to manage the affairs of the institution. The petitioners case is that the action of the Board was in stigated by one Lakshminarayana Rao, a lawyer of Udipi, who wanted to have control over the affairs of the Math. It appears that in pursuance of the direction of the Board, one Sripath Achar was appointed an agent and a Power of Attorney was executed in his favour on the 24th of December, 1948. The agent, it is alleged by the petitioner, wanted to have his own way in all the affairs of the Math and paid no regard whatsoever to the wishes of the Mahant. He did not even submit accounts to the Mahant and deliberately flouted his authority. In this state of affairs the Swami,, on the 26th of September, 1950, served a notice upon the agent terminating his agency and calling upon him to hand over to the Mathadhipati all account papers and vouchers relating to the institution together with the cash in hand. Far from complying with this demand, the agent, who was supported by the aforesaid Lakshminarayans Rao, questioned the authority of the Swami to cancel his agency and threatened that he would refer the matter for action to the Board. On the 4th of October, 1950, the petitioner filed a suit against the agent in the Sub,Court of South Kanara for recovery of the account books and other articles belonging to the Math, for rendering an account of the management and also for an injunction restraining the said agent from interfering with the affairs of the Math under colour of the 1010 authority conferred by the Power of Attorney which the plaintiff had cancelled. The said Sripath Achar anticipating this suit filed an application to the Board on the 3rd of October, 1950, complaining against the cancellation of the Power of Attorney and his management of the Math. The Board on the 4th October, 1950, issued a notice to the Swami proposing to inquire into the matter on the 24th of October following at 2 p.m. at Madras and requesting the Swami either to apppear in person or by a pleader. To this the Swami sent a reply on 21st October, 1950, stating that the subject matter of the very enquiry was before the court in the original suit filed by him and as the matter was sub judice the enquiry should be put off. A copy of the plaint filed in that suit was also sent along with the reply. The Board, it appears, dropped that enquiry, but without waiting for the result of the suit, initiated proceedings suo moto under section 62 of the Earlier Act and issued a notice upon the Swami on the 6th of November, 1950, stating that it had reason to believe that the endowments of the said Math were being mismanaged and that a scheme should be framed for the administration of its affairs. The notice was served by affixture on the Swami and the 8th of December, 1950, was fixed as the date of enquiry. On that date at the request of the counsel for the Swami, it was adjourned to the 21st of December, following. On the 8th of December, 1950, an application was filed on behalf of the Swami praying to the Board to issue a direction to the agent to hand over the account papers and other documents, without which it was not possible for him to file his objections As the lawyer appearing for the Swami was unwell, the matter was again adjourned till the 10th of January, 1951. The Swami was not ready with his objections even on that date as his lawyer had no t recovered from his illness and a telegram was sent to the Board on the previous day requesting the latter to grant a further adjournment. The Board did not accede to this request and as no explanation was filed by the Swami, the enquiry was closed and orders reserved upon it. On the 13th of January, 1951, the Swami, it appears sent a written 1011 explanation to the Board, which the latter admittedly received on the 15th On the 24th of January, 1951, the Swami received a notice from the Board stating inter alia that the Board was satisfied that in the,, interests of proper administration of the Math and its endowments, the settlement of a scheme was necessary. A draft scheme was sent along with the notice and if the petitioner had any objections to the same, he was required to send in his objections on or before the 11th of February, 1951, as the. final order regarding the scheme would be made on the 15th of February, 1951. On the 12th of February, 1951, the peti tioner filed the petition, out of which this appeal arises, in the High Court of Madras, praying for a writ of prohibition to prohibit the Board from taking further steps in the matter of settling a scheme for the administration of the Math. It was alleged inter alia that the Board was actuated by bias against the petitioner and the action taken by it with regard to the settling of a scheme was not a bona fide act at all. The main contention, however, was that having regard to the fundamental rights guaranteed under the Constitution in matters of religion and religious institutions belonging to particular religious denominations, the law regulating the framing of a scheme interfering with the management of the Math and its affairs by the Mathadhipati conflicted with the provisions of art icles 19(1) (f) and 26 of the Constitution and was hence void under article 13. It was alleged further that the provisions of the Act were discriminatory in their character and offended against article 15 of the Constitution. As has been stated already, after the New Act came into force, the petitioner was allowed to end his petition and the attack was now directed against the constitutional validity of the New Act which replaced the earlier legislation. The learned Judges, who heard the petition, went into the matter with elaborate fullness, both on the constitutional questions involved in it as well as on its merits. On the merits, it was held that in the circumstances of the case the action of the Board was a perverse exercise of its jurisdiction and that it should 1012 not be allowed to proceed in regard to the settlement of the scheme. On the constitutional issues raised in the case, the learned Judges pronounced quite a number of sections of the New Act to be ultra vires the Constitution by reason of their being in conflict with the fundamental rights of the petitioner guaranteed under articles 19(1)(f), 25, 26 and 27 of the Constitution. In the result, the rule nisi issued on the petition was made absolute and the Commissioner, Hindu Religious Endowments, Madras, was prohibited from proceeding further with the framing of a scheme inregard to the petitioner 's Math. The Commisioner has now come up on appeal before us on the strength of a certificate granted by the High Court under article 132(1) of the Constitution. The learned Advocate General for Madras, who appeared in support of the appeal, confined his arguments exclusively to the constitutional points involved in this case. Although he had put in an application to. urge grounds other than the constitutional grounds, that application was not pressed and he did not challen the findings of fact upon which the High Court based its decision on the merits of the petition. The position, therefore, is that the order of the High Court issuing the writ of prohibition against the appellant must stand irrespective of the decision which we light arrive at on the constitutional points raised before us. It is not disputed that a State Legislature is competent to enact laws on the subject of religious and charitable endowments, which is covered by entry 28 of List III in Schedule VII of the Constitution. No question of legislative incompetency on the part of the Madras Legislature to enact the legislation in question has been raised before us with the exception of the provision, relating to payment of annual contribution contained in section 76 of the impugned Act. The argument that has been advanced is, that the contribution is in reality a tax and not a fee and consequently the State Legislature had no authority to enact a provision of this character. We will deal with this point separately later on. All the other points canvassed 1013 before us relate to the constitutional validity or otherwise of the several provisions of the Act which have been held to be invalid by the High Court of Madras on grounds of their being in conflict with the fundamental rights guaranteed under articles 19(1) (f), 25, 26 and 27 of the Constitution. In order to appreciate the contentions that have been advanced on these heads by the learned counsel on both sides, it may be convenient to refer briefly to the scheme and the salient provisions of the Act. The object of the legislation, as indicated in the preamble, is to amend and consolidate the law relating to the administration and governance of Hindu religious and charitable institutions and endowments in the State of Madras. As compared with the Earlier Act, its scope is wider and it can be made applicable to purely charitable endowments by proper notification under section 3 of the Act. The Earlier Act provided for supervision of Hindu religious endowments through a statutory body known as the Madras Hindu religious Endowments Board. The New Act has abolished this Board and the administration of religious and charitable institutions has been vested practically in a department of the Government, at the head of which is the Commissioner. The powers of the Commissioner and of the other authorities under him have been enumerated in Chapter II of the Act. Under the Commissioner are the Deputy Commissioners, Assistant Commissioners and Area Committees. The Commissioner, with the approval of the Government, has to divide the State into certain areas and each area is placed in charge of a Deputy Commissioner, to whom the powers of the Commissioner can be delegated. The State has also to be divided into a number of divisions and an Assistant Commissioner is to be placed in charge of each division. Below the Assistant Commissioner, there will be an Area Committee in charge of all the temples situated within a division or part of a division. Under section 18, the Commissioner is empowered to examine the records of any Deputy Commissioner, Assistant Commissioner, or Area Committee, or of any trustee not being the trustee 131 1014 of a, Math, in respect of any proceeding under the Act, to satisfy himself as to the regularity, correctness, or propriety of any decision or order. Chapter III contains the general provisions relating to all religious institutions. Under section 20, the administration of religious endowments is placed under the general superintendence and control of the Commissioner and he is empowered to pass any orders which may be deemed necessary to ensure that such endowments are properly administered and their income is duly appropriated for the purposes for which they were founded or exist. Section 21 gives the Commissioner, the Deputy and Assistant Commissioners and such other officers asmay be authorised in th is behalf, the power to enter the premises of any religious institution or any place of worship for the purpose of exercising any power conferred, or discharging any duty imposed, by or under the Act. The only restriction is that the officer exercising the power must be a Hindu. Section 23 makes it obligatory on the trustee of a religious institution to obey all lawful orders issued under the provisions of this Act by the Government, the Commissioner, the Deputy Commissioner, the Area Committee or the Assistant Commissioner. Section 24 lays down that in the administration of the affairs of the institution, a trustee should use as much care as a man of ordinary prudence would use in the management of his own affairs. Section 25 deals with the preparation of registers of all religious institutions and section 26 provides for the annual verification of such registers. Section 27 imposes a duty on the trustee to furnish to the Commissioner such accounts, returns, reports and other information as the Commissioner may require. Under section 28, power is given to the Commissioner or any other officer authorised by him to inspect all movable and immovable properties appertaining to a religious institution. Section 29 forbids alienation of all immovable properties belonging to the trust, except leases for a term not exceeding five ,,ears, without the Sanction of the Commissioner. Section 30 lays down that although a trustee may incur expenditure for making arrangements for securing the health and 1015 comfort of pilgrims, worshippers and other people, when there is a surplus left after making adequate provision for purposes specified in section 79(2), he shall be guided in such matters by all genera or special instructions which he may receive from the Commissioner or the Area Committee. Section 31 deals with surplus funds which the trustee may apply wholly or in part with the permission in writing, of the Deputy Commissioner for any of the purposes specified in section 59(1). Chapter IV deals specifically with Maths. Seetion 52 enumerates the grounds on which a suit would lie to remove a trustee. Section 54 relates to what is called " dittam " or scale of expenditure. The trustee has got to submit to the Commissioner proposals for fixing the "dittam" and the amounts to be allotted to the various objects connected with the institution. The proposals are to be published and after receiving suggestions, if any, from persons interested in the instution, they would be scrutinised by the Commissioner. If the Commissioner thinks that a modification is necessary, he shall submit the case to the Government and the orders of the Government would be final. Section 55 empowers the trustee to spend at his discretion and for purposes connected with the Math the "Pathakanikas " or gifts made to him personally, but he is required to keep regular accounts of the receipts and expenditure of such personal gifts. Under section 56, the Commissioner is empowered to call upon the trustee to appoint a manager for the administration of the secular affairs of the institution and in default of such appointment, the Commissioner may make the appointment himself. Under section 58, a Deputy Commissioner is competent to frame a scheme for any religious institutions if he has reason to believe that in the interests of the proper administration of the trust any such scheme is necessary. Sub section (3) of this section provides that a scheme settled for a Math may contain inter alia a provision for appointment of a paid executive officer professing the Hindu religion, whose salary shall be paid out of the funds of the institution. Section 59 makes provision for application of the "cy pres" doctrine when the specific 1016 objects of the trust fail. Chapter VI of the Act, which comprises sections 63 to 69, deals with the notification of religious institutions. A religious institution may be notified in accordance with the provisions laid down in this chapter. Such notification remains in force for five years and the effect of it is to take over the administration and vest it in an executive officer appointed by the Commissioner. Chapter VII deals with budgets, accounts and audit and Chapter VIII relates to finance. Section 76 of Chapter VIII makes it compulsory for all religious institutions to pay annually to the Government a contribution not exceeding 5 per cent. of their income on account of the services rendered to them by the Government and their officers functioning under this Act. Chapter IX is not material for our purpose, and Chapter X deals with provisions of a miscellaneous nature. Section 89 in Chapter X prescribes the penalty for refusal by a trustee to comply with the provisions of the Act. Section 92 lays down that nothing contained in the Act shall be deemed to confer any power or. impose any duty in contravention of the rights conferred on any religious denomination under clauses (a), (b) and (c) of article 26 of the Constitution. Section 99 vests a revisional jurisdiction in the Government to call for and examine the records of the Commissioner and other subordinate authorities to satisfy themselves as to the regularity and propriety of any proceeding taken or any order or decision made by them These, in brief, are the provisions of the Act material for our present purpose. The learned Judges of the High Court have taken the view that the respondent as Mathadhipati has certain well defined rights in the institution and its endowments which could be regarded as rights to property within the meaning of article 19(1)(f) of the Constitution. The provisions of the Act to the extent that they take away or unduly restrict the power to exercise these rights are not reasonable restrictions within the meaning of article 19(5) and must consequently be held invalid. The High Court has held in the second place that the respondent, as the head and 1917 representative of a religious institution, has a right guaranteed to him under article 25 of the Constitution to practise and propagate freely the religion of which he and his followers profess to be adherents. This right, in the opinion of the High Court, has been affected by some of the provisions of the Act. The High Court has held further that the Math in question is really an institution belonging to Sivalli Brahmins, who are a section of the followers of Madhwacharya and hence constitutes a religious denomination within the meaning of article 26 of the Constitution. This religious denomination has a fundamental right under article 26 to manage its own affairs in matters of religion through the Mathadhipati who is their spiritual head and superior, and those provisions of the Act, which substantially take away the rights of the Mathadhipati in this respect, amount to violation of the fundamental right guaranteed under article 26. Lastly, the High Court has. held that the provision for compulsory contribution made in section 76 of the Act comes within the mischief of article 27 of the Constitution. This last point raises a wide issue and We propose to discuss it separately later on. So far as the other three points are concerned, we will have to examine first of all the general contentions that have been raised by the learned Attorney General, who appeared for the Union of India as an intervener in this and other connected cases, and the questions raised are, whether these articles of the Constitution are at all available to the respondent in the present case and whether they give him any protection regarding the rights and privileges, of the infraction of which he complains. As regards article 19(1)(f) of the Constitution, the question that requires consideration is, whether the respondent as Mathadhipati has a right to property in the legal sense,, in the religious institution and its endowments which would enable him to claim the protection of this article ? A question is also formulated as to whether this article deals with concrete rights of property at all ? So far as article 25 of the Constitution is concerned, the point raised is, whether this 1018 article which, it is said, is intended to protect religious freedom only so far as individuals are concerned, can be invoked in favour of an institution or Organisation ? With regard to article 26, the contention is that a Math does not come within the description of a religious denomination as provided for in the article and even if it does, what cannot be interfered with is its right to manage its own affairs in matters of religion only and nothing else. It is said, that the word it religion ", as used in this article, should be taken in its strict etymological sense as distinguished from any kind of secular activity which may be connected in some way with religion on but does not form an essential part of it. Reference is made in this connection to clause (2)(a) of article 25 and clause (d) of article 26. We will take up these points for consideration one after another. As regards the property rights of a Mathadhipati, it may not be possible to say in view of the pronouncements of the Judicial Committee, which have been accepted as good law in this country ever since 1921, that a Mathadhipati holds the Math property as a lifetenant or that his position is similar to that of a Hindu widow in respect to her husband 's estate or of an English BishoP holding a benefice. He is certainly not a trustee in the strict sense. He may be, as the Privy Council(1), says, a manager or custodian, of the institution who has to discharge the duties of a trustee and is answerable as such; but he is not a mere manager and it would not be right to describe Mahantship as a mere office. " A superior of a Math has not only duties to discharge in connection with the endowment but he has a personal interest of a beneficial character which is sanctioned by custom and is much larger than that of a Shebait in the debutter property. It was held by a Full Bench of the Calcutta High Court(2), that Shebaitship. itself is property, and this decision was approved of by the Judicial Committee in Ganesh v Lal Behary(3), and again in Bhabatarini vs Ashalata(4). (1) Vide Vidya Varuthi vs Balusami, 48 I. A. 302 (2) Vide Monahai vs Bhupendra, (3) 63 I.A. 448. (4) 70 I.A. 57. 1019 The effect of the first two decisions, as the Privy Council pointed out in the last case, was to emphasise the propriet ary element in the Shebaiti right and to show that though in some respects an anomaly, it was an anomaly to be accepted as having been admitted into Hindu ,law from an early date. This view was adopted in its entirety by this court in Angurbala vs Debabrata (1), and what was said in that case in respect to Shebaiti right could, with equal propriety, be applied to the office of a Mahant. Thus in the conception of Mahantship, as in Shebaitship, both the elements of office and property, of duties and personal interest are blended together and neither can be detached from the other. The personal or beneficial interest of the Mahant in the endowments attached to an institution is manifested in his large powers of disposal and administration and his right to create derivative tenures in respect to endowed properties; and these and other rights of a similar character invest the office of the Mahant with .the character of proprietary right which, though anomalous to some extent, is still a genuine legal right. It is true that the Mahantship is not heritable like ordinary property, but that is because of its peculiar nature and the fact that the office is generally held by an ascetic, whose connection with his natural family being completely cut of, the ordinary rules of succession do not apply. There is no reason why the word "property", as used in article 19(1) (f) of the Constitution, should not be given a liberal and wide connotation and should not be extended to those well recognised types of interest which have the insignia or characteristics of proprietary right. As said above, the ingredients of both office and property, of duties and personal interest are blended together in the rights of a Mahant and the Mahant has the right to enjoy this property or beneficial interest so long as he is entitled to hold his office. To take away this beneficial interest and leave him merely to the discharge of his duties would be to destroy his character as a Mahant altogether. It is true that the beneficial interest which he enjoys is appurtenant to his duties (1) 1020 and as he is in charge of a public institution, reasonable restrictions can always be placed upon his rights in the interest of the public. But the restrictions would cease to be reasonable if they are calculated to make him unfit to discharge the duties which he is called upon to discharge. A Mahant 's duty is not simply to manage the temporalities of a Math. He is the head and superior of spiritual fraternity and the purpose of Math is to encourage and foster spiritual training by maintenance of a competent line of teachers who could impart religious instructions to the disciples and followers of the Math and try to strengthen the doctrines of the particular school or order, of which they profess to be adherents. This purpose cannot be served if the restrictions are such as would bring the Mathadhipati down to the level of a servant under a State department. It is from this standpoint that the reasonableness of the restrictions should be judged. A point was suggested by the learned AttorneyGeneral that as article 19(1) (f) deals only with the natural rights inherent in a citizen to acquire, hold and dispose of property in the abstract without reference to rights to any particular property, it can be of no real assistance to the respondent in the present case and article 3l of the Constitution, which deals with deprivation of property, has no application here. In the case of The State of West Bengal vs Subodh Gopal Bose(II) (Civil Appeal No. 107 of 1952, decided by this court on the 17th December, 1953), an opinion was expressed by Patanjali Sastri C. J. that article 19(1) (f) of the Constitution is concerned only with the abstract right and capacity to acquire, hold and dispose of property and that it has no relation to concrete property rights. This, it may be noted, was an expression of opinion by the learned Chief Justice alone and it was not the decision of the court ; for out of the other four learned Judges who together with the Chief Justice constituted the Bench, two did not definitely agree with this view, while the remaining two did not express any opinion one way or the other. This point was not raised before us by the Advocate General for Madras, who appeared in support of the appeal, nor by any of the other (1) (1954] S.C.R. 587 1021 counsel appearing in this case. The learned Attorney. General himself stated candidly that he was not prepared to support the view taken by the late Chief Justice as mentioned above, and he only raised the. point to get an authoritative pronouncement upon it by the court. In our opinion, it would not be proper to express any final opinion upon the point in the present case when we had not the advantage of any arguments addressed to us upon it. We would prefer to proceed, as this court has proceeded all along, in dealing with similar cases in the past, on the footing that article 19(1) (f) applies equally to concrete as well as abstract rights of property. We now come to article 25 which, as its language indicates, secures to every person, subject to public order, health and morality, a freedom not only to entertain such religious belief, as may be approved of by his judgment and conscience, but also to exhibit his belief in such outward acts as he thinks proper and to propagate or disseminate his ideas for the edification of others. A question is raised as to whether the word "persons" here means individuals only or includes corporate bodies as well. The question, in our opinion, is not at all relevant for our present purpose. A Mathadhipati is certainly not a corporate body; he is the head of a spiritual fraternity and by virtue of his office has to perform the duties of a religious teacher. it is his duty to practise and propagate the religious tenets, of which he is an adherent and if any provision of law prevents him from propagating his doctrines, that would certainly affect the religious freedom which is guaranteed to every person under article 25. Institutions as such cannot practise or propagate religion; it can be done only by individual persons and whether these person propagate their personal views or the tenets for which the institution stands is really immaterial for purposes. of article 25. It is the propagation of belief that is protected, no matter whether the propagation takes place in a church or monastery, or in a temple or parlour meeting. As regards article 26, the first question is, what is the precise meaning or connotation of the expression 132 1022 "religious denomination" and whether a Math could come within this expression. The word "denomination" has been defined in the Oxford Dictionary to mean 'Ca collection of individuals classed together under the same name: a religious sect or body having a common faith and Organisation and designated by a distinctive name. It is well known that the practice of setting up Maths as centres of the logical teaching was started by Shri Sankaracharya and was followed by various teachers since then. After Sankara, came a galaxy of religious teachers and philosophers who founded the different sects and sub sects of the Hindu religion that we find in India at the present day. Each one of such sects or sub sects can certainly be balled a religious denomination, as it is designated by a distinctive name, in many cases it is the name of the founder, and has a common faith and common spiritual organization. The followers of Ramanuja, who are known by the name of Shri Vaishnabas, undoubtedly constitute a religious denomination; and so do the followers of Madhwacharya and other religious teachers. It is a fact well established by tradition that the eight Udipi Maths were founded by Madhwacharya himself and the trustees and the beneficiaries of these Maths profess to be followers of that teacher. The High Court has found that the Math in question is in charge of the Sivalli Brahmins who constitute a section of the followers of Madhwacharya. As article 26 contemplates not merely a religious denomination but also a section thereof, the Math or the spiritual fraternity represented by it can legitimately come within the purview of this article. The other thing that remains to be considered in regard to article 26 is, what is the scope of clause (b) of the article which speaks of management " of its own affairs in matters of religion ?" The language undoubtedly suggests that there could be other affairs of a religious denomination or a section thereof which are not matters of religion and to which the guarantee given by this clause would not apply. The question is, whereas the line to be drawn between what are matters of religion and what are not 1023 It will be seen that besides the right to manage its own affairs in matters of religion, which is given by clause (b), the next two clauses of article 26 guarantee to a religious denomination the right to acquire and own property and to administer such property in accordance with law. The administration of its property by a religious denomination has thus been placed on a different footing from the right to manage its own affairs in matters of religion. The latter is a fundamental right which no legislature can take away, whereas the former can be regulated by laws which the legislature can validly impose. It is clear, therefore, that questions merely relating to administration of properties belonging to a religious group or institution are not matters of religion to which clause (b) of the article applies. What then are matters of religion ? The word "religion " has not been defined in the Constitution and it is a term which is hardly susceptible of any rigid definition. In an American case(1), it has been said " that the term religion has reference to one 's views of his relation to his Creator and to the obligations they impose of reverence for His Being and character and of obedience to His will. It is often confounded with cultus of form or worship of a particular sect, but is distinguishable from the latter. " We do not think that the above definition can be regarded as either precise or adequate. Articles 25 and 26 of our Constitution are based for the most part upon article 44(2) of the Constitution of Eire and we have great doubt whether a definition of "religion" as given above could have been in the minds of our Constitution makers when they framed the Constitution. Religion is certainly a matter of faith with individuals or communities and it is not necessarily theistic. There are well known religions in India like Buddhism and Jainism which do not believe in God or in any Intelligent First Cause. A religion undoubtedly has its basis in a system of beliefs or doctrines which are regarded by those who profess that religion as conducive to their spiritual well being, but it would not be correct to say that religion is nothing else, but a (1) Vide Davie vs Benson ; at 342. 1024 doctrine or belief. A religion may not only lay down a code of ethical rules for its followers to accept, it might prescribe rituals and observances, ceremonies and modes of worship which are regarded as integral parts of religion, and these forms and observances might extend even to matters of food and dress. The guarantee under our Constitution not only protects the freedom of religious opinion but it protects also acts done in pursuance of a religion and this is made clear by the use of the expression " practice of religion " in article 25. Latham C. J. of the High Court of Australia while dealing with the provision of section 116 of the Australian Constitution which inter alia forbids the Commonwealth to prohibit the "free exercise of any religion" made the following weighty observations(1) : " It is sometimes suggested in discussions on the subject of freedom of religion that, though the civil Government should not interfere with religious opinion&, it nevertheless may deal as it pleases with any acts which are done in pursuance of religious belief without infringing the principle of freedom of religion. It appears to me to be difficult to maintain this distinction as relevant to the interpretation of section 116. The section refers in express terms to the exercise of religion, and therefore it is intended to protect from the operation of any Commonwealth laws acts which are done in the exercise of religion. Thus the section goes far beyond protecting liberty of opinion. It protects also acts. done in pursuance of religious belief as part of religion. " These observations apply fully to the protection of religion as guaranteed by the Indian Constitution. Restrictions by the State upon free exercise of religion are permitted both under articles 25 and 26 on grounds of public order,. morality and health. Clause (2)(a) of article 25 reserves the right of the State to regulate or restrict any economic, financial, political and other secular activities which may be associated with religious practice and there is a further right given to the State by sub clause (b) under which the State can (1) Vide Adelaide Company V. The Commonwealth 67 C.L.R. 116, 127 1025 legislate for social welfare and reform even though by so doing it might interfere with religious practices. The learned Attorney General lays stress upon clause (2)(a) of the article and his contention is that all secular activities, which may be associated with religion but do not really constitute an essential part of it, are amenable to State regulation. The contention formulated in such broad terms cannot, we think, be supported. In the first place, what constitutes the essential part of a religion is primarily to be ascertained with reference to the doctrines of that religion itself. If the tenets of any religious sect of the Hindus prescribe that offerings of food should be given to the idol at particular hours of the day, that periodical ceremonies should be performed in a certain way at certain periods of the year or that there should be daily recital of sacred texts or ablations to the sacred fire, all these would be regarded as parts of religion and the mere fact that they involve expenditure of money or employment of priests and servants or the use of marketable commodities would not make them secular activities partaking of a commercial or economic character; all of them are religious. practices and should be regarded as matters of religion within the meaning of article 26(b). What article 25(2)(a) contemplates is not regulation by the State of religious practices as such, the freedom of which is guaranteed by the Constitution except when they run counter to public order, health and morality, but regulation of activities which are economic, commercial or political in their character though they are associated with religious practices. We may refer in this connection to a few American and Australian cases, all of which arose out of the activities of persons connected with the religious association known as "Jehova 's Witnesses." This association of persons loosely organised throughout Australia, U.S.A. and other countries regard the literal interpretation of the Bible as fundamental to proper religious beliefs. This belief in the supreme Authority of the Bible colours many of their political ideas. They refuse to take oath of allegiance to the king or other Constituted 1026 human authority and even to show respect to the national flag, and they decry all wars between nations and all kinds of war activities. In 1941 a company of " Jehova 's Witnesses " incorporated in Australia commenced proclaiming and teaching matters which were prejudicial to war activities and the defence of the Commonwealth and steps were taken against them under the National Security Regulations of the State. The legality of the action of the Government was questioned by means of a writ petition before the High Court and the High Court held that the action of the Government was justified and that section 116, which guaranteed freedom of religion under the Australian Constitution, was not in any way infringed by the National Security Regulations(1). These were undoubtedly political activities though arising out of religious belief entertained by a particular community. In such cases, as Chief Justice Latham pointed out, the provision for protection of religion was not an absolute protection to be interpreted and applied independently of other provisions of the Constitution. These privileges must be reconciled with the right of the State to employ the sovereign power to ensure peace, security and orderly living without which constitutional guarantee of civil liberty would be a mockery. The courts of America were at one time greatly agitated over the question of legality of a State regulation which required the pupils in public schools on pain of compulsion to participate in a daily ceremony of saluting the national flag, while reciting in unison, a pledge of allegiance to it in a certain set formula. The question arose in Minersville School District, Board of Education, etc. vs Gobitis(2). In that case two small children, Lillian and William Gobitis, were expelled from the public school of Minersville, Pennsylvania, for refusing to salute the national flag as part of the daily exercise. The Gobitis family were affiliated with "Jehova 's Witnesses" and had been (1) Vide Adelaide Company vs The Commonwealth, ; , 127. (2) ; 1027 brought up conscientiously to believe that such a gesture of respect for the flag was forbidden by the scripture. The point for decision by the Supreme Court was whether the requirement of participation in such a ceremony exacted from a child, who refused upon sincere religious ground, infringed the liberty of religion guaranteed by the First and the Fourteenth Amendments ? The court held by a majority that it did not and that it was within the province of the legislature and the school authorities to adopt appropriate means to evoke and foster a sentiment of. national unity amongst the children in public schools. The Supreme Court, however, changed their views on this identical point in the later case of West Virginia State Board of Education vs Barnette(1). There it was held overruling the earlier decision referred to above that the action of a State in making it compulsory for children in public schools to salute the flag and pledge allegiance constituted a violation of the First and the Fourteenth Amendments. This difference in judicial opinion brings out forcibly the difficult task which a court has to perform in cases of this type where the freedom or religious convictions genuinely entertained by men come into conflict with the proper political attitude which is expected from citizens in matters of unity and solidarity of the State organization. As regards commercial activities, which are prompted by religious beliefs, we can cite the case of Murdock vs Pennsylvania(2). Here also the petitioners were "Jehova 's Witnesses" and they went about from door to door in the city of Jeannette distributing literature and soliciting people to purchase certain religious books and pamphlets, all published by the Watch Tower Bible and Tract Society. A municipal ordinance required religious colporteurs to pay a licence tax as a condition to the pursuit of their activities. The petitioners were convicted and fined for violation of the ordinance. It was held that the ordinance in question was invalid under the Federal Constitution as constituting a denial of freedom of speech, press and religion; (1) ; (2) ; 1028 and it was held further that upon the facts of the case it could not be said that "Jehova 's Witnesses" were engaged in a commercial rather than in a religious venture. Here again, it may be pointed out that a contrary view was taken only a few years before in the case of Jones vs Opelika(1), and it was held that a city ordinance, which required that licence be procured and taxes paid for the business of selling books and pamphlets on the streets from house to house, was applicable to a member of a religious Organisation who was engaged in selling the printed propaganda, pamphlets without having complied with the provisions of the ordinance. It is to be noted that both in the American as well as in the Australian Constitutions the. right to freedom of religion has been declared in unrestricted terms with. out any limitation whatsoever. Limitations, therefore, have been introduced by courts of law in these countries on grounds of morality, order and social protection. An adjustment of the competing demands of the interests of Government and constitutional liberties is always a delicate and a difficult task and that is why we find difference of judicial opinion to such an extent in cases decided by the American courts where questions of religious freedom were involved. Our Constitution makers, however, have embodied the limitations which have been evolved by judicial pronouncements in America or Australia in the Constitution itself and the language of articles 25 and 26 is sufficiently clear to enable us to determine without the aid of foreign authorities as to what matters come within the purview of religion and what do not. As we have already indicated, freedom of religion in our Constitution is not confined to religious beliefs only; it extends to religious practices as well subject to the restrictions which the Constitution itself has laid down. Under article 26(b), therefore, a religious denomination .or organization enjoys complete autonomy in the matter of deciding as to what rites and ceremonies are essential according to the tenets of the religion they hold and no outside authority has any jurisdiction to (1) ; 1029 interfere with their decision in such matters. Of course, the scale of expenses to be incurred in connection with these religious observances would be a matter of administration of property belonging to the religious denomination and can be controlled by secular authorities in accordance with any law laid down by a competent legislature; for it could not be the injunction, of any religion to destroy the institution and its endowments by incurring wasteful expenditure on rites and ceremonies. It should be noticed, however, that under article 26(d), it is the fundamental right of a religious denomination or its representative to administer its properties in accordance with law; and the law, therefore, must leave the right of administration to the religious denomination itself subject to such restrictions and regulations as it might choose to impose. A law which takes away the right of administration from the hands of a religious denomination altogether and vests it in any other authority would amount to a violation of the right guaranteed under clause (d) of article 26. Having thus disposed of the general contentions that were raised in this appeal, we will proceed now to examine the specific grounds that have been urged by the parties before us in regard to the decision of the High Court so far as it declared several sections of the new Act to be ultra vires the Constitution by reason of their conflicting with the fundamental rights of the respondent. The concluding portion of the judgment of the High Court where the learned Judges summed up their decision on this point stands as follows: " To sum up, we hold that the following sections are ultra vires the State Legislature in so far as they relate to this Math: and what we say will also equally apply to other Maths of a similar nature. The sections of the new Act are: sections 18, 209 21, 25(4), section 26 (to the extent section 25(4) is made applicable), section 28 (though it sounds innocuous, it is liable to abuse as we have already pointed out earlier in the judgment), section 29, clause (2) of section 30, section 31, section 39(2), section 42, section 53 (because courts have ample powers to meet these contingencies), ,section 54, clause (2) of section 55, section 56, clause (3) 133 1030 of section 58, sections to 69 in Chapter VI, clauses (2), (3) and (4) of section 70, section 76, section 89 and section 99 (to the extent it gives the Government virtually complete control over the Matadhipati and Maths). It may be pointed out at the outset that the learned Judges were not, right in including sections 18, 39(2) and 42 in this list, as these sections are not applicable to Maths under the Act itself This position has not been disputed by Mr. Somayya, who appears for the respondent. Section 20 of the Act describes the powers of the Commissioner in respect to religious endowments and they include power to pass any orders that may be deemed necessary to ensure that such endowments are properly administered and that their income is duly appropriated for the purposes for which they were founded. Having regard to the fact that the Mathadhipati occupies the position of a trustee with regard to the Math, which is a public institution, some amount of control or supervision over the due administration of the endowments and due appropriation of their funds is certainly necessary in the interest of the public and we do not think that the provision of this section by itself offends any fundamental right of the Mahant. We do not agree with the High Court that the result of this provision would be to reduce the Mahant to the position of a servant. No doubt the Commissioner is invested, with powers to pass orders, but orders can be passed only for the purposes specified in the section and not for interference with the rights of the Mahant as are sanctioned by usage or for lowering his position as the spiritual head of the institution. The saving provision contained in section 91 of the Act makes the position quite clear. An apprehension that the powers conferred by this section may be abused in individual cases does not make the provision itself bad or invalid in law. We agree, however, with the High Court in the view taken by it about section 21. This section empowers the Commissioner and his subordinate officers and also persons authorised by them to enter the premises of 1031 any religious institution or place of worship for the purpose of exercising any power conferred, or any duty imposed by or under the Act. It is well known that there could be no such thing as an unregulated and unrestricted right of entry in a public temple or other religious institution, for persons who are not connected with the spiritual functions thereof. It is a traditional custom universally observed not to allow access to any outsider to the particularly sacred parts of a temple as for example, the place where the deity is located. There are also fixed hours of worship and rest for the idol when no disturbance by any member of the public is allowed. Section 21, it is to be noted, does not confine the right of entry to the outer portion of the premises; it does not even exclude the inner sanctuary the Holy of Holies" as it is said, the sanctity of which is zealously preserved. It does not say that the entry may be made after due notice to the head. the institution and at such hours which would not interfere with the due observance of the rites and ceremonies in the institution. We think that as the section stands, it interferes with the fundamental rights of the Mathadhipati and the denomination of which he is head guaranteed under articles 25 and 26 of the Constitution. Our attention has been drawn in. this connection to section 91. of the Act which, it is said, provides a sufficient safeguard against any abuse of power under section 2 1. We cannot agree with this contention. Clause (a ) of section 91 excepts from the saving clause all express provisions of the Act within which the provision of section 21 would have to be included. Clause (b) again does not say anything about custom or usage obtaining in an institution and it does not indicate by whom and in what manner the question of interference with the, religious and spiritual functions of the Math would be decided in case of any dispute arising regarding it. In our opinion, section 21 has been rightly held to be invalid. Section 23 imposes a duty upon the trustees to obey all lawful orders issued be the Commissioner or any subordinate authority under the, provisions of the Act. No exception can be taken to the section if those 1032 provisions of the Act, which offend against the fund&mental rights of the respondent, are left out of account as being invalid. No body can make a grievance if he .is directed to obey orders issued in pursuance of valid legal authority. The same reason would, in our opinion, apply to section 24. It may be mentioned here that sections 23 and 24 have not been specifically mentioned in the concluding portion of the judgment of the High Court set out above, though they have been attacked by the learned Judges in course of their discussion. As regards section 25, the High Court has taken exception only to clause (4) of the section. If the preparation of registers for religious institutions is not wrong and does not affect the fundamental rights of the Mahant,one fails to see how the direction for addition to or alteration of entries in such registers, which clause (4) contemplates and which will be necessary as a result of enquiries made under clause (3), can, in any sense, be held to be invalid as infringing the fundamental rights of the Mahant. The enquiry that is contemplated by clauses (3) and (4) is an enquiry into the actual state of affairs, and the whole object of the section is to keep an accurate record of the particulars specified in it. We are unable, therefore, to agree with the view expressed by the learned Judges. For the same reasons, section 26, which provides for annual verification of the registers, cannot be held to be bad. According to the High Court section 28 is itself innocuous. The mere possibility of its being abused is no ground for holding it to be invalid. As all endowed properties are. ordinarily inalienable, we fail to see why the restrictions placed by Section 29 upon alienation of endowed properties should be considered bad. In our opinion, the provision of clause (2) of section 29, which enables the Commissioner to impose conditions when he grants sanction to alienation of endowed property, is perfectly reasonable and to that no exception can be taken. The provision of section 30(2) appears to us to be somewhat obscure. Clause (1) of the section enables 1033 a trustee to incur expenditure out of the funds in his charge after making adequate provision . for the purposes referred to in section 70(2), for making arrangements for the health, safety and convenience of disciples, pilgrims, etc. Clause (2), however, says that in incurring expenditure under clause (1), the trustee shall be guided by such general or special instruction as the Commissioner or the Area Committee might give in that connection. If the trustee is to be guided but not fettered by such directions, possibly no objection can be taken to this clause; but if he is bound to carry out such instructions, we do think that it constitutes an encroachment on his right. Under the law, as it stands, the Mahant has large powers of disposal over the surplus income and the only restriction is that he cannot spend anything out of it for his personal use unconnected with the dignity of his ,office. But as the purposes specified in sub clauses (a) and (b) of section 30(1) are beneficial to the institution there seems to be no reason why the authority vested in the Mahant to spend the surplus income for such purposes should be taken away from him and he should be compelled to act in such matters under the instructions of the Government officers. We think that this is an unreasonable restriction on the Mahant 's right of property which is blended with his office. The same reason applies in our opnion to section 31 of the Act, the meaning of which also is far from clear. If after making adequate provision for the purposes referred, to in section 70(2) and for, the arrangements mentioned in section 30(2) there is still a surplus left with the trustee, section 31 enables him to spend it for the purposes specified in section 59(1) with the previous sanction of the Deputy Commissioner. One of the purposes mentioned in section 59(1) is the propagation of the religious tenents of the institution, and it, is not understood why sanction of the Deputy Commissioner should be necessary for spending the surplus, income for the propagation of the religious tenets of the order which is one of the primary duties of a Mahant to discharge. The next thing that strikes one is, whether sanction is necessary if the trustee 1034 wants to spend the money for purposes other than those specified in section 59(1) ? If the answer is in the nega tive, the whole object of the section becomes meaningless. If, on the other hand, the implication of the section is that the surplus can be spent only for the purposes specified in section 59(1) and that too with the permission of the Deputy Commissioner, it undoubtedly places a burdensome restriction upon the property rights of the Mahant which are sanctioned by usage and which would have the effect of impairing his dignity and efficiency as the head of the institution. We think that sections 30(2) and 31 have been rightly held to be invalid by the High Court. Sections 39 and 42, as said already, are not applicable to Maths and hence can be left out of consideration,. , Section 53 has . been condemned by the High Court merely on the ground that the court has ample jurisdiction to provide for the contingencies that this section is intended to meet. But that surely cannot prevent a competent legislature from legislating on the topic, provided it can do so without violating" any of the fundamental rights guaranteed by the Constitution. We are unable to agree with the High Court on this point. There seems to be nothing wrong or unreasonable in section 54 of the Act which provides for fixing the standard, scale of expenditure. The proposals for this purpose would have to be submitted by the trustee ; they are then to be published and suggestions invited from persons having interest in the amendment. The Commissioner is to scrutinise the original proposals and the . suggestions received and if in his opinion a modification of the scale is necessary, he has to submit a report to the Government, whose decision will be final. This we consider to be quite a reasonable and salutary provision. Section 55 deals with a Mahant 's power over Pathakanikas or personal gifts. Ordinarily a Mahant has absolute power of disposal over such gifts, though if he dies without making any disposition, it is reckoned as the property of the Math and goes to the succeeding Mahant. The first clause of section 55 lays down that such Pathakanikas shall be spent only for the 1035 purposes of the Math. This is an unwarranted restriction on the property right of the Mahant. It may be that according to customs prevailing in a particular institution, such personal gifts are regarded as gifts to the institution itself and the Mahant receives them only as the representative of the institution; but the general rule is otherwise. As section 55(1) does not say that this rule will apply only when there is a custom of that nature in a particular institution, we must say that the provision in this unrestricted form is an unreasonable encroachment upon the, fundamental right of the Mahant. The same objection can be raised against clause (2) of the section; for if the Pathakanikas constitute the property of a Mahant, there is no justification for compelling him to keep accounts of the receipts and expenditure of such personal gifts. As said already, if the Mahant dies without disposing of these personal gifts, they may form part of the assets of the Math, but that is no reason for restricting the powers of the Mahant over these gifts so long as he is alive. Section 56 has been rightly invalidated by the High Court. , It makes provision of an extremely drastic ,character. Power has been given to the Commissioner to require the trustee to appoint a manager for administration of the secular affairs of the institution and in case of default, the Commissioner can make the appointment. himself. The manager thus appointed though nominally a servant of the trustee, has practically to do everything according to the directions of .the Commissioner and his subordinates. It is to be noted that this power can be exercised at the mere option of the Commissioner without, any justifying necessity whatsoever and no pre requisites like mis management of property or maladministration of trust funds are necessary to enable the trustee to exercise such drastic power. It is true that the section contemplates the appointment of a manager for administration of the secular affairs of this institution. But no rigid demarcation could be made as we have already said between the spiritual duties of the Mahant 1036 and his personal interest in the trust property. The effect of the section really is that the Commissioner is at liberty at any moment he chooses to deprive the Mahant of his right to administer the trust property even if there is no negligence or maladministration on his part. Such restriction would be opposed to the provision of article 26(d) of the Constitution. It would cripple his authority as Mahant altogether and reduce his position to that of an ordinary priest or paid servant. We find nothing wrong in section 58 of the Act which relates to the framing of the scheme by the Deputy Commissioner. It is true that it is a Government officer and not the court who is given the power to settle the scheme, but we think that sample safeguards have been provided in the Act to rectify any error or unjust decision made by the Deputy Commissioner. Section 61 provides for an appeal to the Commissioner, against the order of the Deputy Commissioner and there is a right of suit given to a party who is aggrieved by the order of the Commissioner ,with a further right of appeal to the High Court. The objection urged against the provision of clause (3)(b) of section 58 does not appear to us to be of The executive officer mentioned in much substance that clause could be nothing else but a manager of the properties of the Math, ad the cannot possibly be empowered to exercise the functions of the Mathadhipati himself. In any event, the trustee would have his remedy against such order of the Deputy Commissioner by way of appeal to the Commissioner and also by way of suit as laid down in sections 61 and 62. Section 59 simply provides a scheme for the application of the cy pres doctrine in case the object of the trust fails either from the inception or by reason of subsequent eve*. Here again the only complaint that is raised is, that such order could be made by the Deputy Commissioner. We think that this objection has not much substance. In the first place, the various objects on, which the trust funds could be spent are laid down in the section itself and the jurisdiction of the Deputy Commissioner is only to make a choice out of the several heads . 1037 Further an appeal has been provided from an order of the Deputy Commissioner under this section to the Commissioner. We, therefore, cannot agree with the High Court that sections 58 and 59 of the Act are invalid. Chapter VI of the Act, which contains sections 63 to 69, relates to notification of religious institutions The provisions are extremely drastic in, their character and the worst feature of it is that no access is allowed to the court to set aside an order of notification. The Advocate General for Madras frankly stated that he could not support the legality of these provisions. We hold therefore, in agreement with High Court that these sections should. be hold to be void. Section 70 relates to the, budget of religious institu tions. Objection has been taken only to clause (3.) which empowers the Commissioner and the Area Committee to make any additions to or alterations in the budget as they deem fit. A budget is indispensable in all public institutions and we do not think that it is per be unreasonable to provide for the budget of a religious institution being prepared under the supervision of the Commissioner or the Area Committee. It is to be noted that if the order is made by an Area Committee under clause (3), clause (4) provides an appeal against it to the Deputy Commissioner. Section 89 provides for penalties for refusal by the trustee to comply with the provisions of the Act. If the objectionable portions of the Act are eliminated, the portion that remains will be perfectly valid and for violation of these valid provisions, penalties can legiti mately be provided. Section 99 vests an overall revisional power in the Government. This, in our opinion, is beneficial to the trustee, for he will have an opportunity to approach, the Government in case of an irregularity, error or omission made by the Commissioner or any other subordinate officer. The only other point that requires consideration is the constitutional validity of section 76 of the Act which runs as follows: "76. (1) In respect of the services rendered by the Government and their officers, every religious institution shall, from the income derived by it, pay to the 134 1038 Government annually such contribution not exceeding five per centum of its income as may be prescribed. (2)Every religious institution, the annual income of which for the fasli year immediately preceding as calculated for the purposes of the levy of contribution under sub section (1), is hot less than one thousand rupees, shall pay to the Government annually, for meeting the cost of auditing its accounts, such further sum not exceeding one and a half per centum of its income as the Commissioner may determine. (3)The annual payments referred to in sub sections (1) and (2) shall be made, notwithstanding anything to the contrary contained in any scheme settled or deemed to be settled under this Act for the religious institution concerned. (4)The Government shall pay the salaries, allowances, pensions and other beneficial remuneration of the Commissioner, Deputy Commissioners, Assistant Commissioners and other officers and servants (other than executive officers of religious institutions) employed for the purposes of this Act and the other expenses incurred for such purposes, including the expenses of Area Committees and the cost of auditing the accounts of religious institutions. " Thus the section authorises the levy of an annual contribution on all religious institutions, the maximum of which is fixed at 5 per cent. of the income derived by them. The Government is to frame rules for the purposes of fixing rates within the permissible maximums and the section expressly states that the levy is in respect of the I services rendered by the Government and its officers. The validity of the provision has been attacked on a two fold ground: the first is, that the contribution is really a tax and as such it was beyond the legislative competence of the State Legislature to enact such provision. The other is, that the contribution being a tax or imposition, the proceeds of which are specifically appropriated for the maintenance of a particular religion or religious denomination, it comes within the mischief of article 27 of the Constitution and is hence void. 1039 So far as the first ground is concerned, it is not disputed that the legislation in the present case is covered by entries 10 and 28 of List III in Schedule VII of the Constitution. If the contribution payable under section 76 of the Act is a "fee", it may come under entry 47 of the Concurrent List which deals with " fees" in respect of any of the matters included in that list. On the other hand, if it is a tax, as this particular tax has not been provided for in any specific entry in any of the three lists, it could come only under entry 97 of List I or article 248(1) of the Constitution and in either view the Union Legislature alone would be competent to legislate upon it. On behalf of the appellant, the contention raised is that the contribution levied is a fee and not a tax and the learned Attorney General, who appeared for the Union of India as intervener in this as well as in the other connected appeals made a strenuous attempt to support this, position. The point is certainly not free from doubt and requires careful consideration. The learned Attorney General has argued in the first place that our Constitution makes a clear distinction ,between taxes and fees. It is true, as be t has pointed out, that there are a number of entries in List I of the Seventh Schedule which relate to taxes and duties of various sorts; whereas the last entry, namely entry 96, speaks of "fees" in respect of any of the matters dealt with in the list. Extractly the same is with regard to entries 46 to 62 in List II all of which relate to taxes and here again the last entry deals only with "fees" leviable in respect of the different matters specified in the list. It appears that: articles II 0 and 1 19 of the Constitution which deal with "Money Bills" lay down expressly that a bill will not be deemed to be a "Money Bill" by reason only that it provides for the imposition of fines. . or for the demand or payment of fees for licences or fees for services rendered, whereas a bill dealing with imposition or regulation. of a tax will always be a Money Bill. Article 277 also mentions taxes, cesses and fees separately. It is not clear, how ever, whether the word "tax" as used in article 265 has not been used in the wider sense as including all other 1040 impositions like ceases and fees; and that at least seems to be the implication of clause (28) of article 366 which defines taxation as including the imposition of any tax or impost, whether general, local or special. It seems to us that though levying of fees is only a particular form of the exercise of the taxing power of the State, our Constitution has placed fees uder a separate category for purposes of legislation and at the end of each one of the three legislative lists, it has given a power to the particular legislature to legislate on the imposition of fees in respect to every one of the items dealt with in the list itself. Some idea as to what fees are may be gathered from clause (2) of articles 110 and 119 referred to above which speak of fees for licences and for services rendered. The question for our consideration really is, what are the indicia or special characteristics that distinguish a fee from a tax proper ? On this point we have been referred to several authorities by the learned counsel appearing for the different parties including opinions expressed by writers of recognised treatises on public finance. A neat definition of what "tax" means has been given by Latham C. J. of the High Court of Australia,in Matthews vs Chicory Marketing Board(1). A tax", according to the learned Chief Justice, "is a compulsory exaction of money by public authority for public purposes enforceable by law and is not payment for services rendered". This definition brings out, in our opinion, the esential characteristics of a tax as distinguished from other forms of imposition which, in a general sense, are included within it. It is said that the essence of taxation is compulsion, that is to say, it is imposed under statutory power without the taxpayer 's consent and the payment is enforced by law(2). The second characteristic of tax is that it is an imposition made for public purpose without reference to any special benefit to be conferred on the payer of the tax. This is expressed by saying that the levy of tax is for the purposes of general revenue, which when collected revenues of the State. As the (1) ; , 276. (2) Vide Lower Mainland Dairy vs Crystal Dairy Ltd. 1041 object of a tax is not to confer any special benefit upon any particular individual, there is, as it is said, no element of quid pro quo between the taxpayer and the public authority(1). Another feature of taxation it; that as it is a part of the common burden, the quantum of imposition upon the taxpayer depends generally upon his capacity to pay. Coming now to fees, a 'fee ' is generally defined to be a charge for a special service rendered to individuals by some governmental agency. The amount of fee levied is supposed to be based on the expenses incurred by the Government in rendering the service, though in many cases the costs are arbitrarily assessed. Ordinarily, the fees are uniform and no account is taken of the vary abilities of different recipients to pay(2). These are undoubtedly some of the general characteristics, but as there may be various kinds of fees, it is not possible to formulate a definition that would be applicable to all cases. As regards the distinction between a tax and a fee, it, is argued in the first place on behalf of the respondent that a fee is something voluntary which a person has got to pay if he wants certain ' services from the Government; but there is no obligation on his part to seek such services and if he does not want the services, I he can avoid the obligation. The example given is of a licence fee. If a man wants a licence that is entirely his own choice and then only he has to pay the fees, but not otherwise. We think that a careful examination will reveal that the element of compulsion or coerciveness is present in all kinds of imposition. though in different degrees and that it is not totally absent in fees. This, therefore, cannot be made the sole or even a material criterion for distinguishing a tax from fees. It is difficult, we think, to conceive of a tax except it be something like a poll tax, the incidence of which falls on all persons within a State. The house tax has to be paid only by those who own houses, the land tax by those who possess lands, municipal taxes or rates will fall on those who have properties within a (1) see Findlay Shirras on "Science of Public Finance", Vol. (2) Vide Lutz on "Public Finance" p. 215. 1042 municipality. Persons who do not have houses,land or Properties within municipalities, would not have to pay these taxes, but nevertheless these impositions come within the category of taxes and nobody can say that it is a choice of these people to own lands or houses or specified kinds of properties so that there is no compulsion on them to pay taxes at all. Compulsion lies in the fact that payment is enforceable by law against a man in spite of his unwillingness or want of consent ; and this element is present in taxes as well as in fees. Of course, in some cases whether a man would come. within the category Of a service receiver may be a matter of his choice, but that by itself would not constitute a major test which can be taken as the criterion of this species of imposition. The distinction between a tax and a fee lies primarily in the fact that a tax is levied he a part of a common burden, while a fee is a payment for a special benefit or privilege. Fees confer a special capacity, although the special advan tage, as for example in the case of registration fees for documents or marriage licences, is secondary to the primary motive of regulation in the public interest(1). Public interest seems to be at the basis of all impositions but in a fee it is some special benefit which the individual receives. As seligman says it is the, special benefit accruing to the indivitual which is the reason for payment in the case of fees; in the case of a tax, the particular advantage if it; exists at all is an incidental result of State action(2). If, as we hold, a fee is regarded as a sort of return or consideration for services rendered, it is absolutely necessary that the levy of fees should, on the face of the legislative provision, be co related to the expenses incurred by Government in rendering the services. As indicated in article 1 10 of the Constitution ordinarily there are two classes of cases where Government imposes fees upon persons. In the first class of cases, Government simply grants a permission or privilege to a person to do something, which otherwise that person would not be competent to do and extracts fees either (1) Vide Findlay Shirras on "Science of Public Finance" Vol. (2) Vide Seligman 's Essays on Taxation, P. 408. 1043 heavy or moderate from that person in return for the privilege that is conferred. ; A most common illustration of this type of cases is furnished. by the licence fees for motor vehicles. Here the costs incurred by the Government in maintaining an office or bureau for the granting of licences may be very small and the amount of imposition that is levied is based really not upon the costs incur. red by the Government but upon the benefit that the individual receives. In such cases, according to all the writers on public finance, the tax element is predominant(1), and if the money paid by licence holders goes for the upkeep of roads and other matters of general public utility, the licence fee cannot but be regarded as a tax. In the other class of cases, the Government does some positive work for the benefit of persons and the money is taken as the return for the work done or services rendered. If the money thus paid is set apart and appropriated specifically for the performance of such work and is not merged in the public revenues for the benefit of the general public,, it could be counted as fees and not a tax. There is really no generic difference between the tax and fees and as said by Seligman, the taxing power of a State may manifest itself in three different forms known respectively as special assessments,fees and taxes(2). Our Constitution has, for legislative purposes, made a distinction between a tax and a fee and while there are various entries in the legislative lists with regard to various forms of taxes there is an entry at the end of each one of the three lists as regards fees which could be levied in respect of any of the matters that is included in it. The implication seems to be that fees have special reference to governmental action undertaken in respect to any of these matters. Section 76 of the Madras Act speaks definitely of the contribution being levied in respect rendered by the Government; so far it has the appearance of fees. It is true that religious institutions do not want these services to be rendered to them and it (1) Vide Spligman 's Essays on Taxation, p. 409 (2) lbid, P. 406, 1044 may be that they do not consider the State interference to be a benefit at all. We agree, however, with the learned Attorney General that, in the present day concept of a State, it cannot be said that services could be rendered by the State only at the request of those who require these services. lf in the larger,interest of the public, a State considers it desirable that some special service should be done for certain people, the people must accept these services, whether willing or not(1) It may be noticed, however, that the contribution that has been levied under section 76 of the Act has been made to depend upon the capacity of the payer and not upon the quantum of benefit that is supposed to be conferred on any particular religious institution. Further the institutions,, which come under the lower income group and have income less than Rs. 1,000 annually, are excluded from the liability to pay the additional charges under clause (2) of the section. These are undoubtedly some of the characteristics of a 'tax ' and the imposition bears a close analogy to income tax. But the material fact which negatives the theory of fees in the present case is that the money raised by levy of the contribution is not ear marked or specified for defraying the expenses that the Government has to incur in performing the services. All the collections go to the consolidated fund of the State and all the expenses have to be met not out of these collections but out of the general revenues by a proper method of appropriation as is done in case of other Government expenses. That in itself might not be conclusive, but in this case there is total absences of any co relation between the expenses incurred by the Government and the amount raised by contribution under the provision of section 76 and in these circumstances the theory of a return or counter payment or quid pro quo cannot have any possible application to this case. In our opinion, therefore, the High Court was right in holding that the contribution levied under section 76 is a tax and not a fee and consequently it was beyond the power of the State Legislature to enact this provision. (1) Vide Findlay Shirras on "Science of Public Finance" Vol. 1045 In view of our decision on this point, the other ground hardly requires consideration. We will indicate, however, very briefly our opinion on the second point raised. The first contention, which has been raised by Mr. Nambiar in reference to article 27 of the Constitution is that the word "taxes", as used therein, is not confined to taxes proper but is inclusive of all other impositions like cesses, fees, etc. We do not think it necessary to decide this point in the present case, for in our opinion on the facts of the present case, the imposition, although it is a tax, does not come within the purview of the latter part of the article at all. What is forbidden by the article is the specific appropriation of the proceeds of any tax in payment of expenses for the promotion or maintenance of any particular religion or religious denomination. The reason underlying this provision is obvious. Ours being a secular State and there being freedom of religion guaranteed by the Constitution, both to individuals and to groups, it is against the policy of the ,Constitution to pay out of public funds any money for the promotion or maintenance of any particular religion or religious denomination. But the object of the contribution under section 76 of the Madras Act is not the fostering or preservation of the Hindu religion or any denomination within it. The purpose is to see that religious trusts and institutions,, wherever they exist, are properly administered. It is a secular administration of the religious legislature seeks to control and the in the Act, is to ensure that the institutions that the object, as enunciated endowments attached to the religious institutions are properly administered and their income is duly appropriated for the purposes for which they were founded or exist. There is no qustion of favouring any particular religion or religious denomination in such cases . In our opinion, article 27 of the Constitution is not attracted to the facts of the present case. The result, therefore, is that in our opinion sections 21, 30(2), 31,55,56 and 63 to 69 are the only sections which should be declared invalid as conflicting with the fundamental rights of the respondent as Mathadhipati of the Math in question and 135 1046 section 76(1) is void as beyond the legislative competence of the Madras State Legislature. The rest of the Act is to be regarded as valid. The decision of the High Court will be modified to this extent, but as the judgment of the High Court is affirmed on its merits, the appeal will stand dismissed with costs to the respondent. Appeal dismissed.

Held, that sections 21, 30(2), 31, 55, 56 and 63 to 69 of the Madras Hindu Religious and Charitable Endowments Act, 1951 (Madras Act XIX of 1951) are ultra vires articles 19(1)(f), 25 and 26 of the Constitution of India. Section 76(1) of the Act is void as the provision relating to the payment of annual contribution contained in it is a tax and not a fee and so it was beyond the legislative competence of the Madras State Legislature to enact such a provision. That on the facts of the present case the imposition under a. 76(1) of the Act, although it is a tax, does not come within the latter part of article 27 because the object of the contribution under the section is not the fostering or preservation of the Hindu religion or any denomination under it but the proper administration of religious trusts and institutions wherever they exist. 130 1006 The word " property " as used in article 19(1)(f) of the Constitution should be given a liberal and wide connotation and should be extended to all well recognized types of interest which have the insignia or characteristics of proprietary right. The ingredients of both office and property, of duties and personal interest are blended together in the rights of a Mahant and the Mahant has the right to enjoy this property or beneficial interest so long as he is entitled to hold his office. Therefore he is entitled to claim the protection of article 19(1)(f). A tax is a compulsory exaction of money by public authority for public purposes enforceable by law and is not payment for services rendered. It is not possible to formulate a definition of fee that can apply to all cases as there are various kinds of fees. But a fee may generally be defined as a charge for a special service rendered to individuals by some governmental agency. The amount of fee levied is supposed to be based on the expenses incurred by the Government in rendering the service, though in many cases such expenses are arbitrarily assessed. The distinction between a tax and a fee lies primarily in the fact that a tax is levied as part of a common burden, while a fee is a payment for a special benefit or privilege. " Scope of articles 25 and 26 discussed. Meaning of the term " Mathadhipati " and religion explained. Vidya Varuthi vs Balusami (48 I.A. 302), Monahar vs Bhupendra , Ganesh vs Lal Behary (63 I.A. 448), Bhabatarini vs Ashdlata (70 I.A. 57), Angurbala vs Debabrata ([1951] S.C.R. 1125), Davis vs Benson; , , The State of West Bengal vs Subodh Gopal Bose (civil Appeal No. 107 of 1952 decided by the Supreme Court on the 17th December, 1953), Adelaide Company vs The Commonwealth ; , 127), Minersville School District, Board of Education etc. vs Gobitis ; , West Virginia State Board of Education vs Barnette ; , Murdock vs Penissyl vania ; , Tones vs Opelika (316 U.S. 584), Matthew 's V. Chicory Marketing Board ; , 276), Lower Mainland Dairy vs Crystal Dairy Ltd. ([1933] A.C. 168) referred to. (Findlay Shirras on Science of Public Finance, Vol. I. p. 203).

Civil Appeal No. 1837 of 1974. Appeal by Special Leave from the Judgment and Order dated 4 9 74 of the Calcutta High in Civil Rule No. 5547 (N) of 1974. Civil Appeals Nos. 1838 1842/74 Appeals by Special Leave from the Judgments and Orders dated 18 9 74, 29 7 74, 9 8 74, of the Allahabad High Court (Lucknow Bench) in Civil Writ Nos. 4398, 400, 4397 of 1974 and C.W.A. 3344/74 and W.P. No. 947/74. Civil Appeal No. 485/75 Appeal by Special Leave from the Judgment and Order dated 24 10 74 of the Gujarat High Court in L.P.A. No. 208/74. Civil Appeal No. 1246/75 Appeal by Special Leave from the Judgment and Order dated 1 4 75 of the Andhra Pradesh High Court in W.A. No. 900/75. Civil Appeal No. 2041/74 Appeal by Special Leave from the Judgment and Order dated 15 10 74 of the Gujarat High Court in L.P.A. No. 205/74. Niren De, Attorney General for India (In all appeals) Devakinandan. (In a11 appeals) P.P. Rao (In C. As. 1245/75 and C.A. 2041/74), R.N. Sachthey for the appellants in CAs. 1837 42 of 74, 1246/75 and 2041/74 and R. 2 in C. As. 1839, 1840/74 and RR. 1 and 2 in C.A. 485/75. 33 A.K. Sen, (In CA 1837/74), I. N. Haldar (In CA 1837/74), K.K. Singhvi (In CA 2041/74), Yogeshwar Prasad; S.K. Bagga and (Mrs.) section Bagga for RR. 1, 3, 7, 11, 12 and 14 in CA 1837/74 and R. 1 in CA Nos. 1839 1841/74 and 2041./74 and RR 2 and 3 in CA. No. 1246/75. Yogeshwar Prasad and (Miss) Rani Arora for R. 1 in C.A. 1838 74. Yogeshwar Prasadand (Miss) Rani Arora for R. 1 in C.A. 1842/ 74. Ram Panjwani, Bishamber Lal, S.K. Gupta and Dayal for Appellant in CA. 485/75 and RR 5, 6 and 7 in CA 2041/74 for the Interverners in CA 1838, 1841, 2041/74 and CA No. 1246/75. The Judgment of the Court was delivered by Ray, C.J. The principal question in these appeal is whether the selection list for promotion of Income Tax Officers Class Service to the post of Assistant Commission ers of Income Tax is correct or not. The selection list was prepared by the Departmental Promotion Committee on 23, 24 and 25 July, 1974. It may be stated here that on 16 August 1972 this Court set aside the Seniority List which had been impugned in Civil Appeal No. 2060(N) of 1971 and gave directions on which the Seniority List was to be prepared. (See Bishan Sarup Gupta vs Union of India(1). This selection list was prepared on the basis of the seniority list approved by this Court on 16 April, 1974 in Bishan Sarup Gupta etc. vs Union of India & Ors. etc. The basis of the preparation of the selection list is the field of choice. The principles for promotion to selec tion posts are set out in a Memorandum dated 16 May 1957 issued by the Central Board of Revenue. The principles are these: First, greater emphasis should be placed on merit as criterion for promotion. Appointments to selection posts and selection grades should be made on the basis of merit having regard to seniority only to the extent indicat ed there Second, the Departmental Promotion Committee or other selecting authority should first decide the field of choice, namely, the number of eligible officers awaiting promotion who should be considered for inclusion in the selection list provided, however, that an officer of outstanding merit may be included in the list of eligible persons even if he is outside the normal field of choice. Third, the field of choice wherever possible should extend to five or six times the number of vacancies expected within a year. Fourth, from among such officers those who are considered unfit for promotion should be excluded. The re maining officers should be classified as "outstanding", "very good" and "good" on the basis of merit as determined by their respective records of service. The selection list should then be pre (1)[1975]Supp. S.C.R.491 (2) ; 4 1458SCI/76 34 pared by placing the names in the order of these three categories without disturbing the seniority inter se within each category. Fifth, promotions should strictly be made from the selection list in the order in which their names are finally arranged. The selection list should be periodi cally reviewed. The names of those officers who have already been promoted otherwise than on a 'local or purely temporary basis and continue to officiate should be removed from the list and the rest of the names along with others who may now be included in the field of choice should be considered for the selection list for the subsequent period. Several persons, mainly promotees from Class II to Class I as Income Tax Officers challenged in writ petitions field before several High Courts the correctness of the field of choice so determined by the Departmental Promotion Committee hereinafter referred to as the Committee on the basis of which the said selection list was prepared. The Gujarat and the Andhra Pradesh High Courts delivered judg ments. The other High Courts gave interim orders staying the operation of the selection list. There are two appeals by special leave from the judgments of the Gujarat and the Andhra Pradesh High Courts. There are also appeals by special leave from the interim orders of the High Courts because the questions involved are the same. There were 112 vacancies of Assistant Commissioners. The Government of India sent 336 names in the running order of seniority for consideration of the field of choice. Out of those 336 names the Committee took 276 names in the running order of seniority. The principal question for consideration is whether the field of choice determined by the Committee on the basis of which the Committee prepared the selection list is correct or not. The Gujarat High Court held that the requirement of 10 years ' experience as Income Tax Officer for promotion to the post of Assistant Commissioner as laid down in the Govern ment of India letter No. C. 33(17) Admn. I.I./49 dated 16 January 1950 prevailed while the Committee determined the field of choice and this requirement was violated because the Committee considered persons with 8 years ' experi ence for the field of choice. The High Court further held that even if the requirement of 10 years ' experience was not a statutory rule the requirement was to be complied with in determining the field of choice unless people with such experience were not available in the seniority list of Class I Income Tax Officers. What the High Court said was that if such people with 10 years ' experience were available in the seniority list only such people should be considered in the field of choice ignoring those in the seniority list who are senior to such persons but have less than 10 years ' experi ence as Income Tax Officers. The second reason given by the High Court for holding the selection list to be incorrect is that under the letter dated 16 May 1957 the field of choice should have been 5 times the number of vacancies whereas the actual field of choice contained a much lesser number. The third ground given by the High Court for holding the selec tion list 35 to be incorrect is that in the field of choice of Com mittee did not properly evaluate the merit of persons in the field of choice. The section of persons in the selection list was to be selection on merit only and not seniority cum merit. The fourth reason given by the High Court is that the date for determining the eligibility of officers for promotion to the post of Assistant Commissioner of Income Tax should be decided by the Committee by bearing in mind the two dates, namely, 21 December 1972 when this Court permitted provisional promotions and 29 November 1973 when Government made the second batch of ad hoc promotions, as the two terminals. The principal contentions on behalf of the respondents are these. First, promotions from amongst Income Tax Offi cers Class I Service to the post of Assistant Commissioner of Income Tax have to be made solely on the basis of merit. The respondents relied on rule 18 of Chapter II(c) section 1 Vol. II of the Office Manual in support of their contention. Broadly stated rule 18 is that the promotion shall be strictly on merit and further that no one should ordinarily be considered for promotion unless he has com pleted at least 10 years ' service as income Tax Officer. The respondents amplified their contention to mean that promotion to a selection post is to be made solely on the basis of merit and not on the basis of seniority cum merit. The second contention of the respondents is that only such of the Income Tax Officers in Class I Service who had put in at least 10 years ' service as Income Tax Officers are eligible for being considered for promotion to the post of Assistant Commissioners. This contention. is also based on rule 18 and according to the respondents rule 18 means that the condition precedent for eligibility to be consid ered for promotion to the post of Assistant Commissioner is that an Income Tax Officer in Class I Service must have put in at least 10 years ' service as Income Tax Officer. The respondents further contended that rule 18 was framed on 16 January 1950 and the letter dated 21 July 1950 addressed by the Central Board of Revenue to all Commission ers of Income Tax shows that the Government of India framed the rule with the approval of the Union Public Service Commission and the Ministry of Home Affairs. The Govern ment case is that the rule was abrogated. The respondents ' answer to the Government contention is that the entire correspondence relied on by the Government shows that the Ministry of Finance wanted to frame new rules of seniority. The respondents also contend that the Ministry of Home Affairs gave approval to the framing of new rules of senior ity but gave No. direction with regard to the rule relating to the recruitment except stating that the said rule might be appropriately included in the relevant recruitment rules. Therefore the respondents contend that the recruitment rule regarding 10 years ' experience continued whereas the senior ity rule stood modified in terms of the letter of M.C. Thomas dated 4 April 1964. The respondents also rely on the affidavit dated 8 March, 1968 flied by M.C. Thomas in the Gujarat High Court in application No. 1365 36 of 1965, an affidavit of M.C. Thomas dated 21 May 1970 filed in the Delhi High Court in writ petition No. 196 of 1970, an affidavit of the respondents dated 5 August 1974 filed in the Gujarat High Court in support of the contention that the rule relating to 10 years ' service was in force at least from 21 May, 1970. The respondents further contend that promotions to the post of Assistant Commissioners in the year 1964 and 1970 show that all promotees except 2 had completed at least 10 years ' service before being selected for promotion. Even with regard to those two promotees the respondents submitted that both of them joined on 24 Octo ber, 1960 but they had been selected along with others in May 1960. Therefore, those two officers were promoted along with their batch mates of May, 1960. The third contention of the respondents is that rule 18 has the force of law. It is said that under section 241 of the Government of India Act 1935 the Government was empow ered to make rules. Pursuant to that power the Government of India made the rule. The letters dated 16 January 1950 and 21 July 1950 written by the Government to the Commissioners of Income Tax referring to rule 18 were relied on by the respondents in support of their contention. In the alterna tive, the respondents contended that the decision of the Government contained in the letter dated 16 January, 1950 was made by the Government of India in exercise of executive powers under section 8 of the Government of India Act 1935 read with item 8 of List I of the Seventh Schedule. This order which had the backing of law was an existing law within the meaning of clause 10 of Article 366 of the Constitution. In the further alternative the respondents contended that the rule contained in the letter dated 16 January, 1950 was incorporated in the Office Manual issued by the Government of India in exercise Of its executive power under Article 53 of the Constitution and therefore these instructions have the force of law. It is also said by the respondents that the rule which affects promotions of the persons constitutes the conditions of service. The fourth contention on the part of the respondents is that the use of the word "ordinarily" in rule 18 imposes an obligation on the Union Government not to consider an Income Tax Officer Class I who has not completed at least 10 years ' service as Income Tax Officer for promotion as Assistant Commissioner unless there are extraordinary circumstances. It is said that the word "ordinarily" does not vest in the Government unfettered condition to follow or not to follow the rule. It is also said that the use of the word "at least 10 years ' service" shows that the word "ordinarily" has been used to enable the Government to consider such of the Income Tax Officers who have put in more than 10 years ' service. The respondents also contend that the Government proceeded on the basis that the rule relating to 10 years ' service did not exist after April 1964; and, therefore, it cannot be said that the Government departed from rule 18 because of extraordinary circum stances. The fifth contention is that the selection has been made in complete violation of the rule framed by the Government of India for promotion to selection post as contained in the Office Memorandum 37 of the Ministry of Home Affairs dated 16 May, 1957. This contention is expanded by submitting that the list should have contained names of at least 5 or 6 times the number of vacancies existing within a year and in view of the fact that there were 112 existing and 10 anticipated vacancies the Government of India should have sent to the Committee names of at least 560 officers. The Committee should then have removed such names which were unfit for promotion and thereafter have classified the rest as outstanding, very good, and good on the basis of merit. The respondents contend that the Government sent only 336 names for con sideration when the vacancies were more than 120 and the Government also ignored the rule of 10 years ' experience. It is also said that the Committee ignored the names of 59 officers from consideration and classified only 144 officers out of the remaining 277 and prepared the list of 122 out of 144 officers. The respondents further contend that though respondents No. 2 and 3 in Civil Appeal No. 2041 of 1974, namely, R.K. Desai and B. Srinivasan completed 10 years ' experience they were not included within the field of choice as officers senior to them had not completed 8 years of service as Income Tax Officers. Therefore, rule 18 was violated. The sixth contention of the respondents is that the entire selection was arbitrary and in violation of Article 16 of the Constitution. It is said that if the rule re quiring 10 years ' experience had been followed only such of the persons who had put in 10 years ' service would have been in the field for selection. It is said that the Government included Income Tax Officers who were direct recruits and who had put in less than 8 years ' service in the list but excluded promotees Income Tax Officers who had put in more than 8 years ' service as Income Tax Officers. It is further said by the respondents that out of 122 per sons selected 111 are direct recruits and only 11 are promo tees. Reference was made to the junior most person in the selection list Madan Mohan Joshi. It is said that Madan Mohan Joshi was appointed as Income Tax Officer Class I on 5 July, 1965, and, therefore, he completed 9 years ' service at the time of selection. The last person considered by the Committee is a direct recruit Rajeswar Rao Gnutam who was appointed on 8 July, 1966. Again, it is said that from amongst the promotees Raghubir Singh the promotee who joined Class I Service on 1 May 1964 and had more than 10 years ' service was not placed in the field of choice. The respondents, therefore, contend that promotee Officers who had put in more than 8 years ' service as Income Tax Officers were not included in the field of choice whereas direct recruits who had not completed 8 years ' service were in cluded in the field of choice. The seventh contention of the respondents is that the eligibility of Income Tax Officers for the purpose of promo tion to the post of Assistant Commissioner should be consid ered either as on 21 October, 1972 or 21 March 1973 or 29 November 1973. In support of that contention it is said that when the Government of India made an application for filling up certain posts this Court by order dated 21 Decem ber 1972 permitted the Government to fill in the posts on ad 38 hoc basis from amongst the eligible officers on the basis of continuous, length of service in Class I. Accordingly, by orders dated 21 March 1973, and 29 November, 1973, 59 and 48 officers respectively were promoted on ad hoc basis. These officers were to, be replaced by regular selection. The seniority list was confirmed by this Court by judgment dated 16 April 1974. The respondents, therefore, contend that the Committee had to regularise aforesaid 107 promo tions, and the regularisation had necessarily to be done from the dates of original promotions on ad hoc basis. It is said in this context that the eligibility of officers for the purpose of promotion must be considered either on 21 December 1972 or on 21 March 1973 or on 29 November, 1973. The respondents also submit that the eligibility has refer ence to the date of vacancy and therefore only such of the persons who had the qualified service on the date of vacancy ought to be considered by the Committee. Reliance was placed on the observations of this Court in Bishan Sarup Gupta 's case(1) that after the finalisation of the seniority list the department should consider the cases of all eligi ble officers for promotion on the basis of their records as on the date when they ought to have been considered by selection but who were not so considered. The first question for consideration is whether the rule of 10 years ' experience was modified to 8 years ' expe rience. The correspondence between the Central Government and the Union Public Service Commission between 30 January 1963 and 26 June 1969 shows that the principle for promotion as Assistant Commissioner is that no Income Tax Officer should ordinarily be considered unless he has completed 8 years ' service as Income Tax Officer. The proposal for this change from 10 years to 8 years emanated from the Finance Ministry. The Home Ministry stated that the rule does not strictly relate to the seniority rules in respect of As sistant Commissioners of Income Tax and should thus be included in the relevant Recruitment Rules, that is, Rules for selection for the post of Assistant Commissioner of Income Tax. The Union Public Service Commission as will appear from the letter dated 31 May, 1963 agreed subject to proposed modification regarding the seniority of Assistant Commissioners of Income Tax. It thus appears that the Finance Ministry, the Home Ministry and the Union Public Commission concurred with the change from the requirement of experience for 10 years to that of 8 years. The requirement of 10 years ' experience as laid down in the letter dated 16 January, 1950 and the Office Manual published ' in 1955 thus came to be modified. The only thing which is to be noticed is that no Rules under Article 309 were made. The change from 10 years to 8 years ' experience was recorded by means of correspondence as an administrative instruction. It is explicable that the letter dated 16 January, 1950 as well as the Office Manual published in 1955 was an administrative instruction. The change from 10 years to. 8 years ' experience was not only given effect to in the field of choice but also, recog nized in the Committee meetings of September 1968, April/May 1970 and February, 1972. In September 1968, 16 persons were over 9 years ' experience (1) [1975] supp. S.C.R.491,506 39 but less than 10 years ' experience. None of these persons was however selected to be placed on the selection list. In April/May 1970, 14 persons were over 9 years experience but less than 10 years ' experience, and 24 persons were over 8 years ' experience only. Out of those only 7 who were all over 9 years ' experience were selected to be placed in the selection list. In 1972 the Committee considered 25 persons over 9 years ' experience but less than 10 years ' in experi ence, and 27 persons over 8 years ' experience. Out of these only 10 persons who were all over 9 years ' experience were selected to be placed in the selection list. In the Committee meeting of July, 1974 the selection list prepared did not have any person except 4 emergency commissioned officers who had less than 9 years ' experience. The last person in the seniority list selected was M.M. Joshi bearing No. 967 in the seniority list. 8 years ' experience as a working rule for promotion was publicly announced by the Minister in Parliament on 11 June 1971. It is rightly said by the Attorney General that administrative instructions are followed as a guide line on the basis of executive policy. It is not necessary to put the same on record in so many words. In Bishan Sarup Gupta vs Union of India & Ors. 1975 Supp. SCR 491 when the quota rule which was statutory ceased to have statutory effect after 5 years but the Government followed the principles as a guide line it was upheld by this Court in the application of the principle from 1957 to 15 January, 1959. In the present case the requirement of 8 years was not only followed as a guide line in practice but was also recorded in the correspondence between the Finance and the Home Ministries. The High Court said that the requirement of 8 years ' experience was to be included in the appropriate Recruitment Rules and until that was done the High Court held that 10 years ' experience held the field. The High Court failed to consider the true effect of the correspondence between the finance and the Home Ministries and the Union Public Service Commission. The Ministry of Finance by its letter dated 30 January 1963 stated that the condition of 8 years ' service for promotion was proposed to be retained. The Home Minis try by its letter dated 20 February, 1963 pointed out that the requirement of 8 years ' experience for promotion did not strictly relate to seniority rules relating to Assistant Commissioners of Income Tax and should be delinked from such rules and should be appropriately included in the relevant Recruitment Rules. Thus the Home Ministry and the Union Public Service Commission agreed in principle to the re quirement of 8 years ' experience and the Finance Ministry in practice changed the requirement of 10 years ' to 8 years ' experience. The letter of the Finance Ministry proposing the retention of the requirement of 8 years experience was only in Grade I. The minimum experience in Grade I proposed by the Board was approved by the Secretary as well as the Minister. The High Court referred to the affidavits filed by M.G. Thomas in other proceedings. In one of the affidavits affirmed by Thomas 40 on 8 March 1968 and referred to by the High Court in Special Civil Application No. 1365 of 1965 in the Gujarat High Court in paragraph 5 thereof Thomas said as follows: "The Depart mental Promotion Committee which met sometime in August, 1949 recommended that no officers should be promoted as Assistant Commissioners of Income Tax until he had worked for not less than 10 years as Income Tax Officers. The Government of India agreed with the recommendation of the Departmental Promotion Committee that it was necessary in the interest of efficiency that the Assistant Commissioner of Income Tax should at least have 10 years of service as Income Tax Officer so that for the post ok Assistant Commissioner of Income Tax matured and seasoned officer may be obtained. For arriving at the decision, the Govern ment of India was also influenced by the recommendation of Income Tax Investigations Commission". The High Court also referred to paragraph 9 in the said affidavit of Thomas where he said as follows: "It can thus be seen that the seniority rules for Assistant Commissioner of Income Tax were mainly framed due to the situation created by the introduction of Income Tax Service Class I on an All India basis and the requirement of a minimum period of 10 years of service (later on reduced to. 8 years ' service) (as a requi site condition for promotion) this requirement of minimum service resulted in a senior Income Tax Officer who had not completed the required length of service being passed over by a junior Income Tax officers, who had completed the. required service. To safeguard the interest of such senior Income Tax Officer rule 1 (iii) (b) meaning thereby 10 years ' rule was introduced which enabled the senior officers to regain their seniority on subsequent promotion". The High Court also referred to the affidavits of Thomas in Civil Writ Petition No. 196 of 1970 in the Delhi High Court. M.G. Thomas was an Under Secretary in the Ministry of Finance in 1964. In the affidavit affirmed by Thomas in Writ Petition No. 196 of 1970 in the Delhi High Court he dealt with paragraph 39 of the petition of Bishan Sarup Gupta where it was said that paragraph 18, of section 1, Volume 1 of the Office Manual clause (b) mentioned about the eligibility of 10 years of minimum service before an Income Tax Officer would be considered for promotion to the post of Assistant Commissioner. The High Court said that Thomas in his affidavit in reply had admitted the said statements and concluded that of 8 years ' rule had been introduced Thomas would not have missed to mention the same in his affidavit. The High Court also referred to two features. First, that it was not a proposal of anew rule of 8 years in place of existing rule of 10 years; secondly, it was an assumption that the existing rule prescribed the minimum period of 8 years ' service. The High Court further referred to the Delhi High Court proceedings in Writ Petition No. 196 of 1970 where Counsel for the Union said that the Government expected new rules to be framed under Article 309 to limit the field of choice to those who had 8 years ' service to their credit as Income Tax Officers. The High Court read this argument of counsel for the Union in the High Court to concede that no change in the rule of 10 years ' service as Income. Tax Officer was made so as to reduce the period from 10 years to 8 years. 41 The Central Board of Revenue as appears in No. F. 1/19/60 Ad. II at a meeting on 2 May, 1959 approved the idea of laying down the. minimum period of service uniformly for the three wings of the Central Board of Revenue for purposes of determining the eligibility of officers for promotion. It was decided that before an officer was promoted to a higher post he must have put in a period of minimum service as follows: For promotion to Deputy Collector/Assistant Commissioner (Grade Rs. 1000 1400) minimum service pre scribed was 8 years ' service in Class I posts. For promo tion to Collector (Grade Rs. 1300 1600) the minimum serv ice prescribed was 12 years in Class I post out of which at least two years should be in the grade of Deputy Collector. For promotion to. the post of Collector (Grade Rs. 1600 1800) the minimum service prescribed was 14 years in Class I posts provided that for promotion as Collector of Central Excise (scale Rs. 1600 1800) the officers should have worked at least two years in the scale of Rs. 1300 1600. For promotion to Collector Grade I/Commissioner Grade I (scale Rs. 1800 2000) the minimum service prescribed was 16 years in Class I posts. For promotion to Selection Grade posts of Collectors/Commissioners the minimum service prescribed was 20 years in Class I posts. The Secretary in the note mentioned that he would prefer the alternative of keeping the rule and relaxing it in suitable cases. This note of the Secretary shows that he preferred the retention of the rule in the other 4 grades, namely. Collector Grade Rs. 1300 1600, Collector Grade Rs.1600 1800, Collector Grade I/Commissioner Grade I Grade Rs.1800 2000 and Selection Grade Posts of Collectors/ Com missioners. That is apparent from the fact that the Board suggested the retention of minimum service in Grade 1(Assistant Commissioners) but not in the other four grades including the Selection Grade. The Minister preferred the deletion of the rule about Selection Grade. Thus the mini mum experience in Grade I proposed by the Board was approved by the Secretary as well as the Minister. The minutes of the meeting of the Central Board of Revenue of 22 October 1960 show that the Board of Revenue decided 'that the minimum service of 8 years in Class I Service may be prescribed in the case of Deputy Collector/Assistant Commissioners (Grade Rs.1100 1400). The affidavit evidence of Thomas shows that the minimum period of 10 years was later reduced to 8 years. The affi davit does not show that the requirement of 10 years ' serv ice was maintained. In the Delhi High Court proceedings Bishan Sarup Gupta in his petition made reference to cer tain administrative instructions. Thomas in answer to those paragraphs did not have any occasion to say anything otherwise. Further counsel for the Union in the Delhi High Court merely stated that the Government was expecting rules to be framed under Article 309. This does not mean that the requirement of 8 years ' experience as an administrative practice did not prevail. The High Court was in error in treating the affidavit evidence of Thomas in other proceed ings as a statement of fact that 8 years ' rule had not been introduced. This affidavit evidence in other proceedings is torn 42 out of context and is misread by the High Court without going into the question as to whether such affidavit evi dence is admissible in evidence. It is apparent that the entire affidavit evidence as well as the submission on behalf of the Union is that the requirement of 10 years ' experience be replaced by 8 years. Administrative practice as indicated in the Department Promotion Committee meetings and the Minister 's statement in Parliament supported that contention of the Union. It is a question of construction of correspondence as to whether 10 years ' rule was replaced by 8 years ' rule. The fact that no rules under Article 309 were framed does not detract from the position that the previous administrative instruction of 10 years ' experience was modified to 8 years ' experience. It was suggested on behalf of the respondents that the various affidavits and documents asserted that the require ment of 10 years ' experience had been abrogated and it was not open to the Government to take the stand that require ment of 10 years ' rule was modified or changed. The conten tion is without any substance because the consistent posi tion on behalf of the Union has always been that the re quirement of 10 years ' experience was modified to 8 years and the Gujarat High Court considered the question whether 10 years ' experience was abrogated or modified. The second question is whether the requirement of 10 years ' experience was a statutory rule. The High Court held that the requirement of 10 years ' experience is not a statutory rule. Counsel for the respondents contended that the requirement of 10 years ' experience is statutory because the letter dated 16 January 1950 is by the Government of India and the Government of India has authority to frame rules and one of the letters dated 21 July, 1950 referred to it as a formal rule. The contention is erroneous because there is a distinction between statutory orders and adminis trative instructions of the Government. This Court has held that in the absence of statutory rules executive orders or administrative instructions may be made. (See Commissioner of Income Tax Gujarat vs A. Raman & Company(1). The letter dated 16 January 1950 written by an Under Secretary in the Ministry of Finance does not prove that the requirement of 10 years ' experience for promotion to the post of Assistant Commissioner was a rule made by the Gover nor General or any person authorised by him under section 241 (2) of the Government of India Act, 1935. Furthermore, there is no basis for any authentication under section 17 of the 1935 Act in the letter of 16 January, 1950. In the preface to the Manual published in 1955 it is specifically stated that Vol. I of the Manual contains statutory rules and Vol. II contains administrative instructions. The requirement of 10 years ' experience is in Vol. II of the Manual. In S.G. Jaisinghani vs Union of India & Ors.(2) it is stated at pp. 717 718 that the quota fixed by the Government in its letter dated 18 October, 1951 must be deemed to be fixed in exercise of the statutory (1) (2) ; 43 power under Rule 4 of the Recruitment Rules. There is no such statutory rule under which the letter of 16 January, 1950 was written, Counsel on behalf of the respondents contended that the requirement of 10 years ' experience laid down in the letter dated 16 January, 1950 had the force of law because of Article 313. Article 313 does not change the legal charac ter of a document. Article 313 refers to laws in force which means statutory laws. An administrative instruction or order is not a statutory rule. The administrative in structions can be changed by the Government by reason of Article 53(1)(a) itself. The High Court said that even if the requirement of 10 years ' service is not statutory, it is binding on the Gov ernment and is a condition of service. Counsel for the respondents contended that the word "ordinarily" in the rule imposes an obligation on the Government not to consider any Income Tax Officer with less than 10 years ' experience for promotion except in extraordinary circumstances. The requirement of 10 years ' experience on the face of it con fers a discretion on the authorities to consider Income Tax Officers if according to. the authorities the circumstances so require. What the circumstances are or should be are left entirely to the decision of the authorities. The Central Board of Revenue by a letter dated 21 July, 1950 a few months after the letter dated 21 July, 1950 a few months after the letter dated 16 January, 1950 which spoke of 10 years ' experience stated that the insistence on a minimum period of experience, cannot be regarded as affecting the conditions of service. In the letter dated 21 July, 1950 it was said that the requirement as to 10 years ' experience is sufficiently elastic and all Income Tax Officers with more than 9 years ' experience could be considered for promotion. The letter dated 21 July, 1950 was referred to by this Court in Union of India vs Vasant Jaygram Kamik & Ors(1). It appears in that case that in November, 1951 the case of officers who had completed 9 years ' gazetted service were considered and the Committee further decided to consider for promotion in the near future officers who had completed 8 years of service before 31 December, 1951. In 1953 officers who had completed 8 years ' service were considered for promotion. The expression "ordinarily" in the requirement of 10 years ' experience shows that there can be a deviation from the requirement and such deviation can be justified by reasons. Administrative instructions if not carried into effect for good reasons cannot confer a right. (See P.C. Sethi & Ors. vs Union of India & Ors. The requirement of 10 years ' experience cannot be considered by itself. It is to be read along with administrative instructions of 16 May, 1957. The reason is that the requirement of 10 years ' experience is for being considered for promotion. In para graph 2 of the letter of 16 May, 1957 containing the said instructions it is said that the Committee should first decide the field of choice. namely, the number of eligible officers awaiting promotion who should be considered to be included in the seniority list provided that an officer of outstanding merit may be included in the list even.if he is outside the normal List. (1) ; (2) ; 44 For the foregoing reasons our conclusions are these: First 10 years ' experience was modified to 8 years ' experi ence. Second there was no statutory rule requiring 10 years ' experience. Third the facts and circumstances merit ed the exercise of discretion which was bona fide exercised by determining the field of choice. Fourth there was no deviation from 10 years ' experience because of the modifica tion to 8 years ' experience. Fifth there could not be insistence on 10 years ' experience as conditions of service. The next question is what should have been the field of choice. The two groups of Income Tax Officers in Class I, namely, the direct recruits and the promotees have always found that the field of choice has been prepared strictly on the basis of running seniority in the seniority list of Income Tax Officers Class I. In the three decisions of this Court relating to these officers Jaisinghani 's case, Bishan Sarup Gupta 's case and Bishan Sarup Gupta 's case (supra) it will be seen that since 1962 there has been a long fight between direct recruits and promotees mainly in respect of seniority list of income Tax Officers Class I. This strug gle regarding seniority would have hardly any meaning unless the two groups fought to gain higher positions in the Seniority List only for the purpose of being in the field of choice for consideration for promotion to the post of As sistant Commissioner. if this was not so and if only a cer tain number of years ' requirement was the only consideration for being in the field of choice, this requirement would have. been fulfilled in any case without a higher place in the seniority list. From 1963 the field of choice has always been in a running order of seniority. This has been the administrative practice for over 10 years. There were 112 vacancies and 10 anticipated vacancies in 1974. The Committee was to make a select panel of 122 offi cers. If the field of choice has to be prepared on the basis of running seniority, and if 10 years ' experience had been adhered to, there would not have been more than 95 officers in the field of choice although the number of vacancies was 122. This fact alone will entitle the author ities to deviate from the rule of 10 years ' experience. By reason of the violation of the quota rule since 1952 benefiting the promotees this Court issued the mandamus in Jaisinghani 's case (supra). The collapse of the quota rule and seniority rule from 16 January, 1959 led to the judgment of this Court dated 16 August 1972 in Bishan Sarup Gupta 's case (supra). The introduction of the roster system of 1 direct recruit and 1 promotee being placed alternately in the order of seniority with effect from 16 January, 1959 was upheld by this Court in the judgment dated 16 April, 1974 in Bishan Sarup Gupta 's case (supra). As a result oF the seniority list being upheld by this Court by the deci sion dated 16 April, 1974 many promotees lost their earlier places in the Seniority List. This Court on 16 April, 1974 in Bishan Sarup Gupta 's case (supra) at page 114 of the report said "In the case before us in the absence of a rule determining inter se seniority between the two classes of Income Tax Officers, there is really no integration of the service, which is unavoidably necessary for the purpose of effective promotions. One cannot speak 45 of promotions from a cadre unless it is fully integrated. " There was a change in the seniority list from what prevailed at least in 1952. The requirement of 10 years ' experience could not be given effect to in such a changed situation and the expression "ordinarily" would hardly apply to such a changed situation without destroying the integration and restoring to the promotees the position which they had enjoyed in the past with the Quota Rule and the Seniority Rule and which they lost as a result of the last decision of this Court dated 16 April, 1974. If the respondents ' contention that the field of choice shall be restricted to 10 years ' experience only and the field of choice should have been at least five times the number of vacancies, the result would have been that out of 560 persons in the field of choice, 474 persons would have been promotees and 86 persons would have been direct re cruits and the last direct recruit in the seniority list would have been No. 873 and No. 874 to No. 1922 would have been all promotees. If the above basis suggested by the respondents were followed 429 persons all direct recruits and all senior officers in the seniority list would have been ignored in the field of choice. That would be unjust, unfair and upsetting the decision of this Court dated 16 April, 1974. In the letter of 16 May 1957 it is stated that the field of choice wherever possible should extend to 5 or 6 times the number of vacancies expected within a year. The letter contained administrative instructions from the Home Ministry generally to all Ministries and was not meant specially for the Board of Revenue. These administrative instructions have been changed in the matter of promotions from Income Tax Officers to Assistant Commissioners at least from 1963 by the administrative practice of having in the field of choice generally three times the number of vacancies. In the Committee meeting held on 16 March, 1963 the Committee considered the names of first 33 eligible Income Tax Offi cers in order of existing seniority for 11 vacancies. In the meeting of the Committee held on 26 and 27 August, 1963 the Committee decided to consider the cases of 30 officers in order of seniority for 10 vacancies. In the Committee meeting held on 3 March, 1964 the Committee considered for 21 vacancies the names of 60 persons in order of seniority. At the Committee meeting held on 5 and 7 December, 1964 for 18 vacancies the Committee decided to consider the cases of 60 officers in order of seniority,. At the meeting held on 4 July, 1965 the Committee considered 60 Income Tax Officers in order of seniority for promotion to 20 vacancies. At the Committee meeting held on 4 and 6 December, 1965 the Commit tee considered 122 persons in order of seniority for 45 vacancies. In December, 1965 the Committee considered 114 senior most Income Tax Officers and 48 were promoted as Assistant Commissioners. At the meeting held on 17 May, 1966 the Committee considered the case of 65 officers and approved the promotion of 48 officers. At the meeting held on 16 and 17 September, 1968 the Committee considered 240 persons for promotion to 90 posts. In September, 1968 the Committee considered the cases of 16 officers who had less than 10 years ' experience. The Committee in February 1969 considered 61 persons for 20 posts. In September, 1969 the Committee considered 105 persons for promotion to 35 posts. 46 There is a note made by Thomas in the month of February, 1970 in F. No. 20/2170 Ad. VI to the effect that if officers with less than 8 years ' service and their juniors are ex cluded from the list of officers to by considered by the Committee for 90 vacancies arising during the year only 193 officers will be available. This is said to be less than three times the number of vacancies but this could not be helped unless junior officers are considered over the head of their seniors. The number of such juniors officers with 8 years ' service is also limited, namely, 11. In the circum stances, the selection was made from 193 officers. In April, 1970 the Committee had to select 80 persons for promotion. They desired that 240 names should normally be considered. The Members however stated that the. Ministry had already furnished the names of 193 eligible officers and there were no more eligible officers who could be consid ered. The Committee accordingly considered those 193 offi cers in order of seniority. In April and May 1970 the Committee considered the cases of 38 persons with less than 10 years ' experience. In 1972 there were 84 vacancies and 10 more vacancies were likely to arise. Therefore for 94 selection posts the field of choice should normally have been 3 to 5 times the number of vacancies. It was found that there should have been at least 300 officers. There were 213 officers with 8 years ' experience. There were some promotees with more than 8 years ' experience but they were junior to the direct recruits. As the direct recruits had not completed 8 years ' service their juniors were not considered for promotion over them. In the background of these facts and circumstances it was not possible to have 5 or 6 times the number o.f vacan cies in the field of choice for the simple reason that the Committee required 8 years ' experience for promotion to the post of Assistant Commissioner. If the field of choice had to be based on running seniority the Committee could rightly only have 276 officers in the field of choice in the present case. The next question is whether the Committee evaluated the merit of persons in the field of choice. The High Court held that in the field of choice the evaluation of merit of persons was not properly done. The decision of the High Court is wrong for the following reasons. The letter dated 16 May, 1957 indicates that the Committee was first to decide the field of choice. The cardinal feature which is to be kept in the forefront is that the field of choice is based on running seniority in the seniority list and evalua tion of merit does not come into picture for deciding the field of choice. Paragraph 3 of the said letter states that those in the field of choice who are considered unfit should excluded from consideration. Under paragraph 4 of the letter evaluation of the remaining officers on the basis of merit has to be done by classifying the officers under three different categories,namely, 'outstanding ', 'very good ' and 'good '. Paragraph 4 of the letter states that the selection list is to be prepared by placing the names of officers in the said three categories, without disturbing the seniority inter se within each category. 47 In the present case in view of 112 actual vacancies the Government sent 336 names for the field of choice, that is, three times the number of vacancies. Since 1963 the Commit tee has been receiving from the Government the names of persons forming three times the number of vacancies. The 336 names sent by the Government were in the running order of seniority between S.M. Islam No. 155 in the seniority list and R.N. Dave No. 1186 in the seniority list. Under paragraph 2 of the letter dated 16 May, 1957 it is the function of the Committee to decide the field of choice. The Committee proceeded on the basis of 8 years ' experience and thus could not possibly have in the field of choice any name from No. 1131 onwards because every alternate number thereafter had less than 8 years ' experience. The Committee stopped at No. 1123. The Committee at the meeting held on 23, 24 and 25 July 1974 assessed the merits of 145 persons in order of seniori ty first. After such assessment the Committee found three officers No. 1, 30 and 109 in the list as not yet fit and excluded them. The Committee also excluded 4 officers whose findings were in sealed cover or whose reports were not yet complete (No. 2, 3, 6 and 138 in the Committee List). These 7 officers were excluded from further consid eration for the selection list. In accordance with para graph 3 of the letter 16 May, 1957 the Committee considered the remaining 138 officers and assessed their merits and put them in three categories. The Committee found only one officer "outstanding", namely No. 16 in the list, 114 offi cers "very good" and 7 Scheduled Castes/Scheduled Tribes officers were 'good '. These 7 Scheduled Castes and Sched uled Tribes officers were No. 21, 24, 26, 90, 91, 93 and 94 in the list. The respondents contended that these 7 Sched uled Castes/Scheduled Tribes officers should have been given a grade higher than the grade assessed by the Committee because of the Home Ministry Instructions dated 11 July, 1968. The respondents ' contentions are incorrect for these reasons. In paragraph 2 of the Home Ministry instructions dated 26 March, 1970 on the subject "Concessions to Sched uled Castes and Scheduled Tribes in posts filled by promo tion Class I Services/ posts" it was laid down inter alia that the Scheduled Castes/Scheduled Tribes officers, who were senior enough in the zone of consideration for promo tion so as to be within the number of vacancies for which the selection list has to be drawn, would be included in that list provided they are not considered unfit for promo tion. In paragraph 1 of these instructions, reference was made to the Home Ministry instructions dated 11 July, 1968. It would be found from those instructions as 'also the Home Ministry instructions dated 26 March, 1970 that the July, 1968 instructions applied in the case of promotions from Class III to Class II and Within Class II and from Class II to the lowest rank or category to Class I but had no appli cation in respect of promotion within Class I. The Committee found No. 16 to be 'outstanding ', 114 (No. 2 to 115) 'very good ' and 7 Scheduled Castes/Scheduled Tribes officers 'good. ' and they were to be included in the selection list vide Home Ministry instructions dated 26 March, 1970. The Committee next assessed the merit of the rest of the 276 officers to ascertain whether 48 any of them was 'out standing '. If any one among these remaining officers was not found 'outstanding ' but was only 'very good ' he would not come within the selection list because the selection list was prepared, after evaluating the merits of the officers on the basis of seniority in the seniority list in accordance with the fetter dated 16 May, 1957. Paragraph 4 of that letter was followed by the Committee along with the Home Ministry instructions. It would not be necessary for the Committee after having con sidered 145 to put the others in the category of 'very good ' when the Committee assessed their merits and found them to be not 'outstanding '. After 122 senior officers were as sessed and the Committee found that no other officers junior to them could be assessed to the higher category namely, 'outstanding ' it would be fruitless exercise to find out who among these officers were very good ' or 'good ' or 'not yet fit '. The reason is obvious. Those in the selection list of 122 who had been found to be 'very good ' could not be supplanted by others who were 'very good ' Only 'outstand ing ' persons who would be junior to the category of 122 'very good ' would surpass the category of 'very good '. Therefore the Committee rightly considered the cases only to find ' out whether there was any one outstanding and the Committee found none of them to be 'outstanding '. The Government sent the names of 336 officers in the running order of seniority. Out of 336 the Committee found 276 to be fit for the field of choice. The Committee found 1 'outstanding ', 114 'very good ' and 7 Scheduled Castes/Tribes 'good '. The respondents contended that the rest 59 were not at all considered by the Committee. This contention is not acceptable for these reasons. From No. 1131 in the seniority list every alternate number was an officer with less than 8 years ' experience. Under the letter of 16 May 1957 it is the Committee and not the Gov ernment which decides the field of choice. When the Commit tee found according to the running seniority No. 1131 onwards could not be in the field of choice the Committee did not put the names of the 59 officers in the field, of choice. The question of the evaluation of the merits of these 59 officers did not, therefore, arise because first the seniority list was Considered by the Committee and second the Committee took into consideration only those who were in the seniority list and fulfilled 8 years ' experi ence. It is wrong to hold that because the Government sent the names of 336 persons for consideration by the Committee the field of choice consisted of 336 persons. The field of choice is to be determined by the Committee. The Committee considered 276 names as fit to be included in the field of choice. It is erroneous to suggest that there were 336 names in the field of choice. The field of choice consist ed. of 276 names as determined by the Committee whose juris diction it was to determine. The Committee considered upto No. 1123 in the seniority list to be in the field of choice. Officers from 1124 to 1130 were not included by the Commit tee either because they had retired or joined the Indian Administrative Service and in any event no complaint has been made on their behalf. The Committee found that from 49 No. 1131 onwards every alternate officer had not completed 8 years ' service and therefore they could not be put in the field of choice according to the Committee. The contention of the respondents that there were 336 officers in the field of choice and the Committee did not consider all the 336 persons unmeritorious. The respondents next contended that persons bearing No. 877, 879, 881 and 883 in the seniority list had been put on the selection list although they had less than 8 years ' experience. There is no substance in the ' contention for the following reason. These 4 officers were taken on the ground that they were ex military officers recruited to the Income Tax Department in 1968 and were deemed to have been recruited in 1964 by virtue of the Ministry of Home Affairs Notification dated 4 October, 1967. Another submission was made on behalf of the respondents that after the Committee had put different persons in three categories 'outstanding ', 'very good ' and 'good ' the Commit tee should have further evaluated the merit of all officers inter se within each of the said three categories. This submission is contrary to the specific provision of para graph 4 of the letter dated 16 May, 1957. Further within the category of 'very good ' there could not be any further intra specific assessment of those who were 'very good '. A criticism was made by the respondents that the assess ment was to be only on merit and not seniority cure merit. This contention is wrong. Paragraph 2 of the letter of 16 May, 1957 states that the field of choice is to be decided by the Committee. No question of merit arises in deciding the field of choice. The field of choice is only on the basis of running seniority. The question of merit arises after the field of choice is decided. The selection was correctly done strictly on merit in accordance with para graphs 3 and 4 of the letter dated 16 May. 1957. The Commit tee decides the field of choice in the running order of seniority. The Committee excludes names from the field of choice who are considered unfit for promotion. The remaining officers are classified as 'outstanding ', 'very good ' and 'good ' on the basis of merit. The selection list is pre pared by placing the names in the order of these three categories. That inter se seniority of officers in the selection list under each category is not disturbed. These are the instructions in the aforesaid letter. It will thus be. seen that seniority is the sole criterion for determin ing the field of choice in the running order of seniority and merit is the sole criterion for putting the officers in the selection list in each category according to merit. Finally the contention of the respondents is that the date for determining the eligibility of officers for promo tion to the posts as Assistant Commissioners should have been decided by the Committee by bearing in mind the two dates namely, 21 December 1972 and 29 November 1973. 21 December 1972 is the date when this Court permitted the Union Government to make ad hoc promotions. 21 March 1973 and 29 November 1973 are the two dates when the Central Board of Direct Taxes promoted 59 and 48 officers respec tively. This Court in the order dated 21 December, 1972 stated that the Government would be entitled to appoint people in order of seniority determined according to the date 5 1458SCI/76 50 Of continuous officiating appointment in Class I subject to the suitability which would be decided by the Central Board or Direct Taxes. This order was made without prejudice to the contentions of the parties or their rights in the ap peals. Pursuant to the interim order of this Court the Government made two orders dated 21 March 1973 and 29 Nov ember 1973 provisionally promoting 59 and 48 officers re spectively. In each of the Government orders it is specifi cally stated as follows: "The above promotions are purely ad hoc and have been made on the basis of the suitability as decided by the Central Board of Direct Taxes in terms of directions issued by this Court in their order dated 21 December 1972. These promotions will not confer any claim for continued "officiation" (sic) in the grade of Assistant Commissioner of Income Tax or for seniority in that grade. Appointments against these posts will eventually be made on the basis of the revised list of seniority of Income Tax Offices Class I as finally approved by this Court and on selection by a duly constituted Departmental Promotion Committee to be convened in accordance with the prescribed procedure. The promotions ordered will not establish any claim for eligibility or for selection on merit by a proper ly constituted Departmental Promotion Committee when the same is convened". It is manifest from the order of this Court and the two orders made by the Government pursuant to this Court 's order that these 107 promotions were purely provisional or ad hoc and were made by the Central Board of Direct Taxes and not by the Committee which is the authority for determining promotions. Further these provisional promotions were not made in conformity with the letter of 16 May 1957. It is distinctly stated in the aforesaid two Government orders that appointments against these posts will eventually be made on the basis of revised seniority of Income Tax Offi cers Class I as finally approved by this Court and on selec tion by a duly constituted Departmental Promotion Committee to be convened in accordance with the prescribed procedure. On 9 February 1973 the Income Tax Officers (Class I) Service (Regulation of Seniority) Rules, 1973 were made under Article 309 See Bishan Sarup Gupta 's case (supra). The revised seniority list of Income Tax Officers Class I was made on the basis of the Income Tax Officers (Class I) Service (Regulation of Seniority) Rules, 1973 and was ap proved by this Court on 16 April, 1974. See Bishan Sarup Gupta 's case (supra). The selection list was made by the Committee after it met on 23, 24 and 25 July, 1974. Under paragraph 2 of the letter dated 16 May, 1957 the Committee was to decide the field of choice by including therein eligible officers awaiting promotion. This means that whether an officer is eligible or not should be decided with reference to the date of the Committee meeting. This has always been done at all the Committee meetings. The respondents contended that the regularisation of 107 promotees had to be done from the date of original promo tions on ad hoc basis. In this connection, the respondents relied on the observations of this Court in Bishan Sarup Gupta 's case (supra) at p. 506 of the report. The observa tions relied on are that after the fresh seniority 51 list is made in accordance with the directions given by this Court in Bishan Sarup Gupta 's case (supra) it would be open to any direct recruit or promotee to point out to the de partment that in the selection made to the post of Assistant Commissioner from 1962 onwards he, being otherwise eligible, is entitled on account of the new seniority given to him to be considered for promotion to the post of Assistant Commis sioner. The observations of this Court in Bishan Sarup Gupta 's case (supra) are that if as a result of the fresh seniority list it is found that any officer was eligible for promotion to the post of Assistant Commissioner on account of his place in the new seniority list, the department might have to consider his case for promotion on his record as on the date when he ought to have been considered, and if he would be selected his position will be adjusted in the seniority list of Assistant Commissioners. The object is to see that the position of such a person is not affected in the senior ity list of Assistant Commissioners because he is actually promoted later pursuant to the new seniority list, although according to the new seniority list itself he should have been promoted earlier. The observations do not mean that although the Committee can meet for the selection of offi cers for promotion to the post of .Assistant Commissioner only after the seniority list is approved by this Court, the selection would be deemed to be made at the time when a vacancy in the post of Assistant Commissioner occurred and the eligibility of officers for selection will be determined by such deemed date of selection. No employee has any right to have a vacancy in the higher post filled as soon as the vacancy occurs. Government has the right to keep the vacancy unfilled as long as it chooses. In the present case, such a position does not arise because of the controversy between two groups of officers for these years. The seniority list which is the basis for the field of choice for promotion to the post of Assistant Commissioner was approved by this Court on 16 April, 1974. Promotions to the post of Assist ant Commissioners are on the basis of the selection list prepared by the Committee and are to be made prospectively and not retrospectively. For the foregoing reasons the judgments and orders appealed against are set aside. The selection list made by the Departmental Promotion Committee forming the subject matter of these appeals is held to be correct, lawful and valid. Parties will pay and bear their own costs. V.P.S. Appeals allowed.

The Government of India, in 1950, framed a rule for promotion of an Income Tax Officer as Assistant Commis sioner and it was published as rule 18 in Vol. I1 of the Office Manual published in 1955. The rule provided that promotion shall be strictly on merit and that no one should ordinarily be considered for promotion unless he has com pleted at least ten years service as Income Tax Officer. In 1957, a memorandum was issued by the Central Board of Reve nue containing the following principles for proration of Income Tax Officers Class I as Assistant Commissioners. Greater emphasis should be laid on merit as a criterion. The Departmental Promotion Committee should first decide the field of choice, namely, the number of eligible officers awaiting promotion who should be considered for inclusion in the selection list. An officer of outstanding merit may be included in the list even if he is outside the normal field of choice. The field of choice wherever possible should extend to 5 to 6 times the number of vacancies expected. From among such officers those who are considered unfit for promotion should be excluded and the remaining should be classified as 'outstanding ' very good ' and 'good ' on the basis of merit as determined by their respective records" of service. The selection list should then be prepared by placing the games in the order of these three categories without disturbing the seniority inter se within each category. Promotions should strictly be made from such selection list in the order in which the names are finally arranged. The selection list should be periodically reviewed removing from the list names of persons who have been promoted and including fresh names. On 16th August 1972 this Court set aside the seniority list in the first Bishan Sarup Gupta case [1975] Supp. SCR 491 and gave directions for preparing a fresh list. On 21 December 1972, the Government applied to this Court for making ad hoc promotions and the court permitted them to do so. Accordingly, in March 1973 and November 1973 the Board promoted 59 and 48 Income Tax Officers respectively as Assistant Commissioners. It was distinctly stated in those two orders that the ad hoc appointments made against those posts were provisional and that the appointments eventually be made on the basis of the revised seniority list of Income Tax Officers Class I as finally approved by this Court, and on selection by a duly constituted Depart mental Promotion Committee in accordance with the prescribed procedure. In February 1973, the Income Tax Officers (Class I) Service (Regulation of Seniority) Rules, 1973, were made and a revised seniority list of Income Tax Officers Class I was made on the basis of those rules. The list as well as the Rules were approved in the second Bishan Sarup Gupta Case ; From such seniority list the Depart mental Promotion Committee made a selection list in July 1974, for proration of Income .Tax Officers, Class I, as Assistant Commissioners. There were 112 vacancies and the Government sent 336 names in the running order of seniority for consideration of the field of 29 choice. The Committee followed the instructions in the 1957 Memorandum an.d found 276 to be fit for the field of choice, assessed the merits of 145 persons in order of seniority, found one officer outstanding, 114 very good, and 7 Sched uled Castes/Tribes officers good, according to the instruc tions. The Selection list was challenged in various High Courts. Two of the High Courts held in favour of the peti tioners and the other High Courts gave interim orders stay ing the operation of the Selection List. In appeals by the Union of India to this Court, the respondents sought to support the judgments in their favour on the following contentions : (1) The requirement in the rule regarding 10 years experience was not abrogated as contended by the Government and the affidavits field in the various proceedings on behalf of the Union as well as the petitioners show that the 10 year rule was in force and was followed (2) Rule 18 has the force of law under the Government of India Act, 1935, and hence is existing law within the mean ing of article 366(10) of the Constitution and also because it was incorporated in the Office Manual issued by the Govern ment of India in exercise of its executive power under article 53. (3) The rule constitutes one of the conditions of serv ice and, therefore, should be followed. (4) The rule imposes an obligation on the Union Govern ment to Consider 'ordinarily ' only Officers of ten years service, but the selection list was prepared in violation of the rule in that officers of 8 years experience were considered. (5) The selection has been made in complete violation of the principles set out in the 1957 memorandum and was entirely arbitrary. (6) The promotion should be considered as on 21 December 1972 when the Government applied to this Court for permis sion to make ad hoc appointments, and on the two dates when the Government actually made 107 (59 1 48) ad hoc promotions and it Was the duty of the Committee to regularise the 107 promotions as from the dates of the original promotion and to consider the eligibility of an officer for promotion as on those dates, and this not having been done. the selection list was illegal being contrary to the observations in the first Bishan Sarup Gupta 's case. Rejecting these contentions of the respondents, allowing the appeals, and upholding the Selection List, HELD: (1)(a) The requirement Of 10 years experience in r. 18 was modified to 8 years experience. The correspond ence between the Finance Ministry and Home Ministry and the U.P.S.C. shows that there was concurrence with the change. The High Court was in err, or when it said that the require ment of 8 years experience must first be included in the appropriate recruitment rules and that until that was done 10 years experience held the field. 8 years experience as a working rule for promotion was publicly announced by the Minister in Parliament. Administrative instructions are followed as a guide line on the basis of executive policy. The requirement of 8 years was followed as a guide line in practice in 1968, 1970 and 1972. The requirement was thus not only modified but was given effect to. [39F] (b) The High Court was in error in treating the affida vit evidence of an officer of the Government, in other proceedings, as a statement of fact that the 8 years rule had not been introduced. This affidavit evidence is torn out of context and is misread by the High Court without going into the question as to whether such evidence is admissible. The entire affidavit evidence as well as the submissions made on behalf of the 'Union Government is that the requirement of 10 years experience is replaced by one of 8 years. It is a question of construction of. the correspondence as to whether the 10 years rule was replaced by 8 years rule. The fact that no rules under article 309 were 30 framed does not detract from the position that previous administrative instruction of 10 years experience was modi fied to 8 years experience. The various affidavits and documents show that the consistent position on behalf of the Union has always been that the requirement of 10 years experience was modified to one of 8 years. [41H; 42A B] (2) The rule is not a statutory rule. [42D] (a) The contention that because Government of India has authority to frame rules the letter of 16th January 1950 in which the rule was framed should, therefore, be treated as a formal ' rule is erroneous since there is a distinction between statutory orders and administrative instructions of the Government. The change was recorded by means of correspondence as an administrative instruction. 'In the absence of statutory rules, executive orders or administra tive instruction may be made. [42E F] Commissioner of Income Tax Gujarat vs A. Raman & Compa ny. , referred to. (b) The letter of 16th January 1950 written by an Under Secretary in the Ministry of Finance does not prove that it is a rule made by the Governor General or any person autho rised by him under section 241(2), Government of India Act, 1935. Furthermore, there is no basis for any authentication under section 17 of the 1935 Act in the letter. [42G] (c) In the preface to the Office Manual published in 1955 it is specifically stated that Vol. I contains statuto ry rules and Vol. II, in which r. 18 occurs, contains only administrative instructions. [42G] S.C. Jaisinghani vs Union of India & ors. [1967] 2 S.C.R. 70, referred to. (d) Article 313 refers to laws in force which mean statutory laws. An administrative instruction or order is not a statutory rule or law. The administrative instruc tions can be changed by the Government by reason of article 63(1). Article 313 does not change the legal character of a document. [43B] (3) The High Court erred in holding that the 10 year rule is a condition of service. The word "ordinarily" in the rule does not impose an obligation on the Government not to consider any Income Tax Officer with less than 10 years experience, for promotion. The rule on the face of it, confers a discretion on the authorities to consider Income Tax Officers of lesser years experience if the circumstances so require, and whether such circumstances exist should be left to the decision of the authorities. Even the Central Board of Revenue, in a letter written a few months after the rule was framed, stated that the insistence of a minimum period of experience cannot be regarded as affecting the conditions of service. In that letter. it was stated that the requirement of 10 years experience is sufficiently elastic and all Income Tax Officers with more than 9 years experience could also be considered for promotion. This letter was referred to by this Court in Union of India vs Vasant Jayarama Karnik [43C F] (4) It cannot be said that there is a deviation from the requirement of 10 years experience in preparing the Selec tion list. That requirement was modified to one of 8 years experience. The expression 'ordinarily ' in the rule shows that there can be deviation and such deviation can be justi fied by reasons. Administrative instructions if not carried into effect for good reasons, cannot confer a right. [43G] P.C. Sethi & ors. vs Union of India & Ors. [1975] 3 S.C.R. 201, referred to. (5) The facts and circumstances in the present case merited the exercise of discretion which was bona fide exercised by determining the field of choice and from 1963, the field of choice has always been in a running order of seniority. 31 (a) There were, in the present case,112 vacancies and 10 anticipated vacancies and the Departmental Promotion Commit tee was to make a panel of 122 officers. If the field of choice has to be prepared on the basis of running seniority and if 10 years experience had been adhered to, there would not have been more than 95 officers in the field of choice although the number of vacancies was 122. This fact alone entitled the authorities to deviate from the rule of 10 years experience. [44E F] (b) The requirement of 10 years experience could not be given effect to also because in the second Bishan Sarup Gupta case, this Court had directed that the two classes of Income Tax Officers, direct recruits and promotees, should first be fully integrated before determining inter se sen iority. The expression 'ordinarily ' would hardly apply to such a changed situation without destroying the integration. If the respondents ' contention that the field of choice shall be restricted to 10 years experience only and the field of choice should have been at least 5 times the number of vacancies the result would have been that out of 560 persons in the field of choice 474 persons would have been promotees and only 86 persons would have been direct recruits and 429 senior officers, who were direct recruits, would have been ignored. That obviously would be unjust and unfair and also contrary to the decision of this Court in the second Bishan Sarup Gupta 's case. [47BC] (c) As a result of administrative instructions issued, at least since 1963, for promotion of Income Tax Officers as Assistant Commissioners, the administrative practice is to take the field of choice generally of 3 times the number of vacancies. The evidence shows that in the circumstances of this case, it was not possible to have 5 or 6 times the number of vacancies in the field of choice. [46E] (d) The High Court was wrong in holding that in the field of choice, the evaluation o{ merit of persons was not properly done. The 1957 Memorandum requires that the field of choice is based on running seniority and evaluation of merit does not come into picture for deciding the field of choice. The question of merit comes in only in the preparation of the selection list. Seniority is the sole criterion for determining the field of choice and merit is the sole crite rion for putting the officers in the Selection list. [46G] In present case, the instructions in the 1957 memoran dum were strictly followed. (e) The 7 Scheduled Caste/Tribes officers were not entitled to a grade higher than the grade assessed by the Committee, because, the Home Ministry instructions, regard ing concessions to Scheduled Castes and Tribes applied in the case of promotions from Class III to Class II and within Class II and from Class II to the lowest rank of Class I, but had no application in respect of promotion within Class I. [47E] (f) After 122 senior officers were assessed and 114 were found to be 'very good ', they could not be supplanted by other who were also 'very good '. Only 'outstanding ' persons who would be junior to the 122 could surpass them. There fore, the Committee rightly considered the cases of the officers remaining out of the 276 only to find out whether there was any one 'outstanding" as it would be a fruitless exercise to find out who among them was 'very good '. [48B] (g) The contention of the respondents that the officers remaining out of the 336 sent up, were not at all considered by the Committee is not also acceptable. When the Committee found, according to running seniority, that certain persons beyond a certain number could not be in the field of choice, the Committee did not put the names in the field of choice. The question of the evaluation of their merits did not, therefore, arise. It is wrong to hold that because the Government sent the names of 336 persons the field of choice consisted of all 336 persons. The field is to be determined by the Committee and the Committee rightly con sidered 276 names as fit to be included. [48F] 32 (h) There is no substance in the contention that 4 of the officers had less than 8 years experience, because, they were ex military officers recruited by virtue of a notifi cation of the Ministry of Home Affairs. [49B C] (i) The contention that after putting the officers in the three categories they should further be evaluated on merit inter se within each category is contrary to the specific provision of the 1957 memorandum, and further, there could not be any further intra specific assessment of those who are already considered to be "very good". [49D] (6) The date for determining the eligibility of officers has nothing to do with the dates on which ad hoc appoint ments were permitted and ad hoe appointments were, in fact, made. The observations Of this Court in the first Bishan Sarup Gupta case, are that if as a result of the fresh seniority list, it is found that any officer was eligible for promotion on account of his place in the new seniority list, the Committee might have to consider his case as on the date when he ought to have been considered and his position adjusted in the seniority list of Assistant Commis sioners. The observations did not mean that although the Committee can meet only after the seniority list is approved by this Court, the selection would be deemed to be made at the time when a vacancy in the post occurred and the eligi bility of officers for seleCtiOn should be determined by such deemed date of selection. No employee has any right to a vacancy in the higher post as soon as the vacancy occurs. The Government has a right to keep it unfilled as long as it chooses. The seniority list which is a basis for the field of choice for promotion was approved by this Court on 16th April 1964 in the second Bishan Sarup Gupta case. Promo tions to the post of Assistant Commissioners are on the basis of the Selection List prepared by the Committee and are to be made prospectively and not retrospectively. [51 C D]

Civil Appeal No. 114 of 1951. Appeal from the Judgment and Decree dated the 5th Sep tember, 1947, of the High Court of Judicature at Allahabad (Waliullah and Sapru JJ.) in First Appeal No. 516 of 1942 arising out of Judgment and Decree dated the 3rd October, 1942, of the Court of the Civil Judge of Shahjahanpur in Original Suit No. 10 of 1941. Achhru Ram (N. C '. Sen, with him) for the appel lants. C.K. Daphtary (K. B. Asthana, with him) for the re spondents. October 20. The Judgment of the Court was deliv ered by BHAGWATI J. This is an appeal by the heirs and legal representatives of the deceased plaintiff against the decree of the High Court of Judicature at Allahabad allowing ' the appeal of the defendants against the decree passed by the Court of the Civil Judge of Shahjahanpur in favour of the plaintiff allowing the plaintiff 's claim in part. One Kailashi Nath Kapoor, the plaintiff, was employed by the District Board of Shahjahanpur, the defendants, as their Secretary in the year 1924. He 1124 was also entrusted in 1929 with the additional duties of doing assessment work for the defendants. The work done by the plaintiff did not find favour with some members of the Board and on the 9th November, 1939, six members of the Board tabled a resolution asking the Chairman to convene a special meeting of the Board to consider a resolution for the dismissal of the plaintiff. A special meeting of the Board was convened on the 17th December, 1939. Twelve charges were framed against the plaintiff and he was re quired to furnish his answers to them. A special meeting of the Board was thereafter convened on the 20th January, 1940. The resolution for the dismissal of the plaintiff was on the agenda but the meeting had to be adjourned for want of quorum to the 29th January, 1940. At the adjourned meeting of the 29th January, 1940, twenty five out of the twentyseven members of the Board were present. The charges against the plaintiff were gone into and eleven out of the twelve charges were held proved. Two resolutions were consequently passed by the Board at this meeting, one being a resolution for his dismissal, and the other being a reso lution for his suspension till the matter of his dismissal was decided under section 71 of the U.P. District Boards Act, X of 1922, on an appeal if any preferred by the plain tiff to the Government. The plaintiff preferred an appeal to the Government against the resolution for his dismissal and this appeal was dismissed by the Government on the 19th December, 1940. The plaintiff thereafter commenced in the Court of the Civil Judge at Shahjahanpur the suit out of which this appeal arises against the defendants for a declaration that the two resolutions passed by the Board on the 29th January, 1940, were illegal and ullra vires of the Board and that he continued to be the Secretary and Assessing Officer of the Board, for an injunction restraining the Board from prevent ing him from discharging his duties as such Secretary and Assessing Officer, for arrears of his salary with interest and contribution to his provident Fund and in the alterna tive 1125 for damages and compensation for illegal dismissal and suspension and for costs. The defendants contended that the said resolutions were valid and binding on the plaintiff and that the plaintiff was not entitled to any relief as claimed. The learned trial judge held that the two resolutions passed by the Board on the 29th January, 1940, were properly passed and that there was no irregularity in the procedure. He held that the resolution for dismissal of the plaintiff was valid and binding on the plaintiff but the resolution for suspension was not legal. In the result he decreed the plaintiff 's claim for arrears of salary, and the contribu tion towards the provident fund against the defendants for the period of suspension and awarded to the plaintiff a sum of Rs. 6,629 4 0 with proportionate costs, the rest of the plaintiff 's claim was dismissed. The defendants appealed to the High Court against this decree and the plaintiff filed cross objections in regard to his claim which had been disallowed. The plaintiff died during the pendency of the appeal and his heirs and legal representatives, being his widow and his four sons, were brought on the record. The High Court concurred with the trial court in the finding that there was no irregularity, impropriety or illegality in the procedure followed and the steps taken before the meet ing or at the meeting of the Board when the two resolutions were considered and passed. It however disagreed with the conclusion reached by the trial Court that the resolution for suspension was ultra vires the Board. It held that the resolution for suspension also was valid and binding on the plaintiff and thus dismissed the plaintiff 's suit with costs throughout. The crossobjections of the plaintiff were of course dismissed with costs. The heirs and legal repre sentatives of the plaintiff obtained leave to appeal to the Federal Court against this decision of the High Court and the appeal was admitted on the 5th November, 1948. Both the Courts below having found that there was no irregularity, impropriety or illegality in the procedure followed and the steps taken when the two 1126 resolutions in question were passed by the Board the only question that survived for consideration by this Court was whether the resolution for suspension of the plaintiff was valid and binding on the plaintiff or in other words whether it was competent to the Board to pass the resolution for the suspension of the plaintiff after it had passed the resolu tion for his dismissal under section 71 of the Act. Section 71 of the Act provides for the dismissal and punishment of the secretary: "A board may by special resolution punish or dismiss its secretary: Provided, firstly, that such resolution is passed by a vote of not less than two thirds of the total number of members of the board for the time being: Provided, secondly, that the secretary of a board shall have a right of appeal to the State Government against such resolution within one month from the date of the communica tion of the resolution to him, and that the resolution shall not take effect until the period of one month has expired or until the State Government have passed orders on any appeal preferred by him. " It will be relevant at this stage to note that this section 71 was amended by U.P. Act I of 1933. Section 71 as it originally stood ran thus: "A board may by special resolution punish or dismiss its secretary provided, (a) that such a resolution is passed by a vote of not less than two thirds of the total number of members of the board for the time being, or (b) that it is passed by a vote of not less than one half of the total number of members. and is ' sanctioned by the Local Government ' . It may be noted that in the original section 71 provi sion was made for the sanction of the Local Government in certain cases. No such provision is to be found in the amended section 71 of the Act. The resolution according to the amended section 71 is to be passed by a vote of not less than two thirds of the 1127 total number of members of the Board and such a resolution is not to take effect until the period of one month has expired within which the secretary can exercise his right of appeal or until the Government have passed orders on the appeal if any preferred by him. There is no question of the sanction of the Local Government to any resolution for dismissal the only provision being that the resolution is to take effect after the expiration of the period of one month or after the Government have passed orders on the appeal if any preferred by the secretary within that period of one month. Once that period of one month expires without the secretary preferring any appeal against the resolution of the Board or the Government passes final orders on the appeal preferred by him, the resolution takes effect without anything more in the nature of a sanction by the Government. The power of suspension is conferred and regulated in section 90 of the Act : "(1) Suspension may be of two kinds: (a) suspension as a punishment, and (b) suspension pending inquiry or orders. (2) Where a general power to punish is conferred by this Act, it shall be deemed to include a power to suspend as a punishment for a period not exceeding three months. (3) Where a power of dismissal, whether subject to the sanction of any other authority or not, is conferred by this Act, it shall be deemed to include a power to suspend any person against whom the power of dismissal might be exer cised, pending enquiry into his conduct or pending the orders of any authority whose sanction is necessary for his dismissal. (4) Where suspension is ordered pending inquiry or or ders, and the officer suspended is ultimately restored, it shall be at the discretion of the authority ordering his suspension whether he shall get any, and, if so what, allow ance during the period of suspension; but in the absence of any order to the contrary he shall be 1128 entitled to the full remuneration which he would have re ceived but for such suspension. " The suspension which has been thus provided for is of two categories, (1) suspension as a punishment and (2) suspension pending enquiry or orders. In the case of a suspension falling within the latter category the only power of suspension which is provided is that of suspending any person against whom the power of dismissal might be exer cised pending enquiry into his conduct or pending the orders of any authority whose sanction is necessary for his dis missal. The power of suspension pending enquiry into the conduct of the person can only be exercised if an enquiry against him has been started and before any order is made for his dismissal as a result of such enquiry. The power of suspension pending the orders of the authority whose sanc tion is necessary for his dismissal can similarly be exer cised provided the order of dismissal is made but that dismissal could be effective only after the orders of the authority whose sanction is needed for effectuating the same. The section does not provide for any other case where as on the facts before us the order of dismissal does not require the sanction of any authority but has got to await either the expiry of a particular period after such order of dismissal has been made or the result of an appeal which may be preferred to the Government within the period prescribed in that behalf. A decision of an authority to which an appeal is provided is not the same thing as a sanction by the authority. A perusal of sub section (4) of section 90 makes this position quite clear. The authority ordering the suspension is vested with the discretion to determine whether the officer suspended would get any or if so what allowance during the period of suspension where suspension is ordered pending enquiry or orders and the officer sus pended is ultimately restored. There is no provision for any allowance where the officer having been dismissed is also suspended for the period which has of necessity to expire before his appeal is time barred or before the Gov ernment passes 1129 orders on the appeal if any preferred by him within the prescribed period. Such a case is not at all provided for in sub section 4 of section 90 and the officer so suspended would be without any remedy whatever and would not be able to get any allowance at all from the authority ordering his suspension during such period of suspension. It is necessary to bear in mind the provisions of these sections 71 and 90 of the Act in order to determine whether it was competent to the Board to pass a resolution for suspension of the plaintiff after it had passed the resolu tion for his dismissal on the 29th January, 1940. On a construction of these sections 71 and 90 of the Act the trial Court came to the conclusion that the provisions of section 90 of the Act were exhaustive, that no other category of suspension apart from those specified could be ordered and that therefore the resolution for suspension of the plaintiff was ultra rites the Board. The High Court in appeal realised the difficulty of the position. It came to the conclusion that section 90 as it stood was in close conformity with the provisions of the old section 71 of the Act which provided for the resolution for dismissal passed by a vote of not less than one half of the total number of members being required to be sanctioned by the Local Govern ment. The sanction was expressly provided there. But when that section came to be amended by the U.P. Act I of 1933, the provision for sanction was deleted and it provided for the resolu tion not taking effect until the period of one month had expired within which the secretary could exercise his right of appeal or until the Government had passed orders on the appeal ii any preferred by him. When this amendment was made in the old section 71 of the Act the provision made in section 90 in regard to the power of suspension was lost sight of and no corresponding amendment was made in section 90, sub section (1)(b), sub section (3) or subsection (4) which would bring the provisions of 145 1130 section 90 in conformity with the amended section 71 of the Act. The High Court was therefore at pains to place what it called a liberal construction on the provisions of section 71 and section 90 of the Act trying to read in the power of suspension provided in section 90 also a power of suspension during the period that the secretary preferred an appeal to the Government against the order of his dismissal and the Government passed orders on such appeal. Apart from placing this so called liberal construction on the expression "the orders of any authority whose sanc tion is necesssary" in section 90 subsection 3, the High Court also brought to its aid the provisions of Section 16 of the U.P. General Clauses Act of 1904 which provides that "unless a different intention appears the authority having power to make the appointment shall also have power to suspend or dismiss any person appointed by it in exercise of that power ". It came to the conclusion that nothing in the terms of section 71 or section 90 of the Act controlled or negatived an intention to sustain the general power of suspension, i.e. suspension pending orders on an appeal. The High Court thus justified the resolution for the suspen sion of the plaintiff passed by the Board on the 29th January, 1940. We are afraid we cannot agree with this line of reason ing adopted by the High Court. The defendants were a Board created by statute and were invested with powers which of necessity had to be found within the four corners of the statute itself. The powers of dismissal and suspension given to the Board are defined and circumscribed by the provisions of sections 71 and 90 of the Act and have to be culled out from the express provisions of those sections. When express powers have been given to the Board under the terms of these sections it would not be legitimate to have resort to general or implied powers under the law of master and servant or under section 16 of the U.P. General Clauses Act. Even under the terms of section 16 of that Act, the powers which are vested 1131 in the authority to suspend or dismiss any person appointed are to be operative only "unless a different intention appears" and such different intention is to be found in the enactment of sections 71 and 90 of the Act which codify the powers of dismissal and suspension vested in the Board. It would be an unwarranted extension of the powers of suspen sion vested in the Board to read, as the High Court pur ported to do, the power of suspension of the type in ques tion into the words "the orders of any authority whose sanction is necessary". It was unfortunate that when the Legislature came to amend the old section 71 of the Act it forgot to amend section90 in conformity with the amendment of section 71. But this lacuna cannot be supplied by any such liberal construction as the High Court sought to put upon the expression "orders of any authority whose sanction is necessary". No doubt it is the duty of the court to try to harmonise the 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. Reading the present, section 71 of the Act along with section 90 of the Act we are of the opinion that the power of suspension of the nature purported to be exercised by the Board in the case before us was not the power of suspension contemplated in section 90 sub section (3) of the Act. If the plaintiff allowed the period of one month to expire without preferring an appeal against the resolution to the Government or if the Government passed orders dismissing his appeal, if any, the resolution for ' his dismissal would become effective without any sanction of the Government. The words used therefore in section 90, sub section (3) "pending the orders of any authority whose sanction is necessary for his dismissal" are inappropriate to the present facts and could not cover the case of a suspension of the nature which was resorted to by the Board on the 29th January, 1940. We are therefore of the view that the resolution for suspension which was 1132 passed on the 29th January, 1940, was ultra vires the powers of the Board. We have accordingly come to the conclusion that the decision reached by the High Court that the resolution for suspension which was passed by the Board on the 29th Janu ary, 1940, was valid and binding on the "plaintiff was erroneous and that the conclusion reached by the trial Court was correct. The learned Solicitor General appearing for the defendants has however informed us that the sum of Rs. 6,629 4 0 and the proportionate costs which were awarded by the trial Court to the plaintiff have already been paid to the plaintiff. Nothing therefore remains to be recovered by the heirs and legal representatives of the plaintiff even on the basis that the decree of the trial Court is restored as a result of this judgment of ours. The only thing which therefore survives is the question of the costs of this appeal. The trial Court had already awarded to the plaintiff proportionate costs. The High Court in reversing the judgment of the trial Court dismissed the plaintiff 's suit with costs throughout including the costs of the cross objections which were filed by the plain tiff. The heirs and legal representatives of the plaintiff filed the present appeal in regard to the whole claim of the plaintiff as laid in the plaint. That claim could not be sustained before us by the heirs and legal representatives of the plaintiff and they only succeeded before us in regard to the claim of the plaintiff which had been allowed by the trial Court. If an order for proportionate costs of this appeal were made it would certainly work to the prejudice of the heirs and legal representatives of the plaintiff. We are not disturbing the order which had been made by the High Court in regard to the costs of the appeal before it. No time was taken up before us in arguing the appeal on other points except the one in regard to the resolution for the suspension of the plaintiff being ultra rites and we think that under the circumstances of the case the proper order to pass in regard to the costs of this appeal before us should be that each party should bear its own costs. 1133 The only order which we need pass in this appeal before us under the circumstances is that the appeal is allowed, the decree of the trial court is restored, and each party do bear and pay its own costs of this appeal. Appeal allowed.

Section 71 of the U.P. District Boards Act, 1922, as amended in 1933 provided that a resolution of the Board for the dismissal of its secretary shall not take effect until the period of one month has expired or until the State Government have passed orders on any appeal preferred by him. A District Board passed a resolution for dismissal of its secretary and also for his suspension till the matter of his dismissal was decided under section 71 of the Act on an appeal if any preferred by the secretary: Held, that under section 90 of the Act a secretary could be suspended only as a punishment or pending inquiry or 1123 pending the orders of any authority whose sanction is neces sary for his dismissal. The words "pending the orders of any authority whose sanction is necessary for his dismissal" could not appropriately cover the case of a suspension like the present one and the resolution for suspension was 'therefore ultra vires. Held further, that since the Board was created by stat ute, and its powers of dismissal and suspension are defined and circumscribed by sections 71 and 90 of the Act it would not be legitimate to have resort to general or implied powers under the law of master and servant or under section 16 of the U.P. General Clauses Act;and even under section 16 of that Act powers which are vested in an authority to suspend or dismiss any person appointed, are to be operative only "unless a different intention appears" and such a different intention is to be found in sections 71 and 90 of the Act which codify the powers of dismissal and suspension vested in the Board.

Appeals Nos. 21 to 23, 46, 47, 125 and 274 of 1969. Appeals from the judgment and orders dated April 10, 1968 of the Madras High Court in Writ Petitions Nos. 387 of 1968 etc. section V. Gupte, G. Ramanujam and A. V. Rangam, for the appel lants (in C.As. 21 to 23 of 1969) and the respondent (in C.As. Nos. 46, 47, 125 and 274 of 1969). V. K. T. Chari, T. N. C. Rangarajan and D. N. Gupta, for the appellants (in C.As. Nos. 46 and 47 of 1969) and the respondents (in C.As. Nos. 21 and 23 of 1969). V. K. T. Chari, A. R. Ramanathan, T. N. C. Rangarajan and R. Gopalakrishnan, for the appellant (in C.A. No. 125 of 1969). K. C. Rajappa, section Balakrishnan and section Laxminarasu, for the appellant (in C.A. No. 274 of 1969). K. C. Rajappa, section Balakrishnan, section Laxminarasu and N. M. Ghatate, for the respondents (in C.A. No. 22 of 1969). The Judgment of the court was delivered by Ramaswami, J. In these appeals which have been heard together a common question of law arises for determination, namely, whether the Madras Urban Land Tax Act, 1966 (12 of 1966) is constitutionally valid. In 1963 the Madras Legislature enacted the Madras Urban Land Tax Act, 1963 which came into force in the city of Madras on the 1st of July, 1963. In the Statement of Object and Reasons of the 1963 Act it was stated that the Taxation Enquiry 271 Commission and the Planning Commission were suggesting the need for imposing a suitable levy on lands put to non agricultural use in urban areas. The State Government, after examining the report of the Special Officer, decided to levy a tax on urban land on the basis of market value of the land at the rate of 0.4% on such market value. Section 3 of the Act of 1963 (which win be referred to as the old Act) provided that there shall be levied and collected for every fasli year commencing from the date of the commencement of the Act, a tax on urban land from every owner of urban land at the rate of 0.4% of the average market value of the urban land in a sub zone as determined under subsection (2) of section 6. Section 7 provided for the determination of the highest and lowest market value in a zone. For determining the average market value, the Assistant Commissioner shall have regard to any matters specified in clauses (a) to (e) of sub section 2 of section 6; namely: (a) the locality in which the urban land is situated; (b) the predominant use to which the urban land is put, that is to say, industrial, commercial or residential; (c) accessibility or proximity to market, dispensary, hospital, railway station, educational institution, or Government offices; (d) availability of civil amenities like water supply, drainage and lighting; and (e) such other matters as may be prescribed. The constitutional validity of Act 34 of 1963 was challenged and in Buckingham & Carnatic Co., Ltd. vs State of Madras(1) a Division Bench of the Madras High Court held that the im pugned Act fell under Entry 49, List 11 of Schedule VII to the Constitution and was within the legislative competence of the State Legislature. But the, Act was struck down on the ground that article 14 of the Constitution was violated, because the charging section of the Act levied the tax on urban land not on the market value of such urban land but on the average value of the lands in the locality known as a sub zone. The new Act (Act 12 of 1966) was passed by the State Legislature after the decision of the Madras High Court. In the new Act provisions relating to fixation of average market value in the sub zone were omitted. Instead, section 5 of the new Act provides that there shall be levied and collected from every year commencing from the date of the commencement of the Act a tax on each urban land from the owner of such urban land at the rate of 0.4% of the market (1),(1966) II M.L.J. 172. 272 value of such urban land. Section 2(10) defines "owner" as follows "Owner includes (i) any person (including a mortgagee in possession) for the time being receiving or entitled to receive, whether on his own account or as agent, trustee, guardian, manager or receiver for another person or for any religious or charitable purposes, the rent or profits of the urban land or of the building constructed on the urban land in respect of which the word is used; (ii) any person who is entitled to the kudiwaram in respect of any inam land; but does not include (a) a shrotriemdar; or (b) any person who is entitled to the melwaram in respect of any inam land but in respect of which land any other person is entitled to the kudiwaram. Explanation. For the purposes of clause (9) and clause (10) inam land includes lakhiraj tenures of land and shrotriam land. Section 2(13) defines 'land ' to mean any land which is used or is capable of being used, as a building site and includes garden or grounds, if any, appurtenant to a building but does not include any land which is registered as wet in the revenue accounts of the Government and used for the cultivation of wet crops. " Section 6 states "For the purposes of this Act, the market value of any urban land shall be estimated to be the price which in the opinion of the Assistant Commissioner, or the Tribunal, as the case may be, such urban land would have fetched or fetch, if sold in the open market on the date of the commencement of this Act". Section 7 provides for the submission of returns by the owner of urban land and reads "Every owner of urban land liable to pay urban land tax under this Act shall, within a period of one month from the date of the publication of the Madras Urban Land Tax Ordinance, 1966 (Madras Ordinance 273 III of 1966) in the Fort St. George Gazette, furnish to the Assistant Commissioner having jurisdiction a return in respect of each urban land containing the following particulars, namely : (a) name of the owner of the urban land, (b) the extent of the urban land, (c) the name of the division or ward and the street, survey number and subdivision number of the land and other particulars of such urban land, (d) the amount which in the opinion of the owner is the market value of the urban land. " Section 1 0 deals with the procedure for the determination of the market value by the Assistant Commissioner and states : (1) Where a return is furnished under section 7 the Assistant Commissioner shall examine the return and made such enquiry as he deems fit. If the Assistant Commissioner is satisfied that the particulars mentioned therein are correct and complete he shall, by order in writing determine the market value of the urban land and the amount of urban land tax payable in respect of such urban land. (2) (a) Where no examination of the return and after the enquiry the Assistant Commissioner is not satisfied that the particulars mentioned therein are correct and complete he shall serve a notice on the owner either to attend in person or at his office on a date to be specified in the notice or to produce or cause to be produced on that date any evidence on which the owner may rely in support of his return. (b) The Assistant Commissioner after hearing such evidence as the owner may produce in pursuance of the notice under clause (a) and such other evidence as the Assistant Commissioner may require on any specified points shall, by order in writing, determine the market value of the urban land and the amount of urban land tax payable in respect of such urban land. (c) Where the owner has failed to attend or produce evidence in pursuance of the notice under clause (a) the Assistant Commissioner shall, on the basis of the enquiry made under clause (a), by order in writing determin e the market value of the urban land and the amoun t of urban land tax payable in respect of such urban land. " 274 Section 11 enacts : (1) Where the owner of urban land has failed to furnish the return under section 7 and the Assistant Commissioner has obtained the necessary information under section 9 he shall serve a notice on the owner in respect of each urban land specifying therein (a) the extent of the urban land, (b) the amount which, in the opinion of the Assistant Commissioner, is the correct market value of the urban land, and direct him either to attend in person at his office on a date to be specified in the notice or to produce or cause to be produced on that date any evidence on which the owner may rely. (2) After hearing such evidence, as the owner may produce and such other evidence as the Assistant Com missioner may require on any specified points, the Assistant Commissioner shall, by order in writing, determine the market value of the urban land and the amount of urban land tax payable in respect of such urban land. (3) Where the owner has failed to attend or to produce evidence in pursuance of the notice under subsection (1) the Assistant Commissioner shall, on the basis of the information obtained by him under section 9, by order in writing, determine the market value of the urban land and the amount of the urban land tax payable in respect of such urban land. " Section 20 provides for an appeal to the Tribunal from the orders of the Assistant Commissioner : "(1) (a) Any assessee objecting to any order passed by the Assistant Commissioner under section 10 or 11 may appeal to the Tribunal within thirty days from the date of the receipt of the copy of the order. (b) Any person denying his liability to be assessed under this Act may appeal to the Tribunal within thirty days from the date of the receipt of the notice 1 of demand relating to the assessment :. Provided that no appeal shall lie under clause (a) or clause (b) of this sub section unless the urban land tax has been paid before the appeal is filed. 275 (2) The Commissioner may, if he objects to any order passed by the Assistant Commissioner under section 10 or 11, direct the Urban Land Tax Officer concerned to appeal to the Tribunal against such order, and such appeal may be filed within sixty days from the date of the receipt of the copy of the order by the Commissioner. (3) The Tribunal may admit an appeal after the expiry of the period referred to in clause (a) or clause (b) of sub section (1) or in sub section (2), as the case may be, if it is satisfied that there was sufficient cause for not presenting it within that period. (4) An appeal to the Tribunal under this section shall be in the prescribed form and shall be verified in the prescribed manner and shall be accompanied by such fee as may be prescribed. (5) The Tribunal may after giving both parties to the appeal an opportunity of being heard, pass such orders thereon, as it thinks fit and shall communicate any such orders to the assessee and to the Commissioner in such manner as may be prescribed." Section 30 confers power of revision in the Board of Revenue: and is to the following effect : (1) The Board of Revenue may, either on its own motion or on application made by the assessee in this behalf, call for and examine the records of any proceeding under this Act (not being a proceeding in respect of which an appeal lies to the Tribunal under section 20) to satisfy, itself as to the regularity of such proceeding or the correctness, legality or propriety of any decision or order passed therein and if, in any case, it appears to the Board of Revenue that any such decision or order should be modified, annulled, reversed or remitted for reconsideration, it may pass orders accordingly : Provided that the Board of Revenue shall not pass any order under this subsection in any case, where the decision or order is sought to be revised by the Board of Revenue on its own motion, if such decision or order had been made more than three years previously : Provided further that the Board of Revenue shall not pass any order under this section prejudicial to any 276 party unless he has had a reasonable opportunity of making his representations. " Section 33 states : "(1) The Tribunal, the Board of Revenue, the Commissioner, the Assistant Commissioner, or the Urban Land Tax Officer or any other officer empowered under this Act shall, for the purposes of this Act, have the same powers as are vested in a Court under the Code of Civil Procedure, 1908 (Central Act V of 1908), when trying a suit in respect of the following matters, namely : (a) enforcing the attendance of any person and examining him on oath; (b) requiring the discovery and production of documents; (c) receiving evidence on affidavit; (d) issuing commissions for the examination of witnesses; and any proceeding before the Tribunal, the Board of Revenue, the Commissioner, the Assistant Commissioner the Urban Land Tax Officer or any other officer empowered under this Act shall be deemed to be a judicial proceeding within the meaning of sections 193 and 228 and for the purposes of section 196, of the Indian Penal Code (Central Act XLV of 1860). (2) In any case in which an order of assessment is passed ex parte under this Act, the provisions of the Code of Civil Procedure, 1908 (Central Act V of 1908), shall apply in relation to such order as it applies in relation to a decree passed ex parte by a Court. " The validity of the new Act was challenged in a group of writ petitions before the Madras High Court on various constitutional grounds. By a common judgment dated the 10th April, 1968 a Full Bench of five Judges overruled all the contentions of the petitioners with regard to the legislative competence of the Madras Legislature to enact the new Act. However, the Full Bench by a majority of 4 to 1 struck down section 6 of the new Act as being violative of articles 14, 19(1)(f) of the Constitution. The State of Madras and other respondents to the writ petitions (hereinafter ,called the respondents for the sake of convenience) filed appeals 277 Nos. 21 to 23 of 1969 under a certificate granted by the High Court under articles 1,32 and 1 3 3 (I) (a), (b) and (c) of the Constitution. The writ petitioners (hereinafter called the petitioners) have filed C.As Nos. 46, 47, 125 and 274 of 1969 against the same judgment on a certificate, granted by the High Court under article 132 of the Constitution. The first question to be considered in these appeals is whether the Madras Legislature was competent to enact the legislation under Entry 49 of List 11 of Schedule VII of the Constitution which reads : "Taxes on lands and buildings". It was argued on behalf of the petitioners that the impugned Act fell under Schedule VII, List 1, Entry 86, that is "Taxes on the capital value of the assets, exclusive of agricultural land, of individuals and companies; taxes on the capital of companies. " The argument of Mr. V. K. T. Chari may be summarised as follows : The impugned Act was, both in form and substance, taxation of capital and was hence beyond the competence of the State Legislature. To tax on the basis of capital or principal value of assets was permissible to Parliament under List 1, Entries 86 and 87 and to State under Entry 48 of List II. Taxation of capital was the appropriate method provided for effecting the directive principle under article 39 of the Constitution, namely, to prevent concentration of wealth. Article 366(9) contains a definition of 'estate duty ' with reference to the principal value. Entry 86 of List I (Taxes on capital value of assets exclusive of agricultural land) and Entry 88 (Duties in respect of succession to such property) form a group of entries the scheme of which is to carry out the directive principle of article 39(c). The Constitution indicated that capital value or principal value shall be the basis of taxation under these entries and, therefore, the method of taxation of capital or principal value was prohibited even to Parliament in respect of other taxes and to the States except in respect of Estate Duty on agricultural land. Such in effect is the. argument of Mr. V. K. T. Chari. But in our opinion there is no warrant for the assumption that entries 86, 88 of List I and Entry 48 of List II form a special group embodying any particular 'scheme. The directive principle embodied in article 39(c) applies both to Parliament and to the State Legislature and it is difficult to conceive how entries 86 to 88 of List I would exclude any power of the State Legislature to implement the same principle. The legislative entries must be given a large and liberal interpretation, the reason being that the allocation of the subjects to the lists is not by way of scientific or logical definition but by way of a mere sixplex enumeratio of broad categories. We see no reason, therefore, for holding that the entries 86 and 87 of List I preclude the State Legislature from taxing capital value of lands and buildings under 13SupCI69 4 278 Entry 49 of List II. In our opinion there is no conflict between Entry 86 of List I and Entry 49 of List 11. The basis of taxation under the two entries is quite distinct. As regards Entry 86 of List I the basis of the taxation is the capital value of the asset. It is not a tax directly on the capital value of assets of individuals and companies on the valuation date. The tax is not imposed on the components of the assets of the assessee. The tax under Entry 86 proceeds on the, principle of aggregation and is imposed on the totality of the value of all the assets. It is imposed on the total assets which the assessee owns and in determining the net wealth not only the encumbrances specifically charged against any item of asset, but the general liability of the assessee to pay his debts and to discharge his lawful obligations have to be taken into account. In certain exceptional cases, where a person owes no debts and is under no enforceable obligation to discharge any liability out of his assets it may be possible to break up the tax which is leviable on the total assets into components and attribute a component to lands and buildings owned by an assessee. In such a case, the component out of the total fax attributable 'Lo lands and buildings may in the matter of computation bear similarity to a tax on lands and buildings levied on the capital or annual value under Entry 49, List II. But in a normal case a tax on capital value of assets bears no definable relation to lands and buildings which may or may not form a component of the total assets of the assessee. But Entry 49 of List II, contem plates a levy of tax on lands and buildings or both as units. It is not concerned with the division cf interest or ownership in the units of lands or buildings which are brought to tax. Tax on lands and buildings, is directly imposed on lands and buildings, and bears a definite relation to it. Tax on the capital value of assets bears no definable relation to lands and buildings which may form a component of the total assets of the assessee. By legislation in exercise of power under Entry 86, List I tax is contemplated to be levied on the value of the assets. For the purpose of levying tax under Entry 49, List 11 the State Legislature may adopt for determining the incidence of tax the annual or the capital value of the lands and buildings. But the adoption of the annual or capital value of lands and buildings for determining tax liability will not make the fields of legislation under the two entries overlapping. The two taxes are entirely different in their basic concept and fall on different subject ' matters. In Ralla Ram vs Province of East Punjab(1) the Federal Court held that the tax levied by section 3 of the Punjab Urban (1) 279 Immoveable Property Tax Act, 17 of 1940 on buildings and lands situated in a specified area at such rate not exceeding twenty per cent. of the annual value of such buildings and lands, as the Provincial Government may by notification in the official Gazette direct in respect of each such rating area was not a tax on income, but was a tax on lands and buildings within the meaning of Item No. 42 of List 11 of the Seventh Schedule of the Government of India Act, 1935. In that case it was contended that under the provisions of the Punjab Act the basis of the tax was the annual value of the buildings and since the same basis was used in the Income tax Act for determining the income from property and generally speaking the annual value is the fairest standard for measuring income and, in many cases, is indistinguishable from it, the tax levied by the impugned Act was in substance a tax on income. The Court pointed out that the annual value is not necessarily actual income, but is only a standard by which income may be measured and merely because the Income tax Act had adopted the annual value as the standard for determining the income, it did not follow that, if the same standard is employed as a measure for any other tax, that latter tax becomes also a tax on income. It was held by the Court that in substance the property tax levied by section 3, Punjab Urban Immoveable Property Tax Act, 1940 fell within item 42 of the Provincial List and was not a tax on income falling within item 54 of the Federal List although the basis of the tax was the annual value of the building. The same view has been expressed by this Court in Sudhir Chandra Nawn vs Wealth Tax Officer(1) wherein it was held that the power to levy tax on lands and buildings under Entry 49 of List II did not trench upon the power conferred on Parliament by Entry 88 of List I and, therefore, the enactment of the Wealth Tax Act by Parliament was riot ultra vires. The problem in this case is the problem of characterisation of the law or classification of the law. In other words the question must be asked : what is the subject matter of the legislation in its "pith and substance" or in its true nature and character for the purpose of determining whether it is legislation with respect to Entry 47 of List 11 or Entry 86 of List 1. In Gallahagher vs Lynn 2 ) the principle is stated as follows : "It is well established that you are to look at the true nature and character of the legislation the, pith and substance of the legislation. If on the view of the statute as a whole, you find that the substance of the legislation (1) ; (2) [1937] C. 853 870 280 is within the express powers, then it is not invalidated if incidentally it affects matters which are outside the authorized field. The legislation must not under the guise of dealing with one matter in fact encroach upon the forbidden field. Nor are you to look only at the object of the legislator. An Act may have a perfectly lawful object e.g. to promote the health of the inhabitants, but may seek to achieve that object by invalid methods, e.g., direct prohibition of any trade with a foreign country. In other words, you may ' certainly consider the clauses of an Act to see whether they are passed 'in respect of ' the forbidden subject. " In the case of Subrahmanyan Chettiar vs Muttuswami Goundan(1) Sir Maurice Gwyer, C.J. said : "It must inevitably happen from time to time that legislation, though purporting to deal with a subject in one list, touches also on a subject in another list, and the different provisions of the enactment may be so closely intertwined that blind adherence to a strictly verbal interpretation would result in a large number of statutes being declared invalid because the Legislature enacting them may appear to have legislated in a forbidden sphere. Hence the rule which has been evolved by the Judicial Committee whereby the impugned statute is examined to ascertain its 'pith and substance ', or its 'true nature and character ', for the purpose of determining whether it is legislation with respect to matters in this list or in that : Citizens Insurance Company of Canada vs Parsons(); Russell vs The Queen(3); Union Colliery Co. of British Columbia vs Bryden(4); Att. Gen. for Canada vs Att. Gen. for British Columbia(5); Board of Trustees of Lethbridge Irrigation District vs Independent Order of Foresters(6). In my opinion this rule of interpretation is equally applicable to the Indian Constitution Act. " For the reasons already expressed we hold that in pith and substance the new Act in imposing a tax on urban land at a percentage of the market value is entirely within the ambit of Entry 49 of List II and within the competence of the State Legislature and does not in any way trench upon the field of legislation of Entry 86 of List I. (1) [194O] F.C.R. 188 at 201. (2) [1881] 7 A.C. 96. (3) [1882] 7 5) 301 A.C. III. (6) 281 It was then said that as Entry 49 of List 11 provides for taxes on lands and buildings, the impugned Act which imposes tax on lands alone cannot be held to fall under that entry. It was submitted that when the Legislature taxed land deliberately the legislation fell under List 11 of Entry 45, i.e., "land revenue, including the assessment and collection of revenue, the maintenance of land records, survey for revenue purposes and records of rights and alienation of revenues ' ' and not under Entry 49 of that List. The legislative history of Entry 49 of List 11 does not however lend any support to this argument. Before the Government of India Act, 1935 lands and buildings were taxed separately and all that was done under the Government of India Act, 1935 and ' the Constitution was to combine the two entries relating to land and buildings into a single entry. Section 45 A of the Government of India Act, 1919 provided for making rules under the Act for the devolution of authority in respect of provincial subjects to local Governments, and for the allocation of revenues or other moneys to those Governments. ' The Government of India by a notification dated December 16, 1920 made rules under that provision called the "Scheduled Tax Rules". These Rules contained two schedules. The first Schedule contained eight items of tax or, fee. The Legislative Council of a Province may without obtaining the previous sanction of the Governor General make and take into consideration any law imposing for the purposes of the local Government any tax included in Schedule I. Schedule II contained eleven items of tax. In making a law imposing or authorising any local authority to impose for the purposes of such local authority any tax in Schedule 11, the Legislative Council required to previous sanction of the Governor General. In Schedule II, item No. 2 was tax on land or land values and item 3 was a tax on buildings. In the Government of India Act, 1935 the two entries were combined and List 11, Entry 42 is "Taxes on lands and buildings and hats and Windows". The legislative history of Entry 49, List 11 does not, therefore, lend any support to the argument that Entry 49 of List 11 relating to tax on land and buildings cannot be separated. On the other hand we are of opinion that Entry 49 "Taxes on lands and buildings" should be construed as taxes on land and taxes on buildings and there is no reason for restricting the ampli tude of the language used in the Entry. This view is also borne out by authorities. In Raja Jagannath Baksh Singh vs The State of U.P.(1) the question at issue was whether the tax imposed by the U.P. Government on land holdings under the U.P. Large Land Holdings Tax Act, 1957 (U.P. Act 31 of 1957) 'was constitutionally valid. It was held that the legislation fell under Entry (1) 282 49 of List 11 and the tax on land would include agricultural land also. Similarly in H. R. section Murthy vs Collector of Chittoor & Anr.(1) it was held that the land cess imposed under sections 78 and 79 of the Madras District Boards Act (Mad. Act No. XIV of 1920) and Mines and Minerals (Regulation and Development) Act, (Act 67 of 1957) was a tax on land falling under Entry 49 of the State List. We are of opinion that the argument of Mr. V. K. T. Chari on this aspect of the case must be rejected. We proceed to consider the argument that no machinery is provided for determining the market value and the provisions of the new Act, therefore, violate article 14 of the Constitution. The argument was stressed by Mr. V. K. T. Chari that the guidance given under the 1963 Act has been dispensed with and the Assistant Commissioner is not bound to take into account, among other matters, the sale price of similar sites, the rent fetched for use and occupation of the land, the principles generally adopted in valuing land under the Land Acquisition Act and the compensation awarded in recent land acquisition proceedings. We see no justification for this argument. The procedure for determining the market value and assessment of urban land is described in Chapter III of the new Act. Section 6 provides that the market value of the urban land "shall be estimated to be the price which in the opinion of the Assistant Commissioner, or the Tribunal, as the case may be, such urban land would have fetched or fetch, if sold in the open market on the date of the commencement of this Act. " It was said on behalf of the petitioners that the opinion which the Assistant Commissioner has to form is purely subjective and may be arbitrary. We do not think that this contention is correct. Having regard to the language and context of section 6 of the new Act we consider that the opinion which the Assistant Commissioner has to form under that section is not subjective but should be reached objectively upon the relevant evidence after following the requisite formalities laid down in sections 7 to 11 of the new Act. Instead of the Assistant Commissioner classifying the urban land and determining the market value in a zone, the present Act requires a return to be submitted by the owner mentioning the amount which, in the opinion of the owner, is the market value of the urban land. On receipt of the return, if the Assistant Commissioner is satisfied that the particulars mentioned are correct and complete, he may determine the market value as given by the owner of the land. If he is not satisfied with the return, he shall serve a notice to the owner asking him to attend his office with the relevant evidence in support of his return. After bearing the owner and considering the evidence produced, the Assistant Commissioner may determine the (1) 28 3 market value. In case the owner fails to attend or fails to produce the evidence, the Assistant Commissioner is empowered to assess the market value on the basis of an enquiry made by him. Section 11 prescribes the procedure for determining the market value when the owner fails to furnish a return as required under section 7. The section requires the Assistant Commissioner to serve a notice on the owner specifying amongst other things the amount, which in the opinion of 'the Assistant Commissioner, is the correct market value and directing the owner to attend in person at his office on a date specified in the notice or to produce any evidence on which the owner may rely. After hearing such evidence as the owner may produce and considering such other evidence as may be required, the Assistant Commissioner may fix the market value. The proceeding before the Assistant Commissioner is judicial in character and his opinion regarding the market value is reached objectively on all the materials produced before him. Section 20 provides for an appeal by the assessee objecting to the determination of the market value made by the Assistant Commissioner to a Tribunal within thirty days from the date of the receipt of the copy of the order. The Act requires that the Tribunal shall consist of one person only who shall be a judicial officer not below the rank of a Subordinate Judge. By section 30, the Board of Revenue is empowered either on its own motion or on application made by the assessee in this behalf, to call for and examine the records of any proceedings under the Act (not being a proceeding in respect of which an appeal lies to the Tribunal under section 20) , to satisfy itself as to the regularity of such proceeding or the correctness, legality or propriety of any decision or order passed therein, and if it appears to the Board of Revenue that any such decision or order should be modified, annulled , reversed or remitted for reconsideration, it may pass orders accordingly. Section 32 enables the urban land tax officer, or the Assistant Commissioner, or the Board of Revenue or the Tribunal to rectify any error apparent on the face of the record at any time within three years from the date of any order passed by him or it. Section 33 confers power on the Assistant Commissioner to take evidence, to require discovery and production of documents and to receive evidence on affidavit etc. Thus the Act envisages a detailed procedure regarding submission of returns, the making of an assessment after hearing objections and a right to appeal to higher authorities. We are hence unable to accept the contention of the petitioners that the provisions of section 6 of the new Act are violative of article 14 of the Constitution. It is necessary to state that the High Court decided the case in favour of the respondents mainly on the ground that investment 284 of the power to determine value of the urban land under section 6 of the Act constituted excessive delegation of authority and so violative of articles 19(1) and 14 of the Constitution. (see the judgment of Veeraswami, J., who pronounced the main judgment in the High Court. But Mr. V. K. T. Chari did not support this line of reasoning, in his arguments before this Court. On the other hand learned counsel conceded that the power of determining the value of the urban land being judicial or quasi judicial in character the doctrine of excessive delegation of authority had no application. We pass on to consider the next contention raised on behalf of the petitioners namely that the Act should be struck down as an unreasonable restriction on the right to acquire, hold and dispose of property and as such violative of article 1 9 (1) (f) of the Constitution. It was argued that the test of reasonableness would be that the tax should not be so high as to make the holding of 'the property or the carrying on of the activity (business or profession) which is subject to taxation, uneconomic according to accepted rates of yield. In this connection it was said that the new Act by imposing a tax on the capital value at a certain rate was not correlated to the income or rateable value and, therefore, violates the requirement of reasonableness. We are unable to accept the proposition put forward by Mr. Chari. It is not possible to put the test of reasonableness into the straight jacket of a narrow formula, The objects to be taxed,, the quantum of tax to be levied, the conditions subject to which it is levied and the social and economic policies which a tax is designed to subserve are all matters of political character and these matters have been entrusted to the Legislature and not to the Courts. In applying the test of reasonableness it is also essential to notice that the power of taxation is generally regarded as an essential attribute of sovereignty and constitutional provisions relating to the power of taxation are regarded not as grant of power but, as limitation upon the power which would otherwise be practically without limit. It was observed by this Court in Rai Ramakrishna vs State of Bihar(1) : "It is of course true that the power of taxing the people and their property is an essential attribute of the Government and Government may legitimately exercise the said power by reference to the objects to which it is applicable to the utmost extent to which Government thinks it expedient to do so. The objects to be taxed so long as they happen to be within the legislative competence of the Legislature can be taxed by the legislature according to the exigencies of its needs, because (1) A.T.R. 1963 S.C. 1667 at 1673. 28 5 there can be no doubt that the State is entitled to raise revenue by taxation. The quantum of tax levied by the taxing statute, the conditions subject to which it is levied, the manner in which it is sought to be recovered, are all matters within the competence of the Legislature, and in dealing with the contention raised by a citizen that the taxing statute contravenes article 19 Courts would naturally be circumspect and cautious. Where for instance it appears that the taxing statute is plainly discriminatory, or provides no procedural machinery for assessment and levy of the tax, or that it is confiscatory, Courts, would be justified in striking down the impugned statute as unconstitutional. In such cases, the character of the material provisions of the impugned statute is such that the Court would feel justified in taking the view that, in substance, the taxing statute is a cloak adopted by the Legislature for achieving its confiscatory purposes. This is illustrated by the decision of this Court in the case of Kunnathat Thathunni Moopil Nair vs State of Kerala ; where a taxing statute was struck down because it suffered from several fatal infirmities. On the other hand, we may refer to the case of Jagannath Baksh Singh vs State of Uttar Pradesh ; where a challenge to the taxing statute on the ground that its provisions were unreasonable was rejected and it was observed that unless the infirmities in the impugned statute were of such, a serious nature as to justify its description as a colourable exercise of legislative power, the Court would uphold a taxing statute." As a general rule it may be said that so long as a tax retains it&. character as a tax and is not confiscatory or extortionate, the reasonableness of the tax cannot be questioned. Mr. Chari submitted that the existing property tax under section 100 of the City Municipal Corporation Act and the tax on urban lands under the new Act both enacted under Entry 49 of the State List, one of them imposing a tax on the capital value of urban lands and the other on the annual value of lands and buildings exhaust an unreasonably high proportion of income. I Or instance, it is pointed out that in W.P. No. 2835 of 1967 the annual income on property was Rs. 6,000 and the proposed market value for the lands alone comes to Rs. 10,40,000. The urban land tax at 0.4% of the market value is Rs. 4,160 and the income tax at the rate applicable to the petitioner was Rs. 1.234. The total tax burden in the aggregate under the three beads was Rs. 6,794, which 286 exceeds the rental income. In W.P. No. 3686 of 1967 the municipal annual value was Rs. 4,095, the property tax was Rs. 1,098 and the urban land tax at 0.4% was Rs. 1,523. The proportion of the two taxes together to yearly or annual municipal value worked out to Rs. 62.5%. It was, therefore, said that the taxes put together would practically exhaust the total income and the charging section in the new Act was unreasonable. The answer to the contention is that the charge is on the market value of the urban land and not on the annual letting value on which the municipal property tax is based. The basis of the two taxes being .different it is not permissible to club together the two taxes and complain of the cumulative burden. If the tax is on the market value of the urban land as it is in this case it does not admit of a complaint that it takes away an unreasonably high proportion of the income. A tax on land values and a tax on letting value, though both are taxes under Entry 49 of List II cannot be clubbed together in order to test the reasonableness of one or the other for the purposes of article 19 (I). But so far as the new Act is concerned we consider that the levy at 0.4% of the market value of the urban land is by no means confiscatory in effect. It was also pointed out by Mr. V. K. T. Chari that in certain cases the market value of the urban land was arrived at by applying what is known as the contractor 's method not to the building which stands on the land whose value is, ascertained by that means but to some other building on a different land taken for comparison. It was said that it was difficult enough for a to apply the contractor 's method of valuation to his own building which could be done by a competent architect after taking into account all measurements. But it is absolutely an impossible task to check up or make objections to the contractor 's method applied to another man 's property which cannot be trespassed upon. It was said that the contractor 's method was the last resort in valuation when a building has to be valued apart from the land and that it was a wrong application of the formula to use it to value the land without the building particularly when valuation of land can be made by applying the principles of the Land Acquisition Act. But this argument has no bearing on the constitutional validity of the charging section or the machinery provisions of the Act. It is, however, open 'to the writ petitioners to challenge the validity of the particular valuation in any particular case by way of an appeal under a statute or to move the High Court for grant of writ under article 226 of the Constitution. The impugned Act provides for the retrospective operation of the Act. Section 2 states that except sections 19, 47 and 48, other sections shall be deemed to, have come into force in the City of 287 Madras on the 1st day of July, 1963 and sections 19 and 47 shall be deemed to have come into force in the City of Madras on the 21st May, 1966. It also provides that section 48 shall come into force on the date of the publication of the Act in the Fort St. George Gazette. Section 6 enacts that the market values of the urban lands shall be estimated to be the price which in the opinion of the Assistant Commissioner or the Tribunal such urban land would have fetched or fetch if sold in the open market on the date of the commencement of the Act,, that is, from 1st July, 1967. The urban land tax is, therefore payable from 1st July, 1963. It is contended on behalf of the petitioners that the retrospective operation of the law from 1st July, 1963 would make it unreasonable. We are unable to accept the argument of the petitioners as correct. It is not right to. say as a general proposition that the imposition of tax with retrospective effect per se renders the law unconstitutional. In applying the test of reasonableness to a taxing statute it is of course a relevant consideration that the tax is being enforced with retrospective effect but that is not conclusive in itself. Taking into account the legislative history of the present Act we are of opinion that there is no unreasonableness in respect of the retrospective operation of the new Act. It should be noticed that the Madras Act of 1963 came into force on 1st July, 1963 and provided for the levy of urban land tax at the same rate as that provided under the new Act. The enactment was struck down as invalid by the judgment of the Madras High Court which was pronounced on the 25th March, 1966. The legislature by giving retrospective effect to Madras Act 12 of 1966 that the urban land must be taxed on the date on which the 1963 Act came into force the new Act cured the defect from which the earlier Act was suffering. In Rai Ramkrishna 's case(1) the question at issue was whether the Bihar Taxation on Passengers and Goods (Carried by Public Service Motor Vehicles) Act, 1961 (17 of 1961) was violative of article 1,9(5) and (6) of the Constitution for the reason that it was made retrospective with effect from 1st April, 1950. It appears that the Bihar Finance ,Act, 1950 levied a tax on passengers and goods carried by public service motor vehicles in Bihar. In an appeal arising out of a suit filed by the passengers and owners of goods in a representative capacity, the Supreme Court pronounced on the 12th December, 1960 a judgment declaring Part III of the said Act unconstitutional. Thereafter an Ordinance, namely, Bihar Ordinance No. 2 of 1961 was issued on the 1st of August, 1961 by the State of Bihar. By this Ordinance, the material provisions of the earlier Act of 1950 which had been struck down by this Court were validated and brought into force retrospectively from the (1) ; 288 date when the earlier Act had purported to come into force. Subsequently, the provisions of the said Ordinance were incorporated in the Act, namely, the Bihar Taxation on Passengers and Goods (Carried by Public Service Motor Vehicles) Act, 1961 which was duly passed by the Bihar Legislature and received the assent of the President on 23rd September, 1961. As a result of the retrospective operation of this Act, its material provisions were deemed to have come into force on April 1, 1950, that is to say, the date on which the earlier Act of 1950 had come into, force '. The appellants challenged the validity of this Act of 1961. Having failed in their writ petition before the High Court, the appellants came to this Court and the argument was that the retrospective operation prescribed by section 1 (3) and by a part of section 23 (b) of the Act so completely altered the character of the tax proposed to be retrospectively recovered that it introduced a serious infirmity in the legislative competence of the Bihar Legislature itself. The argument was rejected by this Court and it was held that having regard to the relevant facts of the case the restrictions imposed by the said retrospective operation was reasonable in the public interest under article 19(5) and (6) and also reasonable under article 304(b) of the Constitution. In our opinion the ratio of this decision applies to the present case where the material facts are of a similar character. In this context a reference may be made to a recent review of retroactive legislation in the United States of America : "It is necessary that the legislature should be able to cure inadvertent defects in statutes or their administration by making what has been aptly called 'small repairs '. Moreover, the individual who claims that a vested right has arisen from the defect is seeking a windfall since had the legislature 's or administrator 's action had the effect it was intended to and could have had, no such right would have arisen. Thus, the interest in the retroactive during 'of such a defect in the administration of government outweighs the individual 's interest in benefiting from the defect. . The Court has been extremely reluctant to override the legislative judgment as to the necessity for retrospective taxation, not only because of the paramount governmental interest in obtaining adequate revenues, but also because taxes are not in the nature of a penalty or a contractual obligation but rather a means of apportioning the costs of government among those who benefit from it. Indeed, as early as 1935 one commentator observed that "arbitrary retroactivity" may continue . to rear its head 289 in tax briefs, but for practical purposes, in this field, it is as dead as wager of law." (Charles B. Hochman in at p. 705). In view of the legislative background of the present case we are of opinion that the imposition of the tax retrospectively from 1st July, 1963 cannot be said to be an unreasonable restriction. We, therefore, reject the argument of the petitioners on this aspect of the case, For these reasons we hold that the Madras Urban Land Tax Act, 1966 (Act 12 of 1966) must be upheld as constitutionally valid. We accordingly set aside the judgment of the Madras High Court dated the 10th April, 1968 and order that writ petitions filed by the petitioners should be dismissed. In other words C.As 21 to 23 are allowed and C.As 46, 47, 125 and 274 are dismissed. There will be no order with regard to costs of these appeals. 21 to 23 of '69 allowed. R.K.P.S. C.As. 46, 47, 125 and 274 of '69 dismissed.

By section 3 of the Madras Urban Land Tax Act, 1963, a tax was levied on every owner of urban land at the rate of 0.4 % of the average market value of the urban land as determined under section 6(2) of the Act. The vires of the Act was challenged by a writ petition and the impugned Act. was struck down on the ground that it violated article 14 of the Constitution because the charging section levied the tax on urban land not on the market value of such land but on the average value of the land in a sub zone . Thereafter the State Legislature passed the Madras Urban Land Tax Act 12 of 1966 which omitted the provisions relating to fixation of average market value in the sub zone, and instead provided in section 5 for the levy of a tax on urban land from the owner at the rate of 0.4% of the market value of 'such urban land. The validity of the new Act was again challenged in a group of writ petitions before the High Court which held that the Madras Legislature was competent to enact the new Act but that it was violative of articles 14 and 19(1)(f) of the Constitution. In appeals to this Court it was contended, inter alia, on behalf of the petitioners (1) that the impugned Act fell under Entry 86, List I and not under Entry 49 of List 2, so that the State Legislature was incompetent to pass the Act; furthermore as Entry 49, List 2 provides for taxes on land and buildings, the impugned Act which imposed tax on land alone could not be held to fall under the Entry; (ii) that the machinery was provided for determining the market value and the matter having been left to the arbitrary determination of the Assistant Commissioner, the provisions of the new Act were violative of article 14 of the Constitution (iii) that the Act was an unreasonable restriction on the right to acquire, hold and dispose of property and as 'such was violative of article 19 (1) (f) of the Constitution; furthermore together with the existing property tax under section 100 of the City Municipality Corporation Act the tax under the impugned Act exhausted an unreasonably high proportion of income and on this account also it was an unreasonable restriction; it was also contended that the giving of retrospective operation to the Act from July, 1963 made it unreasonable. HELD: The Madras Urban Land Tax Act 12 of 1966 was constitutionally valid. (i) In pith and substance the new Act in imposing a tax on urban land at a percentage of the market value is entirely within the ambit of 269 Entry 49 of List II and within the competence of the State Legislature, it does not in any way trench upon the field of legislation of Entry 86 of List 1. [280 G H] There was no conflict between Entry 86 of List I and Entry 49 of List II. The tax under Entry 86 proceeds on the principle of aggregation and is imposed on the totality of the net value of an assets. Entry 49 of List II, contemplates a levy of tax on lands and buildings or both as units; it is not concerned with the division of interest or ownership in the units of land or buildings which are brought to tax. [278 E F] The legislative entries must be given a large and liberal interpretation, the reason being that the allocation of the subjects to the Lists is not by way of scientific or logical definition but by way of a mere sixplex enumeratio of broad categories. [277 G H] Ralla Ram vs Province of East Punjab, , Sudhir Chandra Nawn vs Wealth Tax Officer, A.I.R. 1969 S.C. 59; Gallahagher vs Lynn, at p. 870; and Subrahmanyan Chettiar vs Mittuswami Goundan, [1940] F.C.R. 188 at 201; referred to. The legislative history of Entry 49, List II, does not lend any support to the argument that Entry 49 of List if relating to tax on land and, buildings cannot be separated. On the other hand Entry 49 "Taxes on lands and buildings" should be construed as taxes on land and taxes on buildings and there is no reason for restricting the amplitude of the language used in the Entry. [281 G] Raja Jagannath Baksh Singh vs The State of U.P., ; ; and H. R. section Murthy vs Collector of Chittoor and Anr., ; ; referred to. (ii) The provisions of section 6 of the new Act were not violative of article 14 of the Constitution. Having regard to the language and context of section 6 of the new Act, the opinion which the Assistant Commissioner has to form under that section is not subjective but should foe reached objectively upon the relevant evidence after following the requisite formalities laid down in sections 7 to 1 1 of the new Act. The proceeding before the Assistant Com missioner is judicial in character and his opinion regarding the market value is reached objectively on all the materials produced before him. [282 F] (iii) The new Act was also not violative of article 19(1) (f) of the Constitution. It is not possible to put the test of reasonableness into the straight jacket of a narrow formula. The, objects to be taxed, the quantum of tax to be levied; the conditions subject to which it is levied and the social and economic policies which a tax is designed to subserve are all matters of political character and these matters have been entrusted to the Legislature and not to the Courts. In applying the test of reasonableness it is also essential to notice that the power of taxation is generally regarded as an essential attribute of sovereignty and constitutional provisions relating to the power of taxation are regarded not as grant of power but as limitation upon the power which would otherwise be practically without limit. [284 E] Rai Ramakrishna vs State of Bihar, ; at 1673; referred to. 270 The charge under the City Municipality Corporation Act was a tax .,on the annual letting value whereas the charge under the Act of 1966 was .on the market value of the urban land. The basis of the two taxes being different, it was not permissible to club the two together and complain of the cumulative burden. As a general rule, so long as a tax retains its character as a tax and is not confiscatory or extortionate, the reasonableness of the tax cannot be questioned. In so far as the new Act of 1966 was concerned, it could not be said that the levy at 0.4% of the market value of the urban land was confiscatory in effect [285 F] (iv) In view of the legislative background of the new Act of 1966, which replaced the earlier Act of 1963, it could not be said that the imposition of the tax retrospectively 'from July, 1963, was an unreasonable restriction. [289 B]

Appeal No. 1249 of 1967. Appeal from the judgment and decree dated July 21, 1967 of the Delhi High Court in Regular First Appeal No. 166 D of 1965. A.K. Sen, Rameshwar Nath, P. L. Vohra and Mahinder Narain, for the appellant. Bishan Narain, Radhey Mohan Lal and Harbans Singh, for the respondent. The Judgment of the Court was delivered by Bachawat, J. This appeal arises out of a suit for ejectment instituted by a landlord against a tenant. It is common case that the suit is governed by the provisions of ' the Delhi and Ajmer Rent Control Act, 1952 (Act No. 38 of 1952) hereinafter referred to as the Act. The material provisions of section 13(1) of the, Act are as follows : "13. (1) Notwithstanding anything to the contrary contained. in any other law or any contract, no decree or order for the recovery of possession of any premises shall be passed by any Court in favour of the landlord against any tenant (including a tenant whose tenancy is terminated) : Provided that nothing in this sub section shall apply to any suit or other proceeding for such recovery of possession if the Court is satisfied (b)that the tenant without obtaining the consent of the landlord in writing has, after the commencement of this Act, (i)sub let, assigned or otherwise parted with the possession of the whole or any part of the premises; or 550 (ii) used the premises for a purpose other than that for which they were let; or, (c) that the tenant without obtaining the consent of the landlord has before the commencement of this Act, (i)sub let, assigned or otherwise parted with the possession of, the whole or any part of the premises;, or (ii)used the premises for a purpose other than that for which they were let; or (k)that the tenant has, whether before or after the commencement of this Act, caused or permitted to be ,caused substantial damage to the premises, or notwithstanding previous notice has used or dealt 'with the premises in a manner contrary to any condition imposed on the landlord by the Government, or the Delhi Improvement Trust while giving him a lease of the land on which the premises are situated;" The respondent constructed the building known as the Hotel Imperial, New Delhi, on land leased to him by the Secretary of State for India in Council under a perpetual lease deed dated July 9, 1937. By a deed dated August 18, 1939, he leased to the appellant the hotel premises together with fittings and furniture for a term of 20 years commencing on September 15, 1939. On January 28, 1958, the respondent instituted the present suit alleging that in breach of the express conditions of the lease dated August .18, 1939, the appellant sub let portions of the premises and made unauthorised additions and alterations in the premises, that on such breaches he was entitled to determine the lease and he did so, by notice in writing dated January 6, 1958. He claimed eviction of the appellant on the grounds mentioned in cls. (b), (c) and (k) of the proviso to section 13(1) of the Act. The appellant filed its written statement on April 3, 1958 denying most of the material allegations in the plaint. The appellant also pleaded that the respondent had waived the breaches, if any, of the conditions of the lease by accepting rents with knowledge of such breaches and particularly by accepting rent on or about January 3, 1958. On April 24, 1958, Sri P. L. Vohra, counsel for the appellant, made the following statement before the trial Court : "The plaintiff can seek ejectment of the defendant only under section 13 of Act 38 of 1952. In case the 551 plaintiff succeeds in establishing the liability of, the defendant for ejectment on any of the grounds given in .section 13 of the Rent Act, the defendant would not seek any protection under the terms of the lease deed dated 18th August, 1939 executed between the parties, as regards the period of lease fixed therein. " Having regard to the pleadings and statement of counsel, the Court settled the following issues on May 12, 1958 : "1. Whether the defendant had sublet, assigned or otherwise parted with possession, of any part of the suit premises before the commencement of Act 38 of 1952 ? 2. If so, was the same done with express or implied consent of the plaintiff ? 3. Whether the defendant had sublet, assigned or otherwise parted with possession of any part of the suit premises after the commencement of Act 38 of 1952 ? 4.If so, was the same done with the prior consent in writing of the plaintiff ? 5.Whether the defendant has used the tenancy premises for a purpose other than that for which they were let ? 6. Whether the defendant has caused substantial damage to the tenancy premises ? 7. Whether the defendant notwithstanding previous notice has been. using and dealing with the tenancy premises in a manner contrary to the conditions imposed on the plaintiff by, the Government while giving him lease of the site of the tenancy premises ? 8. Is the defendant entitled to special cost ? 9. Whether the plaintiff is estopped or has waived his right to seek ejectment of the defendant on any of the grounds mentioned above ? If so, what and to what effect ? 10.Whether the defendant is entitled to sublet any part of the hotel premises even when there was a clause to the contra in the lease dated the 18th August, 1939. and in face of statutory provisions under the Rent Control Act (for reasons given in para 16 of the amended written statement) ?" A tenant holding premises under a subsisting lease is pro tected by the lease and needs no protection under the Rent Act. It was open to the appellant to contend that it was protected by 552 the terms of the lease dated August 18, 1939, that the breaches, if any, of the conditions of the lease had been waived by the respondent and that the lease had not determined. But the appellant deliberately elected to seek protection under section 13 of the Act only. The appellant 's counsel made a ' formal statement in the trial Court that the appellant would not seek any protection under the terms of the lease deed as regards the period of the lease fixed therein. The Court accordingly settled the ten issues. Issue No. 8 was not pressed. All the other issues relate to thegrounds of eviction mentioned in cls. (b), (c) and (k) of theproviso to section 13(1) of the Act. Issue No. 9 raises the question of waiver of the respondent 's right to seek ejectment on those grounds. Thus, the only questions in issue between the parties was whether the appellant was entitled to protection from eviction under section 13 and whether any ground for eviction under the Act was made out. The case was tried and decided on this footing. We have come to this conclusion after a close examination of the 'pleadings, particulars, statement of counsel, issues and the judgment of the trial Court. No issue was raised on the question whether the breaches of the express conditions of the lease had been waived by the respondent, and whether the lease was still subsisting. The appellant sought to raise this plea in the High Court and also in this Court Having regard to the deliberate stand taken by the appellant in the trial Court, the appellant cannot be allowed to raise the plea at a later stage. The lease determined by efflux of time on September 15, 1959. Had the appellant taken the plea that the lease had not determined by forfeiture on the date of the institution of the suit, it is possible that the respondent might have filed another suit for ejectment of the appellant immediately after September 15, 1959. Because of the stand taken by the appellant, it was not necessary for the respondent to file another suit. This appeal must be decided on the footing that the lease had determined by forfeiture on the date of the institution of the present suit. The respondent is entitled to a decree for eviction if any of the grounds mentioned in cls. (b), (c) and (k) of the proviso to section 13(1) is made out. The trial Court answered issue No. 5 in the negative. With regard to all the other issues, the trial Court found in favour of the respondent, and held that the grounds of eviction mentioned in cls. (b)(1), (c)(i) and (k) were proved. With regard to the ground of eviction mentioned in cl. (k), the trial Court held that the appellant was entitled to relief on certain conditions. The trial Court, however, held that the respondent was entitled to an unconditional decree, for eviction on the ground of sub letting mentioned in cls. (b)(i) and (c)(i). The appellant preferred 553 an, appeal to the High Court. The High Court agreed with all the findings of the trial Court, and dismissed the appeal. The two Courts concurrently found that the appellant had sub let several rooms, counters, showcases and garages. The two Courts found that the appellant had sub let rooms to (1) Pan American World Airways, (2) Mercury Travels, India (Private) Ltd., travel agents, (3) Indian Art Emporium, dealers in curios and jewellery, (4) Shanti Vijay and Co., dealers in jewellery, (5) Roy and James, hairdressers, (6) Sita World Travels, travel agents and (7) Ranee Silk Shop, dealers in saris and curios. The businesses of the sub lessees were not confined to the residents of the hotel. The letting to Pan American World Airways and Indian Art Emporium were before the commencement of the Act and the lettings to Mercury Travels, Shanti Vijay and Co., and Roy and James were after the commencement of the Act. Sita Travels and Ranee Silk Shop were inducted as tenants after the institution of, the suit. The entrances to the rooms were in ,the main corridor of the hotel on the ground floor. The concurrent finding is that the occupants were given exclusive possession of the rooms occupied by them. The appellant did not retain any control and dominion over the rooms. It is possible that the keys of the apartments were sometimes left at the reception counter, but the evidence on this point was not convincing. It was not a condition Of the grants that the keys would be left at the reception counter, or that the duplicate keys would be retained by the appellant. The occupants were at liberty to take away the keys if they liked '. The occupants availed themselves of the services of the hotel sweeper for, their own convenience. The appellant retained control of the corridor, but it is common case before us that the entrance to the corridor was open day and night. The occupants paid monthly sums to the appellant as the consideration of the sub leases. The consideration though described as license fee was in reality rent. The portion occupied by Roy and James has an interesting history. It was formerly sub let to R. N., Kapoor. In Associated Hotels of India Ltd. vs R. N. Kapoor(1), this Court held by a majority on a construction of the grant to R. N. Kapoor that he was a lessee and not a licensee. Roy and James began to occupy this portion of the premises from February, 1955. According to the appellant, the agreements with Roy and James, Mercury Travels and Shanti Vijay and Co., were in writing. The appellant produced several documents in Court at an early stage of the suit. The appellant 's case was that these documents were the relevant agreements. According to the respondent, the documents were not genuine and the real agree (1) [196] 1 S.C.R. 36F 554 meats were being withheld. The stamp auditor noted on the documents the deficiency in stamps and penalty leviable on them on the footing that they were lease deeds. The appellant did not contest this note nor paid the penalty and deficiency as directed by the trial Court. The surprising feature of the case is that the appellant did not attempt to prove any of the documents. Where the agreement is in writing, it is a question of construction of the agreement whether the grant is a lease or a license. It was for the appellant to prove the written agreements, and the Court could then construe them. The appellant has not brought before the Court the best and the primary evidence of the terms on which the apartments were being occupied. The onus to prove sub letting was on the respondent. The respondent discharged the onus by leading evidence showing that the occupants were in exclusive possession of the apartments for valuable consideration. The appellant chose not to rebut this prime facie evidence by proving and exhibiting the relevant agreements. The documents formed part of the appellant 's case. The appellant bad no right to withhold them from the scrutiny of the Court. In the absence of the best evidence of the grants, the Courts below properly inferred sub lettings from the other materials on the record. The test of exclusive possession, though not conclusive, is a very important indication in favour of tenancy, see Addiscombe Garden Estates Ltd. and Anr. vs Crabbe and Ors.(1) The argument is that as the landlord is living in the premises, that fact raises the presumption that he intends to retain the control of the whole of the premises and that the occupation of the other parts is that of a lodger or inmate and not that of a tenant, and reliance was placed on Helman vs Horsham Assessment Committee(2) and the cases referred to therein. Those cases consider what constitute rateable occupation. In the case last cited, Denning, L. J. said that a person who is regarded as a lodger for rating purposes need not necessarily be a lodger for the purposes of the Rent Restriction Acts, while Evershed L.J. seems to have expressed a contrary opinion. Normally, an occupier of an apartment in a hotel is in the position of a licensee as the hotel keeper retains the general control of the hotel including the apartment. But it is not a necessary inference of law that the occupier of an apartment in a hotel is not a tenant. Where, as in this case, the hotel keeper retains no control over the apart ment, the occupier is in the position of a tenant. In Halsbury 's Laws of England, Vol. 23, article 1028, p. 433, the law is accurately summarised thus "A lodger who has no separate apartment is only a licensee, and, even though he has a separate apart (1) , 525. (2) 555 ment, he has not in law an exclusive occupation, and is therefore in the position of a licensee, if the landlord retains the general control and dominion of the house, including the part occupied by the lodger; but, if in fact the landlord exercises no control over that part, the occupier is a tenant. The occupier does not, however, become a lodger merely by reason of the fact that the landlord resides on the premises and retains control of the passages and staircases and other parts used in common. " On the question whether the occupier of a separate apartment in a premises is a licensee or a tenant, the test is has the landlord retained control over the apartment ? The fact that the apartment is a room in a hotel may lead to the inference that the hotel keeper retains the general dominion of the en tire hotel including the apartment and that the occupier is in the position of a lodger or inmate. But the inference is not a necessary inference of law. Where, as in this case, the best evidence of the rant was withheld from the scrutiny of the Court, the inference was rightly drawn that the occupiers were tenants. At the hearing of this appeal, the appellant moved an appli cation for reception of the documents as additional evidence. The genuineness of the documents was disputed by the respondent. In the Courts below, the appellant made no attempt to prove these documents. We found no ground for directing a new trial. Having regard to all these facts, we dismissed the application. The hotel building constitutes premises within the meaning of section 2(g) of the Act. ' It is because the hotel building constitutes Premises that the appellant can claim protection from eviction under the Act. A room in a hotel is a part of the hotel premises. A sub letting of a room in a hotel in contravention of cls. (b) and (c) of the proviso to section 13(1 ) is a ground for eviction under the Act. Section 2(g) provides that 'premises ' does not include " a room in a hotel or lodging house. " The sub lessee of a room in a hotel is, therefore, not a tenant and cannot claim protection under section 13 from eviction, nor can he ask for fixation of standard rent. see Associated Hotels of India Ltd. vs R. N. Kapoor(1). If the interest of the tenant of the hotel premises is determined, the sub tenant to whom a room in the hotel has been lawfully sublet becomes under s, 20 a direct tenant of the landlord, It may be that when the sub tenant of a room in a hotel becomes a direct tenant under section 20 he enjoys the protection of the Act because the room is no, longer a room in a hotel. But that point does not arise and need not be decided. Because a room in a hotel is not (1) ; 556 premises, it does not follow that the room is not a part of the hotel premises or that a sub letting of the room is not a contravention of cls. (b) and (c) of the proviso to section 13(1). The Courts below concurrently found that the sub lettings after the commencement of the Act were made without obtaining the consent of the landlord in writing, and the sub lettings before the commencement of the Act were made without obtaining the consent of the landlord either orally or in writing. We are not inclined to interfere with this concurrent finding. It is said that by the lease deed dated August 18, 1939 the respondent impliedly consented to this sub letting. Clauses 21 .and 22 of the lease are in these terms "21. That the lessee shall not be entitled to either transfer or sub lease the premises or any part thereof to any other party without the written consent of the lessor and on such transfer, both the transferee and the lessee shall be liable for the payment of rent to the lessor and responsible to deliver,possession of the building and equipments in the same condition as when taken. 22.That the lessee will use the premises only for the purpose of running a first class hotel. " It is ,aid that for the purpose of running a first class hotel it was necessary to sub let the apartments. It is impossible to accept the contention. A hotel keeper may run a first class hotel without sub letting any part of it. Clause 21 clearly provided that the lessee shall not sub lease the hotel premises or any part thereof. In the teeth of cl. 21, it is impossible to read in cl. 22 an implied consent to sub letting. Reliance is placed on the correspondence passed between the Land Development Officer, New Delhi and the respondent bet ween April 1948 and February 1949 for establishing that the respondent gave written consent to the sub lettings. The Land and Development Officer was then complaining of the occupation of portions of the premises by Pan American World Airways and other persons. By his letters dated November 4, 1948 and February 23, 1949, the respondent requested the Land and Development Officer to regularise the matter adding that in an first class hotels counters of air lines and show rooms of jewellery and curios were always provided. These letter,.; do not amount to a consent in writing to sub lettings of portions of the hotel to the persons mentioned therein. Moreover, the consent, if any, 'was to the sub lettings made before 1949 and not to the sub lettings made thereafter. It is not possible to infer from these letters a general consent to all sub lettings. 557 It is argued that the respondent waived the requirement of consent to the sub letting. Any subletting in breach of the provisions of cl. (b) of the proviso to section 13 ( 1) is an offence punish able under section 44. Assuming that the landlord can waive the requirement as to consent, it is not shown that the respondent waived it. A waiver is an intentional relinquishment of a known right. , There can be no waiver unless the person against whom the waiver is claimed had full knowledge of his rights and of facts enabling him to take effectual action for the enforcement of such rights. See Dhanukdhari Singh vs Nathima Sahu(1). It is said that the respondent knew of the sub lettings as he frequently visited the hotel. It appears that he visited the hotel up to 1953 and he must have known of the occupation of R. N. Kapoor, Indian Art Emporium and Pan American World Airways. But he came to know of the other lettings in January 1958 only. Moreover, the precise nature of the grant was never communicated ,to the respondent. The Courts below rightly held that the respondent did not waive his right to evict the appellant on the , rounds mentioned in cls. (b) and (c) of the proviso to section 13 (1). We are therefore satisfied that the respondent is entitled to evict the appellant on the ground of sub letting of the rooms. The Courts below held that the appellant had also sublet several counters, show cases and garages to various persons. We express no opinion on the question whether there was any sub letting of the counters, show cases and garages. The sublettings of the rooms are sufficient grounds of eviction tinder cls. (b) and (c) of the proviso to section 13(1). Clause 2(v) of the head lease granted by the Government to the respondent provided that the respondent would not, without the previous consent in writing of the Chief Commissioner. Delhi or a duly authorised officer, erect or suffer to be erected on any part of the demised premises any building other than the buildings erected there on the date of the lease. The appellant had due notice of the conditions of the head lease. Notwithstanding such previous notice, the appellant dealt with the premises in a manner contrary to the conditions imposed by cl. 2 (v). The Courts below found that contrary to this condition, the appellant made several unauthorised constructions without obtaining the requisite consent. To give one illustration, the appellant admittedly constructed a room 16 ft. 6 in X 19 ft. 6 in. with R.C.C. slab and brick masonry walls. This newly constructed room was let to Shanti Vijay and Co. On the ground of unauthorised construction of this room alone it must be held that the appellant in contravention of cl. (k) of the proviso to section 13 (1), notwithstanding previous notice, dealt with the premises in a manner contrary to (1) , 852. 558 a condition imposed on the respondent by the Government while ,giving him a lease of the land on which the premises are situated. The notice of the conditions imposed by the head lease was sufficient notice for the purposes of cl. The ground of eviction under cl. (k) was thus made out. The Courts below also held that the appellant caused substantial damage to the premises. We express no opinion on it, and this question is left open. It follows that the respondent is entitled to evict the appellant on the grounds mentioned in cls. (b) (i), (c) (i) and (k) of the proviso to section 13(1). In the result, the appeal is dismissed with costs. The execution of the decree is stayed for a period of six months from today. The appellant through Mr. A. K. Sen gives an undertaking that the appellant will hand over to the respondent, on the expiry of six months, vacant possession of the entire hotel premises except the portion in the possession of sub lessees. Y.P. Appeal dismissed.

The respondent landlord of a hotel filed a suit for eviction of his tenant appellant under section 13(1) proviso (b) and (c) of the Delhi and Ajmer Rent Control Act, 1952 on the allegation that the appellant had sub let several rooms. These occupants were doing business, which were not confined to the residents of the hotel. The occupants were given ex clusive possession of the rooms occupied by them. The appellant did not retain any control and dominion over these rooms. It was not a condition of the grants that the keys would be left at the reception counter, or that the keys would be retained by the appellant. The occupants were at liberty to take away the keys if they liked. The occupants availed themselves of the services of the hotel sweeper for their own convenience. The appellant retained control of the corridor, but the entrance to the corridor was open day and night. The occupants paid monthly sums to the appellant as the consideration of the sub leases. The appellanttenant denied the allegations and pleaded that the respondent landlord had waived the breaches, if any. The suit was decreed which the High Court, in appeal maintained HELD : The landlord was entitled to the decree for eviction. [558 B] On the question whether the occupier of a separate apartment in a premises is a licensee or a tenant, the test is has the landlord retained control over, the apartment Normally, an occupier of an apartment in a hotel is in the position of licensee as the hotel keeper retains the general control of the hotel including the apartment. But it is not a necessary inference of law that the occupier of an apartment in a hotel is not a tenant. A hotel keeper may run a first class hotel without sub letting any part of it. Where as in this case, the hotel keeper retained no control over the apartment, the occupier was in the position of a tenant. The onus to prove sub letting was on the respondent. The respondent discharged the onus by leading evidence showing that the occupants were in exclusive possession of the apartments for valuable consideration. The appellant chose not to rebut this prima facie evidence by proving and exhibiting the relevant agreements. [553 D; 554 C D, F H; 555 C; 556 E] Under section 2(g) "premises" does not include " a room in a hotel or lodging house". The sub lessee of a room in a hotel is, therefore, not a tenant and cannot claim protection under section 13 from eviction, nor can he ask for fixation of standard rent. But, because a room in a hotel is not premises, it does not follow that the room is not a part of the hotel premises or that a sub letting of the room is not a contravention of cls. (b) and (c) of the proviso to section 13(1). [555 F G 556 A] Associated Hotels of India Ltd. vs R. N. Kapoor, [1960]1 S.C.R. 368, followed. Addiscombe Garden Estates Ltd. & Anr. vs Grabbe and Ors. and Helman vs Horsham Assessment Committee, [1949] 2 K.B. 335,referred to. 549 A waiver is an intentional relinquishment of a known right. There can be no waiver unless the person against whom the waiver is claimed had full knowledge of his rights and of facts enabling him to take effectual action for the enforcement of such rights. Assuming that the landlord can waive the requirement as to consent, it was not shown that the respondent waived it. It is said that the respondent knew of the sub lettings as be frequently visited the hotel up to 1953 and he must have known of the occupation of some of the occupants. But he came to know of the other lettings in 1958 only. Moreover, the precise nature of the grant was never communicated to the respondent. [557 B D] Dhanukdhari Singh vs Nathima Sahu, , referred to.

Appeal No. 132 of 1956. Appeal by special leave from the judgment and order dated May 16, 1955, of the Election Tribunal, Bhatinda, in Election Petition No. 14 of 1954. C. K. Daphtary, Solicitor General of India, J. B. Dadachanji, section N. Andley, Rameshwar Nath and K. C. Puri, for the appellant. N.C. Chatterji, A. N. Sinha and Gopal Singh, for respondent No. 1. 1956. December 20. The Judgment of the Court was delivered by VENKATARAMA AIYAR J. The appellant was one of the candidates who stood for election to the Legislative Assembly of the Paterson and East Punjab States Union from the Farber Constituency in the General Elections held in 1954. He secured the largest number of votes, and was declared duly elected. The result was notified in the Official Gazette on February 27, 1954, and the return of the election expenses was published therein on May 2, 1954. On May 18, 1954, the first respondent filed a petition under section 81 of the Representation of the People Act No. XLIII of 1951, hereinafter referred to as the Act, and therein he prayed that the election of the appellant might be declared void on the ground that We and his agents had committed various corrupt and illegal practices, of which particulars were given. The appellant filed a written statement denying these allegations. He therein raised the further contention that the election petition had not been presented within the time limited by law, and was, therefore, liable to be dismissed. Rule 119, which prescribes the period within which election petitions have to be filed, runs, so far as it is material, as follows: 119. "Time within which an election petition shall be presented : An election petition calling in question an election may, 27 210 (a) in the case where such petition is against a returned candidate, be presented under section 81 at any time after the date of publication of the name, of such candidate under section 67 but not later than fourteen days from the date of publication of the notice in the Official Gazette under rule 113 that the return of election expenses of such candidate and the declaration made in respect thereof have been lodged with the Returning Officer ," The last date for filing the petition, according to this Rule, was May 16, 1954, but that happened to be a Sunday and the day following had been declared a public holiday. The first respondent accordingly presented his petition on May 18, 1954, and in paragraph 6 stated as follows: " The offices were closed on 16th and 17th; the petition is, therefore, well within limitation." On this,, the Election Commission passed the following order : "The petition was filed on l8 5 1954. But for the fact that 16 5 1954 and 17 5 1954 were holidays, the petition would have been time barred. Admit. " The plea put forward by the appellant in his written statement based on Rule 119(a) was that whatever might have been the reason therefor, the fact was that the petition had not been filed "not later than fourteen days" from the publication of the return of the election expenses, which was on May 2, 1954, and that it was, therefore, not presented within the time prescribed. The Tribunal overruled this plea on the ground that under Rule 2(6) of the Election Rules, the General Clauses Act X of 1897 was applicable in interpreting them, and that under section 10 of that Act, the election petition was presented within the time allowed by Rule 119(a). On the merits, the Tribunal held that of the grounds put forward in the Election Petition, one and only one had been substantiated, and that was that the appellant had 'employed for payment, in connection with his election, 25 persons in addition to the number of persons allowed under Rule 118 read along with Schedule VI thereto, and had thereby 211 committed the major corrupt practice mentioned in section 123(7) of the Act. The Tribunal accordingly declared the election void under section 100(2)(b) of the Act. It also observed that on its finding aforesaid, the appellant had incurred the disqualification enacted in sections 140(1)(a) and 140(2) of the Act. Against this decision, the appellant has preferred this appeal by special leave. On behalf of the appellant, two contentions have been pressed before us: (1) that the election petition was presented beyond the time prescribed by Rule 119(a), and should have been dismissed under section 90 (4) of the Act; and (2) that on the findings recorded by the Tribunal, the conclusion that Rule 118 had been contravened does not follow and is erroneous. The first question turns on the interpretation of section 10 of the General Clauses Act, which is as follows: "Where by any Central Act or Regulation made after the commencement of this Act, any act or proceeding is directed or allowed to be done or taken in any Court or office on a certain day or within a prescribed period, then if the Court or office is closed on that day or the last day of the prescribed period, the act or proceeding shall be considered as done or taken in due time if it is done or taken on the next day afterwards on which the Court or office is open. " The contention of Mr. Solicitor General on behalf of the appellant is that this section can apply on its own terms only when the act in question is to be done " within a prescribed period", that under Rule 119(a) the petition has to be filed "not later than" fourteen days, that the two expressions do not mean the same thing, the words of the Rule being more peremptory, and that accordingly section 10 of the General Clauses Act cannot be invoked in aid of a petition presented under Rule 119, later than fourteen days. In support of this contention, he invites our attention to some of the Rules in which the expression "the time within which" is used, as for example, Rule 123, and he argues that when a statute uses two different expressions, they must be construed as used in two different senses. He also points out that whenever the Legislature intended 212 that if the last date on which an act could be performed fell on a holiday, it could be validly performed on the next working day, it said so, as in the proviso to section 37 of the Act, and that there would be no need for such a provision, if section 10 of the General Clauses Act were intended generally to apply. This argument proceeds on an interpretation of section 10 of the General Clauses Act which, in our opinion,is erroneous. Broadly stated, the object of the section is to enable a person to do what he could have done on a holiday, on the next working day. Where, therefore, a period is prescribed for the performance of an act in a court or office, and that period expires on a holiday, then according to the section the act should be considered to have been done within that period, if it is done on the next day on which the court or office is open. For that section to apply, therefore, all that is requisite is that there should be a period pres cribed, and that period should expire on a holiday. Now, it cannot be denied that the period of fourteen days provided in Rule I 1 9 (a) for presentation of an election petition is a period prescribed, and that is its true character, whether the words used are " within fourteen days" or "not later than fourteen days". That the distinction sought to be made by the appellant between these two expressions is without substance will be clear beyond all doubt, when regard is had to section 81 of the Act. Section 81 (1) enacts that the election petition may be presented "within such time as may be prescribed, and it is under this section that Rule 119 has been framed. It is obvious that the rule making authority could not have intended to go further than what the section itself had enacted, and if the language of the Rule is construed in conjunction with and under the coverage of the section under which it is framed, the words "not later than fourteen days" must be held to mean the same thing as "within a period of fourteen days". Reference in this connection should be made to the heading of Rule 119 which is, " Time within which an election petition shall be presented ". We entertain no doubt that the legislature has used both 213 the expressions As meaning the same thing, and there are accordingly no grounds for holding that section 10 is not applicable to petitions falling within Rule 119. We are also unable to read in the proviso to section 37 of the Act an intention generally to exclude the operation of section 10 of the General Clauses Act in the construction of the Rules, as that will be against the plain language of Rule 2 (6). It should be noted that proviso applies only to section 30 (c) of the Act, and it is possible that the Legislature might have considered it doubtful whether section 30 (c) would, having regard to its terms, fall within section 10 of the General Clauses Act and enacted the province abundant cauterize. The operation of such a beneficent enactment as a. 10 of the General Clauses Act is not, in our opinion, to be cut down on such unsubstantial grounds as have been urged before us. We are accordingly of opinion that the petition which the respondent filed on May 18, 1954, is entitled to the protection afforded by that section and is in time. We should add that the appellant also raised the contention that if we agreed with him that the election petition was not presented in time, we should hold that the order of the Election Commission admitting the petition was not one of condonation within the proviso to section 85, because that proceeded on the footing that the petition was in time, and did not amount to a decision that if it was not, there were sufficient grounds for excusing the delay. We are not disposed to agree with this contention; but in the view which we have taken that the petition is in time, it is unnecessary to consider it. Then the next question and that is one of substance is whether there has been contravention of Rule 118. The material facts are that the appellant is the quondam ruler of Faridkot, which enjoyed during the British regime the status of an independent State, and came in for judicial recognition as such in Sirdar Gurdyal 'Singh vs Rajah of Faridkote (1), and, after Independence, became merged in the State of Pepsu. The (1) (I894) L.R. 21 I.A. 171. 214 appellant continues to retain a large staff of subordinates, and the charge of the first respondent in his petition was that as many as 54 of them were employed for purposes of election, and that Rule 118 had thus been violated. Rule 118 is as follows: , "No person other than, or in addition to, those specified in Schedule VI shall be employed for payment by a candidate or his election agent in connection with an election." Under Schedule VI, a candidate for election may employ for payment in connection with election (1) one election agent, (2) one counting agent, (3) one clerk and one messenger, (4) one polling agent and two relief polling agents for each polling station or where a polling station has more than one polling booth, for each polling booth and (5) one messenger for each polling station, or for each polling booth, if a polling station has more than one booth. The finding of the Tribunal on this question is as follows: " . it is clear that 25 persons named in the foregoing paragraphs took part in the election campaign of respondent No. I apart from any duties they may have performed as polling agents. Now admittedly all these persons are paid employees of respondent No. 1. As their number exceeds the statutory number provided in Rule 118, respondent No. I is undoubtedly guilty of a major corrupt practice under section 123 (7). A question however arises whether the fact that these persons were already in the employ of respondent No. I and were not specially engaged for purposes of election, would take them out of purview of Rule 118. In our judgment it would not." Then, dealing with the question as to whether the return of election expenses made by the appellant was false in that it did not include anything on account of the services of the 25 employees, the Tribunal says: " We have held under Issue No. 3 that respondent No. I did utilise the services of 25 of his employees for furthering his election prospects. Now there is no evidence on the record to show that these employees 215 were engaged specifically for the purposes of election. All of them had been in the service of respondent No. I for a long time before the election in normal course. Therefore, there is no reason why the emoluments paid should be charged to the election account. However, if any additional allowances were paid to these persons that would certainly be chargeable to the election account. But there is no evidence on the record to show that any such allowance was paid. " Now, the question is whether on these facts there is a contravention of Rule 118. The contention of Mr. Solicitor General for the appellant is that the Rule would apply only if 'the employment of the persons was specifically for work in connection with the election and such employment was for payment. In other words, according to him it is only employment ad hoc for the election that ' is within the mischief of the Rule. On behalf of the respondent Mr. N. C. Chatter bee contends that it is not necessary for the Rule to operate that there should have been an employment specially for the purpose of the election, and that it would be sufficient if the persons who did work in connection with the election were in the employment of the candidate, and that employment carried with it payment of salary or remuneration. In our opinion, neither of these contentions is wellfounded. Rule 118 does not require that the person engaged by a candidate to work in the election should have been specially employed for the purpose of the election. It is sufficient, on the wording of the Rule, that person is employed in connection with the election. At the same time, the requirements of Rule 118 are not satisfied by proving merely that the person does work in connection with the election. That work must be done under a contract of employment. Thus, if the candidate has been maintaining a regular staff of his own and its members have been doing personal service to him and he has been paying them and then the election supervenes, and off and on he sets them on election work but they continue to do their normal work as members of his staff, it cannot 216 be said of them that they have been employed in connection with the election. But if, on the other hand, he takes them out of their normal work and puts them on whole time or substantially whole time work in connection with the election, that would amount to converting their general employment into one in connection with the election. It will be a question of fact in each case whether what the candidate has done amounts merely to asking the members of the staff to do casual work in connection with the election in addition to their normal duties, or whether it amounts to suspending the work normally done by them and assigning to them election work instead. Then again, it is a condition for the application of the Rule that the employment of the person must be for payment. If the members of the staff continue to do their normal work and do casual work in connection with the election, the payment of salary to them would be a payment on account of their employment as such members of the staff and not in connection with the election. Rule 118 would not apply to that case, as there is neither an employment in connection with the election, nor a payment on account of such employment. Indeed, the salary paid to the members would not even be election expenses liable to be included in the return. But if, in the above case, the members are paid extra for their work, such extra payment will have to be included in the return of election expenses, though it 'may be that Rule 118 itself might have no application for the reason that there is no employment for election and the payment is not in respect of such employment. If, however, the members of the staff are switched off from their normal work and turned on to election work so that it could be said that work has been assigned to them in supersession of their normal work, then the salary paid to them could rightly be regarded as payment for work in connection with election within Rule 118. That being our view on the construction of Rule 118, we shall now proceed to consider what the position is, on the authorities cited before us. 217 In the Hartlepools Case(1) the question arose with reference to one Butler who was the general secratary of Mr. Furness, the returned candidate, and certain clerks in a company in which Mr. Furness, had considerable influence. All these persons had taken part in the election. As regards Butler, Phillimore J. observed that if it could be held that at the time ' of his employment his duties included also work in elections if and when they, were held, then a proportionate part of his salary should be regarded as election expenses; but, on the facts, he held that it was no part of the duties of Butler in respect of his standing employment to be election agent when called upon, and that, therefore, no part of his salary need be shown as election expenses. As put by Pickford, J., in Ins concurring judgment, Butler was paid " his salary as private secretary and was not paid anything as election agent ". Counsel for the appellant relies on these observations, and argues that on the finding of the Tribunal that the 25 men had been in service for a, long time, there could be no question, of their having been employed for work in connection with election, and that they were, therefore, neither election agents nor was the salary paid to them payment on account of any employment in connection with the election. But then, considering the effect of the clerks of the company taking part in the election, Phillimore J. observed: " . I am certainly inclined to think that if a business man takes his business clerks and employs them for election work which, if he had not business clerks, would be normally done by paid clerks, he ought to return their salaries as part of his expenses." Counsel for respondent strongly relies on these obser vations. But then, the point was not actually decided by Philimore, J., as the evidence relatinig to the matter was incomplete, and Pickford, J. expressly reserved his opinion on the question. In view of the remarks of Sankey, J., in the Borough of Oxford Case (2), in the (1) 28 (2) , 56 57 218 course of his argument, it is doubtful,,how far the observations ' of Phillimore, J. quoted above could be accepted as good law. They Were, however,. adopted in two decisions of the Election Tribunals of this country, to which our attention was invited by Mr. Chatterjee. In the Amritsar Case(1), the following observation occurs: We also consider that if any man in the service of the respondent were put on election work, their wages for the period should have been shown in the return. (See Hartlepools Case(2) ". The words " put on election work " in this passage suggest that the employees had been taken out of their original work. As there is no discussion of the present question, the authority of this decision is, in any event, little. In Farrukhabad Case(3), this passage,, as also the observations of Phillimore, J., we 're quoted, and in accordance therewith, it was held that the salaries of Tilakdhari Singh, Kundan Singh and Drigpal Singh for the period they worked in connection with the election of the respondent Nol should have been shown in the return It was found in that case that Tilakdhari Singh worked exclusively for 30 days in connections with the election and Kundan Singh and Drigpal Singh would appear to have similarly devoted themselves to election work for certain periods. None of these cases has considered what would amount to employment in connection with election, when the persons had been previously employed on other work; and they throw no light on the present question. The position may thsu be summed up : (1)For Rule 118 to apply, two conditions must be satisfied, viz., there should have been an employment by the candidate of a person in connection with,an election, and such employment should have been for payment. (1) [1924] Hammond 's Election Cases 83. (2) (3) [1927] Hammond 's Election Cases 349. 219 (2) Where a person has been in the employment of the candidate even prior to his election and his duties do not include work in election 'and he takes part in election, whether he is to be regarded as employed in connection with the election will depend on the nature of the work which he performs during the election. (3) When the work which he does in election is ', casual and is in addition to the normal work for which, he has been employed , he is not within Rule l 18. if his work in connection with the election is such that he could be regarded as having been taken 'out of his previous work and put on election work, then he would be within Rule 118. (4) Whether a person who has been previously employed by the candidate on other work should held to have been employed in connection with election is a question of fact to be decided on the evidence in each case. In the present case, the finding is that 25 persons belonging to the staff of the appellant had taken part in the election. It has been found that they had been in the service of the appellant for a long time and that their appointment was not colorable for election purposes. It has also been found that they were not paid anything extra for what work they might have done in connection with the election. But there is no finding that having regard to the work which they are proved to have done, they must be taken to have been relieved of their original work and put on election work. In the absence of such a finding, it cannot be held that Rule II 8 had been infringed. It is possible that the Election Tribunal did not appreciate the true legal position and has in consequence failed to record the findings requisite for a decision on Rule 118, and that would be a good ground on which we could, if the Justice of the case required it, set aside the order and direct the matter to be heard afresh and disposed of by another Tribunal in accordance with law. But we do not consider that this is a fit case for passing such an order. The evidence adduced by the first respondent is very 220 largely, to the effect that the appellant 's men did election work in the morning or in the evening, that is , out of office hours. That shows that the work the staff was in addition to their normal duties, and on the, principles stated above, they could not be held to have been employed in connection with the election. As the first respondent does not appear himself to have under , stood the true position under Rule 118 and has failed to adduce, evidence requisite for a decision of the question, he must fail, the burden being on him to establish that Rule had been infringed. In the result, this appeal is allowed, the order of the, Election Tribunal is set aside and the election petition of the first respondent will stand dismissed. As the parties have each succeeded on one issue and failed on another, they will bear their own costs, throughout. Appeal allowed.

The last day for filing the election petition was a Sunday and the day following was a public holiday. The petition was presented on the next day after the public holiday. Held, that section 10 of the General Clauses Act was applicable and that the petition was presented within time. The appellant, who retains a large staff of subordinates, was charged with employing 54 of them for purposes of the election in violation of Rule 118, and with failure to include their salaries in the return of his election expenses. The election tribunal found that 25 of the old paid employees of the appellant took part in his election campaign, that their number exceeded the statutory number provided by Rule 118 and that consequently the appellant was guilty of a major corrupt practice under section 123 (7) of the Representation of the People Act, 1951. The tribunal further held that there was no evidence to show that the employees were engaged specifically for the purposes of the election, that they had been in the service of the appellant for a long time and that the emoluments paid to them were not election expenses. In the result the tribunal set aside the election of the appellant: Held, that where a person has been in the employment of a candidate even prior to his election and his duties do not include election work but he takes part in the election, and the work which he does is casual and is in addition to his normal work, he is not within Rule 118. But if the work in connection with the election is such that he could be regarded as having been taken out of his normal work and put on election work, then he would be within Rule 118. Hartlepooles Case, and Borough of Oxford Case, , referred to. If the members of the staff of a candidate do their normal work and do casual work in connection with the election, the payment of salary to them would be payment on account of their 209 employment as such members of the staff and not in connec tion with the election.

Civil Appeal No. 1652 of 1973. Appeal by Special leave from the Judgment and Order dated the 25th June, 1973 of the Calcutta High Court in Appeal No. 233 of 1970. WITH Civil Appeal Nos. 759 760 of 1973 From the Judgment and Order dated the 2nd June, 1972 of the Calcutta High Court in Appeal from Original Order Nos. 155 & 158 of 1970. AND Civil Appeal No. 661 of 1975 From the Judgment and Order dated the 15th March, 1974 of the Calcutta High Court in Appeal No. 96 of 1972. V.S. Desai, B.B. Ahuja and Miss A. Subhashini for the Appellant, in CA. 1652 of 1973. 819 S.T. Desai, Miss A. Subhashini for the Appellants in CA. 759 760 of 1973 & 661 of 1975. Sanjay Bhattacharya, Rathindas and K. Kathazarika for the Respondent in CA. No. 1652 of 1973. V.B. Saharya for the Respondent in CA. No. 759 of 1973. N.S. Das Behl for the Respondent in CA. No.760 of 1973. D.N. Mukherjee for the Respondent in CA. No.661 of 1975. The Judgment of the Court was delivered by TULZAPURKAR, J. All these appeals, at the instance of the Commissioner of Income tax, raise a common question whether the Revenue is under a statutory obligation to communicate to the person (from whose custody books of account and documents have been seized under section 132(1) of the Income tax Act, 1961) the approval obtained from the Commissioner of Income tax and the recorded reasons of the Authorised Officer/Income Tax Officer on which such approval is based for the retention of the seized books of account and documents by the Department for a period exceeding 180 days from the date of seizure under sec. 132 (8) of the Income tax Act, 1961 ? Since in all these appeals the facts giving rise to aforesaid question are almost similar, it will suffice to indicate briefly the facts obtaining in M/s. Oriental Rubber Work 's case (Civil Appeal No. 1652 of 1973). Under a proper authorisation issued in that behalf under sec. 132(1) of the Act, on 17th February, 1965 a search was conducted by the Income tax Department in the factory premises at Kantalia as well as the offices and godown at Mahatma Gandhi Road Calcutta belonging to the respondent assessee and various books of account and documents were seized from the aforesaid premises. After lawfully carrying out the aforesaid search and seizure, the respondent assessee was given opportunity to inspect the seized books and documents as also to make copies of the entries. The concerned Income Tax Officer then issued a notice to the respondent assessee under Sec. 142(1) of the Act in connection with its assessment for the assessment year 1964 65 and after giving several hearings which were attended by the respondent assessee or its representative the assessment for the said year was completed under section 143(3) of 820 the Act on 5th February, 1969. Notwithstanding the passing of such assessment order on 5th February, 1969, the respondent assessee on 27th February, 1969 moved the Calcutta High Court by way of a writ under article 226 of the Constitution inter alia praying (a) for a direction to the Commissioner of Income tax and the concerned Authorized Officer/Income Tax Officer to return forthwith the said books of account, documents and papers etc. seized as aforesaid and to cancel or rescind the warrant of authorisation issued under sec. 132(1) of the Act and (b) for a mandamus commanding the concerned Income Tax Officer not to proceed with the assessment for the assessment year 1964 65 until the return of documents seized on 17th February, 1965. The main submission of the respondent assessee was that the retention of the seized books of account and documents beyond the period of 180 days from the date of the seizure (17th February, 1965) was illegal and invalid inasmuch as neither the approval accorded by the Commissioner of Income tax for such extended retention nor the recorded reasons of the Authorized Officer/Income Tax Officer on which such approval was based had been communicated to the respondent/assessee and that without the return of the seized books of account and documents no assessment for the concerned assessment year 1964 65 could be proceeded with or made. On behalf of the Revenue it was pointed out that the concerned Income Tax Officer had recorded his reasons seeking approval of the Commissioner of Income tax for extended retention of the seized books of account and documents and had obtained approval of the Commissioner of Income tax for such extended retention from time to time and therefore such retention of the seized books and documents beyond 180 days was perfectly legal and valid that there was no obligation under sec. 132(8) of the Act to communicate the Commissioner 's approval for such extended retention or the, recorded reasons of the Income Tax Officer therefor to the respondent assessee and that in any event due inspection of the seized books and documents was afforded to the respondent assessee who was also permitted to take copies of the entries in the books and after giving proper hearing to the respondent assessee the assessment for the year 1964 65 had been validly completed on 5th February, 1969 long before the respondent assessee approached the Court and obtained a Rule Nisi. A learned Single Judge of the High Court held that the seized books of account and other documents could not be retained beyond the period of 180 days without a complete and effective order of approval for such extended retention of the said books and documents and that since the approval of 821 the Commissioner and the recorded reasons therefore had not been communicated to the respondent assessee, the retention of the books and documents beyond 180 days was unlawful. The learned Judge, therefore, ordered the issuance of a mandamus directing the Commissioner and the concerned Income Tax Officer to return all the seized books and documents and he further ordered that the concerned Income Tax Officer shall be at liberty to complete the assessment for the year 1964 65 after the return of the said books and documents and after issuing afresh statutory notices under section 142(1)/143(2) of the Income tax Act to the respondent assessee. In rendering the aforesaid decision, the learned Judge followed two earlier decisions of his own High Court in Mahabir Prasad Poddar 's case decided by T. K. Basu, J. and his own decision in C. K. Wadhwa 's case (which is the subject matter of the companion Civil Appeal No.760 of 1973 before us). At the instance of the Commissioner of Income tax, an appeal was preferred to the Division Bench of the High Court being Appeal No. 233 of 1970. The self same contentions were urged on behalf of the Revenue in the appeal and it was specifically submitted that the assessment for the assessment year 1964 65 having been completed on 5th February, 1969 long before the rule nisi had been issued, the direction given by the learned Single Judge with regard to the liberty to complete the assessment for the said assessment year had become infructuous. The Division Bench, however, negatived all the contentions a dismissed the appeal affirming all the directions given by the learned trial Judge. The Revenue has come up in appeal to this Court. Counsel for the Revenue urged two points before us in support of this appeal. In the first place, the counsel urged that section 132(8) of the Income tax Act, which deals with the extended retention of the seized books and documents in excess of the period of 180 days from the date of the seizure merely provides that for such extended retention the Authorised Officer/the concerned Income Tax Officer has to record his reasons in writing in that behalf and has to obtain the approval of the Commissioner of Income tax for such extended retention and there is no obligation imposed by the said sub section to communicate the approval of the Commissioner of the recorded reasons of the I.T.O. on which it is based to the person from whose custody the books and documents have been seized or to the person legally entitled to such books and documents and therefore the High Court erroneously held that such extended retention of the seized books and documents without communicating the 822 Commissioner 's approval and the reasons on which it is based was unlawful or illegal. Secondly, the counsel contended that in any event since proper opportunity to inspect the seized books and documents and to make copies of the entries was given to the respondent/assessee and since after issuing proper notices and giving hearing to the respondent assessee, the assessment for the assessment year 1964 65 had been completed long before the issuance of the rule nisi, the same ought to have been upheld as binding on the respondent assessee. In other words, according to the counsel for the Revenue, the unauthorised retention of the seized books and documents beyond 180 days, if any, could not render the assessment for the year 1964 65 properly made invalid. Counsel further pointed out that the respondent assessee had even preferred appeals to higher authorities challenging the said assessment on merits. It may be stated that Counsel for the respondent assessee in this appeal conceded that in all the circumstances of the case the assessment already made on 5th February, 1969 should be allowed to stand subject of course to the result of the appeals that have been preferred by the respondent assessee against it. In this view of the matter, the second contention urged by Counsel for the Revenue in this appeal has to be accepted and the assessment for the assessment year 1964 65 made on 5th February, 1969 subject as aforesaid to be upheld. That leaves for consideration the first contention, which as we have indicated earlier, is common to all the appeals. In order to decide the aforesaid contention it will be desirable to set out the material provisions of sec.132 of the Act, namely, sub secs.(8), (10) and (12) thereof, which run as follows: "132 (8) The books of account or other documents seized under sub section (1) or sub section (1A) shall not be retained by the authorised officer for a period exceeding one hundred and eighty days from the date of the seizure unless the reasons for retaining the same are recorded by him in writing and the approval of the Commissioner for such retention is obtained: Provided that the Commissioner shall not authorise the retention of the books of account and other documents for a period exceeding thirty days after all the proceedings under the Indian Income tax Act, 1922 (XI of 1922), or this Act in respect of the years for 823 which the books of account or other documents are relevant are completed. (10) If a person legally entitled to the books of account or other documents seized under sub section (1) or sub section (1A) objects for any reason to the approval given by the Commissioner under sub section (8), he may make an application to the Board stating therein the reasons for such objection and requesting for the return of the books of account or other documents. (12) On receipt of the application under sub section (10) the Board may, after giving the applicant an opportunity of being heard, pass such orders as it thinks fit. " On a plain reading of the aforesaid provisions it will be clear that ordinarily the books of account or other documents that may be seized under an authorisation issued under sub sec.(1) of sec.132 can be retained by the authorised officer or the concerned Income tax officer for a period of one hundred and eighty days from the date of seizure, whereafter the person from whose custody such books or documents have been seized or the person to whom such books or documents belong becomes entitled to the return of the same unless the reasons for any extended retention are recorded in writing by the authorised officer/the concerned Income Tax Officer and approval of the Commissioner for such retention is obtained. In other words two conditions must be fulfilled before such extended retention becomes permissible in law: (a) reasons in writing must be recorded by the authorised officer or the concerned Income tax Officer seeking the Commissioner 's approval and (b) obtaining of the Commissioner 's approval for such extended retention and if either of these conditions is not fulfiled such extended retention will become unlawful and the concerned person (i.e. the person from whose custody such books or documents have been seized or the person to whom these belong) acquires a right to the return of the same forthwith. It is true that sub sec.(8) does not in terms provide that the Commissioner 's approval or the recorded reasons on which it might be based should be communicated to the concerned person but in our view since the person concerned is bound to be materially prejudiced in the enforcement of his right to have such books and documents returned to him by being kept ignorant about the factum of fulfilment of either of the 824 conditions it is obligatory upon the Revenue to communicate the Commissioner 's approval as also the recorded reasons to the person concerned. In the absence of such communication the Commissioner 's decision according his approval will not become effective. Moreover, sub sec.(10) confers upon the person legally entitled to the return of the seized books and documents a right to object to the approval given by the Commissioner under sub sec.(8) by making an application to the Central Board stating therein the reasons for such objection and under sub sec.(12) it is provided that the Central Board may, after giving the applicant an opportunity of being heard pass such orders as it thinks fit. It is obvious that without the knowledge of the factum of the Commissioner 's approval as also of the recorded reasons on the basis of which such approval has been obtained it will not be possible for the person to whom the seized books or documents belong to make any effective objection to the approval before the Board and get back his books or documents. In our view the scheme of sub secs. (8), (10) and (12) of sec.132 makes it amply clear that there is a statutory obligation on the Revenue to communicate to the person concerned not merely the Commissioner 's approval but the recorded reasons on which the same has been obtained and that such communication must be made as expeditiously as possible after the passing of the order of approval by the Commissioner and in default of such expeditious communicating any further retention of the seized books or documents would become invalid and unlawful. It is obvious that such obligation arises in regard to every approval of the Commissioner that might have been accorded from time to time. In the result the orders passed by the High Court directing the return of the seized books of account and documents to the respondents in each of the appeals are confirmed and the appeals (subject to the directions given below in two of them) are dismissed with no order as to costs. In Civil Appeal No.1652 of 1973 the assessment order passed on 5th February, 1969 is upheld subject to the result of the appeals that may have been preferred against it. In Civil Appeal No.661 of 1975 it is directed that the assessment orders passed for the concerned assessment years would be subject to the appeals already preferred if any or such as might be preferred in accordance with law, against the same. H.S.K. Appeals dismissed.

The Revenue who had seized the books of account and documents of the assessee under sec. 132(1) of the Income Tax Act, 1961 did not return the same to the assessee after a period of 180 days of the seizure. The assessee filed a writ petition in the High Court inter alia praying for a direction to the Revenue to return the said books of account. The assessee submitted that the retention of the seized books of accounts and documents beyond the period of 180 days was illegal and invalid inasmuch as neither the approval accorded by the Commissioner of Income Tax for such extended retention nor the recorded reasons of the Income Tax Officer on which such approval was based had been communicated to him. A single Judge of the High Court held that the retention of the books and documents beyond 180 days was unlawful. A Division Bench dismissed the Revenue 's appeal. In these appeals the Revenue submitted that sec. 132(8) of the Act did not impose any obligation on the Revenue to communicate the approval of the commissioner or the recorded reason of the Income Tax Officer on which it is based to the person from whose custody the books of accounts and documents had been seized. Dismissing the appeals, ^ HELD: It is true that sub sec.(8) of sec. 132 of the Income Tax Act, 1961 does not in terms provide that the Commissioner 's approval of the recorded reasons on which it might be based should be communicated to the concerned person but since the person concerned is bound to be materially prejudiced in the enforcement of his right to have such books and documents returned to him by being kept ignorant about the factum of fulfilment of either of the two conditions laid down therein it is obligatory upon the Revenue to communicate the Commissioner 's approval as also the recorded reasons to the person concerned. In the absence of such communication the Commissioner 's decision according his approval will not become effective. [823 H; 824 A] Moreover, sub sec.(10) of sec.132 confers upon the person legally entitled to the return of the seized books and documents a right to object to the 818 approval given by the Commissioner under sub sec.(8) by making an application to the Central Board stating therein the reasons for such objection and under sub sec.(12) of sec.132 it is provided that the Central Board may, after giving the applicant an opportunity of being heard pass such orders as it thinks fit. It is obvious that without the knowledge of the factum of the Commissioner 's approval as also of the recorded reasons on the basis of which such approval has been obtained it will not be possible for the person to whom the seized books or documents belong to make any effective objection to the approval before the Board and get back his books or documents. [824 B C] The scheme of sub secs (8), (10) and (12) of sec.132 makes it amply clear that there is a statutory obligation on the Revenue to communicate to the person concerned not merely the Commissioner 's approval but the recorded reasons on which the same has been obtained and that such communication must be made as expeditiously as possible after the passing of the order of approval by the Commissioner and in default of such expeditious communication any further retention of the seized books or documents would become invalid and unlawful. It is obvious that such obligation arises in regard to every approval of the Commissioner that might have been accorded from time to time. [824 D F]

Appeal No. 640 of 1961. Appeal by special leave from the judgment and order dated September 14, 1961, of the Calcutta High Court in Matter No. 44 of 1961. WITH Civil Appeals Nos. 173 to 175 of 1962. Appeal by special leave from the judgments and order dated September 14 and 21, 1961, of the Calcutta High Court in Matters Nos. 149, 258 and 162 of 1961. M.C. Setalvad, Attorney General of India, B. Sen and P. K. Boae, for the appellants in C.A. No. 640 of 61. Sachine Chaudhuri, Ellis Meyer, Subrota K. Chaudhuri and I. N. Shroff, for the respondent in C.A. No. 640/61. 956 N.C. Chatterjee, B. L. Kanodia and B. P. Mahemari, for the appellants in C.A. No. 173 of 1962. B.Sen, B. L. Kanodia and B. P. Maheshwari, for the appellants in C.As. No. 174 and 175 of 1962. G.S. Pathak, M. G. Poddar and D. N. Mukherjee for the respondents in C.A. No. 173/62. P.L. Khaitan, section N. Andley and Rameshwar Nath, for the respondents in C A. No. 174/62. A.O. Bhabra, M. G. Poddar, P. L. Khaitan and D.N. Mukherjee for the respondents in C. A. No. 175/62. 1962. May .3. The Judgment of the Court was delivered by S.K. DAS, J. These four appeals, all with special leave of this Court, have been heard together because they raise common questions of law ' and fact. This judgment will govern them all. In the High Court of Calcutta, in or about February July, 1961, a series of applications numbering about 170 were filed by sellers of raw jute. The main relief asked for by those applications was the revocation of the authority of an arbitrator appointed under certain contracts Which the applicants had entered into with the respondents in circumstances which we shall presently state. Except in two or three casts the respondents were all jute mill companies which purchase raw jute and manufacture finished goods therefrom. The main controversy which these applications gave rise to was dealt with by the High court in its judgment dated September 14. 1961, in the application entitled Ram Kumar Chhotaria vs Titaghur Jute Factory Co. Ltd. (Matter No. 20 of 1961 before the High Court). 957 Certain special points arising in some of the other applications were dealt with in separate ' judgments. The High Court stated in its judgment in Ram Kumar Chhotaria vs Titaghur. Jute Factory Co. Ltd. that the only relief, among the many included in the petition, pressed at the hearing was leave to revoke the authority of the appointed arbitrator under the provisions of section 5 of the (Act 10 of 1940) which provides that "the authority of an appointed arbitrator or umpire shall not be revocable except with the leave of the Court, unless a contrary intention is expressed in the arbitration agreement. " We shall now state the circumstances in which the applications were made for leave to revoke the authority of the appointed arbitrator and in doing so we shall state somewhat fully the facts alleged in the application of M/s. Amarchand Lalitkumar a firm registered under the Indian Partnership Act, and carrying on business in Calcutta, which firm is the appellant before us in Civil Appeal No. 640 of 1961. The facts being similar we shall not repeat them with regard to the other three appeals, but refer to such special facts or points in those appeals as have been pressed before us. On April 22, 1960, M/s. Amarchand Lalitkumar, whom we shall refer to as the appellant, entered into a contract being contract No. 1786 with Shree Ambica Jute Mills Ltd., respondent in Civil Appeal No. 640 of 1961, whereby the appellant agreed to sell and the respondent agreed to buy some 10,000 maunds of Middle and Bottom Jute at a particular price. The Contract was negotiated by a firm of brokers M/s. A. M. Mair & Co. (Private) Ltd., and was entered into in the standard printed form prescribed by the East India Jute & Hessian Exchange Ltd. (hereinafter referred to as the 958 (Exchange) and was subject to the rules and bylaws made by it. The contract was a 'forward contract being a transferable specific delivery contract in raw jute, the contract providing by a guarantee clause for "shipment or despatch during August/September, 1960". By the operation of the provisions of the Forward Contracts (Regulation) Act 1952 (Act 74 of 1952), and the notifications made by the ' Central Government thereunder, forward contracts for the sale or purchase of raw jute in the city of Calcutta which included the area within the municipal limits of Calcutta, the Port of Calcutta and the districts of 24 Parganas, Nadia, Howrah and Hooghly, could only be entered into between members of a recognised association or through or with any such member. The exchange was such a recognised association. The Act empowered recognised associations to make bye laws for the regulation and control of forward contracts subject to the previous approval of the Central Government. The Exchange made such bye laws relating to the transferable specific delivery contracts in raw jute which bye laws will be found in Chapter IX of the Working Manual issued by the Exchange. Terms and conditions of transferable specific delivery contracts in raw jute as prescribed by the said byelaws provided for arbitration of all claims and disputes arising out of or in relation to such contracts by the Tribunal of Arbitration, of the Bengal Chamber of Commerce and Industry or the Indian Chamber of Commerce in Calcutta in accordance with the rules framed by the said Chambers. In some appeals before us the contracts provided for arbitration by the Bengal Chamber of Commerce and Industry and some by the Indian Chamber of Commerce in Calcutta. The rules of the two Chambers for constituting Tribunals of Arbitration are similar and such difference as is material for our purpose will be adverted to later in this judgment. Paragraph 11 in Ch. IX of the 959 Working Manual of the Exchange made certain provisions for unavoidable delay in the supply of goods by the sellers of jute. In order to appreciate the main controversy between the parties it is necessary to quote the relevant, portion of that paragraph. "11. (a) In the case of jute and in the event of seller being prevented or delayed in carrying out their obligations under the con tract by the occurrence of fire, strikes, riots, political or communal disturbances, hartals and or civil 'Commotions, breakdown of public transport services, suspension of bookings, they shall give immediate intimation thereof to buyers. The sellers ' and buyers ' rights shall thereupon be as follows : (i)On the sellers 'Producing satisfactory evidence of the prevention or delay, they shall be granted an extension of time for delivering not exceeding thirty days from due date of all penalties. (ii)If the contract be not implemented within the extended period referred to in clause (i) above buyers shall thereupon be entitled to exercise any one of the following option (1) of cancelling the contract, (2) of buying against sellers in the open market on the day on which the option is declared and charging them any difference, (3)of cancelling the 'contract and charging sellers the difference between contract and the market price on the day on which the option is declared 960 Sellers shall notify buyers that the goods will or will not be shipped within such extended period referred to in clause (i) and in the case of sellers intimating that they will be unable to ship within the extended time buyer shall exercise their option under clause (ii) on the fifth working day of receiving such notice and notify, sellers. In ' the absence of any such notice from sellers it shall be deemed that the goods have not been shipped and buyers shall exercise their aforesaid option on the fifth working day after expiration of the extended date and notify sellers. . . . ." The case of the appellant was that at the relevant time certain emergent conditions srose in the raw jute trade and industry, which prevented the appellant from supplying the raw jute stipulated for in the contract within the time mentioned in the guarntee clause. By a letter dated October 10, 1960, the respondent exercised its option under para. 1 1 quoted earlier, cancelled the contract and charged the appellant for the difference in price between the contract rate ' and the market rate prevailing on the date of cancellation. The appellant denied that it bad any liability to pay the difference. Thereupon the respondent applied for arbitration by the Tribunal of Arbitration constituted in accordance with the rules of the Bengal Chamber of Commerce and Industry. The Registrar of the Chamber wrote to the appellant that the arbitration case (No. 10 of 1961) would be heard by the Tribunal on a certain date. The date was then extended and before the Arbitration Tribunal could decide the matter the applications in the High Court were made for revoking the authority of the appointed arbitrator. The facts and circumstances which according the appellant situated the emergency were 961 stated in para 11 of the petition and the substance of the allegations was that owing to the two causes of scarcity of raw jute and speculation, the prices of raw jute shot up abnormally giving rise to an emergent condition in the jute trade and industry and especially in respect of trading in future contracts in raw jute. The appellant 's case was that by reason of that emergency the buyers and sellers of raw jute were placed in two conflicting camps and the vast majority of the arbitrators in the panel of arbitration comprising the Tribunal of Arbitration of the Bengal Chamber of Commerce and Industry were either directly or indirectly connected with one or other of the jute mills which were all buyers of raw jute. In paras. 21, 22 and 23 of its petition the appellant stated that when the parties entered into the contract they never contemplated that there would happen such an exceptional situation as arose in the jute trade during the relevant period of September October, 1960 ; that the arbitrators of the Tribunal of Arbitration of the Bengal Chamber of Commerce and Industry were disqualified from acting as arbitrators inasmuch as they were all connected with the buyers and there was every probability that they would be biased in favour of the buyers; therefore, the appellant reasonably apprehended that it would not be possible for the arbitrators to act as impartial or disinterested judges. In para 33 the appellant stated : "The interest of the sellers of raw jute are in conflict with the interest of the buyers of raw jute. In the events that have happened the sellers of raw jute have formed themselves into a group and the buyers of raw jute have formed another group. The Indian Jute Mills Association is dominated by the buyers. The Indian Jute Pi) ills Association dominates the said Chamber and its Arbitrator. The Indian Jute Mills Association is committed 962 to the view that the said contracts have not been frustrated. The said Association has also formed an opinion in respect of the disputes between the buyers and the sellers of raw jute. " These were the allegations on which the appellant prayed that the authority of the appointed arbitrator should be revoked under section 5 of the . The application was opposed by the respondent which denied the allegations made by the appellant both as to the facts and circumstances which were said to constitute the emergency and as to the alleged reasonable apprehension of bias in the appointed Arbitration Tribunal. We have stated earlier that in the High Court to main controversy between the parties centred round the question, (1) if there was such an emergent condition in the jute trade and industry at the relevant time as divided the sellers and buyers of raw jute into two opposing camps, and (2) if the existence of such opposing camps, provided such opposing camps were proved to exist, would justify the revocation of the authority of the appointed arbitrator. The learned Judge who heard the applications dealt first with the legal position in England and India, in the matter of revocation of the authority of an appointed arbitrator. Having dealt with the legal position, he Went into the facts of the case and held that no such emergent condition has been proved as would justify the revocation of the authority of an appointed arbitration. He expressed his final conclusion in these words: "In my opinion, the allegations about the buyers and sellers in raw jute being thrown into conflicting camps by the operation of emergent circumstances or above 963 reasonable apprehension of bias in the minds of the sellers that they will not get justice from the persons whose names appear on the list of the panel of arbitrators of the Bengal Chamber of Commerce and Industry are unsubstantial." He accordingly dismissed the applications with costs. We consider that as a matter of logical sequence, we should deal with the question of fact first whether there was any such emergent condition in the jute trade aid industry at the relevant time as divided the sellers and buyers of raw jute into two conflicting camps so as to give rise to a reasonable apprehension in the minds of the sellers that they will not get a just decision from the appointed arbitrator. It, is only when we answer the question of fact in favour of the appellants that a consideration of the legal position would be necessary. What are the circumstances on which the appellants rely in support of their allegation of an emergent condition in the jute trade dividing the buyers and sellers of raw conflicting camps ? It is pointed out that on October 18, 1960, the Exchange issued a press note in which it was stated inter alia that owing to emergent conditions prevail ing in the jute trade, the Director of the Exchange had imposed from time to time various control measures in respect of trading in future contracts in raw jute and had taken up a review of the trading position in transferable specific delivery contracts. On October 31, 1960, a notice by the Exchange directed that trading in transferable specific delivery contracts in raw jute shall be registered with the Exchange. In their petitions for leave to revoke the authority of the arbitrator, the appellants also referred to reports made by reporters of 964 certain newspapers as also news items published therein. We do not think that these newspapers reports establish anything beyond. what the reporters heard from people whose identity is not disclosed, and they are not admissible in evidence to establish either that an emergency had arisen or the nature thereof. At best they show that there were reports in the market of a short fall in jute production, a shortage of supply of raw jute from Pakistan, sealing of some of the looms in the raills, and a reduction in working hours. The affidavits filed on behalf of the appellants do not, however, establish that there had been any failure of the jute crop in Bengal, Bihar and Assam or that jute had become unavailable at its normal sources or that such a crisis had arisen as would divide the buyers and sellers into conflicting camps. It is Worthy of note that like any other trade in goods in a short market, the jute trade, especially the trade in future contracts, is very sensitive and readily responds to any stimulus, including forces which affect supply and demand even temporarily. Such responses can even be said to be the normal feature of the jute trade like any other trade in commodities. As there was no evidence of the rise and fall in prices of raw jute during the relevant period except from what we could gather from the differences in price between the contract rate and the market rate claimed by. the respondents, we allowed the parties to produce before us the rates quoted by authorised brokers for various kinds of jute from April 1960 to August These figures show that the market in raw jute almost always fluctuates; sometimes there is steady rise '; sometimes a fall; sometimes there is a steep rise or a steep fall. Take for example, the period between August 1960 to January 1961 the period of delivery in most of the cases in one of the varieties of jute viz. Assam Bottom Jute. 965 August 1960 there was a steady rise from Rs.35/ to about Rs.40/ per maund. In September 1960 the rise continued and reached to about Rs. 43/ . It continued also in October and reached about Rs. 54/ . Towards the middle of November there was a fall. In January 1961 there was again a rise which continued till March. In April there was again a fail which continued till July 1961. We have taken only one example, but these ups and downs in price levels are noticeable in other varieties of jute also, such as, Pakistan N. C. Cuttings etc. A person trading in future contracts must take these ups and downs into consideration when entering into contracts, and we fail to appreciate how these ups and downs can constitute an emergent condition which will divide the buyers and sellers into two conflicting camps. The question whether the seller was entitled to an extension of time in the circumstances then prevailing would undoubtedly arise for determination by the appointed arbitrator, who having practical experience of the fluctuations which the trade normally undergoes would be in a position to judge the validity of such a claim. But it is difficult to appreciate how this periodical rise or fall in prices can be called an emergency which made the contracts impossible of performance or divided ' the buyers and sellers into two conflicting camps at the relevant time. Much was made of the fact that the Indian Jute Mills Association was a very influential body of jute mill owners, affiliated with the Bengal Chamber of Commerce and Industry. It was alleged that they were sister bodies having their offices at the came place and that they carried out a common policy in matters of trade. It was pointed out that the majority of arbitrators in the panel of arbitration of the Behgal Chamber of Commerce and Industry were either directly or in. directly connected with one or other of the jute 966 mills. The relevant rules of Bengal Chamber of Commerce and Industry, it was pointed out, provided that "the Tribunal shall consist of such members or assistants to members and of such other persons who were from time to time on the panel of special Advisory Board to the Indian Jute Mills Association, as may from time to time be selected by the Registrar". In this respect there is a difference in the rules made by the Indian Chamber of Commerce, Calcutta. Those rules provide for an unrestricted selection and say that in making an appointment and nomination, the Registrar shall select, as far as possible, persons or a person having practical knowledge of the subject matter of the contract or contracts in question and the Registrar shall not appoint any person who for any reason within his knowledge would not be a proper person to act as Arbitrator etc. in the parti culor matter. The appellant in Civil Appeal No. 640 brought to our notice the circumstance that his solicitor wrote to the Registrar of the Bengal .Chamber of Commerce and Industry for the names of the arbitrators and was told in reply that it was not the practice of the Tribunal to disclose the names of the arbitrators; but a classification of arbitrators of some of the cases was furnished and this showed that one of the arbitrators would be a mill representative and the other a jute broker or baler. We have taken all these circumstances into our consideration and we are unable to agree with the appellants that they made out a case of a reasonable apprehension of bias on the basis alleged, namely, that of a clash of interests between buyers and sellers on the ground of a rise in prices. The High Court has rightly pointed out that it is not quite correct to say that the persons who made the applications were only sellers of raw jute and not buyers their turn ' they are people who carry 967 on business in Calcutta and some of them probably have buying agencies in the mofussil. They must be buying jute from others and selling them to shippers, balers, and jute mills. The jute mills usually buy raw jute and turn out manufactured products therefrom, which they sell. Balers and shippers buy raw jute and sell the same after pressing and baling. At one end of the chain there are jute growers who are only sellers while others are both buyers and sellers of jute or jute goods. This latter category of persons must be taking note of the trends in the market in entering into their contracts and unless there was an emergency of the kind which nobody could foresee, it is impossible to say that there was such a clash of interests between buyers and sellers that the appointed arbitrator having practical experience of normal fluctuations of the market would not be able to judge with fairness and impartiality the claim of the sellers that they were entitled to an extension of time or other relief. The high Court further pointed that though there were 170 applications, the number of applicants was only 42 and some only of the. jute mills in West Bengal were involved. The High Court then said: "If one takes into consideration the number of jute mills situate in the district of 24 Parganas, Howrah, Hooghly and Nadia and considers further that there are thousands of persons who are engaged in the trade of raw jute it is significant that only a few dozen of them have come to this Court in between the period February, 1961, to the end of June, 1961. It appears to me that the difficulty, real or assumed, is confined to a very small number of persons, not brought about by any emergent conditions at all as alleged. There can be no denying the fact that the outturn of jute has been smaller 968 thaw expected and that jute mills have had to reduce their working hours. Such a shortage in jute cannot be said to have brought about an upheaval in the trade throwing buyers and sellers into sharply divided conflicting camps. " We are in agreement with the view thus expressed by the High Court. As to the arbitrators to be appointed by the Indian Chamber of Commerce, Calcutta, and in some of the appeals before us the arbitrators have to be so appointed, there can hardly be any ground for a reasonable apprehension. The names of the arbitrators are not known nor even their classification. The rules contemplate that the Registrar shall not appoint any person as arbitrator who for any reason within his knowledge would not be a proper person to act as arbitrator. What grounds can there be of a reasonable apprehension in such cases? We have held that there are no conflicting camps of buyers and sellers and even if there are such camps, the Registrar can select persons who have practical experience of the subject matter of the contract and not other wise improper persons to act as arbitrators. The difference between an 'application under a. 5 of the and one under a. 34 is a difference as to the point of time when the application is made. If proceedings are commenced in Court, application is made under section 34; if. proceedings have not commenced in Court the application is made under section 5. The object of both the section is the same, namely, to prevent arbitration. But different considerations would arise on an application to set aside an award on the ground that the arbitrator was biased. It is true that on an application under section 5 it is not necessary to show that. the arbitra or is in fact biased and it is enough to show that 969 there is a reasonable ground for apprehension that the arbitrator will be biased. But the reasonable ground must be established to the satisfaction of the Court to which an application for leave to revoke ' the authority of an appointed arbitrator is made. No such reasonable ground is made out in the present appeals. We now turn to the legal position which seems to us to be quite clear. Before the Court exercises its discretion to give leave to revoke an arbitrator 's authority, it should be satisfied that a substantial miscarriage of justice will take place in the event of its refusal. In considering the exercise by the Court of the power of revocation it must not be forgotten that arbitration is a particular method for the settlement of disputes. Parties not Wishing 'the law 's delays ' know, or ought to know, that in referring a dispute to arbitration they take arbitrator for better or worse, and that his decision is final both as to fact and law. In many cases the parties prefer arbitration for these 'reasons. In exercising its discretion cautiously and sparingly, the Court has no doubt these circumstances in view, and considers that the parties should not be relieved from a tribunal they have chosen because they fear that the arbitrator 's decision way go against them. (See Russel on Arbitration, 16th edition, page 54). The grounds on which leave to revoke may be given have been put under five heads : 1 .Excess or refusal of jurisdiction by arbitrator. Misconduct of arbitrator. Disqualification of arbitrator. Charges of Fraud. Exceptional cases. 970 We have held that there were no such exceptional circumstances in these cases as would justify us to come to the conclusion that the appointed arbitrator would be disqualified as a result of bias by reason of a conflicting class interest. In view of this finding it is unnecessary to examine the decisions, English or Indian, as respects the principle that an interest of which the parties were fully aware at the date of the arbitrators appointment will not in general disqualify him, nor will the fact that he stands in a particular relationship to the parties or to the matters in dispute, if it can be said that the parties selected him with knowledge that this was or must be so. Nor are we concerned with the exception to which the aforesaid rule is subject in relation to arbitrators appointed to determine future disputes, and the statutory changes made in English law relating thereto. There are, however, four decisions of the Calcutta High Court which bear an apparent resemblance to the cases under our consideration and to those decisions we must now turn. In Balabux Agarwala vs Lachminarain Jute Manufacturing Co. Ltd(1) the question was of a certain suits on applications under section 34 of the and one of the grounds taken was that persons interested in or connected with various jute mill companies were members of the Bengal Chamber of Commerce and were on the panel from which arbitrators were chosen; and a reference was made to a circular letter which showed that the arbitrators or the firms they represented were all buyers and as such interested in seeing that the points in issue were decided against the others. After scrutinising the allegations made in support of this ground, the Court said : "For all know the tremendous rise in prices which, it is said, will prompt the (1) (1947)51C.W.N.863,875. 971 arbitrators who are buyers to decide against the plaintiffs who are sellers so as to make huge profit for themselves, may well have induced the plaintiffs to make these allegations against the arbitrators or their firms so as to get out of their submission and to take their chance of winning the suit in Court and getting the benefit of that rise in prices. In my opinion the allegations in the affidavits are not such as I may act upon them. The Bengal Chamber of Commerce has gained a reputation for the excellence of their arbitration proceedings and I shall require much more specific averments of facts properly verified showing that in any particular case justice will be denied by the Bengal Chamber of Commerce to any party. " These observations do not help the appellants of the present oases. Rather they show that the Court must be fully satisfied before it exercises its discretion under section 5. to revoke the authority of an appointed arbitrator. The same learned Judge came to a contrary conclusion in Tolaram Nathmull vs Birla Jute Manufacturing Co. Ltd.(1), That was also a case of stay under section 34, and one of the questions raised was whether there was sufficient reason why the matter should not be referred to arbitration. One of the points to be decided in that connexion was whether 'mesta ' was jute within the meaning of the Jute (Price Control) Order and if the Jute Mills Association had issued a circular, while the arbitration was pending, stating, or deciding that 'mesta ' was not included in that Order. It was held that at a meeting of the representatives of five associations the view was expressed that 'mesta ' did not come within the Order. In those circumstances the learned Judge said (1) ,196. 972 "In the light of these principles, the question I have to consider is whether, in the events that have happened, it will be fair to drive the plaintiff firm to a tribunal both the members of which are members of associations which have expressed some definite views on the question in controversy. There is, to my mind, considerable justification for the apprehension expressed by the plaintiff firm of probable bias of the arbitrators. I do not question the honesty and integrity of the two arbitrators, but, in the circumstances appearing in the evidence before me, it will be unfair alike to them and to plaintiff firm to put them in a position of conflict with their own associations. On the whole I have come to the conclusion that this is a case *here circumstances exist which are calculated to bias the mind,% of the arbitrators and where the plaintiff firm may legitimately ask the Court to release it from its bargain to go to arbitration". The decision rested on the facts established in that case and cannot help the appellants to prove their case, on the present applications. In fairness to learned Counsel for the respondents we must say that he submitted before us that the decision in Tolaram Nathmull vs Birla Jute Manufacturing Co. Ltd. (1) went much beyond what was accepted as the correct legal position in English decisions referred to by the learned Judge; but that is an aspect of the matters which we consider it unnecessary to decide. We hold that the facts which must be established to call in aid that decision have not been established in these cases. In Dwarkadas Co. vs Keshardeo Bubna (2) the same learned Judge explained the position succinctly by holding (see headnote, pars, 4) (1) , 196. (2) 973 "The fact that members of a committee of an association of commercial men dealing in a particular commodity are themselves the arbitrators and ate also buyers and sellers of that commodity will not ordinary dispute between a particular buyer and a particular seller. But extraordinary circumstance may .nevertheless arise, as in the case of a commercial crisis, when the members of the association may be sharply divided into two opposing groups, as buyers in general and sellers in general as may make it improper for the committee, which may be packed with an overwhelming majority of buyers or sellers, as the case may be, to adjudicate upon a dispute between a buyer and a seller. " The pre requisite condition for the application of the principle which be laid down is not fulfilled in the present cases. The last decision is Bhuwalka Brothers Ltd. vs Fatechand Murlidhar (1). That was a case which .proceeded on different grounds, viz. (1) frustration and (2) applicability of an Ordinance to the contract under consideration. On those two grounds, the learned Judge thought that he should give leave to the petitioner to revoke the authority of the appointed arbitrator. We say nothing as to the correctness of the decision, but merely point out that the facts of the cases under our consideration are entirely different. We have, therefore, come to the conclusion that on the main point of controversy between the parties, the High Court came to a correct finding on facts and there are no grounds for interference. It remains now to consider two special points taken on behalf of the appellants ' in Civil Appeals (1) 974 Nos. 174 and '175. The points taken were : (1) that the contracts were not in accordance with law, and (2) that the parties were not ad idem with regard to one of the clauses thereof. Both these points have been dealt with by the learned Judge of the High Court in his judgment dated September 21, 1961, in great detail and as we are in agreement with him it is not necessary to deal with these two points in detail. On point number (1) the argument before us was based on para. 7(c) of the byelaws in Ch. IX of the Working Manual. That paragraph, so far as it is relevant here, reads as follows: "7(c) In the case of Pakistan Jute, buyers to deliver to sellers, or sellers ' nominee, letter of authority to import the Pakistan Jute or open confirmed, irrevocable Letter of Credit in terms of paragraph 8(b)(ii) within 14 working days from the commencement of the delivery period of the contract failing which there shall be free extension for delivery equal to the period of delay occurring after the 14 working days but where stipulated quantities monthly are sold the free extension shall only be in respect of the delivery for the first month. If buyers do not deliver letter of authority or open confirmed irrevocable Letter of Credit within one month from. the commencement of the delivery period of the contract, the sellers shall be entitled to exercise any One of the following options on the next working day .following the expiry of the said month: (i) Cancelling the contract. (ii) Cancelling the contract and charging buyers the difference (if any) between the contract price and the market price 975 on the date of cancellation of the contract. The clause in the bought note said : "The buyers to give letter of authority to the sellers and the sellers to open letter of credit. If the buyers fail to furnish the license up to December 1960 the contract will be deemed as cancelled. " The corresponding clause in the sold note said "The buyers to give letter of authority to the sellers and the sellers to open letter of credit. If the buyers fail to furnish the license up to December 1960 the contract will be deemed as cancelled without any difference on the both sides. " The argument was that the clauses in the bought and sold notes were not in conformity with para. 7(c) and therefore the contracts were not in conformity with law. We do not see any material conflict between para. 7(c) of the bye laws and the clauses in the. bought and sold note. Instead of one month given to the buyers for delivery of letter of. authority in para 7(c) the time given in the contracts was up to December 1960. We do not think that this extension of time brought the contracts into any material conflict with the provisions of para. 7 (c). As to the second point the argument was that the expression "without any difference on both sides" occurred in the sold notes not in the bought notes, and therefore, the parties were not ad idem with regard to this clause. The learned Judge rightly pointed out that the expression :,without any difference on both sides" made no real difference. Clearly the parties contemplated that in case the buyer failed to furnish the license to import Pakistan Jute within the period 976 mentioned, the contract would be deemed to be cancelled which meant that the contract was to be treated as non est for all purposes. If the contract was deemed to be cancelled, it must mean that the right and obligations of the parties came to an end simultaneously. It was not really necessary to insert the words "with out any difference on both sides" in the bought notes and such addition in the sold notes did not make any difference to the rights of the parties. For the reasons given above we hold that there is no merit in any of the appeals. The appeals are accordingly dismissed with costs ; one hearing fee.

The appellants as sellers of raw jute entered into forward contracts with the respondent jute mills to sell such jute to them. The contracts being transferable specific delivery contracts,were entered into in the standard printed forms of the East India Jute & Hessian Exchange Ltd., which was an association recognised under the Forward Contracts (Regulation) Act, 1912, and thus were subject to the rules and bye laws made by the Exchange which provided for arbitration of disputes by the tribunal of Arbitration of the 954 ,Bengal Chamber of Commerce and Industry or the Indian Chamber of Commerce in Calcutta. The appellants failed to supply the stipulated jute within the time mentioned in the guarantee clauses. The respondents exercised their option under the rules aforesaid, cancelled the contracts and charged the appellants for the difference in price between the contract rate and the market rate prevailing on the dates of cancellation and on the appellants denying their liability applied for arbitration. The appellants thereupon applied to the High Court under section 5 of the , for revoking the authority of. the arbitrator. There case in contemplated in Para 11, in Ch. IX of the Working Manual of the Exchange substance was that there was an emergency as due to scarcity of raw jute and speculation at the relevant time and the price of raw jute shot up abnormally, this placed the buyers and sellers of raw jute in two conflicting camp, and the majority of the arbitrators in the panel of arbitration of the Bengal Chamber of Commerce and Industry being connected with the buyers of raw jute, the jute mills, were disqualified from acting as impartial arbitrators. The High Court held that no such emergent condition had been proved as would justify revocation of the authority of an appointed arbitrator. Held, that the normal periodical fluctuation in the price of raw jute could not constitute an emergency within the meaning of para. 11 in Ch. IX of the Manual since such fluctuations have been taken into consideration by those who entered into forward contracts. Such an emergency must be one which is abnormal and which none could foresee. It could not, therefore, be said that in the present case there was such a conflict of interest between sellers and buyers as would tender the panel of arbitrators having a practical experience of the normal fluctuations of the market disqualified to act as impartial arbitrators. The object of sections 5 and 34 of the was the same, namely, to prevent arbitration, with this difference that an application under s.5 would lie if proceedings had not yet been commenced in Court whereas under section 34 an application lay when they had commenced. But a Court would not lightly exercise its discretion to, grant leave to revoke an arbitrator 's authority. Before it would do so it must, be satisfied that a substantial miscarriage be relieved from a tribunal of their own choice simply because they feared that its decision might go against them, 955 and the court had to base its decision on one on other of five grounds, namely, excess or refusal of jurisdiction by arbitrator, misconduct of arbitrator, disqualification of arbitrator, charges of fraud and lastly the existence of exceptional circumstances. In the instant cases there were no exceptional circumstances to justify the conclusion that the arbitrator was disqualified by bias due to conflicting class interest. Balabux Agarwala vs Lachminarain Jute Mfg. Co. Ltd. , Tolaram Nathmull vs Birla Jute Manufacturing Co. Ltd. , Dwarkadas Co. vs Keshardeo Bubna, and Bhuwalka Bros. Ltd. vs Petechand Murlidhar, , distinguished. The extension of time given to the buyers by the contracts beyond a month specified by para, 7(c) in Ch. IX of the Working Manual for delivering letter of authority did not bring the contracts materially into conflict with that provision nor could the absence of the expression "without any difference on both sides", which occurred in the sold notes, from the bought notes make any difference to the rights of the parties.

Appeal No. 1240 of 1967. Appeal from the judgment and order dated June 24, 1964 of the Assam and Nagaland High Court at Gauhati in Civil Rule No. 57 of 1963. D. N. Mukherjee, for respondents Nos. 1 to 3. B. D. Sharma and section P. Nayar, for respondent No. 4. The Judgment of the Court was delivered by ALAGIRISWAMI, J. This is an appeal by special leave against the judgment of the High Court of Assam allowing the petition filed by respondents questioning the validity of the order dated 27 6 1962 issued by the Deputy Commissioner, Khasi Jaintia Hills on behalf of the Government of Assam that their application for renewal of the mining lease granted to their father must be deemed to have been refused under sub rule (3) of Rule 24 of the Mineral Concession Rules, 1960. 171 The lease in question was granted by the Crown Representative on 29th April, 1942 to Bhagirath Mohta the father of the respondents for a period of 20 years to operate the coal mines. Bhagirath Mohta died on 18 5 1961 and on 3 8 1961 the respondents applied for renewal of the lease. By his order earlier mentioned the Deputy Commissioner informed the respondents that the application for renewal must be deemed to have been refused. On 22 10 1962 the respondents filed a revision petition to the Central Government under Rule 54 of the Mineral Concession Rules, and this was rejected on 8 2 1963. On 7 5 1963 the respondents filed a petition before the High Court of Assam for quashing the order dated 27th June, 1962 and for a writ of Mandamus directing the renewal of the lease. The appellants contended that the rights of the respondents, if any, were wholly contractual and based on disputed facts and they could only establish them by. filing a regular suit in a Civil Court. The High Court of Assam allowed the petition filed by the respondents holding that Rule 24(3) of the Mineral Concession Rules, under which the application by the respondents was deemed to have been rejected, was unreasonable and ultra vires of Section 8 of the Mines & Minerals (Regulation and Development) Act, 1957, and the deemed refusal of the application for renewal had no legal effect, that the explanation to Rule 54 should also be struck down as repugnant to the main sections of the Act. It, therefore, quashed the order of the Deputy Commissioner dated 27th June, 1962 and issued a writ of Mandamus to the State Government to deal with and dispose of the application of the petitioners dated 3 8 1961 for renewal. The first question to be decided, therefore, is whether Rule 24(3) and the explanation to Rule 54 are repugnant to the provisions of Section 8 of the Act and, therefore. liable to be struck down. We may first set out the relevant provisions. Rule 24 reads as follows : "24. Disposal of application for mining lease.(1) An application for the grant of a mining lease shall be disposed of within nine months from the date of its receipt. (2)An application for the renewal of a mining lease shall be disposed of within ninety days from the date of its receipt. (3)If any application is not disposed of within the period specified in sub rule (1), of sub rule (2), it shall be deemed to have been refused. " 172 Rule 54 reads as follows: "Application for revision. (1) Any person aggrieved by any order made by the State Government or other authority in exercise of the powers conferred on it by the Act or these rules may, within two months of the date of communication of the order to him, apply to the Central Government in duplicate in Form N for revision of the order. The application should be accompanied by a treasury receipt showing that a fee of Rs. 100 has been paid into a Government treasury or in any branch of the State Bank of India doing the treasury business to the credit of the Central Government. Provided that any such application may be entertained after the said period of two months, if the applicant satisfies the Central Government that he had sufficient cause for not making the application within time. (2)In every application under sub rule (1) against the order of a State Government refusing to grant a prospecting licence or a mining lease, any person to whom a prospecting licence or mining lease was granted in respect of the same area or for a part thereof, shall be impleaded as a party. (3)Along with the application under sub rule (1), the applicant shall submit as many copies thereof as there are parties impleaded under sub rule (2). (4)On receipt of the application and the copies thereof, the Central Government shall send a copy of the application to each of the parties impleaded under sub rule (2) speci fying a date on or before which he may make his representations, if any, against the revision application. Explanation. For the purpose of this rule, where a State Government has failed to dispose of an application for the grant or renewal of a prospecting licence or a mining lease within the period specified in respect thereof in these rules. the State Government shall be deemed to have made an order refusing the grant or renewal of such licence or lease on the date on which such period expires. (1) The period for which a mining lease may be granted shall not (a) in the case of coal. iron ore or bauxite, exceed thirty years; and 173 (b) in the case of any other mineral, exceed twenty years. (2) A mining lease may be renewed (a) in the case of coal. iron ore or bauxite, for one period not exceeding thirty years; and (b) in the case of any other mineral, for one period not exceeding twenty years : Provided that no mining lease granted in respect of a mineral specified in the First Schedule shall be renewed except with the previous approval of the Central Government. (3)Notwithstanding anything contained in subsection (2), if the Central Government is of opinion that in the interests of mineral development it is necessary so to do, it may, for reasons to be recorded, authorise the renewal of a mining lease for a further period or periods not exceeding in each case the period for which the mining lease was originally granted. " From a reading of Section it is difficult to see how exactly the rules referred to above can be said to be contrary to the provisions contained in that Section. Let us, therefore, consider the scheme of the Act. It is an Act to provide for the regulation of mines and the development of minerals under the control of the Union. Section 4 lays down that no person shall undertake any prospecting or mining operations in any area, except under and in accordance with the terms and conditions of a prospecting licence, or as the case may be, a mining lease, granted under this Act and the rules made thereunder. Section 5 lays down certain restrictions in the matter of granting prospecting licences or mining leases. Section 6 lays down the maximum area for which a prospecting licence or mining lease may be granted. Section 7 lays down periods for which prospecting licences may be granted or renewed. Section 8 lays down the periods for which mining leases may be granted or renewed. Section 10 lays down the procedure for applying for prospecting licences or mining leases. Section 11 lays down the preferential rights of certain persons to the grant of prospecting licences and mining leases. Section 13 enables the Central Government to make rules for regulating the grant of prosecuting licences and mining leases. Among the clauses contained in subsection (2) of that Section, which specify the purpose for which rules may be made, are clauses (g) and (r) which are as follows (g)the terms on which. and the conditions subject to which, any other prospecting licence or mining lease may be granted or renewed; 174 (r)any other matter which is to be, or may be prescribed under this Act. Section 19 lays down that any prospecting licence or mining lease granted, renewed or acquired in contravention of the provisions of this Act, or any rules or orders made thereunder shall be void and of no effect. Section 20 lays down that the provisions of the Act and the rules made thereunder shall apply in relation to the renewal after the commencement of this Act of any prospecting licence or mining lease granted before such commencement as they apply in relation to the renewal of a prospecting licence or mining lease granted after such commencement. Section 30 enables the Central Government of its own motion or on application made within the prescribed time by an aggrieved party, revise any order made by a State Government or other authority in exercise of the powers conferred on it by or under the Act. The first Schedule to the Act contains a list of minerals in respect of which no prospecting licence or mining lease shall be granted except with the previous approval of the Central Government. The Mineral Concession Rules, 1960 were made under this Act. Chapter 11 of the rules contains provisions regarding certi ficate of approval. Chapter III deals with grant of prospecting licences in respect of land in which the minerals vest in the Government. Chapter IV deals with grant of mining leases in respect of land in which the minerals vest in the Government. Rule 24 is found in this Chapter. Chapter V deals with procedure for obtaining a prospecting licence or mining lease in respect of land in which the minerals vest in a person other than the Govern ment. Chapter VI deals with grant of prospecting licences and mining leases in respect of land in which the minerals vest partly in Government and partly in a private person. Chapter VII deals with revision. Rule 54, the explanation to which has been held void by the Assam High Court, is found in this Chapter. It is not necessary for the purpose of this discussion to refer to Chapters VIIII and DC. The Act and the Rules thus contain the complete code in res pect of the grant and renewal of prospecting licences as well as mining leases in lands belonging to Government as well as lands belonging to private persons. The main point to be kept in mind is the fact that the mining lease in question is in a land belonging of Government and it is for a mineral included in the First Schedule to the Act in respect of which no mining lease can be granted without the previous approval of the Central Government. Normally the Government like any other owner of property is entitled to choose with whom it shall deal and what sort of a contract it will enter into, but being a public authority its 175 acts are necessarily regulated by certain rules. The Act and the rules in this case are intended to regulate the development of mines and minerals under the control of the Union and contain the provisions necessary for that purpose. No person can claim any right in any land belonging to Government or in any mines in any land belonging to Government except under and in accordance with the Act and the Rules or any right except those created or conferred by the Act. There is no question of any fundamental right in any person to claim that he should be granted any lease or any prospecting licence or mining lease in any land belonging to the Government. It is necessary to bear this in mind because some sort of vague right was claimed on behalf of the respondents as though there is a right of renewal of the mining lease in question even apart from the rules. The original lease in favour of the father of the respondents contained a clause that if the lessee were desirous of taking a renewed lease for a further term of years he should give six calendar months ' previous notice in writing to that effect and the Crown Representative will deliver a renewed lease for a further term of 20 years. Now as a result of the provisions of Section 19 and 20 of the Act renewal of the lease granted to the father of the res pondents is governed by the Act and the Rules. Rule 24(3) provides that an application for the grant of a mining lease shall be disposed of within ninety days from the date of its receipt, and if it is not so disposed of it shall be deemed to have been refused. A later amendment omitted the words "or sub rule (2)" found in that sub rule with the result that the sub rule (3) now reads as follows : "If any application is not disposed of within the period specified in sub rule (1) it shall be deemed to have been refused. " This might seem a little confusing. Does it mean that the period specified in sub rule (1) applies not merely to the grant of a mining lease mentioned in sub rule (1) but also to the renewal of a mining lease mentioned in sub rule (2) ? But we think that it will be a reasonable interpretation to hold that the effect of this amendment would be that while the provision regarding disposal within 90 days of an application for renewal still stands, the provision for deeming it to have been refused is no longer there. But this does not dispose of the matter because the "plantation to rule 54 lays down that for the purposes of that rule, where a State Government has failed to dispose of an application for the grant or renewal of a prospecting licence or a mining lease within the Period specified in respect thereof, the State Government shall be deemed to have made an order refusing the grant or renewal on the date on which such period expires. So the explanation 176 has two purposes (i) to state the effect of the failure to dispose of the applications referred to in Rule 24, sub rule (1) & (2) within the periods specified in those sub rules, as also (ii) to provide the starting point for the purpose of computing,the period of two months within which an application for revision under Rule 54 must be preferred. It has been urged vehemently that a provision to the effect that if the State Government does not dispose of an application for renewal within 90 days it should be deemed to have been refused is an unreasonable one and should, therefore, be struck down. As we have already mentioned it cannot be said that the respondents had any right apart from the rights conferred on them by the Act and the Rules. Their right, if any, is a creation of, and only flows from, the Act and the Rules. They cannot claim any right de hors the Act and the Rules. So if the Act and the Rules provide that an application not disposed of within 90 days should be deemed to have been refused, they have to abide by the Rules and take the consequences. There is no question of any contravention of any rights of the respondents in the making of these rules. It is said that there is no way of the respondents knowing what has been done about their application for renewal and if the concerned officer or authority neglects to take any action with regard to their application they should not be penalised. We do not see how, if that is the Legislative policy, it can be ques tioned. It cannot be said to be in contravention of any provision of the Constitution. Nor is there any question of the principles of natural justice having been violated. Indeed there may be some purpose in such a provision. It is well known that in almost all statutes regarding local bodies it is provided that applications for building licences that are not disposed of within a specified period should be deemed to have been granted. It has never been argued in those cases that it is unfair to the local bodies concerned. That is the provision of law. Let us assume that in a case like the present rule 24(2) did not exist. Let us assume that the officer or authority dealing with the application for renewal simply sleeps over it for years. The applicant will then be in a worse position. Apparently the idea was that the officer or authority dealing with an application for renewal must dispose of it quickly and if he did not it should be deemed to have been refused thus giving an opportunity to the aggrieved party to approach the Central Government to exercise its powers of revision under Rule 54. Under Rule 55 the Central Government can call for the records from the State Government and after considering any comments made on the petition by the State Government or other authority, may confirm, modify or set aside the order or Pass such other order in relation thereto as the Central Government may deem just and proper. It also provides for an opportunity to the 177 applicant to make his representation against the comments, if any, received from the State Government or other authority. Thus the fact that the application for renewal is deemed to have been refused as a result of Rule 24(2) does not prohibit the Central Government from passing any order it may deem just and proper including an order granting renewal. In this case the respondents did not file an application for renewal within two months of the Deputy Commissioner 's informing them that their application should be deemed to have been rejected, though that letter of the Deputy Commissioner itself was issued nearly nine months after their date of application. Indeed they could have filed an application. for revision when they failed to get a reply within 90 days of their application for renewal. It means that it is the respondents that were not alert. We can see nothing unreasonable in the order passed by the Central Government. It has been mentioned in that order that after careful consideration of the facts stated in their review application it was rejected as being time barred. The application to the Central Government preferred by the respondents contained all the facts. The applications for revision have to be in form (L) appended to the Rules. It has to specify the minerals for which the revision application is filed. the details of the area in respect of which the revision application is filed and a map or plan for the area has also to be attached. There is no reason to assume that the Central Government did not apply their minds to these facts. We are unable to see how Rule 24 (3) and explanation to Rule 54 can be said to contravene the provisions of Section 8 of the Act. They are within the rule making powers of the Government. Clause (g) of Section 13 too enables the Government to make rules regarding the terms on which and conditions subject to which any prospecting licence or mining, lease may be granted or renewed. It includes the power to make rules regarding conditions subject to which they may be refused. We do not see how the provision of Rule 26, which lays down that 'where the State Government passes any order refusing to grant or renew a mining lease, it shall communicate in writing the reasons for such order militates against this conclusion. In view of the provisions of Rule 24 and 54 the only reason which the State Government can give under Rule 26 is that because 90 days are over the application should be deemed to have been refused. The High Court 's view that Rule 24(3) and the explanation to Rule 54 are in contravention of Section 8 is vitiated by its assumption that every order to be 'Passed on an application for renewal should be approved by the Central Government. This is not correct. Only renewal cannot be granted without the Central Governments approval and not rejection. L631Sup CI/73 178 The only relevant decisions of this Court are reported in ; , Shivji Nathubhai vs Union of India & others and the, decision in C.A. No. 657 of 1967 dated 17 8 67. In both of them it was held that the power of the Central Government under Rule 54 is a quasi judicial power. They do not deal with the nature of the power exercised by the State Government in granting or refusing mining leases renewals thereof. The decisions or in Seeta Ramaiah vs State of Andhra Pradesh(1) and Shivji Nathubhai vs Union of India(2) more or less take the same view of the matter as we have. We do not feeld called upon to deal with the question whether as a result of the order passed by the Central Government there has been a merger and the application by the respondents before the High Court, which did not ask for setting aside the order of the Central Government, cannot succeed as that point was not taken before the High Court; nor it is necessary to deal with the question in the view that we have taken of this case in its other aspects. In the result we hold that the High Court was in error in holding that Rule 24(3) and the explanation to Rule 54 of the Mineral Concession Rules 1960 are contrary to the provisions of the Act and should be struck down. The appeal is allowed and the order of the High Court is set aside. The respondents will pay the appellant 's costs. S.B.W. Appeal allowed. (1) A.I.R. 1963 A.P. 54. (2) A.I.R. 1959 Punjab 510.

On 29 4 1942, a mining lease was granted by the Crown Representative to the father of the respondents for a period of 20 years to operate the coal. mines. The father died on 18 5 1961. On 3 8 61, the respondents applied for renewal of the lease. By his order dated 27 6 62, the Deputy Commissioner Khasi Jayantia Hills informed the respondents that the application for renewal must be deemed to have been refused. On 22 10 1962. the respondents filed a revision petition to the Central Government under Rule 54. This was rejected on 8 2 1963. On 7 5 63, the respondents filed a writ petition before the High Court for quashing the order dated 27 6 62 and for a writ of mandamus directing the renewal of the lease. The High Court allowed the petition filed by the respondents holding that Rule 24(3) of the Rules under which the application by the respondents was deemed to have been rejected was unreasonable and ultra vires of Sec. 8 of the Act, and the deemed refusal of the application for renewal had no legal effect that the explanation to Rule 54 should also be struck down as repugnant to the main sections of the Act. On appeal by special leave to this Court, HELD : (i) The Act and the Rules contained the complete code in respect of the grant and renewal of prospecting licence as well as mining lease in lands belonging to the Government, as well as the lands belonging to private persons. The mining lease in question is in a land belonging to Government and it is for a mineral included in the First Schedule to the Act in respect of which no mining lea ,P. can be granted without previous approval of the Government. Normally, the Government like any other owner of property is entitled to choose with WhoM it shall deal and what sort of a contract it will enter into, but being a public authority, its acts are necessarily regulated by certain Rules. The Act and Rules in this case are intended to regulate the development of mines and minerals under the control of the Union an contained the provisions necessary for that purpose. No person can claim as of right any lease or prospecting licence in any land belonging to Government or in any mines in anv lands belonging to Government except under and in accordance with the Act at the Rules or any right except these created or conferred by the Act. [174G H] As a result of the provisions of Sections 19 and 20 of the Act, renewal of the lease granted to the father of the respondents is governed by Act and the Rules. Rule 24(3) as amended. has the effect that while the provisions regarding disposal within 90 days of an application for renewal still stands, provision for deeming it should have been 170 refused is no longer there. The explanation to Rule 54 has two purposes : (i) to state the effect of the failure to dispose of the applications referred to in Rule 24 sub rule (1) and (2) within the periods specified within these sub rules as also (ii) to provide the starting point for the purpose of computing the period of two months within which an application for re vision under Rule 54 must be preferred. [175D, G & 176A] (ii)There is nothing unreasonable in the order passed by the Central Government. It has been mentioned in that order that after careful considerations of the facts stated in that review application, it was rejected as time barred. The application to the Central Government preferred by the respondents contained, all the facts. There is no reason to assume that the Central Government did not apply their minds to these facts. [177 DE] (iii)Rule 24(3) and the explanation to Rule 54 cannot be said to contravene the provisions of Section 8 of the Act. They are within the rule making powers of the Government and in view of the provisions of Rule 24 and 54, the only reason which the State Govt. can give under Rule 26 is that because 90 days are over, the application should be deemed to have been refused. The High Court 's view that Rule 24(3) and the explanation to Rule 54 are in contravention of Sec. 8 is vitiated by its assumption that every order to be passed on an application for renewal should be approved by the Central Government. This is incorrect. Only renewal cannot be granted with the Central Govt 's approval and not rejection. [177 F H] Shivji Nathubhai vs Union of India & Others, [1960] 2S.C.R. 775, Supreme Court judgment dated 7 8 1967 in C.A. 657/67 distinguished. Seeta Ramaiah vs State of Andhra Pradesh, A.I.R. 1963 A.P. 54, Shivaji Nathubhai vs Union of India, A.I.R. 1959 Punjab 510 referred to.

Appeal No. 56 of 1962. Appeal by special leave from the judgment and decree dated March 3, 4, 1958 of the Bombay High Court in Appeal No. 27 of 1957. Purshattam Tricumdas, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for the appellant. H.N. Sanyal, Solicitor General, N. P. Nathwani, AtiqurRehman and K. L. Hathi, for respondents Nos. 1 3, 5, 6, 8 17, 19 and 20. The Judgment of the Court was delivered by Ayyangar, J. This appeal, by special leave, raises for con sideration a very short point regarding the proper construction of bye law 137 B of the Bombay Bullion Association Ltd., which will hereafter be referred to as the 'Association ' and in particular whether on the facts established in this case the requirements of the said bye law has been satisfied. The appellant is a member of the first respondent the Association and carries on business as a bullion merchant. By a notification dated March 14, 1949, the Government of Bombay in exercise of the powers conferred by section 6 of the Bombay Forward Contracts Control Act, 1947 (Bombay Act LXIV of 1947) sanctioned by the bye laws framed by the Association. Under the said Act the members of the Association were permitted to carry on forward dealings in bullion subject to the said bye laws. The appeal is concerned with the regularity of a purchase effected by the Association purporting to act under its bye laws, of a quantity of silver at the risk of the appellant, on the footing that he had defaulted in performing his contract as a seller on February 3, 1953 which was a settlement day. The Association made this purchase treating the appellant as a defaulter and claimed from him the difference which amounted to Rs. 1,37,880 12 0. The appellant paid this sum when demanded on the 5th February under protest but on the next day he filed the suit out of which the present appeal arises against the Association and its Directors for its refund on the ground that the purchase at his risk by the Association was invalid as contrary to the bye laws and was, therefore, not binding on him. The appellant did not dispute that he defaulted in performing his obligation to tender the bullion of which he was the forward seller on the settlement day as he was bound to do under the relevant bye laws but the point on which he attacked the purchase was that no purchase could be made unless the forward purchasers for that settlement had fulfilled the terms of their 251 obligations under the bye laws and that as they had failed to do so, the Association had no right to effect a purchase on behalf and for the benefit of such defaulting purchasers. The suit was tried before Coyajee J. on the Original Side of the Bombay High Court. The learned Judge recorded a finding that there had been no default on the part of the purchasers and he, therefore, dismissed the suit. An appeal preferred by the appellant to a Division Bench also failed and it is the correctness of this decision of the High Court that is challenged in this appeal. Though the evidence went into minute details as to the things that happened on the Vaida day February 3, 1953 and in particular whether the several parties who figured as purchasers on the Vaida day had or had not paid in their cheques into the Clearing House of the Association on February 3, 1953 as they were bound to do under the bye laws, it is not necessary for us to go into this matter because there is a concurrent finding of fact of both the Courts that each one of the cheques of the several purchasers was, paid into the Clearing House on February 3, 1953, though it is now clear from the evidence that entries in regard to some of these transactions which took place on February 3, 1953 were made by the receiving bank or by the Clearing House only on the 4th. It is on the basis of this finding which could not be and was not challenged before us that we propose to deal with the points urged before us in this appeal. There is also one other matter which is referred to in the pleadings as well as in the judgments of the High Court which also we are putting aside. This relates to a plea by the appellant that the Director , of the Association had acted mala fide in permitting certain infractions of bye laws on the 3rd February by purchasers who would otherwise be in default and treating them is if they had fulfilled their obligations. The suggestion was that some of the members of Board of Directors had, in their individual capa city, figured as purchasers at the said settlement and that it was this personal interest of theirs that led to their favouring the group of purchasers as against the sellers at this Vaida. There was nothing in the evidence in support of this plea and Coyajee, J. having negatived it, the same does not appear to have been pressed before the Division Bench. Mr. Purshotam learned Counsel for the appellant did not seek to reagitate this matter, as indeed he could not, and hence this aspect also might be excluded from consideration. This leads us to the main question which it would be apparent from the above narrative is whether those who made forward 252 purchases for this Vaida had fulfilled their obligations under the bye laws. Now, the first matter that requires to be noticed is that the settlement for the Maha Vaida was originally fixed to February 2, 1953. Bye law 32 of the Association empowers the Board to fix the days of settlement in these terms : "32. (1) The settlement days shall be fixed by the Board or the Sub Committee appointed by it keeping in mind the provisions or these Rules and bye laws." but el. (3) of the same bye law empowers the Board : "if of opinion that circumstances exist which require an alteration of days so fixed [by cl. (1)] the Board may postpone such settlement day for a period not exceeding 5 days. " It was in exercise of this power that the Vaida day was postponed from February 2, 1953 to February 3, 1953. No dispute was raised by the appellant regarding the competence of the Board to effect this change of date or to the validity of the change effected thereby. Bye law 120 makes provision for the establishment of a Clearing House for effecting a settlement on the Vaida days. This bye law reads : " 120. Clearing House : A Clearing House shall be established under the jurisdiction of the Board to act as an ordinary agent of the members for settling forward transactions effected between members in gold, silver and sovereigns by exchanging delivery orders as also for making payment of the amounts of difference through the Clearing House. " Under the powers thus conferred the Bank of Baroda which opened a branch at the premises of the Association were appointed as the Clearing House. Bye law 125 provides for the appointment of a Clearing House Committee by the Board of Directors of the Association. Bye law 127 specifies the powers and duties of the Clearing House Committee and this runs : "127. Powers and duties of the Clearing House Committee : (1) The Clearing House Committee shall settle forms of clearing sheets, delivery forms, "Kaplis" (slips) relating to payment of differences and delivery of goods and other necessary documents for being used for the work relating to the Clearing House and every member shall have to use the said forms or other forms of the same size and with 253 similar writing. The said Committee shall from time to time fix charges for the said forms. (2) It shall issue instructions with regard to the work of the Clearing House and every member shall act according to the same. (3) If any member does not act according to any such instructions or commits any error or mistake in filing in any form or other document or writes so illegibly that it cannot be deciphered or makes delay in submitting, any such form or document to the Clearing House, then in every such case, the Clearing House Committee can impose on any member a penalty not exceeding Rs. 500. Sub Committee can be appointed for attending to the work relating to this sub clause. (4) It shall fix Havala rates in respect of outstanding transactions (transactions, which are not squared up) between two members and all members shall enter Havalas in respect of such outstanding transactions (which are not squared up) at these rates and also prepare statement of differences at those rates. Delivery orders also shall be issued at these very rates. The Havala rates in respect of transactions are given to facilitate the settlement. That does not in any way reduce the liability in respect of transactions. (5) The Clearing House Committee may declare any member as a defaulter and for that purpose, it shall have power to pass such resolutions and orders as it deems proper and necessary. (6) If, in connection with any forward settlement, the Clearing House finds, it difficult to make settlement on the days fixed for settlement, then the Clearing House Committee shall have power to make a change` of 48 hours at the maximum in all or any settlement days relating to that forward settlement. " Bye law 134(1) reads "134. (1) The member who wants to have his transactions settled through the Clearing House shall have to send to the Clearing House a clearing sheet in the settled form (form No. 1) on the days fixed for that purpose (which day will hereafter be known as he Clearance Day). 254 Bye law 137 specifies the obligations of members of the Association who give delivery and it reads: "137. The member who has to give delivery shall have to submit to the clearing house as many delivery orders signed by him as there would be, upon a calculation on the basis of every delivery order being either for five bars of silver or for 1,000 tolas of gold bar, or for 1,000 sovereigns. If any member has sent delivery orders without signing he shall attend the Clearing House at 10 A.M. in the morning on the date fixed for giving delivery orders by the Clearing House and shall sign the delivery orders. If the Clearing House finds it necessary it can call for further delivery orders from any member, and the member shall have to furnish the same forthwith but if the goods are with a bank he shall have to give delivery orders on the bank directly as mentioned above. " Bye law 137 A(1) deals with theobligations of a member whose clearance sheet shows outstanding sales and it reads : "137 A(1). A member whose Clearance Sheet shows outstanding sales shall submit to the Clearing Housewith hisdelivery orders a complete list of bars(gold or silver) in his possession or in the possession of his Banker inBombay with their number and marks, to bedelivered against such delivery orders. " As stated earlier, it is now common ground that the appellant did not carry out his obligations under this bye law. Bye law 137 B whose proper construction is raised by this appeal deals with the obligations of members whose Clearance Sheet shows outstanding purchases. It reads : "137 B. A member whose Clearance Sheet shows outstanding purchases will submit to the Clearing House with his Clearance Sheet a cheque certified "good for payment" or a demand draft on a Bank or a Bank 's payslip or cash for an amount sufficient to pay for all his outstanding purchases at the rate fixed by the Association. Failing payment as aforesaid the purchases outstanding in the Clearance Sheet or a part thereof will be auctioned at the purchaser 's risk on the same day. The cheques, demand drafts etc., so received by the Clearing House will be paid into the Clearing House Account in the Bank of Baroda Ltd., Bullion Hall Subbranch, and crossed cheques payable to bearer or payslips 255 of the said Bank in favour of the sellers whose delivery orders are given by the Clearing House to the purchasers will be handed over by the Clearing House to the said purchasers. The sellers shall give delivery of the goods covered by the delivery order to the said purchasers against such cheques or payslip issued by the said bank. Refusal by a seller to give delivery of goods covered by his delivery order to the purchaser against such a cheque or payslip during the time fixed for giving delivery, will amount to failure to give delivery and consequences in Bye law 147 will ensue. " It was not contested that if by the transactions to which we shall refer presently, members whose Clearance Sheets showed outstanding purchases had fulfilled their obligations under Bye law 137 B, the Association was entitled to effect the purchases at the risk and cost of the appellant under the succeeding bye laws which confer upon the Association this power to effect purchases or sales to square the transactions of defaulting members. An analysis of the bye law 137 B would show that a member whose Clearance Sheet showed outstanding purchases had, on the Vaida day, to file his Clearance Sheet and to make a payment into the Clearing House of an amount sufficient to pay for all his outstanding purchases at the rate fixed by the Association. This payment had to be made along with the Clearance Sheets and had to be in one of four forms: (a) a cheque certified good for payment, or (b) a Demand Draft on a bank, or (c) a bank 's pay in slip, or (d) cash. The question raised in this appeal, relates to whether certain of the purchasers had made payments into the Clearing House of the amounts payable by them in any of the permitted modes. Before proceeding further we might add that the Bank of Baroda which was the Clearing House admitted that the amounts required to be paid by the several purchaser members had been received by it on the 3rd and the total amounts represented by these payments were credited to the Association. Before setting out the matters in controversy as regards the form of payment adopted by certain purchasers under bye law 137 B, it is necessary to premise the narrative by a few facts. As already stated, the Bank of Baroda Ltd. had been appointed as the Clearing House of the Association under bye law 120 in or about 1949 and had been functioning as such ever since. To facilitate payments by and between members the Bank had opened a special branch called the 'Bullion Hall Sub branch ' in the premises of the 256 Association itself. Bye law 174(3) required every member to open an account in the Bank, so that it might be convenient to pay or draw cheques for effecting clearance. All the members had, in pursuance of and in obedience to this bye law, opened such accounts. The Bank issued special pay in slips for doing its business as a Clearing House. These slips were in triple foil, all of which had to be filled in by the member making the payment. When a member made a payment into the Bullion Exchange Branch of the Bank the extreme right of the three parts which recited the payment to the credit of the Clearing House of the Association by the member named and of the amount, also specifying the particulars of the payment would be signed or initialled by the Cashier and Ledger Keeper and be retained with the Bank. The paying in slip consisting of the other two parts in which similar entries were made and bearing the signature or initials of the Bank authorities was handed over to the member making the payment. He had thereafter to present this slip to the Clearing House along with the Valan or the Clearance Sheet, and thereupon the Clearing House department would endorse receipt on the part to the extreme left which would be returned to the member the other part being retained by the Clearing House. The settlement for the Vaida on February 3, 1963 appears. to have been an exceptionally heavy one on account of the very large volume of sales and purchases for that settlement and there was a total outstanding sale of 1897 bars of silver with, of course, corresponding purchases of the same number. Sellers of 1,004 bars gave delivery orders as required by bye laws 137 and 137 A but the appellant who had an outstanding sale of 853 bars failed to submit to the Clearing House the necessary delivery orders. The purchasers of the 1,897 bars had, under the bye laws, to submit their Clearance Sheets and make payments into the Clearing House in the manner provided by bye law 137 B of a total sum of Rs. 88,31,050 by February 3, 1953. By reason of the extraordinary situation created by the heavy payments having to be made coupled with a strike of the Clerks of the members on the previous day, the Directors of the Association passed a resolution extending the time for payment and delivery of Clearance Sheets beyond the usual banking hours to 7 P.m. on the 3rd February. The point in controversy in the appeal is whether this amount had been paid into the Bank on the 3rd February to the credit of the Clearing House in the manner provided by bye law 137 B. Out of the Rs. 88,31,050, some amount was paid in cash, 257 Rs. 42,99,400 by cheques drawn by members on their respective accounts with the Bullion Hall Sub branch of the Bank of Baroda Ltd. in favour of the Association 's Clearing House account, Rs. 24,64,050 by four pay slips of other banks in favour of the Bank of Baroda Ltd., Rs. 15,30,150 by transfers by two members from their accounts with the Jhaveri Bazar branch of the Bank of Baroda Ltd., to the Bullion Hall Sub branch for payment to the Association, Rs. 4,65,000 was by a cheque drawn by a member on his account with the Fort Branch of the Bank of Baroda Ltd., in favour of the Association, Clearing House Account. Of these, the submission of the appellant was that only the cash payment was a proper one and that the rest were not made in accordance with bye law 137 B. Before dealing with it, however, it might be stated that the Bank of Baroda Ltd. Clearing House submitted a statement on February 4, 1953 stating that all the payments totalling Rs. 88,31,050 had been received by it as a Clearing House and had been credited to the Association. Now, taking first the amounts paid by cheques drawn by mem bers on their accounts in the Bullion Hall Sub branch, several points were urged in support of the contention. The first was this : On February 3, 1953 the banking hours ended at 2.30 P.m. and several of the payments into the Clearing House Account by cheques drawn on the Banking account at this branch were made after that hour. It was, therefore, contended that even if there was enough money in the accounts of the several members to meet the cheques drawn by them, still their cheques could not be treated as cash as the banking hours had passed. This was answered by the Division Bench by pointing out that there was nothing illegal in the bank functioning for the purpose, of the members of the Clearing House after 2.30 P.m. that day. There was evidence before the Court that the ledgers and other books of account in the bank were available for being looked into to ascertain whether a member 's account had sufficient funds to meet the cheques which had been drawn. There was also evidence that the state of the member 's account was ascertained before the triplicate form was accepted by the bank and the two left side foils passed on to the depositing member for being handed over to the Clearing House and, as we stated earlier, on the next day the bank submitted a statement acknowledging receipt of the amount of the several cheques and showed their amounts to the credit of the Association. In these circumstances, the learned Judges of the High Court came to the conclusion that there had been a payment as required by the bye law 137 B on February 3, 1953. L3Sup./65 258 We entirely agree with the High Court as regards the alleged illegality said to have been caused by the Bank accepting cheques after the close of the usual Banking hours. It would be noticed that the extension of the banking hours from 2.30 P.m. to 7 p.m. that day was not in contravention of any statute and whatever the position might have been, if such extension acted to the detriment of a constituent of the bank, in the case on hand it was really for the benefit of the customer. In those circumstances, there was nothing illegal and, of course, nothing improper in the banking business having continued so long as the work of the bank as a Clearing House continued. There were also other objections raised to support the argument that these payments were contrary to bye law 137 B. To appreciate them it would be necessary to state a few more facts. From the analysis that we have made of payments that were made into the Clearing House by the purchasers in satisfaction of the amounts due by them for the settlement, Rs. 42,99,400 were by way of cheques drawn on the Bullion Hall Sub branch of the bank. We have also stated that the staff of the bank to whom the cheques were presented had endorsed on the slips that there were sufficient funds in the account to enable the cheque to be cleared and that it was after this process that the pay in slips were presented to the Clearing House with the Clearance Sheets in fulfilment of their obligations under the bye law. In regard to these payments by transfer entries to the credit of the Association it was urged (1) That several of the members numbering about 17 or so, did not, in fact, have enough funds in their accounts before 7 P.m. that day to enable the cheques which they drew in favour of the Clearing House to be honoured and that in consequence notwithstanding the acceptance of the cheques by the bank, such a payment could not be deemed within bye law 137 B. It was common ground that at 2.30 P.m. on the 3rd of February the amount to the credit of several of these members was not sufficient to enable the cheques which they issued later in the day to be cleared. But before the cheques were actually presented the purchaser members paid into their accounts (a) refunds which they obtained of margin moneys which they had deposited with the Association and to which they were entitled under the bye laws and (b) other cheques in favour of the Bank of Baroda. Taking up first the margin money refunds, purchasers had, under the bye laws, to pay margin moneys on their purchases and these had to be refunded to them on fulfilment of certain conditions. 'Me amounts 259 originally paid as margin by the purchasers had been credited to the Association and when the amount had to be refunded payment orders were made out by the Association on the 3rd of February of the amounts due to be refunded and these refund orders were paid by the respective purchasers to the credit of their accounts and their accounts were so credited with the Bullion Hall Subbranch. It was not the case of the appellant that the members were not entitled to the refund granted by the Association but what was objected to was that the refunds were really not due that day and had been improperly paid over by the Association in advance of the time when it was due Bye law 33 C(2) deals with the refund of margin money and it reads: "Where the conditions described in clause (a) or (b) as the case may be, cease to exist, the Association shall return the margin amount to the members concerned on the day following the next clearance day after making the necessary adjustment. " On this the appellant 's case was that the margin money could have been returned only on the 4th and that the Association acted improperly in refunding the amounts to the purchasers on the 3rd itself to enable them to utilise that money for the purpose of making their payments towards the settlement. We do not see any sub. stance in this complaint, nor do we see any relevance of this to the point now in controversy, viz., whether there had been a compliance with bye law 137 B. As already pointed out, the Vaida was originally fixed for the 2nd of February and if that had stood the amount would have been refundable on the 3rd. It was, however, owing to a strike of the Gumashtas of the members that a situation had arisen by reason of which the Vaida had to be postponed by a day. Whether as urged by Mr. Purshottam, that upon the proper construction of bye law 33 C that when a Vaida day is shifted the day fixed for the refund of the margin money also gets shifted or whether it would be payable on the day originally fixed, would, in our opinion, make no difference to the result. The bye law imposes an obligation on the Association to refund the margin money on the day next after the Vaida. On its terms, however, if the conditions of cls. (a) & (b) cease to exist, and obviously they ceased to exist in the present case even on the 2nd, there is nothing in the bye law to preclude the Association from refunding the margin money. Again, even if the margin money were returned before such refund could be legally enforced, the propriety or impropriety of the refund would have no bearing on the only point for consideration relevant to the question whether bye law 137 B was 260 complied with or not viz., whether the accounts of the members were in credit at the time the cheques were presented. (2) The next category of objection under this head was in relation to the bank having given credit to one of the members for the amount of a cheque of Rs. 2,00,000/ which was drawn on the Bank of India, Australia and China. Now, the evidence in the case was that this constituent Khimji Poonja & Co. had to pay Rs. 4,65,000/ as a purchaser. He had a credit balance at 2.30 P.m. on the 3rd of Rs. 1,93,215/13/5. To enable him to meet the cheque for Rs. 4,65,000/ which he drew on the Bullion Hall Sub Branch he paid into his account Rs. 1,05,500/ as refund of margin money. Besides, he drew a cheque for Rs. 2,00,000/on his account with the Bank of India, Australia & China in favour of the Bank of Baroda and paid this cheque to the credit of his account with the Head Office of the Bank of Baroda. The Head Office intimated this credit to the Bullion Exchange Branch and when he presented his cheque for Rs. 4,65,000/ to the Bullion Exchange Branch the same was honoured and the amount credited to the Association. The learned Judges accepted this evidence and the explanation and held that this constituent had enough funds with the Bank to meet the cheque of Rs. 4,65,000/ which he drew. Mr. Purshottam challenged the credibility of this evidence. We do not, however, propose to go into it for the reason that if, as a matter of fact, the Bank of Baroda as a Banking Institution gave Khimji Poonja & Co. credit for Rs. 2 lakhs that was a matter between those two parties and is not a matter which bears upon the validity of the payment for Rs. 4,65,000/ which Khimji made. It is not disputed, or rather it cannot be disputed that the Head Office of the bank credited Khimji Poonja & Co. with the sum of Rs. 2,00,000/ and there is evidence as to the intimation of this credit by the Head Office. Of course, the cheque by Khimji on the Chartered Bank was not certified "good for payment" but that was not a payment under bye law 137 B. The Head Office accepted it and therefore nothing follows from their not having insisted on that cheque being certified. The fact remains that the Head Office accepted that cheque; we shall take it in anticipation of being cleared, and as a fact it was cleared the next day. With the propriety of the Head Office of the Bank crediting the constituent with the amount of that cheque before actual realisation neither the Bullion Exchange Branch nor the Association to whose account the sum of Rs. 4,65,000/ represented by the cheque drawn in their favour was credited, nor the appellant are concerned. When once the Bank credited that sum into the account there was enough 261 credit for meeting the cheque of Rs. 4,65,000/ which is the only point we are concerned with. (3) The third head of objection that was raised, and this was the one which was the subject of strenuous contest in the High Court and before us, was whether the cheques on the Bullion Exchange Sub branch which were paid in with the Clearance Sheets were "certified good for payment" within bye law 137 B. It was urged that only four modes of payment were recognised and that a cheque even on the customer 's account in the same bank was still a cheque and that unless 'It was certified good for payment it did not satisfy the requirement of a valid payment within bye law 137 B. In this connection it was stressed that having regard to the consequences flowing from a payment or non payment on the terms of the bye laws a strict and literal construction of the bye law was called for and that the Courts should so construe the bye law and hold that a literal and not merely a substantial compliance with it in the sense of the Clearing House having received payment would satisfy the rule. In connection with the submission that cheques drawn against the customer 's account in the same branch of the bank could not be "cheques certified good for payment" even though there were enough funds to meet the cheques, learned Counsel drew our attention to the fact that certification of a. cheque was a well known form of commercial procedure which bankers adopted for the purpose of clearance by which the certifying and the Clearing bank became bound to each other. Reliance was, in this connection, placed on the observations of the Privy Council in Gaden vs The Newfoundland Savings Bank(1) where it is stated : "The only effect of the certifying is to give the cheque additional currency by showing on the face that it is drawn in good faith on funds sufficient to meet its payment, and by adding to the credit of the drawer that of the bank on which it is drawn. " Reference was also made to the judgment of Lord Wright in Bank of Baroda vs Punjab National Bank(2) where the histroy of certification or marking of cheques in India is dealt with. We do not, however, derive any assistance from these decisions on the point now in controversy. The first thing to be noticed about this objection as to certification is that there is no question of certification where a cheque drawn on an account in a branch of a bank is paid into the same branch to the credit of another party who has an account in that branch. Certification is a method adopted when a (1) [18991 A.C. 281 at p. 285. (2) 71 I.A. 124. 262 bank on which a cheque is drawn verifies the customer 's account on which it is drawn and indicates on the cheque that there are enough funds in his account to meet that cheque. It is obvious that there could be no question of such a certification by a bank of a cheque ,drawn on an account in a branch when the drawer pays it to the credit of a different account in the same branch. The verification of the account of the constituent for the purpose of ascertaining whether there is enough credit to meet the cheque which precedes a certification takes place at the very moment when the cheque is cleared. There is therefore no question then of two banks a certifying bank on which the cheque is drawn and a clearing bank into which that cheque is paid. In such circumstances, we should consider that the proper view to take of the payment would be that it is really a payment in cash. The Privy Council had, in Arsene A. Larocque vs Hyacin the Beauchmin,(1) to consider whether the payment a company by receipts given by it on account of the purchase price of the property which they sold was a payment in cash. In dealing with this question Lord Macnaghten quoted with approval the following from the judgment of James L. J. in Spargo 's(2) case : "It was said by the Lord Chancellor, and we entirely concurred with him, that it could not be right to put any construction upon that section (section 25 of the Companies Act, 1867) which would lead to such an absurd and un justifiable result as this, than in exchange of cheques would not be payment in cash, or that an order upon a banker to transfer money from the account of a company would not be a payment in cash." and another passage from the judgment of Mellish, L.J. "It is a general rule of law that in every case where a transaction resolves itself into paying money by A to B and then handing it back again by B to A, if the parties meet together and agree to set one demand against the other, they need not go through the form and ceremony of handing the money backwards and forwards. " We consider these observations apposite and hold that where a payment was made by a cheque drawn on an account with the Bullion Exchange Sub branch and the amount represented by that cheque was transferred to the Clearing House Account of the Association it is virtually a payment in cash, though in form a payment by cheque. (1) (2) L.R. 8 Ch. 407. 263 The next transaction to which objection was taken was a payment into the Bullion Hall Sub branch of a sum of Rs. 4,65,000/ by one Sri Bansilal & Sons. The evidence was that the cheque was drawn not on his account on the Bullion Hall Sub branch of the Bank of Baroda but with the branch of the Bank at the Fort, Bombay. The evidence which the Court accepted was that on the presentation of the cheque the staff ascertained that the constituent had enough funds in the bank for the cheque to be cleared and accepted it and credited the same to the account of the Bullion Exchange Association. The objection raised to the receipt of this payment was also founded on the cheque not being certified as good for payment. It will be noticed that the only point of difference between this cheque and the cheques which were drawn on accounts of members with the Bullion Hall branch which we have dealt with just now is, that the cheque for Rs. 4,65,000/was not drawn on the drawer 's account with the Bullion Hall Subbranch but on an account in the same bank at the Fort branch. For the purpose of considering this point it is not necessary to enter on any examination of the question as to what extent the two branches of the same bank are separate entities. There is no doubt that a customer cannot claim to draw cheques except on the branch where his moneys are deposited and on the account in respect of which the cheque is issued. But that is not what is in controversy in the present case. Here a cheque drawn on the Fort Branch is paid into the Bullion Hall Sub branch to the credit of the Association. The Bullion Hall Sub branch of the bank accepts that cheque and credits it to the Association after ascertaining that the drawer of the cheque has enough funds at the Fort branch for meeting that cheque. The only question is whether the payment could be treated as by a cheque which is certified as good for payment. We consider that what we have stated earlier as to the position in regard to a cheque drawn on an account in the same branch would also apply to the present case and that a certificate of the banker that is referred to in the bye law is a certificate of a bank different from that into which the cheque is being paid. Even if there be any doubt in this matter we are satisfied that when once the staff at the Bullion Hall Sub branch ascertained that the cheque was backed by sufficient funds to the credit of the customer in the account on which it is drawn, it satisfies the requirements of a cheque certified as good for payment within bye law 137 B. The learned Judges of the High Court, therefore,, rightly held that this payment was not outside the payments permitted by the said bye law. The last of the cases concerns a payment by one Jethalal Sangji Shah of a cheque for Rs. 1.16,250/ . The cheque was 264 made in favour of the Bank of India Ltd. not certified good for payment and was paid into the Bullion Hall Sub branch. The Clearing House received this cheque from Jethalal Sanagi Shah after obtaining a declaration from him that he had enough credit in his account with the Bank of India for meeting that cheque. It was stated that the Directors of the Association were approached by the Bank as to whether this cheque could be received in payment and that it was on their advice that a declaration in the form specified was taken from the member and it was only thereafter that the payment was accepted as conforming to bye law 137 B. Mr. Purshottam submitted that this payment could certainly not be within bye law 137 B. and we consider that learned Counsel is right. This, however, does not help him because it concerns the price for 25 bars and, having regard to the quantity of silver with which we are concerned, Mr. Purshottam could not but concede that even if the payment by this constituent was irregular it would not affect the validity of the purchase at the risk of the appellant. We thus reach the conclusion that except the last payment which was not quite regular but whose irregularity is not material, all the other payments were substantially, if not literally, in accordance with the requirements of bye law 137 B and in consequence the purchase made by the Directors at the risk of the appellant was legal and justified under the bye laws. Before concluding it is necessary to advert to the fact that both before the learned trial Judge as well as before the Division Bench a detailed analysis was made of the several payments made by about 17 members of the Association with a view to establish that those payments were not, even if they were made on the 3rd. in accordance with bye law 137 B. The learned Judges considered the several objections which were formulated to the validity of these payments and after discussing some of the details of the individual cases which were placed before the Court, recorded their finding that the payments satisfied the requirements of the relevant bye law. In view of the arguments addressed to us we have not examined in detail each one of the objections but have dealt only with those specifically urged before us and the tenability in general of the principles on which these objections were based. The appeal accordingly fails and is dismissed with costs. Appeal dismissed.

The members of the Bombay Bullion Association, respondent herein, were permitted under the Forward Contracts Control Act (Bom. Act 64 of 1947) to carry on forward dealings in bullion subject to the bye laws framed by the Association. The appellant who was a member of the Association and was carrying on business as bullion merchant, defaulted in performing his obligation to tender silver of which he was the forward seller, on the settlement day, and so the Association, purporting to act under its bye laws, purchased a quantity of silver at the risk of the appellant and claimed from him the difference in price. The appellant paid the amount and challenging the legality of his being treated as in default filed a suit for its refund. The suit was dismissed by the High Court. In appeal to the Supreme Court it was contended that the Association should not have made the purchase because the purchasers had not fulfilled the terms of their obligations under the bye laws in making their payments to the Association. The contentions were that : (i) certain of the purchasers who had made payments into the Clearing House of the Association by cheques, drawn on their account in the Clearing House, had not had the cheques certified as good for payment as required by bye law 137 B, and (ii) one payment was made by a purchaser, by a cheque drawn, not on the Clearing House but on a branch of the Clearing House in the city, and which besides was not certified good for payment as required by the bye law. HELD : (i) Where a payment was made by a cheque drawn on in account with the Clearing House and the amount represented by that cheque was transferred to the Clearing House Account of the Association, it is virtually a payment in cash, though in form a payment by cheque. Since payment in cash is one of the modes of payment recognised by the byelaw it satisfied the requirement of a valid payment. [255 E F; 262 G H] Arsene A. Larocque vs Hyacinthia Beauckemin, (1897) A.C. 358, referred? to. (ii)Where the Clearing House had accepted the cheque and credited it to the Association after ascertaining from the branch on which it was drawn, that the drawer of the cheque had enough funds at that branch for meeting of the cheque, the cheque need not be certified as good for payment. The position with respect to such a cheque is the same as when the cheque is drawn on an account in the same branch, because the certificate of the banker that is referred to in the bye law is the certificate of a bank different from that into which the cheque is being paid. In any event, when the staff of the Clearing 1 louse ascertained from the branch that the cheque was backed by sufficient funds to the credit of the customer in the branch on which it was drawn, it satisfied the requirements of a cheque certified as good for payment within the bye law. [260 B; 262 A C; 263 G H] up./ 65 17 250

vil Appeals Nos. 633 and 634 of 1964. Appeals from the judgement and order dated July 23 and 24, 1962 of the Bombay High Court in Income tax Reference No. 61 of 1961. A. V. Viswanatha Sastri, S.N. Vakil, T.A. Ramachandran, 1. B. Dadachanji, O.C. Mathur and Ravinder Narain, for the appellant (in both the appeals). Niren De, Additional Solicitor General, R. Ganapathy lyer and R.N. Sachthey, for respondent (in both the appeals). A.V. Vishwanatha Sastri, M.N. Shroff and 1. N. Shroff, for the Intervener (in all the appeals). The Judgment of the Court was delivered by Subba Rao, J. The appellant, the Poona Electric Supply Co., Ltd., hereinafter called the Company, carried on the business of distribution of electricity in the city of Poona under a licence issued by the Government. Under the relevant provisions of the , (Act 54 of 1948), hereinafter called the Act, the Company 's "clear profit" in any year should not, as far as possible, exceed the amount of "reasonable return" as defined under the Act. The excess, if any, after making some deductions, the Company has to distribute to its consumers in the form of rebate. During the assessment years 1953 54 and 1954 55 the Company claimed deduction of two amounts of Rs. 42,148/ and Rs. 77,138/ for the said two years from its taxable income as they were credited to "Consumers Benefit Reserve Account". The Income tax Officer disallowed the claim; and on appeal the Appellate Assistant Commissioner agreed with the Income tax Officer. On a further appeal, the Income tax Appellate Tribunal accepted the contention of the appellant and allowed the deductions. At the instance of the Revenue, the Tribunal submitted the following question of law to the High Court of Judicature at Bombay for its opinion: "Whether the two sums of Rs. 42,1481 in the assessment year 1953 54 and Rs. 77,138/ in the assessment year 1954 55 were deductible in computing income, profits and gains from the assessee 's business assessable to tax. " 820 A Division Bench of the said High Court answered the question in the negative and against the appellant. The present appeals have been filed by the Company after obtaining the requisite certificate from the High Court. The argument of Mr. A.V. Viswanatha Sastri, learned counsel for the appellant, may be summarised thus: (1) There is a distinction between commercial profit of a company and "clear profit" under the Act one is arrived at on commercial principles and the other is regulated by the statute; the real profit of a company under section 10(1) of the Indian Income tax Act can be determined only after excluding the amount statutorily transferred to the "Consumers Benefit Reserve Account", for that amount represents a rebate to the customers of the excess amount collected from them. (2) As the reservation of a part of the said excess is a statutory condition subject to which the Company carries on its business, it is an expenditure wholly and exclusively incurred for the purpose of the Company 's business and, therefore, it is an allowance deductible under section 10(2)(xv) of the Income tax Act for computing the profit of the Appellant 's business. (3) The Company follows the mercantile system of accounting and, therefore, the amount of rebate so reserved is deductible for arriving at the commercial profit of the Company in the year when the statutory liability arises and not when the amount is actually paid; and in the present case the statutory liability for the said two amounts arose in the accounting years of 1952 and 1953. Learned Additional Solicitor General contended that (1) under the relevant provisions of the Act the transference of a part of the said excess to the consumers benefit reserve account would only amount to apportionment or distribution of the profit after it has been earned and, therefore, it is not a deductible item for ascertaining the profit of the Company under section 10(1) of the Income tax Act; (2) the said amounts could not be said to be an expenditure wholly and exclusively incurred for the purpose of the business, as the expenditure was not incurred either during the course of the business or for the purpose of earning the profits of the business, but was only apportioned or distributed from and out of the profits already earned. To appreciate the rival contentions and to arrive at a satisfactory solution it will be necessary to notice the relevant provisions of the Act and of the Income tax Act. The gist of the relevant provisions may be stated thus: No person can supply electric energy in any area unless he has obtained a licence from the State Government under section 3(1) of the (9 of 1910). The Act, i.e., The , provides for the rationalization of the production and supply of electricity and generally for taking 821 measures conducive to electrical development. One of its main objects is to prevent such licensees from charging unreasonable rates to the detriment of the consumers. Under section 57(1) of the Act the provisions of the Sixth Schedule and the table appended to the Seventh Schedule thereto are deemed to be incorporated in the licence of every licensee. Paragraph I of the Sixth Schedule imposes a duty on every such licensee to so adjust his rates for the sale of electricity by periodical revision that his clear profit in any year shall not, as far as possible, exceed the amount of "reasonable return". The expressions "clear profit" and "reasonable return" are defined. Under Para. II thereof if the clear profit of a licence in any year of account is in excess of the amount of reasonable return, one third of such excess, not exceeding 7 1/2% of the amount of reasonable return, shall be at the disposal of the undertaking; one half of the said excess shall either be distributed in the form of a proportional rebate on the amounts collected from the sale of electricity and meter rentals or carried forward in the accounts of the licensee for distribution to the consumers in future in such manner as the State Government may direct. It is, therefore, clear from these provisions that for the purpose of rationalization of rates and keeping them under control the licence is directed to adjust his rates in such a way that his clear profit in any year shall not, as far as possible, exceed the amount of reasonable profit; but if an excess is collected, the licensee shall distribute half of that excess in the form of a proportional rebate to the consumers or carry forward the same in his accounts for future distribution to the consumers. Briefly stated, the scheme of the provisions is that a part of the excess collected is returned to the consumers by way of a rebate. The question is whether the amount so returned or returnable by the licensee to his consumers is deductible for ascertaining his taxable income from his business under section 10(1) or section 10(2)(xv) of the Income tax Act. Learned Additional Solicitor General took us though the various paragraphs of the Sixth Schedule to the Act and argued that under them the licensee 's clear profit was arrived at after all the deductions were made, including the appropriations for all taxes on income and profits and, therefore, the distribution of a part of the excess was only a distribution out of the profits. There is plausibility in this argument and at the first blush it appears to be attractive. But there is an obvious fallacy underlying the argument and that arises from the fact that the argument equates the expression "clear profit" with that of commercial profits. The object of the Act and that of the Sixth Schedule thereto, as aforesaid, is to statutorily rationalize and regulate the rates chargeable for the energy supplied in the interest of the public and for electrical development. The rules embodied in the Sixth Schedule to the Act are intended only to achieve that object. Under the said rules certain appropriations and certain deductions have to be made to. arrive at the clear profit; otherwise the items may be manipulated 822 to sustain a demand for abnormal rates. The rules have no concern with income tax; though for the purpose of arriving at the clear profit the taxes paid are also deductible. If this distinction is borne in mind, the problem presented is easily and readily solved. Under section 10 (1) of the Income tax Act, tax shall be payable by an assessee under the head "profits and gains of business" in respect of profits and gains of any business carried on by him. The said profits and gains are not profits regulated by any statute, but profits in a business computed on business principles. They are business profits and not statutory profits. They are real profits and not notional profits. The real profit of a businessman under section 10(1)of the Income tax Act cannot obviously include the amounts returned by him by way of rebate to the consumers under statutory compulsion. It is as if he received only from the consumers the original amount minus the amount he returned to them. In substance there cannot be any difference between a businessman collecting from his constituents a sum of Rs. Y in addition to Rs. X by mistake and returning Rs. Y to them and another businessman collecting Rs. X alone. The amount returned is not a part of the profits at all. In this context some of the decisions cited at the Bar may be of some help. In Pondicherry Railway Co., Ltd. vs Commissioner of Income tax, Madras(1). under an agreement with the French Colonial Government the railway company had to pay to the said Government half of its net profits calculated as provided thereunder. One of the questions that arose in the appeal was whether the appellant company was entitled to deduct the payments made under the agreement with the said Government as being expenditure incurred solely for the purpose of earning such profits within section 10(9) of the Income tax Act. In dealing with the question, Lord Macmillan observed: "A payment out of profits and conditional on profits being earned cannot accurately be described as a payment made to earn profits. It assumes that profits have first come into existence. But profits on their coming into existence attract tax at that point, and the revenue is not concerned with the subsequent application of the profits. " The learned Lord, after citing with approval the principle laid down by Lord Chancellor Halsbury in Gresham Life Assurance .Society vs Styles(2), proceeded to observe: "The word 'profits ' I think is to be understood in its natural and proper sense. in a sense which no commercial man would misunderstand. But once an individual or (1) , 251 252, 252. (2) 823 a company has in that proper sense ascertained what are the profits of his business or his trade, the destination of those profits or the charge which has been made on those profits by previous agreement or otherwise is perfectly immaterial. The tax is payable upon the profits realized, and the meaning to my mind is rendered plain by the words 'payable out of profits. " The distinction between payment out of profits and a payment to earn profits is unexceptionable. The difficulty is to ascertain in each case whether a particular payment falls under one or other of the two categories. The statement in the aforesaid observations that a payment conditional on profits being earned cannot be a payment made to earn profits has been modified and explained by the Privy Council in The Indian Radio and Cable Communications Cornpony, Ltd., vs The Commissioner of Income tax, Bombay Presidency & AdenC). There, their Lordships were dealing with a case of a joint venture by two companies; and Lord Maugham pointed out thus: "It may be admitted that, as Mr. Latter contended, it is not universally true to say that a payment the making of which is conditional on profits being earned cannot properly be described as an expenditure incurred for the purpose of earning such profits. The typical exception is that of a payment to a director or a manager of a commission on the profits of a company. " To that extent the principle laid down by Lord Macmillan in the case of Pondicherry Railway Co.(2) has been modified. Lord Macmillan himself in a later decision in The Union Cold Storage Co. Ltd., vs Adamson (H. M. Inspector of Taxes)(3) explained his observations in the Pondicherry Railway Co. 's case (2). There, the appellant company leased lands and premises abroad under a deed reserving a particular rent per annum. The deed provided that if at the end of any financial year it was found that after providing for this rent the result of the Company 's operations was insufficient to pay both interest on its charges and debentures and dividends at fixed rates on its preference shares and also at least 10 per cent, on its ordinary shares, the rent for the year was to be abated to the extent of the deficiency, repayment of rent already paid being made if necessary. The question raised in that case was whether such repayments made were allowable as deductions in assessing the Company 's income to income tax. The House of Lords held that they were allowable deductions. When the observations of Lord Macmillan in the Pondicherry Railway Co. 's case(2) were pressed upon the House in support of the contention (1) , 277. (2) L.R. 58 A.C. 239. (3) , 331. 824 on behalf of the Revenue, Lord Macmillan explained his earlier observations thus: "When, therefore, in the passage referred to by the Attorney General in the Pondicherry case I said that "a payment out of profits and conditional on profits being earned cannot accurately be described as a payment made to earn profits", I was dealing with a case in which the obligation was, first of all, to ascertain the profits in a prescribed manner, after providing for all outlays incurred in earning them, and then to divide them. Here the question is whether or not a deduction for rent has to be made in ascertaining the profits, and the question is not one of the distribution of profits at all. " Though a contractual term of payment of rent operated after the profits were ascertained and on the insufficiency to meet certain obligations was discovered, the House of Lords did not find any difficulty in holding that the deductions for rent were made only for ascertaining the profits and not for distributing the same. The decision of the Court of Appeal in British Sugar Manufacturers, Ltd. vs Harris (Inspector of Taxes(1) is rather instructive. There, a company carrying on a manufacturing business agreed with two other companies to pay them a stated percentage of its "net profits" in consideration of their giving to the company the full benefit of their technical and financial knowledge and experience, and giving to the company and its directors advice to the best of their ability. The question arose whether in computing the profits of the company for the purpose of income tax, the company was entitled to deduct the sums so paid as being money wholly and exclusively laid out or expended for the purposes of the trade within Rule 3(a) of Cases I and II. Greene, M.R., pithily observed thus: "Once you realise that as a matter of construction the word "profits" may be used in one sense for one purpose and in another sense for another purpose, I think you have the real solution of the difficulties that have arisen in this case. " Applying that test, the Master of the Rolls held that: "In the present case there are two funds of so called profits which come into the picture. The first one is the fund which has to be ascertained for the purposes of calculating the 20 per cent . . . . Now when that amount has been ascertained, that fund has ceased to have any usefulness at all, and it then becomes necessary to ascertain what are the divisible profits, and for that purpose, to take another account, which not only would bring in depreciation, but would also take into (1) , 105, 106, 108 109. 829 account the sum that had been paid out to the Skoda works, and the Corporation upon the taking of the first account. " Romer, L.J., put the test in a different way when he said: "Is the payment that has to be made by the trader under the contract in question a mere division of profits with another party or is it a payment to the other party, the amount of which is ascertained by reference to the profits?" MacKinnon, L.J. stated much to the same effect thus: "The whole question in this, as in other cases, is whether this, which is an annual payment, is an annual payment to be taken into account in order to ascertain the profits, or is it an annual payment payable out of the profits after they have been ascertained? I think the true facts of this case are that it is of the former character. The difficulty in the case arises largely because of the necessary ambiguity in the word "prof its" and the fact that in this agreement "profits" as a word does appear; but "profits", as I think, quite clearly of a different description from the annual profits or gains with which one is concerned in assessing the income tax. " This decision accepts the principle that a contract or a statute may provide for the ascertainment of two profits for different purposes and the question to be decided in each case is whether the amount claimed as deduction is payable out of the real profits. The Judicial Committee again in Raja Bejoy Singh Dudhuria vs Commissioner of Income tax, Calcutta(1) emphasized the concept of real income in the context of payment of income tax. Lord Macmillan, speaking for the Board, after adverting to the Imperial System of income tax legislation, proceeded to observe: "The correlative of the obligation to return as income sums which are really charges upon the taxpayer 's income is the right to reimbursement of the tax on such charges. The Indian Income tax Act makes no similar provision for the deduction of tax at the source and the consequent reimbursement of the taxpayer in the case of such a charge as that to which the revenues of the appellant are subject . . . . . that the omission from the Indian Act of any such provision points rather to an intention to tax, in Lord Davey 's Phrase, only "the real income" of. the taxpayer, than to an intention to impose, without right of reimbursement, a tax on what is a charge upon his income." (1) L.R. (1933) 60 I.A. 196, 202. 826 The concept of "real income" is also expounded in the decision of the Bombay High Court in H.M. Kashiparekh & Ca. Ltd. vs Commissioner of Income tax, Bombay North (1). There, under the managing agency agreement the managing agent was under a duty to forgo up to one third of its commission where the profits of the managed company were not sufficient to pay a dividend of 6 per cent. The contention of the Revenue that such a surrender of the commission under the provisions mentioned in the agreement was not deductible for the purpose of income tax was negatived. The principle has been succinctly stated in the head note thus: "The principle of real income is not to be subordinated as to amount virtually to a negation of it when a surrender or concession or rebate in respect of managing agency commission is made, agreed to or given on grounds of commercial expediency, simply because it takes place some time after the dose of an accounting year. In examining any transaction and situation of this nature the court would have more regard to the reality and speciality of the situation rather than the purely theoretical or doctrinaire aspect of it. It will lay greater emphasis on the business aspect of the matter viewed as a whole when that can be done without disregarding statutory language. " Now let us look at two of the cases on which strong reliance is placed on behalf of the Revenue. In Mersey Docks and Harbour Board vs Lucas(3) the harbour board was empowered by Act of Parliament to levy dock dues to be applied in maintaining the concern and in paying interest on moneys borrowed; any surplus income remaining after meeting these charges was directed to be applied in forming a sinking fund to extinguish the debt incurred in the construction of the docks. It went to reduce the capital liability. The question was whether the sum carried to the sinking fund, and the surplus carried to the following year 's accounts, were "profits" within the meaning of the Income tax Acts. The House of Lords held that the surplus was profit assessable to the incometax. In this case the surplus income formed the sinking fund and was utilised to pay off the debts of the harbour board; therefore, the Court rightly held that the said amount was utilised by the board from and out of its profits and, therefore, the said surplus could not be an allowable deduction. The decision of the Queen 's Bench Division in Paddington Burial Board vs Commissioners of Inland Revenue(3) was also based on the same principle. Under a public Act of Parliament a burial ground was provided out of the poor rates, and fees were charged to persons using it; any (1) , 707. (2) (3) 827 surplus of income over expenditure was applied in aid of the poor rates as required by the Act. It was held that the surplus was a profit assessable to income tax. It will be seen that the burial ground was managed on behalf of the Parish of Paddington and the surplus was applied for the benefit of the parishners. In the words of Day, J., it was a business carried on for the benefit of the rate payers of the parish of Paddington. This case also, therefore, dealt with payments out of profits utilised for the benefit of those on whose behalf the business was conducted. In Young (H. M. Inspector of Taxes) vs Racecourse Betting Control Board(1) the question that arose was whether the Racecourse Betting Control Board was entitled in computing the profits of the trade of totalisatot operator for the years 1953 54 and 1954 55 to deduct certain payments. The Board would be entitled, under the appropriate statutes, to deduct payment of moneys wholly and exclusively laid out or expended for the purpose of trade. It was held in that case that the said payments were all voluntary payments and were not made for the purpose of the trade. This decision has no bearing on the question raised before us. The said decisions lead to the following results: Income tax is a tax on the real income, i.e., the profits arrived at on commercial principles subject to the provisions of the Income tax Act. The real profits can be ascertained only by making the permissible deductions. There is a clear cut distinction between deductions made for ascertaining the profits and distributions made out of profits. In a given case whether the outgoings fall in one or the other of the heads is a question of fact to be found on the relevant circumstances, having regard to business principles. Another distinction that shall be borne in mind is that between the real and the statutory profits, i.e., between the commercial profits and statutory profits. The latter are statutorily fixed for a specified purpose. If we bear in mind these two principles there will be no difficulty in answering the question raised. The appellant company is a commercial undertaking. It does business of the supply of electricity subject to the provisions of the Act. As a business concern its real profit has to be ascertained on the principles of commercial accountancy. As a licensee governed by the statute its clear profit is ascertained in terms of the statute and the schedule annexed thereto. The two profits are for different purposes one is for commercial and tax purposes and the other is for statutory purposes in order to maintain a reasonable level of rates. For the purposes of the Act, during the accounting years the assessee credited the said amounts to the "Consumers Benefit Reserve Account". They were part of the excess amount paid to it and reserved to be returned to the consumers. They did not form part of the asessee 's real profits. So, to arrive at the taxable income of the assessee from the business (1) (D)5SCI 14 828 under section 10(1) of the Act, the said amounts have to be deducted from its total income. In this view it is not necessary to express our opinion on the question whether the said amounts would be allowable deductions under section 10(2)(xv) of the Act. The next question is whether the amounts so reserved for future payment were deductible in computing the income, profits or gains from the assessee 's business for the assessment years 1953 54 and 1954 55. It is not disputed that the assessee adopts the mercantile system of accounting. The liability to return the amounts was incurred by the assessee during the relevant accounting years. This Court held in Calcutta Co. Ltd., vs Commissioner Income tax, West Bengal(1) that where an assessee maintained his accounts on mercantile basis, the accrued liability and the estimated expenditure which it would incur in discharging the same could be deducted from the income of the accounting year in which the said liability accrued. Indeed, this legal position was not contested on behalf of the Revenue. In the result we answer the question referred to the High Court in the affirmative and in favour of the assessee. The order of the High Court is set aside. The appeals are allowed with costs. Appeals allowed.

The appellant company was a commercial undertaking, doing the business of supply of electricity subject to the provisions of . For the purpose of rationalization of rates and keeping them under control, the licensee was directed by the Act to adjust the rates in such a way that the clear profit in any year did not exceed the amount of reasonable return as defined in the Act; but that if an excess was collected, the licensee should distribute half of that excess by way of rebate to the consumers, or carry the amount forward in the accounts for distribution to the consumers. For the purposes of the Act, during the accounting years, the assessee credited certain amounts which formed part of the excess collected to the "Consumers Benefit Reserve Account", and claimed deduction of those amounts from the taxable income. The Income Tax Officer and the Appellate Assistant Commissioner disallowed the claim, but the Tribunal allowed the deductions. The High Court, on a reference, held against the assessee. In it appeal to this Court the appellant contended that there was a distinction between commercial accurancy,. As a ' profit" under the and that the real or commercial profit under section 10(1) of the Income Tax Act, 1922, could be determined only after excluding the amounts statutorily transferred to the "Consumers Benefit Reserve Account", for, that amount represented a rebate to the consumers, of the excess amount: collected from them. HELD: As a business concern the real profit of the appellant had to be ascertained on the principles of commercial accountancy. As a licensee governed by the statute its "clear profit" was ascertained in terms of the statute and the schedule annexed thereto. The two profits are for different purposes one for commercial and tax purposes and the other for statutory purposes in order to maintain a reasonable level of rates. The amounts for which deduction was claimed were a part of the excess amount paid to the assessee and reserved to be returned to the consumers. They did not form part of the assessee 's real profits, and therefore, to arrive at the taxable income of the assessee from the business, under section 10(1) of the Income tax Act the said amounts had to be deducted from its total income. [827G 828A] The income tax is a tax on the real income, that is the real profits arrived at on commercial principles subject to the provisions of the Income tax Act. The real profit can be ascertained only by making the permissible deductions. There is a clear cut distinction between deductions made for ascertaining the profits and distributions made out of profits. It is a question of fact to be found on the relevant circumstances, having regard to business principles. Another 819 distinction that should be borne in mind is that between the real and the statutory profits, that is between the commercial profits and statutory profits. The latter are statutorily fixed for a specified purpose. The real profit of a businessman under section 10(1) of the Incometax Act, cannot ,obviously include the amounts returned by him by way of rebate to the consumers, under statutory compulsion, from the statutory profits. [822C, 827E, F] Case law referred to.

ns Nos. 295, 362, 365, 443 and 444 of 1968. Petitions under article 32 of the Constitution of India for the enforcement of the fundamental rights. H. R. Gokhale and Naunit Lal, for the petitioners (in W. P. No. 295 of 1968). H. R. Gokhale, Jagjit Singh Chawla, section K. Mehta and K. L. Mehta, for the petitioner (in W.P. No. 362 of 1968). R. K. P. Shankar Dass Bishambar Lal and H. K. Puri, for the petitioners (in W.P. No. 365 of 1968). 450 Jagjit Singh Chawla, section K. Mehta and K. L. Mehta, for the petitioners (in W.P. Nos. 443 and 444 of 1968). Niren De, Attorney General, V. C. Mahajan and R. N. Sach they, for the respondents (in W.P. Nos. 295 and 362 of 1968). V. C. Mahajan and R. N. Sachthey, for the respondents (in W.P. No. 365 of 1968). R. N. Sachthey, for the respondents (in W.P. Nos. 443 and 444 of 1968). The Judgment of the Court was delivered by Shah, J. Cattle fairs are held for the last many decades in different parts of the territory of the State of Punjab, by local authorities and individual owners of land. The person or authority holding. the cattle fair provides facilities to cattle owners for board and lodging and for stabling their cattle generally in consideration of charges including a percentage on the price realised by sale or purchase of cattle. The Governor of Punjab with a view to control and regulate cattle fairs promulgated Ordinance No. 14 of 1967 on November 4, 1967, declaring a monopoly in the State of Punjab to hold cattle fairs and prohibiting all local authorities and individuals from holding cattle fairs "at any place in the State". This Ordinance was replaced by the Punjab Cattle Fairs (Regulation) Act 6 of 1968. By section 3 of the Act it is provided : "(1) The right to hold a cattle fair at any place in the State of, Punjab and to control, manage, and regulate such fair shall vest exclusively in the State Government and shall be exercisable by it, in accordance with the provisions of this Act and the rules made thereunder, through such persons or authorities as it may deem fit. (2) Notwithstanding anything contained in any other law for the time being in force and save as provided by sub section (1), it shall be unlawful for any person or local authority to hold, control, manage or regulate a cattle fair at any place in the State of Punjab. " The expression "Cattle" is defined by section 2(b) as including a buffalo, camel, cow, donkey, elephant, goat, horse mule, sheep and their young ones and such other animals as the State Government may by notification specify. By section 4(1) authority is vested in the State Government to appoint Fair Officers for holding, controlling, managing and regulating tattle fairs in a district. By sub section (2) the Fair Officer is made responsible for making arrangements in respect of all matters connected with the holding of a cattle fair and its proper control, management and regulation 451 and has also the power of (i) defining the fair area; (ii) reservation of sites or places for latrines, urinals, baths, shops, exhibitions, shows, demonstrations, foot baths for animals, water supply for drinking purposes, shelters, green and dry fodder, entertainment and similar other purposes necessary in connection with the cattle fair; (iii) allotment of sites temporarily for commercial or other purposes in connection with the cattle fair, authorisation of raising of structures on such sites, and fixation of rents for such sites in the prescribed manner; (iv) arrangements for watch and ward, lighting, medical first aid, veterinary aid, sanitation, tentage and other facilities as may be necessary in connection with the cattle fair; and (v) construction of temporary offices for the purpose of collecting taxes and fees imposed and levied in connection with the cattle fair. The expression "fair area" is defined in section 2 (d) as meaning "such area within a district as may be specified by a fair officer for the purpose of holding a cattle fair". By section 5 power is conferred upon the State Government to impose in a fair area during the continuance of a cattle fair, tolls on vehicles entering such area for business purposes and octroi duty on goods brought for sale within such, area. Jurisdiction of the local authorities to levy taxes and fees in any fair area in connection with the fair is excluded by section 6. By section 8 it is provided that no person shall sell cattle at a cattle fair unless the has obtained a registration certificate in respect of cattle to be sold. Section 9 provides for licensing of brokers. By section 15 the State Government is authorised to direct the Panchayat Samiti or Municipal Committee, in whose jurisdiction the fair is to be held, to deposit in the Cattle Fair Fund the prescribed amount, not exceeding one thousand rupees, to cover the initial expenses of the fair and the local authority so directed is enjoined to comply with the direction. Section 16 provides for the setting up of a Cattle Fair Fund in which all fees, rent or other sums of money (not being tolls and taxes) received or realized under the provisions of the Act or the rules made thereunder, and all donations or grants made to the Fund by the State Government, a local authority or any other person are to be credited. By section 18 penalties are prescribed for contravention of the provisions of sub section (2) of section 3. Power is conferred by section 21 to make regulations to provide against the outbreak or spread of fire and for certain other matters. By section 22 the State Government is authorised to make rules for carrying out the Purposes of the Act. The Act, however, as originally enacted contained no definition of the expression "cattle fair". Validity of the Punjab Cattle Fairs (Regulation) Act, 1967 was challenged in a group of petitions moved before the High Court of Punjab by persons interested in holding cattle fairs: Mohinder Singh Sawhney vs State of Punjab and Others(1) Before the High Court one of the contentions raised by the (1) A.I.R. [1968] Punjab 391. 452 petitioners was that the provisions of the Act were "Vague and ambiguous", and on that account the Act. was ultra vires. The Court accepted that contention. The Court observed that there was a distinction between a "cattle market" and a "cattle fair ' and since no definition of "cattle fair" was supplied by the Act it was left to the executive authorities to determine what a "cattle fair" was and on that account "the infirmity went to the root of the matter, and the Act was liable to be struck down in its entirely on the ground of vagueness, even if some of its provisions were unexceptionable in themselves". The State Legislature then enacted the Punjab Cattle Fairs (Regulation) Amendment Act 18 of 1968 which, introduced by section 2(bb) a definition of the expression "cattle fair" as me "a gathering of more than twenty five persons for the purpose of general sale or purchase of cattle". Fair Officers were appointed by the State Government and they issued notifications. declaring certain areas as "fair areas". A number of petitions were again moved in the High Court of Punjab for an order declaring invalid the Art as amended. The High Court of Punjab dismissed the petitions, upholding the validity of the Act: Kehar Singh vs The State of Punjab & Another(1). The Court in that case held that the definition of "cattle fair" was not intended to bring within its compass sales by private individuals outside fair areas: it was intended only to apply where in general, people assemble at some place for the purpose of buying and selling cattle and the number of persons exceeds twenty five, and that Act 6. of 1968 as amended by Act 18 of 1968 "does not contravene the provisions of articles 19(1)(f) & (g) of the Constitution". Certain persons interested in conducting cattle fairs have filed writ petitions in this Court. Arguments which are common in all the petitions may first be considered. We are unable to accept the argument that since the High Court of Punjab by their judgment in Mohinder Singh Sawhney 's case (2 ) struck down the Act, Act 6 of 1968 had ceased to have ,any existence in law, 'and that, in any event, assuming that the judgment of the Punjab High Court in Mohinder Singh Sawhney 'section case (2 ) did not make the Act non existent, as between the parties in whose favour the order was passed in the earlier writ petitions, the order operated as res judicata, and on that account the Act could not be enforced without re enactment. The High Court of Punjab in Mohinder Singh Sawhney 's case(2) (1) (2) A.I.R. [1968] Punjab 391. 453 ". in our opinion the petitions must succeed on the ground that the legislation is vague, uncertain and ambiguous.", and also (at p. 394) that . ". . as the infirmity of vagueness goes to the root of the matter, legislative enactment has to be struck down as a whole even if some of its provisions are un exceptionable in themselves. " But the rule that an Act of a competent legislature may be "struck down" by the Courts on the ground of vagueness is alien to our Constitutional system. The Legislature of the State of Punjab, was competent to enact legislation in respect of "fairs" vide entry 28 of List 11 of the Seventh Schedule to the Constitution. A law may be declared invalid by the superior Courts in India if the legislature has no power to enact the law or that the law violates any of the fundamental rights guaranteed in Part III of the Constitution or is inconsistent with any constitutional provision, but not on the ground that it is vague. It is true that in Claude C. Connally vs General Construction Company(1) it was held by the Supreme Court of the United States of America that "A statute which either forbids or requires the doing of an act in terms so, vague that men of common intelligence must necessarily guess at its meaning and differ as to its application violates the first essential of due process of law." But the rule enunciated by the American Courts has no application under our Constitutional set up. The rule is regarded as an essential of the "due process clauses" incorporated in the American Constitution by the 5th & the 14th Amendments. The Courts in India have no authority to declare a statute invalid on the ground that it violates the "due process of law". Under our Constitution, the test of due process of law cannot be applied to statutes enacted by the Parliament or the State legislatures. This Court has definitely ruled that the doctrine of "due process of law" has no place in our Constitutional system: A. K. Gopaian vs The State of Madras(2). Kania, C.J., observed (at p. 120). "There is considerable authority for the statement that the Courts are not at liberty to declare an Act void because in their opinion it is opposed to a spirit supposed to pervade the Constitution but not expressed in words. . it is only in express constitutional provisions limiting legislative power and controlling the temporary will of a majority by a permanent and paramount law settled by the deliberate wisdom of the nation that one (1) 70 L. Edn. 322. (2) ; 454 can find a safe and solid ground for the authority of Courts of Justice to declare void any legislative enactment. " The order made by the High Court in Mohinder Singh Sawhney 's case(1) striking down the Act was passed on the assumption that the validity of the Act was liable to be adjudged by the test of "due process of law". The Court was plainly in error in so assuming. We are also unable to hold that the previous decision operates as res judicata even in favour of the petitioners in whose petitions an order was made by the High Court in the first group ,of petitions. The effect of that decision was only that the Act was in law, non existent, so long as there was no definition of the expression "cattle fair" in the Act. That defect has been remedied by the Punjab Act 18 of 1968. We may hasten to observe, that we are unable to agree that the Act as originally enacted was unenforceable even on the ' ground of vagueness. It is true that the expression "cattle fair" was not defined in the Act. The Legislature, when it did not furnish the definition of the expression "cattle fair" must be deemed to have used the expression in its ordinary signification, as meaning, a periodical concourse of buyers and sellers in a place generally for sale and purchase of cattle at times or on occasions ,ordained by custom. We agree with the High Court that by enacting the Act the State was not attempting to prevent all transactions for sale and purchase of cattle. The State took upon itself by the Act a monopoly of conducting fairs, but it did not thereby seek to monopolise all transactions of sale and purchase in cattle. This is now made clear the definition of "cattle fair" in section 2(bb). A law which vests in the State a monopoly to carry on a certain trade or business to the extent that it has direct relation to the creation of the monopoly, is not open to challenge on the ground of violation of the freedom guaranteed by article 19(1) (g). As pointed out by this Court in Akadasi Padhan V. State of Orissa (2) (at p. 707) "A law relating to ' a State Monopoly Cannot, in the context [of article 19 ( 1 ) (g) ] include all the provisions contained in the said law whether they have direct relation with the creation of the monopoly or not. expression should be construed to mean the law relating to the monopoly in its absolutely essential features. If a law is passed creating a State monopoly, the Court should enquire what are the provisions of the said law which are basically and essentially necessary for creating the (1) A.l. R. [1968] Punjab 391 (2) [1963] Supp. 2 S.C.R. 691. 455 State monopoly. It is only those essential and basic provisions which are protected by the latter part of article 19(6). If there are other provisions made by the Act which are subsidiary, incidental or helpful to the operation of the monopoly, they do not fall under the said part and their validity must be judged under. the first part of article 19(6). In other words, the effect of the amendment made in article 19(6) is to protect the law relating to the creation of monopoly and that means that it is only the provisions of the law which are integrally and essentially connected with the creation of the monopoly that are protected. The rest of the provisions which may be incidental do not fall under the latter part of article 19(6) and would inevitably have to satisfy the test of the first part of article 19(6). " The provisions of the Act which seek to monopolise for the State the, right to carry on cattle fairs are protected against the challenge that they put an unreasonable restriction upon persons carrying on the occupation of holding cattle fairs. What is implicit in the grant of a monopoly to the State is expressly enacted in section 3(2) that no other person or authority may conduct a cattle fair at any place in the State of Punjab. But the restriction operates only in respect of cattle fairs and not other trades or occupations relating to dealings in cattle. The Act is restricted in its scope: the prohibition imposed upon all persons and authorities restraining them from holding, controlling managing and regulating cattle fairs at any place in the State of Punjab extend only to cattle fairs strictly so called, and not to cattle markets. The be monopoly declared by the Act does not invest the State with the monopoly to conduct cattle markets, i.e., places where the business of sale or purchase is regularly conducted by private parties and not as a fair. Any attempt made by the Officers of the State claiming to exercise authority under the Act to prohibit cattle markets is without authority of law. The Act also does not invest the State with authority to de clare private property of an individual or of a local authority, a fair area. Section 4(2). enables the Fair Officer to define a fair area, to reserve sites or places for certain facilities, to make temporary allotment for commercial and other purposes and to arrange for watch and ward and for construction of temporary offices. The Cattle Fair Officer is not thereby authorised to hold fairs on lands not belonging to the State. In defining a "fair area" and in making reservation, allotment, construction and arrangements of the nature mentioned in cls. (i) to (v) of sub section (2) of section 4 the Cattle Fair Officer cannot trespass upon private property. It is implicit in the provisions of the Act that the State will hold cattle fairs on its own lands and not on private lands. 456 The words used in section 4 are wide and may be capable of the interpretation that the right to hold, control, manage and regulate a cattle fair at any place in the State of Punjab under section 3 (1 ) authorises the State to hold, control, manage and regulate fairs in all places including private lands. But it would be reasonable to interpret the Act, so as not to authorise violation of the fundamental rights guaranteed by articles 19 and 31 of the Constitution. It is implicit in the provisions of sections 3 & 4 of the Act that the monopoly acquired by the State to hold and manage cattle fairs may be held on property belonging to the State and does not extend to the property of local authorities or private owners. The contention that the provisions of the Act, and especially the definition of "cattle fair" in section 2(bb), impose unreasonable restrictions upon the fundamental rights guaranteed under article 19(1) (b) & (d) has, in our judgment, no substance. The definition of cattle fair in section (bb) does not infringe the right of citizens under article 19(1)(b) to assemble peaceably and without arms, and the right under article 1 9 ( 1 ) (d) to move freely throughout the territory of India. By the definition clause concourse of twenty five persons is not prohibited: the Act does not place restrictions upon the freedom of assembly or of free movement either under cl. (b) or cl. (d) of article 19(1). The Act only prohibits an individual or local authority from arranging a gathering of more than twenty five persons for the purpose specified in the definition of "cattle fair". The restriction for the purpose of making the monopoly effective must be regarded as reasonable within the meaning of cls. (3) & (5) of article 19. By imposing restrictions upon the right to hold a fair, the citizens are not deprived of their property, and the freedom guaranteed by 'article 19(1)(f) is not infringed. The primary object of the Act is to give a monopoly to the State to hold cattle fairs. As a necessary concomitant of that monopoly, holding of cattle fairs by local authorities and individuals is prohibited. The prohibition flows directly from the assumption of monopoly by the State and falls within the terms of At. 19 (6) of the Constitution. It is a provision of the law creating monopoly "basically and essentially necessary" for creating the State monopoly to prevent other persons from conducting the same business. Our attention was invited to the decision of this Court in State of Bihar vs Rameshwar Pratap Narain Singh and Others(1) and to a decision of the Madras High Court in Mandivil Vania Pudukudi Ramunni Kurup and Others vs Panchayat Board, Badagara and Others(2 ) in support of the plea that a right to hold a fair is property. But those cases have no bearing on the question arising in these petitions. A law which creates a monopoly to (1) (2) A.I.R. [1954] Mad. 457 carry on a business in the State and thereby deprives the citizens of, the right to carry on that business by virtue of article 19(6) is not open to challenge on the ground that it infringes the Fundamental right guaranteed by article 19(1) (g) : The law win not also be exposed to attack on the ground that the right to carry on business is property, for the validity of restrictions on the right to carry on occupation, trade or business, or to practise any profession must be adjudged only in the light of article 19(6). In any event the presumption of reasonableness of a statute creating a monopoly in the State may come to aid not only in respect of the claim to enforce the right under article 19(1)(g) but under article 19(1)(f) as well. Section 15 which authorises the State to call upon a Pancha yat Samiti of a Municipal Committee, within whose jurisdiction the fair is to be held to deposit in the Cattle Fair Fund the prescribed amount, not exceeding one thousand rupees to cover the initial expenses of the fair and compelling the local authority to abide by the directions, is invalid. It is clearly a provision for deprivation of property. Reasonableness of such a provision was not set up either in the affidavit or in the arguments before us. It is true that under section 17 (d) out of the Cattle Fair Fund the amount which has been recovered from a local authority may be reimbursed, but the provision authorising the State to call upon a local authority to pay a sum of money towards the Cattle Fair Fund is, in our judgment, unreasonable and must be declared invalid. The learned Attomey General appearing on behalf of the State of Punjab did not seek to support the provision. To sum up, the power which the State Government may exercise to declare a fair area and to make provision for reservation of sites, allotment of sites temporarily for commercial or other purposes, and to arrange for watch and ward and to construct temporary offices may be exercised only on lands belonging to the State. No such power may be exercised in respect of lands owned by local. authorities or individuals. The monopoly which is acquired by the State by section 3 is a monopoly to hold, control, manage and regulate a fair and not a cattle market business. An attempt to prevent persons from conducting the business of cattle. markets and from holding, controlling, managing and regulating cattle markets is unauthorised, for by section 3 private individuals, local authorities and associations incorporated or not are prohibited only from holding cattle fairs and not cattle markets. In the light of these principles we proceed to examine the claims made in the five petitions. The Fair Officers have not made any declaration of fair areas which include the lands of the petitioners in Writ Petitions Nos. 458 362, 443 & 444 of 1968. In respect of the lands of the petitioners in Writ Petitions Nos. 295 and 365 of 1968 a notification defining a fair area has been made. Writ Petition No. 295 of 1968 This petition is filed by the Municipal Committee, Amritsar. By letter dated August 26, 1968, the Deputy Commissioner, Amritsar, informed the Municipal Committee that a cattle fair was intended to be held as scheduled on the "Cattle Fair Ground (Mal Mandi)", under the management of the District Fair Officer, and the Municipal Committee was required to arrange to supply water and electricity, to make suitable sanitary arrangements, to deposit the income from Baisakhi Cattle Fair in Government Treasury in Cattle Fair Fund and to deliver the record in that behalf to the Fair Officer. The Section Officer, District Amritsar, also served an order, purported to be made under section 4 (2) (i) read with section 2 (d) of the Punjab Cattle Fairs (Regulation) Act, 1967, specifying the fair area, for the purpose of con trolling, managing, regulating and holding the Cattle Fair from October 16, 1968 to October 27, 1968, at Ram Talui Ki Mandi described as "2 Kilometres from the main building situated in Cattle Fair Ground at Ramtabi ' (Mal Mandi) Amritsar". A Municipal Committee is not, according to the decisions of this Court, a "citizen" within the meaning of article 19. The Municipal Committee is, therefore, not entitled to claim protection of. any of the fundamental rights under article 19. But the State is incompetent to declare land belonging to the Municipal Committee as falling within the fair area, and to take possession of that land in exercise of the power conferred by the Act, without providing for payment of compensation guaranteed by article 31(2). The Municipal Committee is by order of the Fair Officer deprived of its property for the duration of the fair. The Act does not authorise the holding of cattle fairs on the land of local authorities, individuals or associations. A direction to make Municipal property available for holding a cattle fair by the State is a threat to requisition municipal property without authority of law and without payment of compensation, and must be deemed unauthorised. Section 23 of the Act which gives the provisions of the Act a paramount operation, notwithstanding anything inconsistent therewith contained in any other law for the time being in force will not supersede a constitutional guarantee. It was argued on behalf of the State that by the order only directions to control, manage and regulate the fair held on behalf of the Municipal Committee were intended to be given. But that is not the effect of the order passed by the Deputy Commissioner. The Deputy Commissioner informed the Municipal Committee that possession of its land should be handed over so that the State 459 may, be able to hold the fair under the provisions of the Punjab Cattle Fairs (Regulation) Act, 1967. Section 3(1) is intended only to provide for a monopoly in the State to hold cattle fairs. and to control, manage and regulate such fairs. The demand. made by the Fair Officer asking the Municipal Committee to supply water, electricity and to make sanitary arrangements and make the staff, articles. and offices of the Municipal Committee available to the Fair Officer is not warranted by any provision of the Act. The notification issued by the Fair Officer defining the fair area. inclusive of the land of Mat Mandi is, therefore, unauthorised. The demand made by the Fair Officer for assistance of the "staff, articles and offices of the Municipality" for holding the fair and ' the demand for supply of 'water and electricity and making suit . able sanitary arrangements is also uncalled for and unauthorised. The directions must, therefore, be declared invalid. Writ Petition No. 362 of 1968 The petitioner is Sardara Singh. He claims that he is in lawful possession of a piece of land situated in village Hussainpur, Tahsil and District Rupar (Punjab), and that for the last ten years he holds a cattle market on that piece of land from the first to the fourth of every month. He also asserted that he has been holding cattle markets on the lands, in his lawful possession at Kurali, Anandpur Saheb, Marunda (District Rupar) within the State of Punjab. According to the petitioner, for the purpose of holding cattle markets on the lands.in his occupation at Hussainpur, the petitioner had constructed a well for providing water to. the cattle, with sheds, and mangers. He further claimed that he provides chaff cutters, tents, charpais and all other amenities which are essential for the cattle and the merchants. It appears from the averments made by the petitioner that he is holding cattle fairs. No declaration was made defining any fair area which included ' the lands of the petitioner. The State, for reasons already set out, is not entitled to hold a cattle fair on the land in the occupation of the petitioner without providing for compensation as guaranteed under article 31(2). But on that account the petitioner is not entitled to hold a cattle fair even on his own lands. Writ Petition No. 365 of 1968 The petitioner is Jagtar Singh. He claims that he has obtained for the period April 1, 1968 to March 31, 1969, from the Municipal Committee, Amritsar, a piece of land on lease called the Ahata near the."Butcher Khana" known as "Adda BakarMandi". The land is used for an enclosure for sheep and goats brought for sale. The petitioner states that he has constructed near the Butcher Khana ten kothas around a vacant. piece of land for enclosure of goats and sheep brought by prospective sellers and 460 has also constructed some rooms where he provides board and lodging to the merchants who come to Adda Bakar Mandi in connection with their business. He has set out in his petition the manner in which the business is carried on and the charges made by him. It may be sufficient to mention that the petitioner claims that he conducts a cattle market and not a cattle fair. The Fair Officer issued a declaration under section 4(2)(i) read with section 2(d) of the Punjab Cattle Fairs (Regulation ) Act, 1967, specifying "2 Kilometres from the main building situated in the Cattle Fair Ground at Bakar Mandi outside Lahori Gate" as a fair area for the purpose of controlling, managing, regulating 'and holding the Cattle Fair, Amritsar, at Bakar Mandi outside Lahori Gate. The Fair Officer also addressed a letter to the petitioner dated October 25, 1968, informing him that the Punjab Government had exclusively undertaken the work of holding, managing, controlling and supervising the Cattle Fairs under section 3 of the Punjab Cattle Fairs (Regulation) Act, 1967, and that the petitioner who was carrying on the business of holding a cattle fair should stop running the Bakar Mandi. The Fair Officer informed the petitioner that the ground of the Bakar Mandi had already been specified as fair area by him and on that account the petitioner was prohibited to work as commission agent, unless he got a broker 's licence under, the Act. The land in, respect of which the declaration has been made as fair area. is the land of the Municipal Committee, of which under a licence or a lease the petitioner is in possession. For reasons which we have already set out, the Government of Punjab is not competent to declare the land of the Bakar Mandi a fair area. The notification declaring the Bakar Mandi as fair area is, therefore, invalid. By section 3 of the Act the cattle fairs can be held in the State of Punjab only by the State and by no other person. But prima facie the business carried on by the petitioner is in the nature of a market for sale of sheep and goats brought by intending sellers for slaughter. Such a place cannot be called a fair. It was urged on behalf of the State that since the petitioner was collecting brokerage and carrying on the business of a broker, he was bound to take out a licence under section 9 of the Act. But a person carrying on his business within the fair area lawfully declared is required to obtain a licence, but not in respect of his business in a cattle market. The petition filed by Jagtar Singh must, therefore, be allowed and the order declaring the petitioner 's land as fair area and the intimation calling upon him to stop his business of cattle market is unauthorised. 461 Writ Petition Nos. 443 & 444 of 1968 The petitioner in these petitions are Narain Singh and another. They claim that they are in ,legal possession" of different pieces of land taken oil lease within the State of Punjab at Khanna, Doraha (District Ludhiana), sunam (District Sangrur) and also in other Districts where they have been holding cattle markets for the last many years. They claimed that they provide the Prospective sellers and purchasers facilities like cots for resting, drinking water, sheds,, mangers, chaff cutters, tents, light, chowkidars, dry fodder and all other essential amenities. They further claimed that the intending vendors come to their lands with cattle and sell the, cattle, bargains being struck. through brokers in the market arranged by the Petitioners on those pieces of land. It is not clear from the averments made, in the petitions whether the so called market is of the nature of a fair. the Petitioners are prohibited from holding or conducting a cattle fair, since the enactment of Punjab Act 6 of 1968. The lands belonging to the petitioners have not been included in a cattle fair area under the notification issued by the Fair Officer. Without deciding the question whether the business carried on by the petitioners is in the nature of a fair or a market, we declare that the petitioners are not entitled to carry on the business of a cattle fair and the, relief claimed by them in Paragraph 21(b) cannot be granted. We deem it necessary to add that the petitioners are not prohibited from carrying on the business of cattle market on their own lands. There will be no order as to costs in these petitions.

In the State of Punjab local authorities and individual owners of land were holding cattle fairs. The Punjab Cattle Fairs (Regulation) Art, 1967, was passed by the State Legislature in exercise of powers under entry 28 of List II of VII Schedule to the Constitution, declaring a monopoly in the State to hold cattle fairs and prohibiting all local authorities and individuals from holding cattle fairs at 'any place in the State '. There was no definition of the expression 'cattle fair ' in the Act. The validity of the Act was challenged on the ground that the provisions of the Act were 'vague and ambiguous ', and the High Court, in Mohinder Singh Sawhney vs State of Punjab, A.I.R. 1968 Punj. 391, accepted the contention. 'Me State Legislature thereupon, by Amendment Act 18 of 1968 introduced section 2(bb) defining the expression 'cattle fair ' to mean 'a gathering of more than 25 persons for the purpose of general sale or purchase of cattle '. Fair Officers were appointed under section 4(1) of the Act, and under section 4(2) they declared certain areas as fair areas. 'Some of the areas so declared belonged to a Municipal Committee in the State. The Munici pal Committee, a lessee from the Municipal Committee and some residents in the State, challenged the Act in this Court on the following grounds (1) Since the Act was struck down in Mohinder Singh Sawhney 's case, the Act ceased to have any existence in law and could not therefore be amended; (2) The order of the High Court in that case operated as res judicata between the parties and could not be enforced without a re enactment of the Act; (3) The Act violated articles 19(1)(b), (d), (f) and (g); and (4) Section 15 (if the Act, which authorises the State to call upon a Panchayat Samiti or a Municipal Committee within whose jurisdiction the fair is held to deposit a prescribed amount in the Cattle Fair Fund to cover the initial expenses of the fair and compels the local authority to abide by the directions, was invalid. The Municipal Committee also challenged the demand by the Fair Officer, asking the Municipal Committee to supply water, electricity and to make sanitary arrangements and to make the staff articles and offices of the Municipal Committee available to the Fair Officer. 448 HELD: (i) The Act as originally enacted was not vague. , When the Legislature did not furnish a definition of 'cattle fair ' it must be deemed to have used the expression in its ordinary signification, as meaning a periodical concourse of buyers and sellers in a place, generally for sale and purchase of cattle, at times or on occasions ordained by custom. [454 C E] But even if it was vague it could not have been struck down on that ground. The High Court in Mohinder Singh Sawhney 's case struck down the Act on the ground of vagueness on the assumption that the validity of the Act was liable to be adjudged by the test of 'due process of law '. But this Court, in A. K. Gopalan vs State of Madras, [1950] S.C.R. 88, held that the doctrine of due process has no place in our Constitution. Superior Courts in India may declare a law invalid, if the Legislature has no power to enact the law or if the law violates any of the fundamental rights guaranteed in Part III of the Constitution or is inconsistent with any constitutional provision, but not on the ground that it is vague. Therefore as a result of the judgment of the High Court the Act did not cease to have existence in law. [453 C D, G; 454 A B] Kehar Singh vs The State of Punjab, , approved. (2) The decision in Mohinder Singh Sawhney 's case does not operate as res judicata even in favour of the petitioners in that case. Its effect was only that the Act was in law non existent so long as there was no definition of the expression 'cattle 'fair ' in the Act. But that defect has been remedied by the Amending Act. [454 B C] (3) (a) The Act does not impose unreasonable restrictions upon the fundamental rights guaranteed under article 19(1)(b) and (d). It prohibits an individual or local authority from arranging a gathering of more than 25 persons for the purpose specified in the definition. The restriction was only for the purpose of making the monopoly effective, and must be regarded as a reasonable restriction within the meaning of cls. 19(3) and (5) upon the freedom of assembly and of free movement. [456 C E] (b) The Act is restricted in its scope and the freedoms guaranteed by article 19(1) (f) and (g) are also not infringed. (i) A law which is 'basically and essentially necessary ' for creating a State monopoly and thereby deprives the citizens of the right to carry on he same business is not, by virtue of article 19(6), open to challenge on the ground that it infringes the fundamental right guaranteed by article 19(1) (g). In the present case, the primary object of the Act is to give a monopoly to the 'State to hold cattle fairs and as a necessary concomitant of that monopoly, holding of cattle fairs by local authorities and individuals is prohibited. The law will not also be exposed to attack on the ground that the right to carry on business is property, for, the validity of restrictions on the right to carry on occupation, trade or business, or to practice any profession must be adjudged only in the light of article 19(6). Moreover, the presumption of reasonableness of a statute creating a monopoly in the State applies not only in respect of the right under article 19(1)(g) but also under article 19(1)(f). [456 E G; 457 A C] Akadasi Padhan vs State of Orissa, [1963] Supp. 2 S.C.R. 691, followed. State of Bihar vs Rameshwar Pratap Narain; [1962] 2 S.C.R. 382 and M. V. P. Ramunni Kurup vs Panchayat Board, Badagara, A.I.R. 1954 Mad. 754, referred to. 449 (ii) The prohibition imposed upon all persons and authorities is in respect of only cattle fairs and not in respect of cattle markets, that is, places where the business of see or purchase is regularly conducted by private parties and not as a fair. The Act does not prohibit anyone from carrying on the business of cattle market on his own land. [455 E F; 461 E] When the business is in the nature of a market for sale of sheep and goats brought by intending sellers 'for slaughter, such a place cannot be called a fair. A person carrying on his business in a cattle market on his own land need not take out a licence under section 9 of the Act even though he was collecting brokerage and was carrying on the business of a broker, because, it is only a person carrying on his business within a fair area, lawfully declared, that is required to obtain the licence. [460 F H] (iii) Though the words used in section 4 are wide and are capable of the interpretation that the State could hold a cattle fair at any place, it is implicit in sections 3 and 4 that the monopoly acquired by the State to hold and manage cattle fairs is confined to property belonging to the State and does not extend to the property of local authorities or private owners. [456 A C] A Municipal Committee is not a 'citizen ' within the meaning of article 19 and therefore, is not entitled to claim protection of any of the fundamental 'rights under article 19.But a direction to make municipal property available for holding a cattle fair by the 'State is a threat to requisition municipal property without authority of law and is not a mere direction to regulate the fair held on behalf of the Municipal Committee. Such a taking possession of property without payment of compensation as required by article 31(2) must be deemed unauthorised and section 23, giving the pro visions of the Act a paramount operation notwithstanding anything inconsistent in any other law, will not supersede the constitutional guarantee. [458 E G] (4) Under section 17(d), out of the Cattle Fair Fund, the amount recovered from a local authority may be reimbursed but the provision in section 15, authorising the State to call upon a local authority to pay a sum of money towards the Cattle Fair Fund is an unreasonable deprivation of property and violates the right under article 19(1) (f) and hence is invalid. [457 C E] Also the demand made by the Fair Officer for assistance of the staff, articles and offices of the Municipality for holding a fair, and the demand for supply of water and electricity and making suitable sanitary arrangements are not warranted by any provision of the Act, and must be de clared invalid. [459 A C]

Appeal No. 507 of 1960. Appeal from the judgment and decree dated March 19, 1958, of the ' Punjab High Court (Circuit Bench) at Delhi in R. F. A. No. 299 of 1951. K. L. Gosain, R. Ganapathy Iyer and G. GopalaKrishnan, for the appellant. B. Sen and P. D. Menon, for the. respondent. March 27. The Judgment of the Court was delivered by WANCHOO, J. This appeal on a certificate granted by the Punjab High Court raises a question as to the interpretation of article 31 of the Limitation Act. The appellant had brought a suit in forma pauperis for recovery of a sum of over Rs. 24,000/from the Union of India in connection with non delivery of certain goods booker with the railway. The appellant was trading in Crujranwala, which is now in Pakistan, under the name and style of G. M. Bootamal and Company and also under the name and style of Gopal Metal Rollin(, Mills and Company he being the sole proprietor of both. On August 5, 1947, just before the partition the appellant handed over two consignments to the North Western 72 Railway at Gujranwala for carriage to Jagadhari and these consignments were booked on the same day by two railway receipts. The consignments however did not reach Jagadhari. The appellant made inquiries and when no delivery was made he made a claim on the railway on November 30, 1947, for the price of the goods not delivered. Later, on January 22, 1948, the appellant gave notice to the railway under section 80 of the Code of Civil Procedure in which it was said that the goods booked under the two railway receipts had not been delivered in spite of repeated reminders and demands from the officials concerned. It was further said that the value of the goods booked was Rs. 24,189/4/ and that the railway was liable for this loss which was due to the negligence of the railway. It was further stated that the cause of action arose on August 21 and 30, 1947 and on subsequent dates when the appellant met with refusal. It was finally said that if the amount was not paid a suit would be brought against the railway. It seems however that in spite this notice correspondence went on between the appellant and the railway and on December 1, 1948, the railway informed the appellant that the two consignments were still lying at Gujranwala and that their despatch had been withheld by the North Western Railway due to restrictions imposed by the Pakistan Government on export. The railway therefore requested the appellant to secure a permit from the Chief Controller , Exports and Imports, Karachi and also from the Custodian of Evacues Property West Punjab and to send the same to the Station Master Gujranwala to enable the goods being sent to Jagadhari. The appellant was also told that in case he failed to produce the requisite permits the consignments would be disposed of in accordance with the law in force in Pakistan, and the railway administration would not be responsible for any loss, damage or destruction to the goods. This seems to have been the end of the correspon 73 dence between the railway and the appellant, and the appellant brought the present suit on December 13, 1949. The suit was resisted by the Union of India and a number of defenses were raised with which we are however not concerned in the present appeal. As many as. seven issues 'Were framed by the trial court, the most important being of limitation. The trial court found in favour of the appellant on all the issues including limitation and gave him a decree for Rs. 24,189/4/ . It however ordered the parties to bear their own costs. Thereupon there was an appeal by the respondent to the High Court, and the main point pressed there was that the suit as filed on December 13, 1949, was barred by limitation. Under article 31 of the Limitation Act time begins to run against a carrier for compensation for non delivery of or delay in delivering goods from the time "when the goods ought to be delivered". The question canvassed in the High Court was the interpretation of these words in article 31. It appears that there had been difference of opinion in the High Court as to the meaning.to be attached to these words in Art 31 and a reference had been made to a Full Bench in another case, namely, Dominion of India vs Firm Aminchand Bholanath (C.A. 97 of 1949, decided on May 2, 1956). In that reference the Full Bench held that "the limitation tinder article 31 starts on the expiry of the time fixed between the parties and in the ' absence of such agreement, the limitation starts on the expiry of reasonable time which is to be decided according to the circumstances of each case. " The High Court therefore followed the view taken in that case and held after taking into account the circumstances prevailing in August 1947 that the goods ought to have been delivered at the most within five or six months of the booking and therefore the suit was 'barred by limitation as it was brought in December 1949, the period of limitation being only one year. The High Court therefore allowed the appeal, set aside the decree of the trial court and dismissed the suit. It however ordered the parties to bear their costs. As the case involved a substantial question of law the High Court granted a certificate to the appellant; and that is how the matter has come up before us. Article 31 reads as follows ____________________________________________________________ Description of suit Period of Time from limitation which period beings to run. ____________________________________________________________ x x x x x x x x x 31 Against a carrier One year When the goods for compensation for ought to be delivered. non delivery of, or delay in delivering goods. Its interpretation has been the subject of a number of decisions by various High Courts in India and the question that has been considered in these decisions is as to the time from which the period begins to run. Under the Article, the time begins .to run ,when the goods ought to be delivered" and one should have thought that there would be no difficulty in finding out the meaning of these words. Ordinarily, the words of a statute have to be given their strict grammatical meaning and equitable considerations are out of place, particularly in provisions of law limiting the period of limitation for filing suits or legal proceedings. ' This was laid down by the Privy Council in two decisions in 75 Nagendranath vs Suresh(1)and General Accident Fire and Life Assurance Corporation Limited vs Janmahomed Abdul Rahim (2). In the first case the Privy Council observed that "the fixation of periods of limitation must always be to some extent arbitrary and may frequently result in hardship. ' But in construing such provisions equitable considerations are out of place, and the strict grammatical meaning of the words is the only safe guide". In the latter case it was observed that "a limitation Act ought to receive such a construction as the language in its plain meaning imports. . Great hardship may occasionally be caused by statutes of limitation in cases of poverty, distress and ignorance of rights, yet the statutory rules must be enforced according to their ordinary meaning in these and in other like cases. " Two lines of reasoning seem to have governed the decisions of various High Courts on the interpretation of these words in the third column of article 31. The first is based on the consideration that it was for the railway to prove what time ought to 'be taken for the delivery of the goods and therefore limitation can only start when the railway says finally that it cannot deliver the goods. The second line of reasoning seems to be based on the principle of estoppel and is to the effect that where the railway enters into correspondence and says that efforts are being made to trace the goods the railway would be estopped from pleading that the time began to run from sometime anterior to the period before the correspondence on the question came to an end. It may however be noted that though the majority of the decisions follow these two lines of reasoning and hold that time begins to run only when the railway finally refuses to deliver the goods, here and there a dissentient note has also been struck. We shall consider some of these cases later. (1) A.I.R. (1932) P.C. 165. (2) 76 Let us first see what these words in article 31 mean on a plain grammatical construction. It would be noticed that article 31 as it now stands after the Limitation Act of 1877 and 1909, governs two class of cases, namely, (i) where there has been no delivery of goods and (ii) where there has been delay in delivering goods. In both class of cases the time begins to run from the date when the goods ought to be delivered. These words therefore in column three of the Article must have a meaning which will apply equally to the two situations envisaged in column one. Whether there has been nondelivery or there has been delay in delivery, in either case limitation would run from the date when the goods ought to be delivered. Now it is not in dispute that if there is a term in a contract of carriage fixing when the goods have to be delivered that would be the time "when the goods ought to be delivered" within the meaning of the words used in the third column of article 31. The difficulty however ' arises in that class of cases where there is no term in the contract of carriage, whether express or im. plied, from which the date on which the goods have to be delivered, can be inferred. It is in these cases that the question of interpretation of the words in the third column of article 31 seriously arises. But these words can only mean one thing whether it is a case of late delivery or of nondelivery. Reading the words in their plain grammatical meaning they are in our opinion capable of only one interpretation, namely, that they contemplate that the time would begin to run after a reasonable period has elapsed on the expiry of which the delivery ought to have been made. The words "when the goods ought to be delivered" can only mean the reasona ble time taken (in the absence of any term in the contract from which the time can be inferred expressly or impliedly) in the carriage of the goods from the place of despatch to the place of destination. Take the case, where the cause of action is 77 based on delay in delivering the goods. In such a case the goods have been delivered and the claim is based on the delay caused in the delivery. Obviously the question of delay can only be decided on the basis of what would be the reasonable time for the carriage of goods from the place of despatch to the place of destination. Any time taken over and above that would be a case of delay. Therefore, when we consider the interpretation of these words in the third column with respect to the case of non. delivery, they must mean the same thing, namely, the reasonable time taken for the carriage of goods from the place of despatch to the place of destination. The view therefore taken by some of the High Courts that the time begins from the date when the railway finally refuses to deliver cannot ,be correct, for the words in the third column of article 31 are incapable of being interpreted as meaning the final refusal of the carrier to deliver. We may in this connection compare the language used in the third column of article 31 with certain other articles of the Limitation Act which will show that. where the legislature intended that time should run from the date of refusal it has used appropriate words in that connection. For example, in article 18, which provides for a suit for compensation against Government when the acquisition is not completed, the time begins to run from "the date of the refusal to complete". Similarly, in article 78 which provides for a suit by the payee against the drawer of a bill of exchange which has been dishonoured by non acceptance, time begins to run from "the date of the refusal to accept". Again in article 131 which provides for a suit to establish a periodically recurring right, ' the limitation begins to run "when the plaintiff is first refused the enjoyment of the righe '. Therefore, if the legislature intended that in case of non delivery, the limitation would start on the final refusal of the carrier to deliver, such a case would have been provided for by a separate article and we 78 would have found appropriate words in the third column thereof. The very fact that article 31 deals with both cases of non delivery of goods and delay in delivering the goods shows that in either case the starting point of limitation is after reasonable time has elapsed for the carriage of goods from the place of despatch to the place of destination. The fact that what is reasonable time must depend upon the circumstances of each case and the further fact that the carrier may have to show eventually what is the reasonable time for carriage of goods would .in our opinion make no difference to the interpretation of the words used in the third column of article 31. Nor do we think that their could be generally speaking any question of estoppel in the matter of the starting point of limitation because of any correspondence carried on between the carrier and the person whose goods are carried. But, undoubtedly, if the correspondence discloses anything which may amount to an acknowledgement of liability of the carrier that will give a fresh starting. point of limitation. A we have said already, the words in 'the third column refer to reasonable time taken for the carriage of goods from the place of despatch to the place of destination and this reasonable time generally speaking cannot be Affected by the subsequent conduct of the parties. We are therefore of opinion that the answer given by the Full Bench in the case of Aminchand Bholanath (supra) that "the limitation in such cases starts on the expiry of the time fixed between the parties and in the absence of any such agreement the limitation starts of the expiry of reasonable time which is to be decide according to the circumstances of each case," is correct. We shall now consider some of the representative cases decided by High Courts in this connection. In Jugal Kishore vs The Great Indian Peninsala Railway(1) it was observed that "when the X.I. Railway Company, by its own conduct made the (1) All 43. 79 plaintiff await the result of the inquiry, it is rather ,startling to find the plea of limitation raised in defence on its behalf". It was further observed that "the correspondence between the parties shows that the matter was being inquired into and that there was no refusal to deliver, up to well within a year of the suit ; in the circumstances of the case we are unable to hold that the suit was instituted more than a year from the expiry of a reasonable, time within which the goods should have been delivered. " This decision seems to suggest that the meaning of the relevant words in the third column is that limitation starts from the expiry of the reason. able time within which the goods should have been delivered. But it has taken into account the subsequent conduct of the railway and the fact that there was no refusal to deliver the goods till much later. It was therefore held that as the suit was brought within one year of the final refusal to deliver, it was within time. With respect, it is rather difficult to understand how the subsequent correspondence between the railway and the consignor or the consignee can make any difference to the starting point of limitation, when that correspondence only showed that the railway was trying to trace the goods. The period that might be taken in tracing the goods can have no relevance in determining the reasonable time that is required for the carriage of the goods from the place of despatch to the place of destination. In Bengal and North Western Railway Company vs Maharajadhiraj Ramhwar Singh Bahadur(1) it was held that "the defendants (i.e. Railway) by a deliberate process of ignoring the plantiff"s repeated requests for attention to his claim misled him into delaying his suit and it is not open to them (1) Pat. 67, 77. 80 now to contend that the suit has been brought too late. " This case seems to be based on estoppel. But here again we find it difficult to understand how the starting point of limitation under. article 31 could be changed because the railway ignored the plaintiff 's requests for attention to his claim. In Jai Narain vs The Governor General of India (1) it was held that ""the time 'when the goods ought to be delivered ' within the meaning of article 31 is not the time when they should have been delivered in the normal course, it least in a case where there is no time fixed for delivery, but the time when they ought to be delivered according to the sub sequent promises by the railway which informs the parties that it is carrying on enquiries. " With respect we, find it difficult to find bow in the face of the clear words in the third column of article 31 the starting point of limitation can be changed because of the subsequent conduct of the railway, which informed. the consignor or consignee that ' it was making enquiries to trace the goods. Finally in, Governor General in Council vs section Ahmed(2). it was held that "cannot be overlooked that for some time the railway authorities themselves were hoping to deliver the remaining packages and were making inquiries all along the route. In such cases it is not fair to expect the plaintiff to rush to Court with a suit without waiting for the result, of the inquiries. Limitation can therefore begin only when there was a definite statement by the railway authorities that they were not in a position to deliver the goods". With respect, this case seems to read in the third column as if the starting point of limitation is from the final refusal of the railway to deliver the goods, when the actual words may that limitation starts from the time when the goods ought to be delivered i.e. in the absence of any term fixing the time in the contract from (1) A.I.R. (1951) Cal. (2) A.I.R (1952) Nag. 81 the expiry of the reasonable time taken for carriage from the place of despatch to the place of destination. It was however urged for the appellant that even though the words in the third column plainly mean that the time starts when the reasonable period which may be taken for the carriage of the goods from the place of despatch to the place of destination expires, the subsequent conduct of the railway a,% disclosed in the correspondence that might pass between the railway and the consignor or the consignee, might have a bearing on this reasonable time. Now if the correspondence is only about tracing the goods that would not be material in considering the question as to when the goods ought to have been delivered. On the other hand if the correspondence discloses material which might throw light on the question of determining the reasonable time for the carriage of the goods from the place of despatch to the place of destination, then it may be open to the court to take into account the correspondence. Further, if there is anything in the correspondence which has a bearing on the question of reasonable time and the railway wants to go back on that, to that extent the railway may be estopped from denying that. But the correspondence can only be taken into account to determine what would be the reasonable time and not to show that because of the subsequent conduct of the railway the reasonable time got extended by the time taken by the railway in tracing the goods. Where however the correspondence provides material from which reasonable time in a particular case may ' be found out the .correspondence would be relevant to that extent. For example, take a case where the correspondence ,shows that a certain bridge between the place of despatch and the place of destination ' has been ' destroyed on account of floods and that is the reason why the goods have not reached 82 the place of destination. In such a case the correspondence may well be taken into account to find out the reasonable time for the carriage of the goods in the circumstances. This will show that reasonable time will depend upon the facts of each case and that in the absence of any special circumstances the reasonable time would practically be. the same between two stations as would normally or usually or ordinarily be taken for the carriage of goods from the one station to the other. Further there may be no difficulty in finding out the reasonable time where bulk of the goods have been delivered and only a part has not been delivered, for in such a case in the absence of special circumstances it should be easy to see that the reasonable time is that within which the bulk of the goods have been delivered. We may in this connection refer to Union of India vs Meghraj Agarwalla (1) and Gajanand Rajgoria vs Union of India (2) where it has been held that where a part of the consignment has been delivered, that should, in spite of the correspondence regarding inquiries and in the absence of circumstances leading to the contrary view, be taken to be the date when the goods ought to have been delivered as a whole within the meaning of those words in article 31. The view taken therefore by the High Court in Aminchand Bholanath 's case as to the interpretation of the words in the third column of article 31 is in our opinion correct. Let us therefore see what was the reasonable time within which the goods ought to. have reached Jagadhari from Gujranwala in the present case. The appellant himself in his replication stated that the goods in ordinary course should have reached Jagadhari before August 15, 1947. Further in their notice that he gave on January 22, 1948, he stated that the cause of action arose on August 21 and 30, 1947, and on subsequent dates when he met with (1) A.I.R. (1958) Cal. (2) A.I.R. (1955) Pat 182. 83 refusal to deliver the goods. The fact that the appellant gave notice under section 80 of the Code of Civil Procedure in January 1948 in our opinion shows that even taking into account the extra ordinary conditions prevailing on account of the partition of India in August 1947, the appellant was satisfy that the goods ought to have been delivered before January 22, 1948 when he gave the notice. If that was not so and if the cause of action had not arisen, there was no reason why the appellant should have given the notice under a. 80 in January 1948. We can see no difficulty therefore on the facts of this case 'in agreeing with the High Court that the goods 'ought to have been delivered even taking into account the extraordinary circumstances prevailing on account of partition within five or six months of the date on which they were sent, namely, August 5, 1947. This is also home out by the fact that the appellant gave notice on January 22, 1948 i.e. about 5 1/2 months after the goods had been consigned. In the circumstances the suit which was brought in December 1949 would be clearly barred by time, for we cannot take the reasonable time within which the goods ought to have been delivered in the circumstances of this case beyond January 22, 1948, when the notice under section 80 was given. As to the correspondence between the parties it in enough to say that there is nothing in the correspondence which has any bearing on the reasonable time taken for the carriage of goods from Gujranwala to Jagadhari. It is true that on December 1, 1948, the appellant was informed by the Railway that the goods were still lying in Gujranwala because of the restrictions imposed by the Pakistan Government and he was asked to get the necessary permits from that Government ; but that in our opinion has nothing to do with the question of reasonable time to be taken for the carriage of goods from Gujran wala to Jagadhari. In the circumstances, the High Court was right in holding that the suit was barred by limitation under article 31. 84 Learned. counsel for the appellant however drew our attention to the Displaced Persons (Institution of Suits) Act(No. XLVII of 1948) as amended by the Displaced Persons (Institution of suits and legal proceedings) amendment Act, (No. LXVIII of 1950) and contended that the appellant being a displaced person would be entitled to file this suit under section 8 of this Act as amended upto March 31, 1952. It appears that in part 9 of the plaint, the appellant relied on his being a displaced person in order to give jurisdiction to the court in Delhi where he filed the suit. But he does not seem to have relied on his being a displaced person on the question of limitation. The respondent in the written statement denied that the appellant was a displaced person and nothing further happened with respect to this aspect of the matter. Learned counsel for the appellant urges that in fact the appellant is a displaced person and would be entitled to the benefit of the Act of 1948 as amended by the Act of 1950 and on that basis his suit would be within time and that the suit might be remanded to allow the appellant to bring his case under the Act of 1948 as amended. Ordinarily we would not have allowed such a prayer when the point was not raised in the plaint ; but considering that the appellant claims to be a displaced person who is registered in Delhi and also considering that he had to file this suit in forma pauperis probably on account of the circumstances arising from the partition of India, we think that the appellant should be given a chance to prove his case under the Act of 1948 as amended by the Act of 1950. We express no opinion on the question whether the appellant is a displaced person or whether he is entitled to the benefit of the Act of 1948 as amended by the Act of 1950. But we think in the interest of justice he should be given a chance to bring his case under the Act of 1948 as amended, by the Act of 1950 in the matter of limitation subject to his 85 paying all the costs incurred by the respondent upto date irrespective of the result of the suit. We therefore allow the appeal and remand the case to the trial court for considering only the question of limitation on the basis of the Displaced Persons (Institution of Suits) Act, (No. XLVII of 1948) as amended by the Displaced Persons (Institution of suits and legal proceedings) Amendment Act ( No. LXVIII of 1950) after giving parties a chance to lead evidence in this connection, if necessary. If the court comes to the conclusion that the suit is within time on the basis, of these two Acts, a decree for the amount claimed minus the costs incurred upto this date by the respondent will be passed in favour of the appellant. If on the other hand the court comes to the conclusion that the suit is not within limitation ,p a under these two acts the suit will be finally, dismissed Costs incurred hereinafter will be in the discretion of the court Appeal allowed.

On August 5, 1947, the appellant booked two consigments by the N. W. Railway from Gujranwala, now in Pakistan, to jagadhari. The consignments were not delivered and, on January 22, 1948, the appellant gave a notice to the railway under section 80 of the Code of Civil Procedure claiming the value of the goods by way of compensation. It was stated in the notice that the cause of action had arisen on August 21 and 30, 1947, when delivery was refused. On December 1, 1948, the railway informed the appellant that the consignments were still lying at Gujranwala and could be despatched on the appellant obtaining the necessary permits from the Pakistan authorities. On December 13, 1949, the appellant bro ught a suit for compensation for non delivery of the goods. The respondent contended that the suit was beyond time as it was not filed within one year from the time "when the goods ought to be delivered" as prescribed by article 31 of the Limitation Act. Held, that the suit was barred by time. The words "when the goods ought to be delivered" in article 31 had to be given their strict grammatical meaning and equitable consi derations were out of place. Under article 31 limitation started on the expiry of the time fixed between the parties for delivery of the goods and in the absence of any such agreement the limitation started after reasonable time had elapsed on the expiry of which the delivery ought to have been made. The reasonable time was to be determined according to the circumstances of each case. The view taken by some High Courts that time began to run from the date when the railway finally refused to deliver was not correct ; where the legislature intended that time should run from ' the date of refusal it had used appropriate words in that connection. The starting point of limitation could not generally be affected by the conduct of the parties or by the correspondence between them, unless it contained an acknowledgment of liability by the carrier or showed something affecting the reasonable time In the present case delivery ought to have been made within five or six months, as is also indicated by the s, 80 notice given 71 by the appellant and the suit was filed more than a year after that expiry of that time. Dominion of India vs Firm Aminchand Bholanath (F. B.) decided by Punjab High Court on May 2, 1956, approved. Jugal Kishore vs The Great Indian Peninsular Rat (1923) I. L. R. 45 All. 43 ; Bengal and North Western Railway Company vs Maharajadhiraj Kameshwar Singh Bahadur, (1933) I. L. R. 12 Pat. 67, 77 ; Jai Narain vs The Governor General of India, A. I. R. ; and Governor General in Council vs section G. Ahmed, A. 1. R. , disapproved. Nagendranath vs Suresh, A. 1. R. and General Accident Fire and Life Insurance Corporation Limited vs Janmahomed Abdul Rahim, A. I. R. , referred to.

Appeal No. 126 of 1966. Appeal from the judgment and order dated November 29, and December 2, 1963 of the Gujarat High Court in Special Civil Application No. 641 of 1962. 736 K. R. Chaudhuri, for the appellant. R. M. Hazarnavis, K. L. Hathi and section P. Nayar, for the respondents. section T. Desai and I. N. Shroff, for the intervener. The Judgment of the Court was delivered by Hegde, J. The main controversy in this appeal by certificate is as to the constitutional validity of section 12A(4) of the Bombay Sales Tax 1946, to be hereinafter referred to as the Act. As in our judgment that provision is void, the same being violative of article 19(1)(f) of the Constitution, we have not thought it necessary to examine the other contentions raised ' in the appeal. The facts material for the purpose of deciding the question formulated above, are these: The appellants are dealers registered tinder the Act carrying on business in art silk, cotton and hand loom cloth. During the period January 26, 1950 to March 31, 1950, the appellants effected various sales outside the State of Bombay. As those sales were protected by article 286(1)(a) of the Constitution, they were outside the reach of the Act. But yet the sales tax officer assessed the turnover relating to those sales. The tax levied in respect of that turnover was Rs. 4,494/3/9. In appeal, the order of the sales tax officer was affirmed by the Assistant Collector of sales,tax. But the Additional Collector of sales tax in revision revised the levy to some extent and, ordered a refund of Rs. 2,238/0/6. That amount was paid to the assessees. Not being satisfied with the order of the Additional Collector of sales tax, the appellants took up the matter in revision to the Sales Tax Appellate Tribunal. But even before they moved the Tribunal in revision, the Additional Collector of sales tax by his letter dated May 17, 1958, informed the appellants that unless they furnished to the sales tax officer proof of their having refunded the amount paid to them in pursuance of his order to the purchasers within a period of three months from the date of that notice, the same would be liable to be forfeited under section 12A(4) The Tribunal by its 'order dated November 26, 1958, allowed the claim of the appellants in full and directed ' the refund of an addi tional sum of Rs. 2,256/2/6. During the period April 1, 1950 to March 31, 1951 the appel lants effected various sales outside the State of Bombay. The turn, over relating to those sales was also brought to tax by the sales tax officer and in that connection a tax of Rs. 23,806/3/6 was levied on the appellants. In appeal, the Assistant Collector of sale tax allowed the appellants ' claim in part and ordered a refund or. Rs. 12,154/15/ but at the same time he informed them that that amount would be forfeited to the State Government if not refunded to the purchasers from whom the same had been collected. No being satisfied with the relief obtained, the appellants went up in revision to the Additional Collector of sales tax. That officer by 737 his order dated November 1, 1958 granted further relief by ordering refund of an additional sum of Rs. 3,588/1/9. But the sales tax officer did not give effect to that order. As the Additional Collector did not accept the appellants ' claim in full, they went up in revision to the Tribunal. The Tribunal allowed their claim in full. The Revenue took up the matter in reference to the High Court but that reference was rejected. From the foregoing it is seen that in respect of the period April 1, 1950 to March 31, 1951 the appellants are entitled to get a refund of Rs. 23,806/3/6. Despite the aforementioned orders, the sales tax officer did not pay the amounts ordered to be refunded. On the other hand, he threatened to take steps to forfeit the same by having recourse to section 12A(4). On June 27, 1962, the sales tax officer called upon the assessees to remain present in their office on July 2, 1962 with particulars of the amount collected by them by way of sales tax from the purchasers in 'other States during the period January 26, 1950 to March 31, 1951. At that stage, the appellants approached the High Court of Gujarat by special civil application No. 641 of 1962 under article 226 of the Constitution. In that application, they prayed for several reliefs, the most important of which was to direct the respondents to comply with the orders of refund and to refrain from taking any action against them under section 12A(4). The High Court dismissed that application. Hence. this appeal. The Act provides for the levy of tax on the sale of goods in the then State of Bombay. It came into force on March 8, 1946. Any person who carries on business of selling or supplying goods in the State of Bombay whether for commission, remuneration or otherwise, is defined as a dealer in section 2(c). Section 8 and section 8(a) of the Act provide for the registration of dealers. As mentioned earlier the appellants are registered ' dealers. Under section 2(k) of the Act, the assessment year is the financial year. Section 5 prescribes the incidence of taxation. Section 10 prescribes the returns to be made by the dealers. The assessment is made under section 11. Section 11 (a) provides for taxing the turnover escaping assessment. Section 12 provides for the payment and recovery of tax. Section 12A is the one with which we are concerned in this appeal. It reads: "(1) No person shall collect any amount by way of tax under this Act in respect of sales or supplies of any goods which are declared, from time to time, under section 7 as sales or supplies on which the tax is not payable. (2) No person selling or supplying any goods shall collect from the purchaser any amount by way of sales tax unless he is a registered dealer and is liable to pay tax under this Act in respect of such sale or supply: Provided that this sub section shall not apply in cases where a person is required to collect such amount of tax separately in order to comply with the conditions 738 and restrictions imposed on him under the provisions of any law for the time being in force. (3) Every registered dealer whose gross turnover exceeds Rs. 60,000 a year shall issue a bill or cash memorandum signed and dated by him or his servant, manager or agent to the purchaser in respect of the goods sold or supplied by him showing the particulars of the goods and the price at which the goods are sold or supplied shall keep the counterfoil or duplicate of such bill or cash memorandum duly signed and dated and preserve it for a period of not less than two years from such date. (4) If any person collects any amount by way of tax in contravention of the provisions of sub section (1) or (2) or if any registered dealer collects any amount by way of tax in excess of the amount payable by him under this Act, the amounts so collected shall, without prejudice to any prosecution that may be instituted against such person or dealer for an offence under this Act be forfeited to the State Government and such person or dealer, as the case may be, shall within the prescribed period, pay such amount into a Government treasury and in default of such payment, the amount shall be recovered as an arrear of land revenue. " In view of article 286(1)(a) of the Constitution as it stood at the relevant time, the appellants ' sales outside the State of Bombay were not exigible to tax. Therefore if the appellants had collected any amount from their purchasers in respect of those sales by way of tax they had undoubtedly contravened sub section 2 of section 12A. Sub section 4 of section 12A provides for the forfeiture to State government any amount collected by a dealer by way of tax in excess of the amount payable by him under the Act. For the purpose of deciding the point in issue it is not necessary to find out the scope of the expression "collects any amount by way of tax" in section 12A(4). We shall assume, without deciding, the collection made by the appellants, if any, was by way of tax. It was not contended nor could it have been contended that the impugned provision is a taxation measure bringing to tax directly or indirectly the sales effected outside the State of Bombay. In Abdul Quadar and Co. vs Sales Tax Officer, Hyderabad,(1) interpreting section 11(2) of, the Hyderabad General Sales Tax Act 1952, a provision somewhat similar to, the impugned provision, this Court observed that legislation under Entry 54 of List II of the Constitution (similar to Entry 48 of List 11 of the Government of India Act, 1935, the entry with which we are concerned in this case) proceeds on 'the basis that the amount concerned is not a tax exigible under the law made under that entry, but (1) ; 739 even so lays down that though it is not exigible under the law, it shall be paid over to the government merely because some dealers by mistake or otherwise have collected it as tax; hence, it is difficult to see how such a provision can be ancillary or incidental to the collection of tax legitimately due under a law made under the relevant taxing entry. Therein it was held that it cannot be said that the State legislature was directly legislating for the imposition of sales or purchase tax under Entry 54 of List 11 when it made the provisions of section 11 (2), for on the basis of the provision the amount that was collected by way of tax was not exigible as tax under the law. According to the Revenue section 12A(4) is a penal provision; and it provides for the imposition of penalty on those who contravene section 12A(1) and (2). It was said on its behalf that power to enact such a provision is incidental to the power to tax sales. In support of that contention reliance was placed on the decision of the Gujarat High Court in Ram Gopal vs Sales Tax Officer, Surat and Another(1). That decision upheld the validity of section 12A(4). If that decision lays down the law correctly, then the appellants are out of court. But we think that the said decision cannot be sustained. We shall not go into the question whether from the language of the impugned provision it is possible to hold that it is a penal provision. For our present purpose we shall assume it to be so. We shall also assume that the legislature had legislative competence to enact that provision. But the question is whether it is violative of article 19(1)(f) which guarantees the freedom to hold property. Prima facie the appellants are entitled to get the amount ordered to be refunded to them. It is for the respondents to establish that the same is liable to be forfeited. Even according to the respondents that amount can be forfeited only as a measure of penalty for the contravention of section 12A(1) and (2). Under our jurisprudence no one can be penalised without a proper enquiry. Penalising a person without an enquiry is abhorrent to our sense of justice. It is a violation of the principles of natural justice, which we value so much. The impugned provision which provides for the forfeiture of the amount in the hands of the dealers, does not lay down any procedure for ascertaining whether in fact the dealer concerned bad collected any amount by way of tax from his purchasers outside the State and if so what that amount is. Neither section 12A(4) nor any rule framed under the Act contemplates any enquiry much less a reasonable enquiry in which the person complained of can plead and prove his case or satisfy the authorities that their assumptions are either wholly or partly wrong. The Act is silent as to the machinery and procedure to be followed in determining the question as to whether there has been a contravention of sections 12A(1) and (2), and if so, to what extent. (1) 16 S.T.C. 1005. L/P(N)7SCI 8 740 Hence it would be open to the department to evolve all the requisite machinery and procedure which means that the whole thing, from the beginning to end, is treated as of a purely administrative character, completely ignoring the legal position. The imposition of a penalty on a person is at least of a quasi judicial character. The impugned provision does not concern itself only with the amount admittedly collected by a person in contravention of sub sections 1 and 2 of section 12A. Even if there is any dispute either as to the facturn of collection or as to the amount collected, such a case also comes within the scope of section 12A(4). Yet that section does not provide for any enquiry on disputed questions of facts or law. The forfeiture provided for in section 12A(4) prima facie infringes article 19(1)(f). Therefore it is for the respondents to satisfy the Court that the impugned provision is a reasonable restriction imposed in the interest of the general public. Section 12A(4) does not contemplate the making of any order. As mentioned earlier, that section prescribes that if any registered dealer collects any amount by way of tax in excess of the amount payable by him under the Act, the amount so collected shall, without prejudice to any prosecution that may be instituted against him for an offence under the Act, be forfeited to the State government and he shall within the prescribed period pay such amount into a government treasury and in default of such payment the amount shall be recovered as arrears of land revenue. This section does not contemplate adjudication. Nor does it, provide for making any order. Hence, it is doubtful whether any appeal can be filed against a demand made under that section under section 21. The question whether appellants in the instant case had been afforded a reasonable opportunity to establish their case or riot is besides the point. The constitutional validity of a provision has to be determined on construing it reasonably. If it passes the test of reasonableness, the possibility of powers conferred being improperly used, is no ground for pronouncing it as invalid, and conversely if the same properly interpreted and tested in the light of the requirements set out in Part III of the Constitution, does not pass the test, it cannot be pronounced valid merely because it is being administered in the manner which might not conflict with the constitutional requirements. On a reasonable interpretation of the impugned provision, we have no doubt that the power conferred under section 12A(4) is unguided, uncanalised and uncontrolled. It is an arbitrary power. As held by this Court in Dr. N.B. Khare vs State of Delhi(1), whether the restrictions imposed by a. legislative enactment upon a fundamental right guaranteed by article 19(1) are reasonable within the meaning of article 19(5) would depend as much on the procedural portion of the law as the substantive part of it. (1) ; 741 Rao(1) wherein it was observed that in considering the reasonable That view was reiterated by this Court in State of Madras vs V. G. ness of laws imposing restrictions on fundamental rights both the substantive and procedural aspects of the impugned law should be examined from the point of view of reasonableness. This Court has taken that view consistently. A provision like the one with which we are concerned in this case can hardly be considered reasonable. For the reasons mentioned above, this appeal is allowed. The order of the High Court is set aside and a writ of mandamus will be issued to the respondents to comply with the refund order set out in the petition filed before the High Court and to refrain from proceeding against the appellants under section 12A(4). The appellants are entitled to their costs both in this Court and in the High Court. Y.P. Appeal allowed.

In view of article 286 (1) (a) of the Constitution, as it stood at the relevant time, the sales by the appellants (registered dealers) outside the State of Bombay were not exigible to tax. The appellants.were directed to refund amounts collected by them from their purchasers in respect of these sales by way of tax, failing which the amounts would be forfeited under section 12A(4) of the Bombay Sales Tax Act. The appellants filed a writ petition in the High Court to restrain the respondents from taking action against them under section 12A(4), The High Court dismissed the petition. In appeal, this Court, Held: section 12A(4) of the Bombay Sales Tax Act was void being violative of article 19(1)(f) of the Constitution. Prima facie the appellants were entitled to get the amount ordered. to be refunded to them. It was for the respondents to establish that the same was liable to be forfeited. Even according to the respondents that amount could be forfeited only as a measure of penalty. Under our jurisprudence no one can be penalised without a proper enquiry. [740 E F]. The impugned provision which provided forfeiture of the amount in the hands of the dealers, did not lay down any procedure for ascertaining whether in fact the dealer concerned hid collected any amount by way of tax from his purchasers outside the State and if so what that amount was. Neither section 12A(4) nor any rule framed under the Act contemplated any enquiry,, much less a reasonable enquiry in which the person complained of could plead and prove his case or satisfy authorities that their assumptions were either wholly or wholly wrong. This section did not contemplate adjudication nor provide for making any order. Hence, it was doubtful whether any appeal could be filed against a demand made under that section under section 21 (740 G H; 741 E]. Abdul Quadar and Co. vs Sales Tax Officer, Hyderabad , Dr. N. B. Khare vs State of 'Delhi. ; State of Madras vs V. G. Rao, (19521 S.C.R. 597 followed. Ram Gopal vs Sales Tax Officer, Surat and another, 16 S.T.C. 1005 disapproved,

Appeals Nos. 137 to 141 of 1958. Appeals by special leave from the judgment and order dated April 26, 1956 of the Patna High Court in Misc. Judicial Cases Nos. 362 to 366 of 1955. A. V. Viswanatha Sastri, section K. Majumdar and I. N. Shroff, for the appellants Nos. 2 to 4 (In all the appeals). Hardayal Hardy and D. Gupta, for the respondent (In all the appeals). December 15. The Judgment of the Court was delivered by KAPUR, J. The assessee who is the appellant has brought these five appeals against the judgment and order of the High Court of Patna by which it answered the two questions stated under section 66(2) of the Indian Income tax Act against the appellant and in favour of the Commissioner of Income tax. The appellant is the son of the late Maharajadhiraja of Darbhanga and the brother of the present Maharaja. The father died in 1929 and the appellant was given by way of maintenance the Estate of Rajnagar. He was also given a yearly allowance of Rs. 30,000 which was later raised to Rs. 48,000. From 1929, the appellant invested his cash surplus in shares and securities, the account of which was entered in what is called Account Book No. 1. From the year 1930 onwards up to the year 1941 42 the appellant purchased a large number of shares and securities which by the accounting year 1941 42 were of the value of Rs. 14.91 lacs. During this period the appellant sold shares and securities in the accounting years 1936 37 and 1939 40 of the value of 1.48 lacs and 1.69 lacs respectively. He made certain amount of profits on these sales but under orders of the Commissioner of Income tax in the former case and of the Income tax Tribunal in the latter case, these sums were not assessed to income tax. In the 290 accounting years 1942 43 to 1946 47 the appellant purchased and sold some shares and securities. The entries in Account No. 1 stood as follows: Total value of Total cost of Total cost of shares shares & securities shares and and securities sold cost at the securities pur during the year. beginning of the chased during the year. 1350 Fs. Rs. 14.66 lacs Nil Rs. 4.68 lacs 942 43 (13 items) 1351 Fs. Rs. 9.98 lacs Rs. 2.37 lacs. Rs. 416 lacs 1943 44 (4 items) (12 items) Rs. 3 05 lacs. Rs. 069 lacs 1352 FS. Rs. 8.20 lacs (2 items) and (3 items) 1944 45 other call money. 1353 Fs. Rs. 10.52 lacs Nil Rs. 1.03 lacs 1945 46 (3 items) 1354 Fs. Rs. 9.50 lacs Rs. 15 83 lacs. Rs. 3.39 lacs 1946 47 ( 9items) (2 items) and in all these years the appellant made profits which varied from Rs. 2,56,959 in the accounting year 194243 to Rs. 33,174 in the accounting year 1946 47. On July 16, 1940, the appellant arranged an overdraft with the Mercantile Bank of India and actually withdrew Rs. 10,000 for the purchase of shares. But his brother the Maharaja advanced to him without interest Rs. 10 lacs and thus the overdraft was paid off. A new Account was opened in the books of the appellant named No. 2 Investment Account which contained all entries in regard to shares purchased and sold from out of the money borrowed from the Maharajadhiraj. In this account entries of the different years were as follows: 292 was held not to. be taxable. Thus in the second period the assessee was held not to be carrying on any trade. In the third period, i.e., the assessment years 1944 45 to 1948 49 the profits made by the appellant from purchase and sale of shares were as follows: 1944 45. Rs.2,62,000 and odd 1945 46. Rs.3,95,000 and odd 1946 47. Rs.1,57,000 and odd 1947 48. Rs.1,33,000 and odd 1948 49. 76,000 and odd The Income Tax Officer held these to be liable to income tax as business profits. On appeal the Appellate Assistant Commissioner excluded the profits for the years 1944 45 and 1945 46 but for the years 1946 47 to 1948 49 the assessments were upheld. Both parties appealed to the Appellate Tribunal. It held on the evidence that the appellant was to be regarded as a dealer in shares and securities and therefore the profits were assessable to income tax. The appellant applied for a case to be stated under section 66(1) of the Income tax Act. This application was dismissed but the High Court made an order under section 66(2) of the Income tax Act to state a case on two questions of law. The questions were as follows: (1). Whether in the circumstances of the case, there is material to support the finding of the Appellate Tribunal that the assessee was a dealer in shares and securities with respect to each of the accounts and, therefore, liable to be taxed? (2). Whether, having regard to the findings of the Appellate Tribunal in respect of 1941/42 assessment, it was open to the Appellate Tribunal in the present case to hold that the profits and the transactions of sale and purchase of shares and securities amounted to profits of business and so liable to be taxed ? The High Court held that the facts and circumstances which the Tribunal took into consideration in arriving at the finding were the material before the Tribunal to support the finding and the first question 293 was answered in the affirmative and therefore against the appellant. In regard to the second question the answer was again in the affirmative and against ', the appellant who has come to this Court by special leave. It was argued on behalf of the appellant that he was not carrying on the business of buying and selling shares but his purchases and sales were in the nature of investments of his surplus monies and therefore the excess amounts received by sales were capital receipts being merely surplus and not profits. It was also submitted that the appellant being a zamindar the buying and selling of shares was not his normal activity; that he had a large income and it was his surplus income which he was investing in buying the shares and whenever he found it profitable he converted his holdings and securities and for a number of years from 1931 32 he had been buying shares but he did not sell them; that the very nature of investments was such that they had to be constantly changed so that the monies invested may be used to the best advantage of the investor; and that the sales were really for the purpose of reemploying the monies that he had invested to his best advantage. Counsel for the appellant relied upon certain cases in support of his submission that the first question raised was of a wider amplitude and that it had been erroneously restricted by the High Court and that its true import was the same as of the questions which were raised in the following cases decided by this Court. He relied on G. Venkataswami Naidu & Co. vs The Commissioner of Income tax (1), Oriental Investment Co., Ltd. vs The Commissioner of Income tax, Bombay (2). In the former case the assessee purchased four plots of land adjacent to the mills of which he was the Managing Agent. On various dates and about five years later sold them to the mills in which he realized about Rs. 43,000 in excess of his purchase price. This was treated by the Income tax authorities as purchase with a view to sell at a profit. The question referred was whether there was material for the (1) [1959] Supp. 1 S.C.R. 646. (2) ; 294 assessment of that amount as income arising from an adventure in the nature of trade. The High Court held that that was the nature of the transaction. On appeal this Court held that before the Tribunal could come to the conclusion that it was an adventure in the 'nature of trade, it had to take into consideration the legal requirements associated with the concept of the trade or business and that such a question was a mixed question of law and fact. It was also held that where a person invests money in land intending to hold it and then sells it at a profit it is a case of capital accretion and not profit derived from an adventure in the nature of trade but if a purchase is made solely and exclusively with the intention to resell it at profit and the purchaser never had any intention to hold the property for himself there would be a strong presumption that the transaction is in the nature of trade but that was also a rebuttable presumption. The purchase in the absence of any rebutting evidence was held to fall in the latter category, i.e., adventure in the nature of trade. In the Oriental Investment case(1) the assessee was an investment company. It had purchased certain shares and sold them and qua those shares it claimed to be treated as an investor and not a dealer on the ground that it did not carry on any business in the purchase and sale of shares. The assessee 's applications for reference to the High Court were rejected on the ground that no question of law arose out of the order of the Tribunal. It was held that the question whether the assessee 's business amounted to dealing in shares and in properties or was merely an investment was a mixed question of law and fact and the legal effect of the facts found was a question of law and this Court ordered the case to be stated on two questions that it framed. One of the questions was similar to the first question in the present case but the second question was a wider one, i.e., whether the profits and losses arising from the sale of shares etc. could be taxed as business profits. The question which the High Court had to answer (1) ; 295 in the present case was a narrow one and the answer to that on the material before the Court was rightly given in the affirmative. But even if the question is taken to be wider in amplitude, on the materials produced and on the facts proved the appellant must be held to have been rightly assessed. Counsel for the appellant argued that the amounts received by him in the accounting years were in the nature of capital accretions and therefore not, assessable. In support, Counsel for the appellant relied on the following cases: Raja Bahadur Kamakshya Narain Singh vs The Commissioner of Income Tax, Bihar & Orissa (1) where Lord Wright observed that profits realised by the sale of shares may be capital if the seller is an ordinary investor changing his securities but in some instances it may be income if the seller of the shares is an investment company or an insurance company. The other cases relied upon were Californian Copper Syndicate Limited vs Harris (2); Cooper vs Stubbs (3); Leeming vs Jones (4) and Edwards vs Bairstow & Harrison (5). It is not necessary to discuss these cases because. the principle applicable to such transactions is that. when an owner of an ordinary investment chooses to realise it and obtains a higher price for it than he originally acquired it at, the enhanced price is not a profit assessable to income tax but where as in the present case what is done is not merely a realisation or a change of investment but an act done in what is truly the carrying on of a business the amount recovered as appreciation will be assessable. In July 1948 the appellant had borrowed, though without interest, a large sum of money to the extent of about Rs. 10,00,000, no doubt from his brother. He started a new account calling it No. 2 Investment Account. For the assessment years under appeal shares purchased and sold were of a large magnitude ranging from Rs. 4.68 lacs to Rs. 69 thousands in what is called the first account and from Rs. 9,64,000 or even if Port Trust Debentures are excluded (1) [1943] L.R.70 I.A. 180,194. (2) (3) , 57. (4) (5). [1955] ; 296 Rs. 3,60,000 to Rs. 30,000. The magnitude and the frequency and the ratio of sales to purchases and total holdings was evidence from which the Income tax Appellate Tribunal could come to the conclusion as to the true nature of the activities of the appellant. The principle which is applicable to the present case is what we have said above and on the evidence which was before the Tribunal, i.e., the substantial nature of the transactions, the manner in which the books had been maintained, the magnitude of the shares purchased and sold and the ratio between the purchases and sales and the holdings, if on this material the Tribunal came to the conclusion that there was material to support the finding that the appellant was dealing in shares as a business, it could not be interfered with by the High Court and in our opinion it rightly answered the question against the appellant in the affirmative. The second question is wholly unsubstantial. There is no such thing as res judicata in income tax matters. The Appellate Tribunal has placed in a tabulated form the activities of the appellant showing the buying and selling and the magnitude of holdings and it cannot be said therefore that it was not open to the Appellate Tribunal to give the finding that it did. In our opinion the High Court rightly held against the appellant. The appeals are therefore dismissed with costs. One hearing fee in this Court. Appeals dismissed.

The appellant used to invest his cash surplus in shares and securities and maintained an account book called Book No. 1 relating thereto. During the period from 1930 to 1941 42 he purchased a large number of shares and securities which by the accounting year 1941 42 were of a value Rs. 1491 lacs. He sold certain shares and securities of the value of several lacs and made certain amount of profit on those sales. In 1940 the appellant borrowed a large amount of money from his brother, the Maharaja of Darbhanga and opened a new account named account No. 2 which contained all entries regarding shares purchased and sold out of the money borrowed from the Maharaja. In the assessment year 1944 45 to 1948 49 the profits made by the (1) ; 288 appellant from purchase and sale of shares amounted to several lacs and the Income tax Officer held those to be liable to income tax as business profits. The Appellate Assistant Commissioner upheld the assessments but excluded the profits for the years 1944 45. On appeal by both the parties the Appellate Tribunal held on the evidence that the appellant was to be regarded as a dealer in shares and securities and therefore the profits were assessable to income tax. The High Court stated the following two questions under section 66(2) of the Income tax Act and answered them in the affirmative: "(1) Whether in the circumstances of the case, there is material to support the finding of the Appellate Tribunal that the assessee was a dealer in shares and securities with respect to each of the account and, therefore, liable to be taxed? (2)Whether having regard to the finding of the Appellate Tribunal in respect of 1941 42 assessment, it was open to the Appellate Tribunal in the present case to hold that the profits and transactions of sale and purchase of shares and securities amounted to profits of business and so liable to be taxed?" On appeal by special leave the appellant contended inter alia, that being a Zamindar the buying and selling of shares was not his normal activity and he did not carry on any such business but his purchases and sales were in the nature of investments of his surplus monies and therefore the excess amounts received by sales were capital receipts being merely surplus and not profits. Held, that on the materials produced and on the facts proved the appellant must be held to have been rightly assessed. The principle applicable to such transactions is that when an owner of an ordinary investment chooses to realise it and obtains a higher price for it than the original price paid by him, the enhanced price is not a profit assessable to income tax, but where as in the present case what is done is not merely a realisation or a change of investment but an act done in what is truly the carrying on of a business the amount recovered as appreciation will be assessable. G.Venkataswami Naidu & Co. vs The Commissioner of Income tax, [1959] Supp. 1 S.C.R. 464, Oriental Investment Company Ltd. vs The Commissioner of Income tax, ; , Raja Bahadur Kamakshya Narain Singh vs Commissioner of Income tax, Bihar and Orissa, (1943) L.R. 70 I.A. 180, discussed. The substantial nature of the transactions, the manner in which the books were maintained, the magnitude of the shares purchased and sold and the ratio between the purchases and sales and the holding justified tile Tribunal to come to the conclusion that the appellant was dealing in shares as business. The High Court could not interfere with those findings and it rightly answered the questions in the affirmative. There is no such thing as res judicata in income tax matters 289 and it was quite open to the Appellate Tribunal to give the finding that it did.

ivil Appeal No. 1197 of 1987. From the Judgment and Order dated 5.1.1987 of the Madhya Pradesh High Court in Civil Revision No. 382 of 1986. K.K. Venugopal, A.K. Chitale, Deepak K. Thakur and S.K. Gambhir for the Appellant. Y.S. Chitale, M.S. Ganesh and Ravi Wagmare for the Respondent. This is an appeal by special leave against the Judgment & Order dated 5 1 1987, of the High Court of Madhya Pradesh, Bench at 251 Indore, in Civil Revision No. 382 of 1986, by which the High Court affirmed the order dated 28 11 1986 of the District Judge, Ujjain in Civil Execution Case No. 1249 of 1986, filed by the respondent against the appellant. The appellant is a textile undertaking at Agra Road, Ujjain. The Madhya Pradesh Government enacted the Madhya Pradesh Sahayata Upkram (Vishesh Upbandh) Adhiniyam, 1978 (No. 32 of 1978), for short the Act, with the object of giving relief to sick undertakings. Relief was given to the appellant company first by notification No. F 17 87 79 XI B 1, dated 15 11 1980, extended from time to time by subsequent orders, the relief so given to continue till 15 11 1987. The respondent filed a summary suit against the appel lant in the Bombay High Court on its original side, as summary suit No. 124 of 1986 claiming a decree for Rs. 12,12,327.50, with interest and costs. The appellant did not contest the suit. The suit was accordingly decreed. The respondent got the decree transferred for execution to the District Judge, Ujjain on 26 9 1986 and then applied for execution of the decree. The appellant resisted execution by filing objection pleading that it was a relief undertaking under the Act, the benefits under which Act were available till 15 11 1986 at the time the objection was filed (now upto 15 11 1987) and that the decree could not therefore be executed against it in view of the bar contained in Section 5 of the Act. The respondent admitted the appellant to be a relief undertaking. However, it was contended that the District Judge had no jurisdiction to entertain any objec tion to the execution of the decree, validly passed by the Bombay High Court The Execution Court, it was contended, could not go behind the decree and the decree mandated execution on its terms. The learned District Judge upheld the contentions of the respondent and held that the appellant could not take advan tage of the notifications under the Act because the rights and liabilities of the parties had to be determined by the transferee court in accordance with the substantive law beating on the question in the court that passed the decree. He further held that the execution of the decree could not be challenged before the transferee court unless it was shown that the transferor Court had no jurisdiction to pass the decree. The objection of the appellant was thus reject ed. The appellant thereupon filed a revision in the High Court. The High Court rejected the revision and affirmed the order of the District Judge. Hence this appeal. 252 The questions of law raised before us are as follows: (a) Whether on a true construction of Section 5 of the Act, execution of the ex parte decree obtained by the respondent against the petitioner at Bombay can be insti tuted, commenced or proceeded with by the respondent against the petitioner, even though the petitioner 's textile undertaking is admit tedly a State Relief Undertaking under the Act? (b) Whether Section 5 of the aforesaid Act is substantive law or procedural law? The High Court considered this question and held that there was no bar against execution of the decree after considering the effect of Section 5 quoted above on the general law governing decrees and their execution as provid ed in the Civil Procedure Code. The High Court relied upon the settled position that the executing Court cannot go behind the decree even if it is erroneous on law or on facts. We extract below the finding by the High Court against the appellant in paragraph 20: "It may be stated that it was perhaps due to the position of the law as propounded in the Delhi decision that the suit in the Bombay High Court was not contested by the petition er. With the determination of the rights of the parties by the Bombay High Court according to the substantive law applicable to the State of Maharashtra, the nonapplicant was manifest ly clothed with the absolute right to execute the decree unless some express provisions of law in Maharashtra empowered the Court to restrain him from executing the same. Such fight cannot again be subjected to and/or regulated by any law of the State of M.P. to which the decree is sent only for execution. Any provision to suspend such right of execu tion of a valid decree does partake of the character of substantive law and cannot be interpreted as merely a rule of procedure within the meaning of Sec. 40 of the C.P.C. prescribing the manner of execution. It has, therefore to be held on the authority of Ramavtar 's case (supra) that the provision in Section 5 of the Adhiniyam pertains to the domain of substantive law and cannot be said to relate to the realm of adjective or proce dural law. The petitioner, therefore. has no locus standi to seek shelter under Section 5 of the Adhiniyam, against 253 the execution of the decree passed by the Bombay High Court, it being a substantive law of the State of M.P. and not merely a proce dural law, within the meaning of Section 40 of the C.P.C. or procedural power under Section 42 ibid governing the mode of execution. The suit in the Bombay High Court was not liable to be stayed and so is the decree therein passed. " It is evident from the above discussion that the High Court completely overlooked the purpose of the Act and the limited period of operation of Section 5. It has to be borne in mind that the Act in question was enacted with a specific purpose. The preamble to the Act states that the Act has been enacted "to enable the State Government to make special provisions for a limited period in respect of industrial relations, financial obligations and other like matters in relation to industrial undertakings the running of which is considered essential as a measure of preventing, or of providing relief against, unemployment. " It is necessary to note that the State Government and other financial institu tions invest large sums of money to revive sick units or relief undertakings. The Government and such institutions are interested in seeing that the amount so invested are utilised for the purpose of running the relief undertaking so that it can be gradually revived and what is more impor tant, to provide continuous employment to a large number of workers. The Government is interested in making sure that the relief undertakings do not incur burdensome debts, engage in costly litigations and consequent attachment of their machineries and moveables thus gradually destroying the units completely. The Act has been enacted to safeguard the interest of the general public, the workers and the amounts invested. It is for this purpose that relief was given to the unit against execution of decrees for a maximum period of seven years. If creditors of the relief undertak ings ingeniously manage to obtain decrees against them from Courts situated in areas where the Act is not in operation and thus try to circumvent the operation of the Act by getting such decrees transferred to the area where the Act is in operation and plead that their decrees are saved from the mischief of the Act, such actions would be to defeat the very purpose of the Act. When we say this, we do not want to encourage such relief undertakings not to pay current li abilities. We are only concerned here with the interpreta tion of the sections of the Act. We will presently refer to some of the relevant sections and consider their operation both for pre notification and post notification debts. Section 2(3) defines relief undertaking and section 2(4) a state industrial undertaking, as follows: 254 "2(3) "relief undertaking" means a State industrial undertaking in respect of which a declaration under Section 3 is in force: 2(4) "State industrial undertaking" means an industrial undertaking. (a) which is started or which, or the management of which is under any law or agree ment acquired or otherwise taken over by the State Government or by a Government company and is run or proposed to be run by, or under the authority of, the State Government or a Government company; or (b) to which any loan, advance, or grant has been given, or in respect of any loan whereof, a guarantee has been given, by the State Government or Government company; or (c) in respect of which a notified order under the Industries (Development and Regula tion) Act, 1951 (No. 65 of 195 1) is in opera tion. " Declaration of a relief undertaking is provid ed for in Section 3 which reads as follows: "The State Government may, if it is satisfied that it is necessary or expedient so to do in the public interest, with a view to enabling the continued running or re starting of a State industrial undertaking as a measure of preventing, or of providing relief against, unemployment, declare, by notification , that the State industrial undertaking shall on and from such date and for such period as may be specified in the notification, be a relief undertaking. Provided that the period so specified shall not, in the first instance, exceed one year but may, by a like notification, be extended, from time to time, by any period not exceeding one year at any one time so however that such periods in the aggregate shall not exceed seven years. " Section 4 provides for suspension of certain enactments, contracts, agreements etc. appel icable to relief undertaking. The Section reads as follows: 255 "4. Application of certain enactments and contracts, agreements, etc. to relief undertaking That State Government may, if it is satisfied that it is necessary or expedient so to do for the purposes specified in section 3, direct, by notification , (a) that in relation to any relief undertaking all or any of the enactments specified in the Schedule to this Act shall not apply or shall apply with such adaptations whether by way of modification, addition or commission (which does not, however affect the policy of the said enactments), as may be specified in such notification, or (b) that the operation of all or any of the contracts, assurances of property, agree ments, settlements, awards, standing orders or other instruments, in force (to which any relief undertaking is a party or which may be applicable to any relief undertaking) immedi ately before the date on which the State industrial undertaking is declared to be a relief undertaking, shall remain suspended or that all or any of the rights, privileges, obligations and liabilities accruing or aris ing thereunder before the said date, shall remain suspended or shall be enforceable with such modifications and in such manner as may be specified in such notification. " The Schedule to the Act mentions the following six Acts: (1) The Industrial Employment (Standing Or ders) Act, 1946 (No. 20 of 1946). (2) The (No. 14 of 1947). (3) The (No. 11 of 1948). (4) The Madhya Pradesh Shops and Establish ments Act, 1958 (No. 25 of 1958). (5) The Madhya Pradesh Industrial Relations Act, 1960 (No. 27 of 1960). 256 (6) The Madhya Pradesh Industrial Employ ment (Standing Orders) 1961 (No. 26 of 1961). Now we come to the important Section with which we are vitally concerned in this appeal and that is Section 5 which reads as follows: "5. Suspension of suits or other legal pro ceedings against relief undertakings: As from the date specified in the notification under sub section (1) of section 3, no suit or other legal proceedings shall be instituted or commenced or, if pending, shall be proceeded with against the industrial undertaking during the period in which it remains a relief under taking any law, usage, custom, contract, instrument, decree, order, award, settlement of other provisions whatsoever notwithstand ing. " What we are called upon to decide in this case is wheth er proceedings taken in the Madhya Pradesh Court for execu tion of a decree validly obtained in the Bombay High Court has to be or can be stayed under this Section. We have already seen that the maximum period of the stay is seven years and this period will expire on 15 11 1987. Section 7 deals with suspension or modification of certain remedies, rights etc. and reads as follows: "7. Suspension or modification of certain remedies, rights etc. , stay of proceedings, their revival and continuance. Any remedy for the enforcement of any right, privilege, obligation or liability referred to in clause (b) of Section 4 and suspended or modified by a notification under that section shall, in accordance with the terms of the notification, be suspended modified, and all proceedings relating thereto pending before any court, tribunal, officer or other authority shall accordingly be stayed or be continued subject to such modification, so however, that on the notification ceasing to have effect (a) any right, privilege, obligation or liability so suspended or modified shall revive and be enforceable as if the notifica tion had never been issued; and 257 (b) any proceeding so stayed shall be proceeded with subject to the provisions of any law which may then be in force from the stage which had been reached when the proceed ing was stayed. " A close scrutiny of the above section reveals that Section 5 has a free field of operation unfettered by any limitation. The section is not happily worded. What the section intends to convey, according to us, if the words are re arranged, would be as follows: "Notwithstanding any law,usage, custom, con tract, instrument, decree, order, award, settlement or other provisions, no suit or other legal proceedings shall be instituted or commenced or if pending shall be proceeded against the industrial undertaking as from the date specified in the notification under sub section (1) of Section 3 during the period in which it remains a relief undertaking. " So read, the object of the section becomes clear. The section seeks to confer benefit to the relief undertakings from the ravages of litigation during the period it remains a relief undertaking. The expression 'decree ' is very mate rial for our purpose. Inclusion of 'decrees ' in the section shows that the fact that decrees were validly obtained against a relief undertaking will not pose any danger to it during the period the declaration is in force. In other words, the section prevents execution of a decree validly obtained against the undertaking during the period mentioned above. That takes us to the question as to whether the words "other legal proceedings" in the section would take in execution proceedings. It is not disputed that the Section bars institution of suits and starting of other proceedings. What is disputed is that expression "other legal proceed ings" will not take in execution proceedings. The contention is grounded on the general principle that the execution court cannot go behind a valid decree and that the execution court cannot, therefore, refuse to execute it. It is admit ted that the decree obtained from the Bombay High Court is a valid decree. That being so, law should take its course and execution should proceed. It is by virtue of the enabling provisions contained in Sections 40 & 42 of the Civil Proce dure Code that this validly obtained decree got transferred to the Court in Madhya Pradesh. It is contended that by the mere transfer of this decree in accordance with the proce dural law, its validity does not disappear nor its binding force cease to exist. We find difficulty in accepting this contention. If we are to accept this submission, it would be rendering section 5 of the Act nugatory and to 258 destroy the benefits sought to be conferred by that section. Nobody questions the validity of the decree. All that is sought to be done is to suspend its animation for the period mentioned in the notification. No Court in Madhya Pradesh can question its validity, nor can refuse to execute it after the period is over. To direct execution of the decree in the teeth of Section 5 would be to encourage filing of suits in Courts outside Madhya Pradesh, secure decrees and defeat the purpose of the Act. We do not think that such an abuse is permissible in the face of Section 5 of the Act. We have, therefore, to answer this question in favour of the appellant. For the disposal of this case, we do not think it neces sary to refer to the lengthy discussion made by the High Court on substantive and procedural law. We have to construe and interpret the section as it stands. The section is unambiguous and full import has to be given to its words and its intent. The non obstante clause in this section takes within its ambit, all the decrees passed against the relief undertakings. The bar of 'institution or commencement ' takes within its ambit suits or other 'legal proceedings ' which include execution petitions also. An attempt was made by the learned counsel for the respondent to contend that the expression "other legal proceedings" cannot take in proceedings to execute validly obtained decrees. It was further contended that if we give such a wide construction to the expression "other legal proceedings" institution of even claims of workers under the and other similar beneficial legis lations, arising after the issue of notification, will be barred. On the wording of the section we feel such a conclu sion is inescapable. Reliance was placed by the counsel for the respondent on the decision in the case of State Bank of India vs Jaipur Udyog & Ors., AIR 1986 Delhi 357 to contend that no objec tion can be raised to the execution of the decree validly obtained from the Bombay High Court. We find that the above decision has no application to our case. In that case, an attempt was made to block a suit filed in the Delhi Court against a relief undertaking under the Rajasthan Relief Undertakings (Special Provisions) Act 9 of 1961, based on Section 3 & 4. That contention was repelled and according to us rightly. There the State Bank of India brought a suit for the recovery of certain amounts against Jaipur Udyog Limit ed, the principal debtor, a company based in Rajasthan and the guarantors. This company had been declared by the State of Rajasthan as a relief undertaking under Section 3 of the Act. Section 2 of the Act barred institution or commencement of suit 259 or other legal proceedings against a relief undertaking. This section contains an explanation as to what "legal proceedings" are. Relying upon this section, the company and the guarantors pleaded that the suit was liable to be stayed. The question before the High Court was whether the Act had extra territorial operation. The case was heard by a Single Judge who referred it to a Division Bench in view of the conflict between the Allahabad High Court and the Punjab & Haryana High Court. The High Court referred to Section 1(2) of the Act which stated that the Act "extends to the whole of the State of Rajasthan" which was an explicit declaration of the legislature about the territorial appli cation of the Act and held that the contention of the debt ors that the suit in Delhi Court ought to be stayed was unsustainable. We are here confronted with a different situation. If what is contended before us had been contended before the Bombay High Court, same result would have fol lowed. We have here a situation entirely different and that is, steps to execute a decree in a territory over which the Madhya Pradesh Act has application. If the decree obtained from the Delhi High Court had been transferred to a Rajas than Court and a decision was rendered on an objection to its execution in favour of the decree holder, that would have helped the respondent. No support can be taken by the respondent from this case. We may seek support for our construction of the words 'legal proceedings ' to include execution proceeding from a judgment of the Federal Court in the case The Governor General in Council vs Shiromani Sugar Mills Ltd., The factual details in brief are as follows: The respondent company was assessed to income tax for the year 1941 42 by an assessment order dated 25th February, 1943. In the meantime, however, a petition to wind up the company had been presented on the 26th November, 1941, a provisional liquidator had been appointed on the 7th Decem ber, 1941 and finally on the 17th April, 1942, a winding up order had been made by the High Court at Allahabad. On 10th March, 1943, a notice of demand was served on the official liquidator of the respondent company under Section 29 of the Income tax Act, 1922. The official liquidator pointed out to the Income tax department that the proper procedure to be followed was to lodge a claim in the winding up in respect of the tax alleged to be due from the Company. Instead of adopting this procedure the Income tax department adopted its statutory procedure under Section 46 and accordingly sent an arrear demand, informing the latter that the demand was recoverable as arrears of land revenue. The official 260 liquidator thereupon made an application to the High Court under Sections 171, 228 and 233 of the Indian Companies Act, 1913, against the department asking for an order that the respondent be directed to put in a formal claim to the official liquidator in respect of the sum due. The Allahabad High Court restrained the department from proceeding accept ing the plea of the company as the leave of the Court was not obtained under Section 171. We are only concerned with the manner in which the Federal Court understood the expres sion "other legal proceeding" occurring in Section 171 of the Indian Companies Act. That Section reads as follows: "When a winding up order has been made or a provisional liquidator has been appointed, no suit or other legal proceeding shall be pro ceeded with or commenced against the company except by leave of the Court, and subject to such terms as the Court may impose. " The Federal Court discussed this question at page 56 as follows: "That still leaves open the question whether action under Section 46 of the Indian Income tax Act is covered by the phrase "other legal proceeding." Clearly it is not a proceeding in an ordinary Court of law. But we see no reason why in British India no "legal proceeding" can be taken otherwise than in an ordinary Court of law, or why a proceeding taken elsewhere than in an ordinary Court of law, provided it be taken in a manner prescribed by law and in pursuance of law or legal enactment, cannot properly be described as a "legal proceeding. " If it be considered that the effect of the Income tax authorities putting the machinery of section 46 of the Income tax Act in motion for the collection of arrears of income tax is to bring into operation all the appropriate legal enactments relating to the collection of land revenue in the Province concerned, it is, in our judgment, very difficult to say that they are not taking a "legal proceeding. " In fact, in this very case, had the company not been in liquidation, the appellant would have had the choice at his option of (a) proceeding by "suit" in the ordinary Courts in respect of the arrears, or (b) by forwarding (under section 46(2) of the Income tax Act) to the Collector the requisite Certificate, initiating and putting into force collection of the arrears as arrears of land revenue under and in ac cordance with the appropriate provisions of the 261 U.P. Land Revenue Act (III) of 1901. Surely such last mentioned action on the part of the income tax authorities, would be the adoption of another legal proceeding for the collection of the arrears as opposed to the institution of a suit. The proviso to section 46(2) empowers the Collector, if he so chooses, to exercise all the powers which a civil court may exer cise in respect of the attachment and sale of debts due to a judgment debtor. If the Income tax Officer will be taking a "legal proceeding" when he moves the Collector as we think he must be held to do to realize the tax by attachment and sale of debts due to the assesee, it can make no difference in princi ple that the Collector is asked to exercise his summary powers under the land revenue law. Accordingly, we agree with the learned Judges of the Allahabad High Court in holding that the words "other legal proceed ing" in section 171 of the Indian Companies Act, 19 13, comprise any proceeding by the revenue authorities under section 46(2) of the Indian Income tax Act, and that accordingly before forwarding the requisite certificate under section 46(2) of the Indian Income tax Act. " There is no reason why the expression 'other legal proceedings ' in section 5 should not include execution petitions also. If we look into the scheme of the Act and the various sections, it will be evident that Section 5 is an independ ent section uncontrolled by Sections 4, 6 & 7. Sections 4, 6 & 7, deal with suspension or modification of certain reme dies, rights etc. , stay of proceedings, their revival and continuance. Section 5 does not make any reference to Sec tion 4. It had been enacted with a definite object and that is to protect the relief undertakings from litigations and consequent actions. The object is clear. The Government wants to relieve such undertakings from litigative pressure for a period of time. It is not a permanent relief. The Government are interested to see that the investments made by it and other financial institutions do not get frittered away by avoidable litigation and other legal proceedings. The bar contained in Section 5 by way of suspension of suits or other legal proceedings is thus an absolute bar but only for the period contemplated by the Act. The limited question that we have to answer is as to whether 262 Section 5 operates even against execution of decrees ob tained against the relief undertaking by its creditors outside the State of Madhya Pradesh. The learned counsel for the respondent brought to our notice decisions reported in AIR 1948 Patna 245 and AIR and similar other decisions to contend that the execution court cannot, while executing decrees, adopt a procedure under any special law available in the State in which the execution court is situate, in relation to decrees obtained outside the States. For example, suppose a decree is obtained in Madras and it is transferred to Madhya Pra desh. Suppose again that in Madhya Pradesh, there is an enactment to scale down the decree amount either in instal ments or to wipe out the debt of an agriculturist; will it be open to the executing court to take recourse to such enactments and give relief to debtors in the State in rela tion to a decree obtained in a Court outside the State. It is settled law that the transferee Court has to execute the decree in accordance with the law obtaining in the Court that passed the decree and determine the rights and liabili ties of the parties in accordance with the substantive law obtaining in the State where that Court is situate. That being so the judgment debtor cannot move the execution court and get the benefit of the procedure available in the State in which the transferee Court is situated. Here we are not confronted with such a situation. Nobody contends that the executing Court has to change the terms of the decree. All that is stated is that its execution has to be suspended for a specified period. Section 5, therefore, does not come into conflict either with Section 40 or sec tion 42 of the Civil Procedure Code. In our view, the bar under Section 5 is an absolute one for the duration of the period contemplated in the Act. If the relief undertakings are not protected by a provi sion like Section 5, the position will be distressing. The creditors will proceed against them. Their properties and goods will be attached. The workers will be rendered job less. In this case, this unit is said to employ nearly 2,000 workers. The creditors will not be in a more advantageous position either. If liquidation proceedings are initiated, the creditors will get only pro rata from the sale proceeds of the assets. If creditors are permitted to proceed against the assets and the products of the undertaking, that would be detrimental to the heavy investment made by the State and other financial institutions. The concern of the Government in enacting this law is thus in the interest of the large 263 number of workmen employed in these undertakings and in the revival, if possible, of a sick unit. It is to protect them and not to render them unemployed that such relief undertak ings are financed by the State. A contention was raised that Section 5 cannot apply to post notification liabilities. In other words, suits and other proceedings in relation to the debts incurred prior to the notification under Section 3 alone are barred and debts incurred subsequent to the notification under Section 3 are not barred under Section 5. In our view, the reading of the Sections does not permit such an interpretation. The object of Section 5 is to protect the relief undertakings from all suits and legal proceedings. This protection is to end on 18 11 1987. We hold that the High Court was in error in allowing execution to proceed. Before parting with this case, we wish to observe that the powers that be will have to evolve a more acceptable procedure while dealing with sick units. We share the con cern expressed in high places about the loss that Government incurs in trying to rescue sick units. Invariably, the amounts pumped in are ultimately lost. The machineries of the unit in question are as old as 1920. One can easily imagine the nature of the products that come out of a unit like this. What purpose will be served by giving life to such units by providing artificial respiration The concern for workers must be matched with the concern for modernisa tion also. The labour should not be left to the mercy of such sick units. The Government will have to evolve a more acceptable and intelligent policy, to help the labour and for modernisation of industry. These units like "flaring tapers brightening as they waste" with temporary financial blood transfusion must, in the interest of all concerned, be subjected to euthanasia. The situation created must be met boldly. Such units with decrepit and antiquated machineries must be got rid of and public money must be saved. In their places new units must come into existence. We know that this would involve heavy financial liability. But in the long run, it would save public interest more. If Government find it difficult to pump enough money, at least a trial must be undertaken to entrust such units to the labour to test how they work with their cooperative efforts. In such a situa tion. there will not be siphoning of the funds of the unit by the entrepreneurs for self aggrandisement, for, more often than not, sickness in such units sets in, because the funds of the units are diverted to defeat both the Govern ment and the labour and only to benefit the owners of such units. 264 With these observations, we set aside the order of the High court and allow this appeal, but with no order as to costs. P.S.S. Appeal allowed.

Section 3 of the Madhya Pradesh Sahayata Upkram (Vishesh Upbandh) Adhiniyam, 1978 provides for the declaration of a State industrial undertaking as a relief undertaking and section 5 for suspension of suits or other legal proceedings against such relief undertakings and bars institution or commence ment of suits or other legal proceedings against such an industrial undertaking during the period in which it remains a relief undertaking notwithstanding any law, usage, custom, contract, instrument, decree, order, award, or settlement. The appellant, a textile undertaking at Ujjain, M.P. was declared a 'relief undertaking ' by notification dated 15.11.1980 issued by the State Government under section 3 of the Act and the time extended by subsequent orders till 15.11.1987. The respondent filed a summary suit against the appellant in the Bombay High Court for a certain sum with interest and costs, which was decreed ex parte. He then got the decree transferred for execution to the Court of Dis trict Judge, Ujjain, Madhya Pradesh on 26.9.1986. The appel lant resisted execution on the ground of the bar contained in section 5 of the Act. The respondent while admitting that the appellant was a relief undertaking contended that the Dis trict Judge had no jurisdiction to entertain any objection to the execution of the decree validly passed by the High Court as it could not 248 go behind the decree, and the decree mandated execution on its terms. The District Judge held that the appellant could not take advantage of the notifications under the Act because the rights and liabilities of the parties had to be deter mined by the transferee court in accordance with the sub stantive law bearing on the question in the court that passed the decree, and that the execution of the decree could not be challenged before the transferee court unless it was shown that the transferor court had no jurisdiction to pass the decree. The High Court took the view that the executing court could not go behind the decree even if it was erroneous on law or on facts and after considering the effect of section 5 on the general law governing decrees and their execution as provided in the Civil Procedure Code held that there was no bar against execution of the decree, and consequently rejected the revision and affirmed the order of the District Judge. In this appeal by special leave it was contended for the respondent that the expression 'other legal proceedings ' would not take in execution proceedings and the execution court could not, therefore, refuse to execute a valid de cree, that if such a wide construction was given to that expression institution of even claims of workers under the Industrial Disputes Act and other similar beneficial legis lation would be barred, that the execution court could not, while executing decrees, adopt a procedure under any special law available in the State in which the execution court was situate in relation to decrees obtained outside the States, and finally that section 5 could not apply to post notification liabilities. Allowing the appeal, the Court, HELD: 1. The High Court was in error in allowing execu tion to proceed. It has completely overlooked the purpose of the Madhya Pradesh Sahayata Upkram (Vishesh Upbandh) Adhini yam, 1978 and the limited period of operation of section 5. The bar contained in the section by way of suspension of suits or other legal proceedings against relief undertakings is an absolute one for the period contemplated in the Act. [263C; 253B; 262F] 2. The section is not happily worded. What it intends to convey if the words are re arranged, would be: "Notwith standing any law, usage, custom, contract, instrument, decree, order, award, settlement or other provisions, no suit or other legal proceedings shall be instituted or commenced or if pending shall be proceeded against the industrial undertaking as from the date specified in the notification under sub section 249 (1) of section 3 during the period in which it remains a relief undertaking". So, read, the object of the section becomes clear. [257BD] 3. The section has to be construed and interpreted as it stands. It iS unambiguous and full import has to be given to its words and its intent. The expression 'other legal pro ceedings ' in the section includes execution proceedings also. The non obstante clause contained therein takes within its ambit all the decrees passed against relief undertak ings. The bar of 'institution or commencement ' takes within its ambit suits or 'other legal proceedings ', which include execution petitions also. The inclusion of the expression 'decree ' in the section further shows that a decree validly obtained against a relief undertaking cannot be executed during the period the declaration is in force. [2S8C; 261E; 257DE] The Governor General in Council vs Shiromani Sugar Mills Ltd., , referred to. State Bank of India vs Jaipur Udyog & Ors., (AIR 1986 Delhi 357), distinguished. Section 5 has a free field of operation unfettered by any limitation. It is independent and uncontrolled by sections 4, 6 and 7 which deal with suspension or modification of cer tain remedies, rights etc., stay of proceedings, their revival and continuance. It does not make any reference to section 4. It had been enacted with a definite object and that is to protect the relief undertakings from litigations and consequent actions during the period the declaration is in force. [257B; 261F] 5. Section 5 operates even against execution of decrees obtained against the relief undertaking by its creditors outside the State of Madhya Pradesh. To direct execution of such decrees would be to encourage filing of suits in courts situated in areas where the Act is not in operation, secure decrees and then try to circumvent the operation of the Act by getting those decrees transferred under sections 40 and 42 of the Civil Procedure Code and defeat the purpose of the Act. Such an abuse is not permissible in the face ors. 5 of the Act. [262A; 258B; 253F; 257G] 6. The transferee court has to execute the decree in accordance with the law obtaining in the court that passed the decree and determine the rights and liabilities of the parties in accordance with the substantive law obtaining in the State where that court is situate. That being so, the judgment debtor cannot move the execution court and get the benefit of the procedure available in the State in which the transferee court is situated. [262D] 250 In the instant case the decree obtained from the Bombay High Court was a valid decree. No court in Madhya Pradesh could question its validity, nor could refuse to execute it. All that is sought to be done by section 5 of the Act is to suspend its animation for the period mentioned in the noti fication. It is not a permanent relief. Section 5, there fore, does not come into conflict either with section 40 or 42 of the Civil Procedure Code. [257FG; 258AB; 261FG; 262EF] 7. It cannot be said that the debts incurred prior to the notification under section 3 alone are barred and debts incurred subsequent to the notification under section 3 are not barred. Section 5 does not permit such an interpretation. [263BC] 8. There is need to evolve a more acceptable procedure while dealing with sick units. Invariably, the amounts pumped in in trying to rescue sick units are ultimately lost. No purpose will be served by giving life to such units. The concern for workers must be matched with concern for modernisation also. The labour should not be left to the mercy of such sick units. The Government will have to evolve a more acceptable and intelligent policy. Units with decrep it and antiquated machineries must be got rid of and public money must be saved. In their places new units must come into existence. If Government finds it difficult a trial must be undertaken to entrust such units to the labour to test how they work with their cooperative effort. [263DH]

Appeal No. 1575 of 1969. Appeal by special leave from the judgment and order dated March 18, 1969 and May 8, 1969 of the Punjab and Haryana High Court in Civil Revision No. 1014 of 1968 and C.M. No. 1863 of 1969. S.V. Gupte and Ravinder Narain, for the appellant. K.R. Chaudhuri, for the respondents. The Judgment of the Court was delivered by Dua, J. By means of an agreement dated August 9, 1963, the appellant company agreed to purchase from the respondents, land measuring 264 kanals and 12 marlas. A sum of Rs. 1,87,000 was. paid as earnest money. The sale deed was to be registered by April 30, 1964. As it was not so registered, both parties blamed each other for the breach. In May, 1966 the Government issued a notification under section 4 of the Land Acquisition Act which was followed by a notification under section 6 in September 1966 acquiring 104 kanals and 18 marlas of land out of the land agreed to be sold. The Collector made an award of the compensation for the acquired land, against which a reference 370 was made to the Court of the District Judge. In May, 1968 the compensation was enhanced to a sum over Rs. 2 lakhs. In the mean time on April 15, 1967, the appellant,company instituted a suit for specific performance of the agreement dated August 9, 1968. This suit was dismissed by the Court of the Senior Subordinate Judge, Gurgaon on August 13, 1968. A Regular First Appeal (No. 216 of 1968) against the dismissal of the suit is pending in the Punjab and Haryana High Court. It appears that the dispute as to apportionment of compensation under section 30 of the Land Acquisition Act was also referred to the Court. In view of the institution of the suit for specific performance, an application was apparently made in the Court of the learned Additional District Judge dealing with the reference under the Land Acquisition Act to stay those proceedings pending the decision of the suit by the learned Senior Subordinate Judge. On February 28, 1968 the learned Additional District Judge took the view that the entire matter in his Court was covered by the civil suit, it being further observed in the order that even the question of the jurisdiction of the Senior Subordinate Judge to determine the amount of compensation was to be first decided by the civil court. On this view, the reference proceedings were stayed pending the decision of the civil court. After the dismissal of the suit, the respondents applied to the Court of the learned Additional District Judge for continuing the proceedings and for making an order of payment of compensation in their favour. This prayer was Contested by the appellant company on the ground that an appeal against the decree dismissing the suit had already been presented in the High Court and that the proceedings for payment of compensation should continue to remain stayed pending the disposal of the appeal. The learned Additional District Judge after hearing both sides decided on August 30, 1969 to continue the order of stay pending the decision of the appeal by the High Court. According to him, the question whether the original agreement had become frustrated or was alive and deserved to be specifically enforced, would have an important bearing on the question of apportionment of compensation. The respondents preferred a revision to the High Court against this order and a learned Single Judge on March 18, 1969 reversed the order continuing stay of the proceedings under section 30 and further directed payment of Rs. 1,78,000 to the respondents. The order of payment of this amount was framed in the following words : "I do feel that in view of the fact that the suit filed by the respondent company has been dismissed, prima facie, it is reasonable that the proceedings under section 30 of the Act should continue, but the petitioners may 371 not be allowed actual payment of more than Rs. 1,78,000. The balance of the amount due in respect of the land of the petitioners shall be kept with the Government to be disbursed in accordance with the decision in the regular first appeal. This will, however, be subject to the further condition that the petitioners will file an undertaking in this Court that they shall not dispose of or otherwise transfer any interest by creating any encumbrance over the balance of the land which was the subject matter of the agreement dated the 9th of August, 1963, without the permission of the Court. Learned counsel for the petitioners appearing before me have agreed to this condition being imposed. " The concluding portion of that order may also be reproduced: ". . . . I accept this revision petition and direct that the proceedings under section 30 of the Act be continued, but the petitioners will not be paid more than Rs. 1,78,000 and the balance will remain undisbursed till the decision of the regular first appeal If the appeal is accepted, this amount shall be treated as part of the consideration that has to be paid by the respondent company. Till the decision of the appeal or till further orders of this Court, the petitioners will not dispose of the balance of the land, which is the subject matter of the agreement, without the permission of the Court. " Before the learned Additional District Judge, the question arose as to whether under the order of the High Court dated March 18, 1969, the sum of Rs. 1,78,000 was to be paid immediately or after the decision of the reference under section 30. The parties apparently desired the learned Additional Judge to decide this question judicially on a consideration of the circumstances of the case. Both parties were accordingly heard and the learned Additional District Judge in a detailed order dated April 19, 1969 expressed his conclusion thus : "To my mind it seems that the decision of the reference under section 30, is to take place first and it is thereafter that the applicants shall be paid amount upto Rs. 1,78,000. In these circumstances, it is ordered that the proceedings u/s 30 be restored and should continue. The cheque will be given only after the decision of the reference u/s 30. The revision before the Hon 'ble Judge was only against the order staying the proceedings and there was no revision regarding the non payment of the amount as that was not the question before this court and no orders were passed by this court in that connec 372 tion. As such, the intention of the Hon 'ble Judge in passing the orders Seems to be that the amount may not be paid to any of the parties now but after the decision of the reference u/s 30. I order accordingly. " The learned Additional District Judge. also fixed May 21, 1969 .,for the evidence of the parties. It appears that instead of challenging on merits the order dated April 19, 1969 in the High Court by way of revision, the respondents filed in that Court on May 6, 1969, an application under sections 151/141 C.P.C. for clarification of its order dated March 18, 1969. This application was placed before the High Court for preliminary hearing on May 8, 1969 and the learned Single Judge recorded the following order without giving notice to the appellant : "My orders are clear that the amount of Rs. 1,78,000 may be paid to the petitioners. The order further directs the petitioners not tO dispose any part of the land which was the subject matter of the agreement. With these observations, this petition is filed. " It is against these two orders that the present appeal by special leave has been presented and the short argument pressed by Shri Gupte was that the order of the High Court dated March 18, 1969 is unsustainable because there was no jurisdictional infirmity made out in the order of the learned Additional District Judge dated August 30, 1968, which would justify interference on revision under section 115 C.P.C. In regard to the order dated May 8, 1969, it was further complained that this order was made ex parte without notice to the appellant. It was contended by Shri Gupte that in face of the judicial order dated April 19, 1969 made by the learned Additional District Judge after hearing both sides at 'length, it was not open to the High Court to record the ex parte .order dated May 18, 1969 without affording to the appellant an opportunity for supporting the view. taken by the learned Additional District Judge. The submissions made by Shri Gupte, in our opinion, possess merit. The revisional jurisdiction has been conferred on the High Court by section 115, C.P.C. in these terms : "115. The High Court may call for the record of any case which has been decided by any Court subordinate to such High Court and in which no appeal lies thereto, and if such Subordinate Court appears (a) to have exercised a jurisdiction not. vested in it by law or (b) to have failed to exercise a jurisdiction so vested. or 373 (c) to have acted in the exercise of its jurisdiction illegally or with material irregularity, the High Court may make such order in the case as it thinks fit. " The mass or reported cases only serve to show that the High Courts do not always appreciate the limits of their jurisdiction under this section. The legal position was authoritatively laid down by the Privy Council as far back as 1894 in Rajah Amir Hassan Khan vs Sheo Baksh Singh(1). The Privy Council again pointed out in Balakrishna Udayar vs Vasudeva Aiyar(2) that this section is not directed against the conclusions of law or fact in which the question of jurisdiction is not involved. This view was approved by this Court in Keshav Deo vs Radha Kissan(3) and has since been reaffirmed in numerous decisions. The position thus seems to. be firmly established that while exercising the jurisdiction under section 115, it is not competent to the High Court to correct errors of fact however gross or even errors of law unless the said errors have relation to the jurisdiction of the Court to try the dispute itself. Clauses (a) and (b) of this section on their plain reading quite clearly do not cover the present case. was not contended, as indeed it was not possible to contend, that the learned Additional District Judge had either exercised a jurisdiction not vested in him by law or had failed to exercise a jurisdiction so vested in him, in recording the order that the proceedings under reference be stayed till the decision of the appeal by the High Court in the proceedings for specific performance of the agreement in question. Clause (c) also does not seem to apply to the case in hand. The words "illegally" and "with material irregularity" as used in this clause do not cover either errors of fact or of law; they do not refer to the decision arrived at but merely to the manner in which it is reached. The errors contemplated by this clause may, in our view, relate either to breach of some provision of law or to material defects of procedure affecting the ultimate decision, and not to. errors either of fact or of law, after the prescribed formalities have been complied with. The High Court does not seem to have adverted to the limitation imposed on its power under section 115 of the Code. Merely because the High Court would have felt inclined, had it dealt with the matter initially, to come to a different conclusion on the question of continuing stay of the reference proceedings pending decision of the appeal, could hardly justify interference on revision under section 115 of the Code when there. was no illegality or material irregularity committed by the learned Additional District Judge in his manner of dealing with this question. It seems to us that in this matter the High Court treated the revision virtually as if it was an appeal. (1) 11 Indian Appeals 237. (2) 44 Indian Appeals 261. L2 Sup. CI/70 12 (3) ; 374 The respondents submission that the order made by the High Court on March 18, 1969 was a consent order, is unsustainable. The agreement mentioned in that order is obviously the agreement by the respondents (petitioners in the High Court) to the condition imposed on them, to file an undertaking in that Court not to. dispose of or ,otherwise transfer any interest by creating encumbrance over the remaining land which, was the subject matter of the agreement dated August 9, 1968, without the previous permission of the Court. There is nothing in the order of the High Court or on the record to which our attention was drawn, showing or even suggesting that the appellant had agreed to the revision being allowed. The order of the High Court dated March 18, 1969 must, therefore, be set aside. The ex parte order dated May 8, 1969 is equally difficult to sustain. In para 5 of the respondents application dated May 6, 1969 under section 151/141 Civil P.C. presented in the High Court, a reference was clearly made to the order passed by the learned Additional District Judge on April 19, 1969. It was averred in this paragraph : "That the learned District Judge by his order dated 19 4 69, has interpreted the High Court 's order wrongly and has held that the intention of the Hon 'ble Judge in passing the order dated 18 3 69, seemed to be that the amount may not be paid to any of the parties now but only after the decision of the reference under Section 30 of the Land Acquisition Act. Thus he has fixed the case under Section 30 of the Act for evidence on 21 5 69. " It seems that at the stage of preliminary hearing the attention of the High Court was not drawn to this fact and that Court proceeded to make an order virtually and in effect reversing the judicial order made by the learned Additional District Judge in favour of the appellant. This could more appropriately be done only on appeal or revision from the order dated April 19, 1969 after notice to the party affected and not on an application under sections 151/141 Civil P.C. Such an application in the circumstances was misconceived. The ex parte order is thus unsustainable and must be set aside. This appeal accordingly succeeds and the impugned orders are set aside with costs. We would like to make it clear that it will be open to the parties, if so advised, to approach the High Court by appropriate proceedings for the speedy disposal of the appeal. R.K.P.S. Appeal allowed.

The appellant company filed a suit against the respondents in the court of the Senior Subordinate Judge, Gurgaon, for the specific performance of an agreement for the purchase of ' certain land by the company from the respondents. Part of the land in question became the subject of proceedings under the Land Acquisition Act, 1894, and dispute relating to compensation was referred to the Court of the District Judge. The court fixed the compensation at over Rs. 2 Iakhs. A dispute as to apportionment of the compensation was also. referred under section ' 30 of the Land Acquisition Act to the court but the proceedings were stayed by the Additional District Judge, pending decision of the suit for specific performance by the Senior Subordinate Judge. The suit was dismissed and thereupon the respondents applied to the Additional District Judge for continuation of proceedings under section 30 and for payment of compensation to them. The appellant company resisted the application on the ground that it had filed an appeal in the High Court against the decree of the Senior Subordinate Judge. The Additional District Judge after hearing both parties stayed the proceedings under section 30 pending disposal of the company 's appeal by the High Court. On a revision application under section 115 C.P.C. filed by the respondents, the High Court ordered on March 18, 1969 that a sum of not more than Rs. 1,78,000 out of the compensation for the acquired land be paid to the respondents who must undertake not to sell the rest of the land during the pendency of the appeal. The Additional District Judge after hearing the parties judicially interpreted the order to. mean that Rs. 1,78.000 were to be paid to the respondents after the conclusion of the proceedings under ' section 30. The respondents again moved the High Court with an application under section 151/141 C.P.C. for a clarification of its earlier order whereupon by order dated May 8, 1969 the High Court ordered immediate payment. The company challenged the High Court 's orders dated March 18, 1969 and May 8, 1969 in an appeal before this Court. It was contended on its behalf that in making its first order the High Court exceeded its jurisdiction u/s 115 C.P.C. and in making the clarificatory order ex parte it violated the rules of natural justice. HELD: (i) The position is firmly established that while exercising its jurisdiction under section 115, it is not competent to the High Court to correct errors of fact however gross or even errors of law unless the errors have relation to the jurisdiction of the Court to try the dispute itself. Clauses (a) and (b) o.f this section on their plain reading quite clearly did not cover the present case because it had not been shown that the learned Additional Sessions Judge had either exercised a jurisdiction not vested in him by law or had failed to exercise a jurisdiction so vested in him in recording the order that the proceedings under reference be stayed till the decision of the appeal by the High Court in the proceedings for specific performance of the agreement in question. Clause (c) of the section also did not apply 369 to the present case. The words "illegally" and "with material irregularity" as used in this clause do not cover either errors of fact or of law; they do not refer to the decision arrived at but merely to the manner in which it is reached. The errors contemplated by this clause may relate either to breach of some provision of law of to material defects of procedure. affecting the ultimate decision, and not to errors of either fact or of law, after the prescribed procedure has been complied with. [375 D G] The High Court had not adverted to the limitation imposed on its power under section 115 of the Code and had treated the revision as if it was an appeal. Merely because the High Court would have felt inclined, had it dealt with the matter initially, to come to a different conclusion on the question of continuing stay of the reference proceedings pending decision of the appeal could hardly justify interference on revision under section 115 of the Code when there was no illegality or material irregularity committed by the Additional Sessions Judge in his manner of dealing with the question. The order of the High Court dated March 18, 1964 had therefore to be set aside. [375 F H] Rajah Amir Hassan Khan vs Sheo Baksh Singh, I I Indian Appeals 237: Balakrishna Udayar vs Vasudeva Aiyar, 44 Indian Appeals 261; Keshav Deo vs Radha Kissan. ; applied. (ii) The ex parte order dated May 8 1969 was equally difficult to sustain. The High Court had proceeded to make an order virtually and in effect reversing the judicial order made by the learned Additional Judge in favour of the appellant. This could, more appropriately be done only on appeal or revision after notice to the party affected and not on an application under sections 151/141 C.P.C. Such an application in the. circumstances was misconceifed. [376 C, F]

minal Appeal No. 128 of 1966. Appeal by special leave from the judgment and order dated December 23, 1965 of the Madhya Pradesh High Court (Indore Bench) in Criminal Revision No. 131 of 1964. C. L. Sareen and R. L. Kohli, for the appellants. I. N. Shroff, for the respondent. The Judgment of the Court was delivered by Vaidialingam, J. This is an appeal, by special leave, in which the appellants challenge the propriety and correctness, of the order of the Madhya Pradesh High Court confirming their conviction, under section 120B, IPC, and section 9(a), of the Opium Act, 1878 (Act I of 1878) (hereinafter called the Act). Appellants 2 and 3 are the sons of the first appellant, and the 4th appellant, since deceased, was his nephew. 189 On receiving information, that opium was being smuggled and secretly kept, in the house of the appellants, the Sub Inspector of Police, Station Malharganj, Indore, with a police party, raided their house, on September 19, 1960, and recovered a fairly large quantity of opium, of about 2 maunds, 14 seers and 14 chhatacks. The appellants were arrested, and charge sheeted, for having committed offences, under section 120B, IPC., and section 9(a), of the Act. They pleaded not guilty. Their defence was that each of them was living separately, and they were not also in the house, when the opium was stated to have been recovered. The deceased. 4th appellant, raised a plea that one Altaf had come, in the morning of September 19, 1960, at about 9 a.m., and told him that the police were after him, and that he wanted to throw a bundle. which was, in his possession, in the house of the appellants. Accordingly, Altaf threw a bundle, in the court yard of the house of the appellants. The Additional City Magistrate, Indore, accepted the case of the prosecution, and rejected the plea of the appellants. The trial Magistrate found that the opium was recovered, from the possession of the appellants, who had no permit or licence, for its possession or transportation, and he also found that the appellants, along with others, had conspired to possess the said opium. On these findings, each of the appellants, was convicted, under sections 120B, IPC., and section 9(a), of the Act, and sentenced to undergo two years ' rigorous imprisonment, in respect of each of the offences, the sentences, to run concurrently. The appellants challenged their conviction and sentence, before the First Additional Sessions Judge, Indore, in Criminal Appeal No. 118 of 1963. The learned Sessions Judge, agreeing with the conclusions, arrived at by the trial Court, dismissed the appeal. The appellants, again, moved the High Court of Madhya Pradesh, in Criminal Revision No. 131 of 1964, to set aside their conviction; but the High Court also, by its order, dated December 23, 1965, which is under attack, dismissed the revision. On behalf of the appellants, Mr. C. L. Sarin, learned counsel raised three contentions : (1) that there is no evidence of any conspiracy, to attract section 120B, IPC; (2) neither the High Court, nor the two Subordinate Courts, have considered the vital question, viz., whether the evidence establishes that the four appellants were in conscious possession of the opium, recovered from the house; and (3) the trial, which was held, under section 251A, of the Code of Criminal Procedure, was vitiated, as it should have been properly held, only under section 252, Cr. So far as the first two contentions are concerned, in our opinion, it is really an attack, on the concurrent findings, recorded 190 by the Magistrate, and, on appeal, by the Sessions Judge, and which have been accepted, 'by the High Court, in revision. The Magistrate, as well as the learned Sessions Judge, have posed, one of the questions for consideration, as to whether the appellants can be considered to have been in conscious possession of the, opium, recovered from the house. It is, in considering this question, that the plea of the appellants, that each of them was living separately in the house and that they were not present, at the time of tile recovery, and that it was. possible, for some outsider, to have thrown the opium recovered, into the court yard of the house, have all been considered, in detail, and findings recorded. against the appellants. The chance of any outsider, having thrown this article in the court yard of the appellants ' house, has been eliminated. The courtyard has been found to be a place where various domestic articles were kept, and has also been found to be a place, in frequent use, by the appellants. Their presence, at the time of the recovery, has also been held to be ,established. In view of all these, and other circumstances, to which it is unnecessary for us to refer, the finding has been recorded that the opium, found in the court yard of the house of the appellants, was in their conscious possession and that the appellants, along with others, had also conspired together, to obtain, deal in, and possession . The further finding is that the presence of such a large quantity of opium could not ,have been possible, without each of them, taking the other, into confidence. 'These findings have been accepted, by the High Court, and we :are satisfied that there is no legal error, or infirmity, committed by any of the Courts, in arriving at that conclusion. Therefore. the two contentions, noted above, will have to be rejected. That leaves us, for consideration, the third contention, noted above, that the trial, in this case ought to have been held, under, s.252, Cr. P.C., and it is vitiated, as it has been held, under section 251A. Mr. Sarin, learned counsel for the appellants, urged that the officers, who are to investigate offences, and grant bail. to persons arrested under the Opium Act, as well as the procedure, for trial, in respect of offences, under the Act, and other incidental matters, connected therewith, have been laid down in sections 20 to 20 1, introduced in the Act, by the Opium (Madhya Pradesh) Amendment Act, 1955 (M.P. Act XV of 1955). Counsel urged that the officer, empowered to investigate ,offences, under section 20, be he an officer of the Department of Excise. or a police officer, must be considered to be an excise officer; and though the report, made by such an officer, is treated, under section 20G, of the Act, as applied to Madhya Pradesh, as a report. made by a police officer, under s.190 (1) (b), Cr. P.C., it cannot be held to be a police report, within the meaning of section 251A, and hence, the trial should have been held, in this case, not under s.251 A, but under section 252, Cr. P.C. Counsel referred us to the 191 decision, of the Madhya Pradesh High Court in Sardar Khan Multan Khan vs State(1), in this connection. Counsel further stated that this question, regarding the illegality, of the trial held under section 251A, was raised, in the present proceedings, when the appellants had filed in the High Court, a criminal revision, challenging their conviction, by the two Subordinate Courts. This question, was referred, by a learned Single Judge by his order dated August 3, 1965, to a Full Bench, for consideration. The Full Bench, in its decision, reported as Ashiq Miyan vs State(2) has overruled the earlier decision, in Sardar Khan 's case(1). The learned Judges, of the Full Bench, have rejected the contention of the appellants, that their trial was vitiated, by the fact that the procedure, prescribed by section 251A, Cr. P.C., has been adopted. The Full Bench has further held that section 251A, Cr.P.C., is attracted to a case, instituted under the Opium Act, on a report made by a police officer, and that it logically follows that the trial, of an accused, under the Opium Act, instituted on a report, made by an excise officer, would also be governed, by section 251A. According to the appellants, this decision of the Full Bench, is erroneous. and counsel wants the earlier decision of the Madhya Pradesh High Court, in Sardar Khan 's case(1), to be restored. Mr. 1. N. Shroff, learned counsel for the State_ pointed out ,that the case against the appellants was investigated, in accordance, with the provisions, contained in the Opium Act and was initiated, on a report, made by a police officer. These facts have been noted, by the learned Judges of the Full Bench, and it is, on that basis, that ultimately, after a reference to the decision of this Court, in Amalshah vs The State of Madhya Pradesh(3), that the Full Bench has held that the trial is not vitiated. It is not really necessary, for us, to consider the larger question, as to whether, when an excise officer makes a report, under section 20 G, of the Act, whether the trial, following it, in such a case, would be governed by section 251A. In fact, the Full Bench has gone further, and expressed an opinion, on this point also, that even in such a case, the trial would be governed, by section 251A,Cr. P.C. We express no opinion, on that aspect of the matter. We will confine our decision, to the present case, on the basis that the crime was investigated, in accordance with the provisions, con tained in the Opium Act and the case was initiated against the appellants, on a report, made by a police officer. The, first information report, Exhibit P 20, shows that the search of the appellants ' house was conducted, by the Sub Inspector of Police, Malharganj Police Station, and the recovery of opium, as well as the arrest of the appellants, were made, by the (1) A.I.R. 1963 M.P. 337. (2) A.I.R. 1966 M.P. 1 (F.B.). (3) Unreported decision, in Crl. A. 201 of 1963, decided on II 1 2 1964. 192 said officer. Investigation was also done, by him. Ultimately, the report, which is styled as a 'complaint ', and dated October 23, 1960, was made and signed by Tehsildar Singh, Sub Inspector of Police, Malharganj Police Station, as the Investigating Officer. It is on the basis of that report, that the Magistrate, in this case, conducted the trial of the appellants. We have already referred to the Full Bench decision, of the Madhya Pradesh High Court, wherein these facts have been stated. No doubt, counsel for the appellants has urged that, even under those circumstances, a trial, for an offence under the Opium Act, cannot 'be held, under section 251 A. We are not inclined to accept, this contention of the, learned counsel. More or less, a similar question arose, before the Constitution Bench of this Court, in Amalsh 's Case(1). Similar contentions were also urged, and reliance was placed, on section 20 G, of the Act, as applied to Madhya Pradesh. This Court, after referring to the material provisions of section 20 G, by its judgment, dated December 11, 1964, declined to express an opinion on the larger question, that the report, made by an excise officer, cannot be held to be a police report, so as to attract section 251 A, of the Code of Criminal Procedure. In that decision, this Court actually found that the proceedings, against the appellant before them, commenced on the report, of a police officer, and not on the report, of an excise officer, and that the complaint, lodged before the Magistrate, had been signed by the police officer, who investigated the offence. On these findings, this Court held that, inasmuch as the proceedings commenced, on a report made by a police officer, section 251 A, Cr. P.C., in terms, would apply, and hence the trial held, under that section, in that case, was perfectly legal. Therefore, it will be seen, that in respect of a trial, conducted by a Magistrate, on a report made by a police officer, under the Opium Act, as applicable to the State of Madhya Pradesh, for an offence under that Act, this Court held that section 251 A, Cr.P.C., applied. In the case before us, on the facts, it is clear that the investigation was done by a police officer, the seizure of the articles and the arrest, of the accused, were effected, by a police officer, and the complaint or report, dated October 23, 1960, to the Magistrate, was made, by the Police Officer. It is, on this report of the police officer, that the Magistrate acted further, and the trial also followed. Under those circumstances, it is clear that section 251 A. Cr. P.C., directly applies, and it was, in accordance with the procedure, indicated in that section, that the trial was held. It follows, that there is no illegality, in the trial. The result is that this appeal fails, and is dismissed. Y.P. Appeal dismissed. (1) Unreported decision in Crl. A. 201 of 1963 decided on 11 12 1964.

On receiving information, that opium was being smuggled and secretly kept in the house of the appellants, the Sub Inspector of Police with a police party raided their house, and recovered large quantity of opium from the courtyard of the house. The Sub Inspector of Police made the report and the trial followed. The appellants ' plea that they were living separately and that one A had thrown the bundle, was rejected by the courts below, and they were convicted under section 120B I.P.C. and section 9(a) of the Opium Act. In the appeal to this Court, the appellants contended that the trial, which was held, under section 251A of the Code of Criminal Procedure, was vitiated, as it should have been properly held only under section 252 Cr. P.C. HELD : There was no illegality in the trial. In this case the investigation was done by a police officer. the seizure ,of the articles and the report to the Magistrate was made by the Police Officer. It was on this report of the police officer that the Magistrate acted further, and the trial also followed. In respect of a trial conducted by a Magistrate on a report made by a police officer, under the Opium Act,as applicable to the State of Madhya Pradesh, for an offence under that Act, section 251A Cr. P.C. is applicable. [192 F H] Amalshah vs State of Madhya Pradesh, unreported decision, in Cr. A. No. 201/63, dt. 11 12 64, followed.

iminal Appeal No.219 of 1966. Appeal by special .leave from the judgment and order dated February 7, 1966 of the Madhya Pradesh High Court Indore Bench in Criminal Appeal No. 127 of 1965. H.K. Puri, for the appellant. I. N. Shroff, for the respondent. The Judgment of the Court was delivered by Shah, J. The appellant Nirbhay Singh was tried before the Court of Session, Ujjain, for causing the death of Bhagwanti his mother by inflicting injuries to her with a spear. The Sessions Judge convicted the appellant of the offence of culpable homicide not amounting to murder, and sentenced him to suffer rigorous imprisonment for seven years. An appeal preferred by the appellant from jail was summarily dismissed by the High Court of Madhya Pradesh on March 16, 1965. Thereafter the State of Madhya Pradesh preferred an appeal on March 31, 1965, against the order acquitting the ' appellant of the offence of murder. The High Court issued notice to the appellant and after hearing counsel for the State and the appellant set aside the order of acquittal and convicted the appellant of the. offence of murder, and in substitution of the order of sentence imposed by the Court of Session sentenced him to suffer imprisonment for life. The appellant has appealed to this Court with special leave. 571 Counsel for the appellant urged that the judgment of the High Court dated March 16, 1965, dismissing the appellant 's appeal from the order of conviction under section 304 Part II I.P. Code became final, and that the judgment of the Court of Session got merged into the judgment of the High Court and thereafter the High Court was incompetent in an appeal filed by the State to modify that order and convict the appellant for the offence of murder. Counsel relied in support of his contention upon sections 369 and 430 of the Code of Criminal Procedure. Section 369 provides: "Save as otherwise provided by this Code or by any other law for the time being in force or, in the case of a High Court by the Letters Patent or other instrument constituting such High Court, no court, when it has signed its judgment, shall alter or 'review the same except to correct a clerical error. " Section 430 provides: "Judgments and orders passed by an Appellate Court upon appeal shall be final, except in the cases provided for in section 417 and Chapter XXXII. " We are unable to hold that the High Court was in the circumstances of the case debarred by the provisions relied upon from entertaining an appeal by the State against the order of acquittal of the offence of murder passed by the Court of Session. The right to appeal against the order of. acquittal is expressly conferred upon the State by section 417 of the Code, and section 369 does not purport to place any restriction upon the exercise of that right. Section 369 occurs in Ch. XXV/and prima facie applies to judgments of the courts of first instance. Section 430 applies to judgments of appellate Courts; it declares the judgment of an appellate Court final except in the cases provided for in section 417 and Ch. XXXII. In terms the 'provision applies to. all judgments of Appellate Courts Courts of the District Magistrate, Courts of Session and the High Courts. Finality of the judgment of the Appellate Court declared by section 430 is subject to. two restrictions, i.e. the judgment may be set aside or modified in an appeal under section 417 of the Code by the High Court, and in exercise of the power conferred upon the Courts under Ch. XXXII which deals with the exercise of power to entertain references and revisions. Judgment of a High Court in appeal is not subject to the exercise of any appellate or revisional power exercisable under the Code. The exception declared in section 430 therefore only applies to judgment of a court subordinate to the High Court exercising appellate power. 572 There is however no warrant for the argument that when an appeal preferred by a person convicted of an offence is dismissed summarily by the High Court under section 421 of the Code of Criminal Procedure, the judgment of the trial court gets merged in the judgment of the High Court and it cannot thereafter be modified even at the instance of any other party affected thereby, and in respect of matters which were not and could not be dealt with by the High Court when summarily dismissing the appeal. When the High Court dismisses an appeal of the person accused summarily and without notice to the State, the High Court declines thereby to entertain the grounds set up for setting aside the conviction of the accused. That judgment undoubtedly binds the accused and he cannot prefer another appeal to the. High Court against the same matter in respect of which he had earlier preferred an appeal. But it is a fundamental rule of our jurisprudence that no order to the prejudice of a party may be passed by a court, unless the party had opportunity of showing cause against the making of that order. When an appeal of a convicted person is summarily dismissed by the High Court the State has no opportunity of being heard. The judgment summarily dismissing the appeal of the accused is a judgment given against the accused and not against the State or the complainant. If after the appeal of the accused is summarily dismissed, the State or the complainant seeks to prefer an appeal against the order of acquittal, the High Court is not prohibited by any express provision or implication arising from the scheme of the Code from entertaining. the appeal. Where, however, the High Court issues notice to the State in an appeal by the accused against the order of conviction, and the appeal is heard and decided on the merits, all questions determined by the High Court either expressly or by necessary implication must be deemed to be finally determined, and there is no scope for reviewing those orders in any other proceeding. The reason of the rule is not so muck the principle of merger of the judgment of the trial court into the judgment of the High Court, but that a decision rendered by the High Court after hearing the parties on a matter in dispute is not liable to the reopened between the same parties in any subsequent enquiry. Cases do frequently arise where a person is charged at the trial with the commission of a grave or major offence and he is convicted of a minor offence, the conviction for the minor offence amounting to his acquittal for the major offence. Where an appeal against the order of conviction for the minor offence at the instance of the convict is entertained and decided, the State having opportunity of being heard on the merits of the dispute. , in an appeal subsequently filed at the instance of the State against the order of acquittal, the High Court is precluded from reconsidering all those matters which were expressly decided or flow as a neces 573 sary implication of the earlier judgment. Any other view is likely to cause the gravest inconvenience in the administration of justice and the principle of finality of judgments would be sadly disturbed. If, for instance, against an order of acquittal passed for a grave offence, the State prefers an appeal and the appeal is summarily dismissed, it would be impossible to contend that thereby the accused is prevented from filing an appeal against the order of conviction. Similarly where the accused prefers an appeal against the order of conviction of a minor offence and that appeal is summarily dismissed, the accused cannot prefer another appeal, but the State will not be precluded from preferring an appeal against the order of acquittal because the State had no opportunity of being heard at the earlier stage. Where, however, notice had been issued in an appeal at the instance of the accused and the State had art opportunity of being heard, the decision of the Court will be regarded as a decision on the merits of the transaction which resulted in the conviction of the accused and that decision cannot be reopened in any subsequent enquiry. These principles are, in our judgment, supported by abundant authority. In U.J.S. Chopra vs State of Bombay(1), the appellant Chopra was convicted by the Trial Magistrate of an offence under . the Bombay Prohibition Act. His appeal to the High Court of Bombay was summarily dismissed. Thereafter the State of Bombay applied to the High Court of Bombay for an order for enhancement of sentence, and notice was issued to Chopra to show cause against enhancement of the sentence. Chopra pleaded that he was entitled to show cause against the order of conviction. This Court held that the summary dismissal of the appeal preferred by Chopra did not preclude him from showing cause against his conviction under section 439 (6) of the Code of Criminal Procedure, even though his appeal was summarily dismissed. The case, in our judgment, involves two propositions that after the dismissal of the appeal of Chopra, an application at the instance of the State for enhancement of sentence was maintainable, and that Chopra could canvass the correctness of his conviction, summary dismissal of his appeal notwithstanding. If the principle of merger of judgment by a summary dismissal of the appeal of the accused is valid, the State could not in U.J.S. Chopra 's case(1) have been permitted to exercise the right to apply for enhancement of the sentence. Bhagwati, J., speaking for the majority of the Court expressed the view that a judgment pronounced by the High Court in the exercise of its appellate or revisional jurisdiction after issue of a notice and a full hearing in the presence of both the parties is a final judgment which replaces the judgement of the Court of first instance, thus constituting the only (1) ; 4 Sup. C.I./69 4 574 final judgment to be executed in accordance with law. When, however, a petition or appeal presented by a convicted person from jail is summarily dismissed under section 421 or a revision application made by him is dismissed in limine the order passed by the High Court does not amount to an expression of the opinion of the Court arrived at after due consideration of the evidence and all the arguments. In Pratap Singh vs The State of Vindhya Pradesh (Now Madhya Pradesh)(1) this Court held that where a person convicted has exercised the right of presenting an appeal from jail and that appeal has been summarily dismissed under section 421 of the Code of Criminal Procedure, no further appeal lies at his instance through an Advocate. The distinction between U.J.S. Chopra 's case(2) and Pratap Singh 's case(1) is clear: summary dismissal of the appeal filed by the accused does not bar any proceeding which the State may be competent to initiate against the order passed in favour of the accused, but another appeal by the accused after summary dismissal of his earlier appeal is barred. In The State vs Babulal and Bherumal,(3), a Division Bench of the Rajasthan High Court held that where the accused charged under section 302 I.P. Code was convicted under section 324 J.P. Code and the appeal of the accused against his conviction under section 324 I.P. Code was dismissed by the High Court on his own prayer that he did not desire to press it and there was no hearing given to. the State, the order of the High Court was not such a judgment as would preclude the High Court from hearing an appeal by the State against the acquittal of the accused for the offence under section 302 J.P. Code. In State vs Kalu(4) a Full Bench of the Madhya Bharat High Court held that where after an appeal against conviction under section 423 (1 )(b) of the Code of Criminal Procedure by the accussed has been dismissed by an appellate Bench of the High Court, an appeal filed against an order of acquittal of the accused of other charges by the State under section 417 is not competent. In the view of the High Court the reason of the rule is that the earlier decision was final, and if the appeal of the State against acquittal was heard on merits, it might disturb the finality of the earlier judgment. In The State vs Mansha Singh Bhagwant Singh(5) the Punjab High Court expressed a similar view. In that case also the accused at the trial charged with the offence punishable under section 302 was convicted by the Sessions Judge of the offence under section 304 Part II I.P. Code. In appeal against the order of conviction by the accused the High Court after hearing 'the State confirmed the (1) ; (2) ; (3) A.I.R. 1956 Raj. 67. (4) A.I.R. 1952 M.B. 81. (5) I.L.R. (1958) Punjab 1475. 575 order. An appeal filed by the State against the order of acquittal of the accused for murder was held not maintainable. In State vs Diwanji Gardharji and others(1) a Division Bench of the High Court of Gujarat apparently held after discussing many other points not relevant here that when an appeal of time accused against the order of conviction and sentence for the offence under section 304 Part II I.P. Code has been dismissed after a hearing, in an appeal by the State against the order of acquittal for the offence under section 302, the question of the accused having committed an offence of culpable homicide not amounting to murder cannot be allowed to be canvassed. In the present case the order passed by the High Court at the earlier stage w,rs an order of summary dismissal of the appeal flied by the accused. No notice of appeal flied by the accused was given to the State, and the State had no opportunity of being heard thereon. It is true that the High Court had at the earlier hearing called for the record of the case from the Court of Session in exercise of the power under section 421 (2) and after persuing the record had dismissed the appeal. But that is not relevant in determining the legal effect of the order of the High Court. The appeal fails and is dismissed. G.C. Appeal dismissed.

The appellant was tried for causing the death of his mother by inflicting injuries with a spear. The Sessions Judge convicted the appellant of the offence of culpable homicide not amounting to murder, and sentenced him to suffer rigorous imprisonment for seven years. An appeal preferred by him from jail was summarily dismissed by the High Court. Thereafter the State filed an 'appeal against the order acquitting the appellant of the offence of murder. The High Court issued notice to the appellant and after hearing counsel on both sides, convicted the appellant of the offence of murder, and in substitution of the sentence imposed by the Court of Session, sentenced him to suffer rigorous imprisonment for life. Appeal was filed in this Court by special leave. On behalf of the appellant it was urged that the judgment of the High Court dismissing summarily the appellant 's appeal against conviction under section 304 became final, and that the judgment of the Court of Sessions got merged into the judgment of the High Court and thereafter the High Court was incompetent in an appeal filed by the State to modify that order and convict the appellant for the offence of murder. Reliance was placed on sections 369 and 430 of the Code of Criminal Procedure. HELD: (i) The right to appeal against the order of acquittal is expressly conferred upon the State by section 417 of the Code and section 369 does not purport to place any restriction upon the exercise of that right. Section 369 ' occurs in Chapter XXVI and prima facie applies to judgments of the courts of first instance. [571] (ii) Finality of the judgment of the Appellate Court disclosed by section 430 is subject to two restrictions i.e. the judgment may be set aside or modified in an appeal under section 417 of the Code by the High Court and in exercise of the power conferred upon the courts under Ch. XXXII which deals with the exercise of power to entertain references and revisions. Judgment of a High Court in appeal is not subject to the exercise of any appellate or revisional power exercisable under the Code. The exception declared in section 430 therefore only applies to judgment of a court subordinate to the High Court exercising appellate power. [571 G] (iii) There is no warrant for the argument that when an appeal preferred by a person convicted of an offence is dismissed summarily by the High Court under section 421 of the Code of Criminal Procedure. the judgment of the trial court gets merged in the judgment of the High Court and cannot thereafter be modified. The summary dismissal of the appeal of the person accused, binds the accused but not the State which has not been heard. [572 A, D] If after the appeal of the accused is summarily dismissed the State or the complainant seeks to prefer an appeal against the order of acquit 570 tal, the High Court is not prohibited by any express provision or implication 'arising fro.m the scheme of the Code from entertaining the appeal. When, however, the High Court issues notice to the State in an appeal by the accused against the order of conviction and the appeal is heard and decided on the merits all questions determined by the High Court either expressly or by necessary implication must be deemed to be finally determined, and there is no scope for reviewing those orders in any other proceeding: The reason of the rule: is not so much the principle of merger of the judgment of the, trial court into the judgment of the High Court, but that a decision rendered by the High Court, after hearing the parties on a matter in dispute is not liable to be reopened between the same parties in any subsequent enquiry. [572 E, F] (iv) The fact that at the earlier hearing the High Court called for the record of the ease from the court of session in exercise of the power under section 421(2) and after persuing the record dismissed the appeal, was not relevant in determining the legal effect of the order of the High Court. [575 D] U.J.S. Chopra vs State of Bombay, ; , applied. Pratap Singh vs State of Vindhya Pradesh (Now Madhya Pradesh) ; , distinguished. State vs Babulal and Bherumal, A.I.R. 1956 Raj. 67, State vs Kalu, A.I.R. 1952 M.B. 81 and State vs Mansha Singh Bhagwant Singh, I.L.R. (1958) Punjab 1475, referred to.

vil Appeals Nos. 89 93 of 1964. Appeals by special leave from the judgment and orders dated August 30, 1961 and June 13, 1961 in Special Civil Application Nos. 440, 441,509, 510 and 7 of 1961. K.S. Chawla and R.S. Sachthey, for the appellant (in C. As. 89/91 of 1964). 79 C.K. Daphtary, Attorney General, K.S. Chawla and R.N. Sachthey, for the appellant (in C.A. NO. 93/64). N.N. Keshwani, for the respondents in all the appeals. The Judgment of the Court was delivered by Sikri, J. These five appeals by special leave raise a common question of interpretation of r. 19 of the Displaced Persons (Compensation & Rehabilitation) Rules, 1955 (hereinafter referred to as the Rules). It is common ground that nothing turns on any dissimilarity in the facts of each appeal. It will accordingly suffice if facts in Civil Appeal No. 93 of 1964 are set out. The respondent, Lachman Hotchand Kriplani, is a displaced person from West Pakistan. He has three brothers. They owned 731 acres of agricultural land in District Nawabshah, Taluka Nawab Shah, Sind now in Pakistan. The respondent submitted a claim under the Displaced Persons (Claims) Act, 1950 (XLIV of 1950) hereinafter referred to as the Claims Act. The word 'claim ' was defined to mean "assertion of a right to the ownership of, or to any interest in (i) any immovable property in West Pakistan which is situated within an urban area, or (,ii) such class of property in any part of West Pakistan, other than an urban area as may be notified by the Central Government in this behalf in the official gazette". It is common ground that agricultural land in Sind was so notified. The respondent 's claim was that he owned 1/4 share of 731 acres and 14 ghuntas standing in the name, of Fatehehand. The Claim Officer, by order dated October 7, 1952, accepted the claim and assessed his claim as 94 3 standard acres. On July 2, 1955, the respondent applied for compensation under the (XLIV Of 1954) hereinafter referred to as the Compensation Act. In the application he stated that he was not a member of a Joint Hindu Family in Pakistan, but his claim was as a co sharer alongwith three others, who had filed separate claims. The Assistant Settlement Commissioner was, however, not satisfied with this assertion and after holding an enquiry, by order dated March 3, 1960, he held that the four alleged co sharers were members of a Joint Hindu Family, and the whole agricultural land claim was to be treated as joint property. On August 29, 1960, a statement of account was issued to the respondent. This statement showed that his claim was assessed as Rs. 10,701/ gross compensation. This figure was arrived at, as stated in the affidavit of the Assistant Settlement Commissioner, thus: "The claim was assessed for 376 standard acres and 12 units out of which the petitioner had 1/4th share. The compensation on 376 Standard Acres and 12 Units works out to 108 Standard Acres 0 3/10 Units as per 80 scale indicated in Rule 51. This converted in terms of money as per Rule 56 comes to Rs. 42,806/ The petitioner 's 1/4th share would be Rs. 10,701/ ". The respondent then on October 28, 1960, served a notice on the Regional Settlement Commissioner calling upon him to rectify the statement of account, failing which he will be constrained to move the High Court under articles 226 and 227 of the Constitution. In this notice he claimed that r. 20 applied to his case; in the alternative he asserted that at least r. 19 should be applied to him. In reply, the Assistant Settlement Commissioner informed him that the calculation had been done correctly. Thereupon, he filed a petition under articles 226 and 227, in the Bombay High Court. The High Court allowed the petition and set aside the statement of account furnished to the petitioner on August 29, 1960, and directed that the respondent shall give the benefit of r. 19 and determine the amount of compensation payable to him in accordance with the provisions of rr. 19, 51 and 56 and other rules of the Displaced Persons (Compensation and Rehabilitation) Rules, 1955. The appellant having obtained special leave, the appeals are now before us. We may mention at the outset that in the High Court the respondent 's counsel did not challenge the finding of the Assistant Settlement Commissioner that the respondent and his brothers were members of a joint family. The High Court came to the conclusion that r. 19 applied to agricultural land. It found nothing in the scheme of the Rules, or in the language of r. 19, to support the claim of the Department that r. 19 applied only to nonagricultural land. The learned Attorney General, on behalf of the appellant, challenges the conclusion of the High Court. He has taken us through various sections of the Compensation Act of 1954 and various rules to substantiate his contention. Let us then look at the Compensation Act and the Rules. The Compensation Act was enacted to provide for payment of compensation and rehabilitation grant to displaced persons and for matters connected therewith. 'Verified claim" is defined to mean, inter alia, a claim registered under the Displaced Persons (Claims) Act (XLIV of 1950). It is not disputed that the claim of the respondent verified by order dated October 7, 1952, is a verified claim. Section 4 provides for an application for the payment of compensation in the prescribed form to be made by a displaced person having a verified claim within a certain period. Section 5 provides that on receipt of an application under section 4, the Settlement Officer shall determine the amount of public dues, if any, recoverable from the applicant and shall forward the application and the record to the Settlement Commissioner. It will be noticed that a verified claim registered under the Claim Act, 1950, includes claims to urban as well as certain agricultural land. Therefore, both sections 4 and 81 5 apply to such agricultural land as has been made the subjectmatter of claim and verification under the Claims Act of 1950. Section 6 was referred to by the learned Attorney General but we have not been able to appreciate how it advances his case. Section 6 gives relief to certain banking companies in this way. If a banking company held a mortgage of an immovable property belonging to a displaced person in west Pakistan, and that mortgage was subsisting at the date when the claim of the banking company was registered under the Claim Act, 1950, and the displaced person is entitled to receive compensation in respect of any such property, the banking company was entitled to various reliefs, the appropriate relief depending on whether the compensation to the displaced person is payable (1) in cash or (2) in the form of transfer of any property, or (3) in any other form. In this section immovable property would include agricultural land and it cannot be denied that the respondent is entitled to compensation at least in one of the three forms mentioned in sub. section (2). Section 7(1).directs the Settlement Commissioner on receipt of the application trader section 5 to ascertain the amount of compensation having due regard to the nature of the verified claim and other circumstances of the case. Section 7(2) provides for the deduction of certain dues and the Settlement Commissioner then makes an order under section 7(3) ascertaining the net amount of compensation. Section 8 provides the form and manner of payment of compensation of the net compensation determined under section 7(3) as being payable to a displaced person. Subject to any rules that may be made, the net compensation is payable in cash, in government bonds, or by sale to the displaced person of any property from the compensation pool and setting off the purchase money against the compensation payable to him, etc. Section 8(2) enables rules to be made by the Central Government on various matters, inter alia, the scales according to which, the form and the manner in which and the installments by which compensation may be paid to different classes of displaced persons. Section 40 enables rules to be made to carry out by the purposes of the Compensation Act. It is not necessary to refer to other sections of the Compensation Act. Before we deal with the 1955 Rules, it is apparent that sections 4, 5, 6, 7 and 8 do not in any manner distinguish between urban land and agricultural land as long as the agricultural land is the subject matter of a verified claim. If a person holding a verified claim in respect of agricultural land owes.public dues and "public dues" is defined very widely in section 2(d) to include all kind of loans not only from the Central Government but from a State Government also this has to be deducted under section 7(3). It is suggested that the expression "net amount of compensation" in section 7(3) means only cash compensation but we are unable to limit the expression thus in view of the scheme of sections 4 to 8. 82 The Central Government in exercise of the power conferred by section 40 of the Compensation Act made the Displaced Persons (Compensation and Rehabilitation) Rules, 1955. Chapter I contains various definitions; Chapter II deals with procedure for submission of compensation application and determination of public dues. Rule 3 enables a displaced person having a verified claim to make an application for compensation. Rule 4 deals with the form of application and Appendix I is the form prescribed, and Appendix II is the questionnaire which has to be answered. One question is important for our purpose. Under the heading "11. Particulars of claims under Displaced Persons Claims Act, 1950" is mentioned: "(a) agricultural land, index no; Village/Tehsil/District; value assessed in standard acres; cosharers in each property with respective shares; if any property is mortgaged state mortgage money and name of the mortgagees". The rest of the rules, upto r. 9, in this Chapter deal with the scrutiny of the application and the determination of public dues. It is only necessary to notice r. 6(2) which requires a Settlement Officer to send a duplicate copy of the application to the Office of the Chief Settlement Commissioner for verification of the assessed value of the claim in respect of which the application has been made. Under r. 10 the Settlement Officer is required to pass an order and send a copy of the order and the original application along with the records of the case to the Regional Settlement Commissioner. It will be seen that Chapter II does not distinguish between verified claims relating to urban property and rural property. Then we come to Chapter III which contains r. 11. Under this rule the settlement Commissioner deals with the duplicate copy sent to him under r. 6(2). He verities the assessed value of the claim, as stated in the application, with the final order in respect thereof, in the claims record and returns the duplicate copy to the Regional Settlement Commissioner with such remarks as may be relevant for the determination of the amount of compensation. Chapter IV deals with determination of compensation. It will be remembered that section 5 of the Compensation Act requires the Settlement Officer to determine the amount of public dues and forward the application and the record of the case to the Settlement Commissioner, and r. 11, which we have just noticed, requires the Settlement Commissioner (Headquarters) to send the duplicate copy to the Regional Settlement Commissioner. Rule 12 directs the Regional Settlement Commissioner to consolidate all these papers. Rule 12 obviously applies to application in respect of verified claims to agricultural land. As we have already said, section 5 and r. 11 applied to such verified claims. Rule 13 deals with determination of certain dues to banking companies under section 6 and any unsecured debt payable by an applicant in respect of which a communication has been received from any Tribunal under section 52 of the Displaced Persons (Debt Adjustment) Act, 1951 (LXX of 1951). Rule 14 directs that the public dues and the amounts referred to in Rule 13 83 shall be deducted from the amount of compensation in a certain order of priority. Rule 15 reads as follows: "Determination of net compensation; After deducting the amount referred to in rule 14, the Regional Settlement Commissioner or an Assistant Settlement Commissioner or a Settlement Officer, or an Assistant Settlement Officer, having jurisdiction and duly authorised by the Regional Settlement Commissioner, shall pass an order determining the net amount of compensation payable to the applicant in respect of his verified claim and shall prepare a summary in the form specified in Appendix VII (Abstract of particulars). It is significant that Appendix Vii has a column for agricultural land and a column for remarks regarding application of r. 19. Pausing here, it is difficult to hold that rr. 12, 13 and 14 do not apply to applications for compensation in respect of agricultural lands which are the subject matter of a verified claim. There fore, we must reject the contention that Chapter IV, in which r. 19 occurs, does not deal with agricultural lands at all. It may be conceded that r. 16 does not apply to agricultural lands. The scale compensation in respect of agricultural lands which are the subject matter of a verified claim is expressly dealt with else where. Rule 51 which provides that the scale of allotment of land as compensation in respect of a verified claim for agricultural land shall be the same as in quasi permanent land allotment scheme in the State of Punjab and Patiala, and the East Punjab States Union, as set out in Appendix XIV. The explanation further provides that if any public dues are recoverable the allocable area shall be reduced correspondingly. Rule 49 read with r. 56 enables the compensation due on the verified claim for agricultural land to be converted into cash if a person wishes to have his claim satisfied against property other than agricultural land. Rule 18 expressly excludes agricultural land from its purview. What emerges from a consideration of these rules in Chapter IV is that we must consider each rule and see whether it has application to a claim for compensation in respect of agricultural land. Rule 19 reads thus: "Special Provision for payment of compensation to Joint families Where a claim relates to properties left by the members of an undivided Hindu family in West Pakistan thereinafter referred to as the joint family) compensation shall be computed in the manner hereinafter provided in this rule. (2) where on the 26th Sept. 1955 (hereinafter referred to as the relevant date) the joint family consisted of: (a) two or three members entitled to claim partition, 84 the compensation payable to such family shall be computed by dividing the verified claim into two equal shares and calculating the compensation separately on each such share, (b) four or more members entitled to claim partition, the compensation payable to such family shall be computed by dividing the verified claim into three equal shares and calculating the compensation separately on each such share. (3) For the purpose of calculating the number of the member of a joint family under sub rule (2), a person who on the relevant date: (a) was less than 18 years of age, (b) was a lenial descendant in the main line of another living member of joint Hindu family entitled to claim partition shall be excluded: Provided that where a member of a joint family has died during the period commencing on the 14th August 1947 and ending on the relevant date leaving behind on the relevant date all or any of the following heirs namely: (a) a widow or widows, (b) a son or sons (whatever the age of such son or sons) but no lenial ascendant in the main line, then all such heirs shall, notwithstanding anything contained in this rule, be reckoned as one member of the joint Hindu family. Explanation For the purpose of this rule, the question whether a family is joint or separate shall be determined with reference to the status of the family on the 14th day of August, 1947 and every member of a joint family shall be deemed to be joint notwithstanding the fact that he had separated from the family after the date". The heading "Special Provision for payment of compensation to joint families" is general. So is sub rule (1). The word properties ' is general and would include agricultural land. That this is the meaning is also borne out if we consider the word "claim". The word "claim" must have reference to the claim in the application to be made under section 4 read with rr. 3 and 4, and as we have already noticed, the application would include a claim in respect of agricultural land if it is the subject matter of a verified claim. The learned Attorney General has not been able to point to any principle of construction which would enable us to limit the scope of the general words in r. 19(1). His main argument that no rule in Chapter IV applies to claims in respect of agricultural land we have already rejected. 85 The learned Attorney General then urges that the scheme of the Rules is to provide in separate chapters for compensation in respect of various classes of properties, and he says that Chapter VIII provides for compensation in respect of verified claim for agricultural land situated in rural area and the rules contained in the chapter are the only rules that govern the grant of compensation. But none of the rules in this chapter deals with what is t9 happen if the agricultural land was held by a joint family in West Pakistan or if the agricultural land was held by co owners in West Pakistan. Even if a Joint Hindu Family is treated as a unit for some purposes in some laws, co owners are very rarely treated as a unit and it would require express language to treat co owners as a unit an.d award compensation to them as a unit. However, r. 20 recognises the general rule and provides that where a claim relates to property left in West Pakistan, which is owned by more than one claimant as co owners, the unit for the assessment of compensation shall be the share of each co owner and the compensation shall be payable in respect of each such share as if a claim in respect thereof has been filed and verified separately. The learned Attorney General, when asked, said that even r. 20 ' would not apply to a claim in respect of agricultural land, but we are unable to accede to this contention. It would be the height of ' inequity to hold this. In other words, rr. 19 and 20 enable the authorities to determine the unit for assessment of compensation. This subject is not dealt with in Chapter VIII, which deals with how the unit, be it an individual, a member of Joint Hindu Family or a co owner, is to be compensated. There is nothing in Chapter VIII which modifies or overrides rr. 19 and 20. Accordingly, in agreement with the High Court, we hold that r. 19 will apply to the claim of the respondent in respect of agricultural land left by him as a member of the Joint Hindu Family. In the result, the appeal fails and is dismissed with costs. As stated in the beginning, it is common ground that if this appeal fails the other appeals must also fail. They are accordingly dismissed with costs. There will be one hearing fee in them. Appeals dismissed.

The respondent who had a "verified claim" applied for compensation under the . He alleged that he was a co sharer along with his brothers in agricultural property in West Pakistan and claimed his share of the compensation. The Assistant Settlement Officer held that the alleged co sharers were members of a joint Hindu family and that t.he agricultural property was joint property. He then calculated the compensation on the joint property as per rr. 51 and 56 of the Displaced Persons (Compensation and Rehabilitation) Rules 1955. The respondent thereupon filed a petition in the High Court under articles 226 and 227 of the Constitution contending that on the finding that the respondent and his brothers constituted a joint family, the unit for assessment of compensation should first be determined according to r. 19, which makes special provision for payment of compensation to joint families, before compensation was calculated. The High Court allowed the petition. In the appeal to this Court it was contended that r. 19 was inapplicable as that rule does not apply to agricultural land. HELD: The High Court was right in holding that the rule applied to the claim of the respondent in respect of the agricultural land. Chapter IV of the Rules in which r.19 occurs contains some rules which apply to applications for compensation in respect of agricultural lands also. Therefore it cannot be said that the Chapter does not deal with agricultural lands at all. Each rule must be considered to see whether it has application to a claim for compensation in respect of agricultural land. So considered, there is no principle of construction by which the scope of the general words in r. 19 could be limited, so as not to apply to agricultural land. Chapter VIII of the Rules provides for compensation in respect of verified claims for agricultural lands in rural areas and only deals with how a unit that has been determined is to be compensated. There is nothing in that Chapter which modifies or overrides r.19 which enables the authorities to determine the unit for assessment of compensation in the case of joint families. [83 D E; 85 A F]

ivil Appeal No. 1743 of 1975. (Appeal by special leave from the judgment and order dated 5.9.1975 of the Rajasthan High Court in S.B. Civil 2nd Appeal 302 of 1974) M. Jain,., for the appellant. S.C. Agarwala and V.J. Francis, for Respondents 1 & 2. The Judgment of Y.V. Chandrachud and P.K. Goswami, JJ. was delivered by Goswami, J.S. Murtaza Fazal Ali, J. gave a separate Opinion. GOSWAMI, J. The facts of the case relating to this appeal by special leave have been fully described in the judgment of our learned brother, Fazal Ali, J. We agree with the conclusion reached by him that this appeal should be dismissed. We also agree with our learned brother that the appeal should be dismissed on the merits. However, so far as the question of law that arises in this appeal, we would like to confine our decision to the reasons given hereinafter. The question of law ,that arises in this appeal is as to whether an application for special leave or an appeal by special leave to thin, Court is an "appeal" within the meaning of section 13A of the Rajasthan Premises (Control of Rent and Eviction) Act 1950, as amended by the Rajasthans Ordinance No. 26 of 1975 (briefly the Act). We should, therefore, read section 13A: "13A. Special provisions relating to pend ing and other matters: Notwithstanding anything to the contrary in this Act as it existed before the commencement of the Ordinance or in any other law, (a) no court shall, in any proceeding pending on the date of commencement of the amending Ordinance pass any decree in favour of a landlord for eviction of a tenant on the ground of non payment of rent, the tenant applies under clause (b) and pays to 327 the landlord,. or deposits in court, within such time such aggregate of the amount of rent in arrears, interest thereon and full costs of the suit as may be directed by the court under and in accordance with that clause; (b) in every such proceeding, the court shall, on the application of the tenant made within thirty days from the date of commence ment of the amending Ordinance, notwithstand ing any order to the contrary, determine the amount of rent in arrears upto the date of the order as also the amount of interest thereon at six per cent per annum and costs of the suit allowable to the landlord; and direct the tenant to pay the amount so determined within such time, not exceeding ninety days, as may be fixed by the court, and on such payment being made within the time fixed as aforesaid, the proceeding shall be disposed of as if the tenant had not committed any default; (c) the provisions of clause (a) and (b) shall mutatis mutandis apply to all appeals, or applications for revision, preferred or made after the commencement of the amending Ordinance, against decree$ for eviction passed before such commencement with the variation that in clause (b), for the expression "from the date of commencement of the amending Ordinance" the expression "from the date of the presentation of the memorandum of appeal or application for revision" shall be substi tuted; (d) no court shall in any proceeding pending on the date of commencement of the amending Ordinance, pass any decree in favour of a landlord for eviction solely on the ground that due to the death of the tenant as defined in clause (vii) of section 3 as it stood before the commencement of the amending Ordi nance, his surviving spouse, son, daughter and other heir as are referred to in sub clause (b) 04 clause (vii) of section 3 were not entitled to the protection against eviction under this Act as it stood before the com mencement of the amending Ordinance; (e) no decree for eviction passed by any court before the commencement of the amending Ordinance shall, unless the same already stands executed before such commencement, be executed against the surviving spouse, son, daughter and other heir as are referred to in sub clause (b) of the clause (vii) of section 3 if such decree was passed solely on the ground as is referred to in clause (d) and such decree shall be deemed to be a nullity as against them; and 5 1546SCI/77 328 (f) the provisions of clause (d) shall mutatis mutandis apply to all appeals, or appli cations for revision preferred or made, after the commencement of the amending Ordinance,and Explanation: For the purposes of this section : (a) amending Ordinance means the Rajas than Premises (Control of Rent and Eviction) (Amendment) Ordinance, 1975; and (b) 'proceeding ' means suit, appeal or application revision. " Even in the original Act passed in 1950 section 13(1)(a) was there with two provisos and there was restriction against eviction. Under section 13(4) of the original Act a right was conferred upon the tenant in a suit founded on the ground of non payment of rent to pay the arrears with inter est and costs as determined by the court on the first day of hearing within the outside limit Of fifteen days from the date of the order. If ,the tenant complied with the order, the suit for eviction stood dismissed, By the Amending Rajasthan Act 12 of 1965 section 13A was introduced. Sub section (4) of section.13 of the original Act was substituted by still preserving the tenant 's right to pay the arrears with interest and costs within the out side limit of two months and on payment of the same no decree for eviction on the ground of nonpayment of rent shall be passed. The Rajasthan Ordinance No. 26 of 1975 inter alia has amended the opening non obstante clause of section 13A and except for substituting the word 'Act ' by 'Ordinance ' in clauses (a), (b) and (c) nothing else has been altered. Section 13A is selective enough. Only one type of eviction decree which is solely based on the ground of non payment of rent is taken care of extending still further the period for payment ,of arrears with interest and costs. Under section 13A, as amended, the benefit is available in pending suits of that category, appeals therefrom and appli cations for revision pending on the date of commencement of the Ordinance, that is, on 29th September, 1975. The decree of eviction with which we are concerned in this appeal is founded on the ground of non payment of rent as specified in section 13(1) (a). There is a two fold submission bY the learned Counsel for the appellant. First, in view of the fact that the appellant lodged on 23rd September, 1975, an application under Article 136 of the Constitution praying for special leave to appeal against the judgment of the High Court and the Ordinance was passed on 29th September, 1975, after that application, his case is governed by section 13A(a) and (b) of the Act. In the alternative, the appellant submits that at any rate after the special leave had been granted by this Court there was an appeal reading against the judgment of the High Court 329 and since he submitted an application within 30 days from the grant of Special leave his case is covered by section 13A(c) of the ACt. " With regard to the first submission it may be pointed out that an application for special leave under Article 136 of the Constitution against a judgment 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 leave does not come within the contemplation of appeal pending before the court under Section 13A(a). It is true that the word "proceeding" winch appears in section 13A(a) and (b) means suit, appeal or application for revision according to the Explanation appended to section 13A. Therefore, in order to attract section 13A(a), a suit, appeal or application for revision ,must be pending on the date of commencement of the Ordinance No. 26 of 1975. In view of the connotation of the wordl "proceeding" as given under the Explanation to section 13A it is impermissi ble to extend the meaning of the word "proceeding" to in clude an application for Special leave under Article 136 of the Constitution. The collocation of the Words, "suit, appeal or application for revision" in the Explanation to denote "proceeding" would go to show that suits, regular appeals therefrom, as provided under the ordinary law and applications for revision alone are intended. It is incon ceivable that if the legislature had intended to include within the ambit of "proceeding" an application for special leave under Article 136 of the Constitution it would have omitted to mention it in express terms. We will now deal with the second submission of the appellant. which is the alternative argument. It is submitted by the appellant that even if an appli cation for special leave is not an appeal for the purpose of section 13A(a) in view of the fact that leave of this Court had been obtained and an appeal had been pending in pursu ance of the grant of special leave he iS entitled to invoke the protection under section 13A(c). It is on that basis that the appellant submitted a second application relying on section 13A(c). Under Order XVI, rule 11 of the Supreme Court Rules, on the grant of special leave the petition for special leave shall, subject to the payment of additional court fee, if any, be treated as the petition of. appeal and it shall be registered and numbered as such. Under section 13A(c) read with section 13A(b), in a pending appeal, the tenant has to make an application within 30 days from the date of the presentation of the memorandum of appeal". There is no provision in an appeal by special leave for presentation of a memorandum of appeal, but, as stated earlier, under rule 11 on the grant of special leave the petition for special leave is treated as the petition of appeal and registered and numbered as such. We may in this connection contrast the provisions of the Civil Procedure Code where the proce dure is laid down for appeals. Order 41, Civil Procedure 330 Code, deals with appeals from original decrees. Under sub rule (1) of rule 1 of Order 41, every appeal shah be pre ferred in the form of a memorandum signed by the appellant or his pleader and presented to the court or to such officer as it appoints in this behalf. Under Order 42, the rules of Order 41 shah apply, so far as may be, to appeals from appellate decrees. Similarly the same procedure, as under Order 41, is provided for under Order 43, rule 2, with regard to appeals from orders. It is, therefore, clear that under the Civil Procedure Code an appeal has to be preferred in the form of a memorandum and presented to the court or to such officer appointed by the court in that behalf. The question of limitation provided under section 13A(b) and (c) is important and the terminus a quo for the purpose of section 13A (c) is from the date of presentation of the memorandum of appeal. Since no petition of appeal has to be presented in this court after special leave is granted, such a contingency of appeal to this Court by way of special leave is not intended to be covered by section 13A(c). On the other hand the expression "the presentation of the memorandum of appeal" in section 13A(c) chimes with the construction that the legislature clearly intended to in clude only the hierarchy of appeals under the Civil Proce dure Code wherein presentation of the memorandum of appeal is an obvious requisite. We may next deal with the question whether section 22 of the Act is of assistance in deciding this controversy since our learned brother 's conclusion has received sustenance also from the said section. We do not think so. Before we proceed further we may turn to some of the material provisions in the Act. Section 6 provides for fixation of standard rent and under sub section (1 ) thereof the landlord or the tenant may institute a suit in the lowest court of competent jurisdiction for fixation of standard rent for any premises. Sub section (1) of section 7 provides for fixation of provisional rent by the same court upon the institution of a suit under section 6. Under sub section (4) of section 7 any failure to pay the provisional rent for any month by the fifteenth day of the next following month shah render the tenant liable to eviction under clause (a) of sub section (1) of section 13, and all sums due from the tenant as such rent shall be recoverable from him as if the order under sub,section (1) were a decree of the court in a suit for periodical payments. Section 11 provides for procedure for increasing rent and the landlord may bring a suit under subsection (3) of section 11 for increasing rent or standard rent in the lowest court of competent jurisdiction. Under sub section 11(4) the court shall, after such summary en quiry, as it may think necessary, make orders according to law, and a decree shall follow. Section 19A provides for payment, remittance and deposit of rent by tenants and the court for the purpose of that section as well as for sec tions 19B and 19C with respect to any local area means any civil court which may be specially authorised by the State Govern 331 ment by notification in this behalf, or where no civil court is so authorised; the court of the Munsif, and the court of the Civil Judge, where there is no court of Munsif having jurisdiction over the area. Section 12 provides for dealing with disallowance of amenities by the landlord by the Magistrate. The Magistrate means the sub Divisional Magistrate having jurisdiction. over the place where the premises in question are situated and includes such other Executive Magistrate having juris diction over and sitting at that place, as the State Govern ment may empower in this behalf section 3(i)]. Under sub section (6) of section 12 the order of the Magistrate under subsection (3) shall be executed by the Munsif having juris diction, or where there is no Munsif, by the Civil Judge having jurisdiction over the area in which the premises are situated as if it were a decree passed by such Munsif or Civil. Judge, as the case may be. Next,section 17 describes the powers of a Magistrate to require premises to be let and certain orders can be passed under that section by the Magistrate. Similarly section 19 enables the Magistrate to pass certain orders with regard to the vacant building sites. From a conspectus of the above provisions it will be seen that there are two types of forums for instituting action under the Act. One category of actions is taken to the lowest court of competent jurisdiction which is a civil court and the other category is lodged before the Magistrate on the executive side. The word court, however, is not defined in the Act but for purposes of sections 19A, 19B and 19C. While the forums are specified for certain types of actions enumerated in the Act no court as such is specified in the Act for entertaining suits of eviction by landlord against a tenant. It is, therefore, manifest that such suits will lie in the ordinary civil court of competent jurisdiction. That court will, however, have to take into account the relevant provisions of the Act, for the purposes of determination of controver sies raised before it. The benefits conferred by the Act upon the tenants will have to be given by the civil court in trying eviction suits. Where there is a bar of eviction under the Act the court will have to give effect to it. As is clear from the above narration that there is a dichotomy of forums under the Act, some matters are lodged before the lowest court of competent jurisdiction and some others before the Magistrate. There is a tertium quid, namely, the usual court which is available to the landlord for instituting suits for eviction against tenants. The landlord, however, will have to take note of the provisions under the Act and comply with those provisions in such a litigation. The tenant also, in such suits, will be able to claim all the benefits conferred upon him under the Act which the courts will, in appropriate cases, grant. In the above background of the provisions in the Act section 22 which provides for appeals and revisions may be read: 332 "22(1) From every decree or order paSsed by a. court under this Act, an appeal shall lie to the court tO which appeals ordinarily lie from original decrees and orders passed by such former court. (2) No second appeal shall lie from any such decree or order; Provided that nothing herein contained shall affect the powers of the High Court for Rajasthan in revision; (3) Any person aggrieved by an order of the. Magistrate may, within fifteen days from the date of such order, appeal therefrom to the District Magistrate or such. authority. as the State Government may from time to time appoint in that month. " It is very significant that while SectiOn 22( 1 ) quali ties the decree or order aS being "under this Act", Section 13A, on the contrary, does not describe "proceeding" to be under the Act. Section 22(1) refers to every decree or order passed by a court under this Act. The decree or order passed. under this Act must,therefore, have reference to those passed under Sections 6, 7, 11, 19A and 19C. Sub section (2) pro vides that no second appeal shall lie from any such decree or order. Such decrees or orders are, therefore, again referable to those passed under the above mentioned sections under the Act, While a second appeal is barred in case of those decrees and orders under the Act the High Court 's power of revision is not barred. Sub section (3), of section 12 provides for appeals from an order of a Magistrate to the District Magistrate or such authority as may be appointed by the Government. As noticed earlier Certain orders are passed by.the Magistrate under section 1,(3), Section. 17 and section 19 Section ,22(3) makes provision of appeal against such orders passed under section 12(3), section 17 and section 19. It is, therefore, clear that the Act provides for the. institution of actions in two different forums and also makes provision for appeals and revisions against orders and decrees passed under the Act. There is no provision in the Act for institution of suits for eviction which will, there fore, lie in the ordinary =courts of competent jurisdiction. Appeals, also revisions, where competent, will lie against 'decrees in eviction suits in the usual hierarchy of Courts. It is manifest from a perusal of the scheme of the Act that appeals or applications for revision under section 13A(c) relate only to decrees in :suits for eviction based on the ground. of nonpayment of rent. Such appeals or appli cations for revision under section 13A(c) are not contem plated under section 22 of the Act. As shown above, decrees or orders passed by the court under the Act against which appeals and revisions are provided in Section 22 do not take in decrees or orders passed in a Suit for eviction. Usual rights of appeal and revision will be available in the latter class of 333 suits. To hold otherwise will be to deny a right of second appeal to a litigation, be he a landlord or tenant, against a decree in an eviction suit which is clearly not the inten tion of the legislature. Second appeal is only barred in ease of decrees or orders passed under the Act to which a copious reference has been made hereinabove with reference to the various provisions of the Act. With regard to execution proceedings, it. would appear that these are outside the scheme of clauses (a) to (c) of section 13A but it is unnecessary to express any firm opinion on that point since it does not arise in this ap peal. We are of opinion that the appellant cannot take advan tage of section 13A in this appeal by special leave. His applications under section 13A stand dismissed. The appeal is, therefore, dismissed, but there will be no order as to costs. FAZAL ALl, J. This appeal by special leave involves a question of law regarding the ambit and.scope of section 13A of the Rajasthan Premises (Control of Rent and Eviction) Act, 1950 as amended by Ordinance No. 26 of 1975 dated September 29, 1975 which was later replaced by an Act. The appeal arises in the following circumstances. The defendant/appellant along with his two brothers Padam Chand and Tara Chand had taken on lease a shop at a monthly rent of Rs.60/ from the plaintiffs/respondents as far back as September 1, 1961. The shop was situated in Tripolia Bazar, Jaipur City (Rajasthan). The plaintiffs served a notice of eviction under section 106 of the Transfer. of Property Act on the appellant and his two brothers terminating. the tenancy and directing. them to vacate the premlses. As the tenants did not Vacate the premises, the plaintiffS instituted the present suit. in the Court of the Munsiff East, Jaipur City,_ claiming eviction of the appel lant and his two brothers on me ground that they had not paid or tendered rent for a period of, six months from Magh shukla 1, smvt. In the plaint the plaintiffs also averted that the. shop was required by them for their own use and occupation and that the tenants had sublet the shop to Rajasthan Bartan Bhandar. without the consent of the plaintiffs. We might mention here that these two grounds. taken by the plaintiffs have been held by all the Courts to be completely disproved, and.the suit was decreed by the District Judge and the High Court mainly, on. the ground that thetenants had defaulted in payment of rent for a PeriOd of six months and were, therefore, liable to be ejected under the provisions. 0f the Rajasthan premises (Control. of Rent and Eviction) Act, 1950 hereinafter referred to as 'the Act '. It appears that after summonses were served on all the three defendants including the appellant, two of the brothers of the appellant, Viz., Padam Chand and Tara Chand put in their appearance, but the appel lant despite the service did not put in his appearance. In fact the counsel who was appearing for the other two defend ants had been instructed to appear for the appellant also, but the Vakalatnama was not signed by the appellant. The appellant appears to have taken advantage of 334 this lacuna in contending that he had not participated in the proceedings of the Trial Court. On February 14. 1966 the defendant Tara Chand moved an application under section 13 of the Act praying to the Court that the rent due may be determined and the defendants may be directed to deposit the rent. The Court accordingly determined the rent on March 1, 1966 and directed the defendants to deposit a sum of Rs.398 75 Paise on or before April 19, 1966. As the rent was not deposited, the plaintiffs moved an application for striking out the defence of the defendants against eviction for their failure to comply with the provisions of section 13(4) of the Act. The Court accordingly by its order dated December 14, 1966 struck out the defence of the defendants. It may be pertinent to note that although the appellant had not put in his formal appearance he under stood the order of the Trial Court dated December 14, 1966 striking out the defence and treated the same as having been passed not only against his brothers Padam Chand and Tara Chand, the two defendants, but also against himself and accordingly he along with his brothers preferred an appeal against that order to the Senior Civil Judge, Jaipur City on October 30, 1967. This appeal was ultimately dismissed and then the three defendants flied an application for revision before the High Court which was also dismissed by the High Court by its order dated September 19, 1968. Thus it is manifest that the appellant was fully aware of the proceedings that had taken place as also of the order that had been passed against the defendants striking out their defence. When the record was received back by the THai Court, Shri Tara Chand Jain Advocate of the defendants informed the Court on November 26, 1968 that he was holding brief only on behalf of the two defendants Padam Chand and Tara Chand and not on behalf of the appellant Gyan Chand. The Court accordingly passed an order that the suit was to proceed ex parte against the appellant. On November 30, 1968 the appellant flied an application for setting aside the ex parte order passed against him and this application found favour with the Trial Court and was accordingly allowed. The appellant was allowed to file his written statement which he filed on January 27, 1969. Thereafter the appellant applied to the Court for determining the rent due to the plaintiffs but that application was rejected on the ground that no amount of rent was payable as the entire rent due had already been paid by the other two defendants. Thereafter the plaintiffs flied an application before the Trial Court for striking out the defence against Gyan Chand as he had not complied with the order under section 13(4) of the Act passed by the Court previously. The Trail Court, however, did not pass any orders on that application and ultimately dismissed the suit holding that there was no default. It may be. stated at the outset that when the appellant applied for setting aside the ex parte order he gave no explanation whatsoever for his non appearance in the suit, after the summonses were served on him but merely tried to explain his absence on November 26, 1968. We have already pointed out that the appellant knew very well that the defence had been struck ,out by an order of the Court and had actually joined in the appeal and the revision flied by the other two defendants. In spite of that for two years he kept quiet and gave no explanation whatsoever for not appearing before the 335 Court and participating in the proceedings until November 30, 1968. This delay of two years which has been seriously commented upon by the High Court has not been explained satisfactorily by the appellant. After the suit was dismissed by the Trial Court, the plaintiffs filed an appeal before the Additional District Judge who allowed the appeal holding that the defendants were defaulters and accordingly decreed the suit. The grounds of subletting and personal requirement as alleged by the plaintiffs were, however, held not proved. Thereaf ter there was second appeal to the High Court which affirmed the judgment of the District Judge and maintained the decree passed by the District Judge. The High Court has rightly pointed out that the conduct of the appellant in not giving any explanation for not participating in the proceed ings despite service of the summonses speaks volumes against him. The argument of the appellant that the entire proceedings should be cancelled as they had taken place in his absence was rightly rejected by the High Court. In view of the concurrent findings of fact recorded on this point by the District Judge and the High Court, we are not at all inclined to interfere, in this appeal by special leave, with the merits of the case decided by the Courts below we are satisfied that the appellant was not diligent at all and has to thank his stars if the decision of the Courts below went against him In these circumstances, we do not propose to enter into merits of the appeal. Mr. Jain, however, raised a pure question of law flowing from the amendment by which section 13A was introduced in the Act by virtue of Ordinance No. 26 of 1975. Mr. Jain submitted that the statutory benefit conferred by section 13A would have to be extended to the appellant before this Court also and since the rent due had already been paid and the appellant was prepared to pay the costs and interest, the suit should be dismissed. In order to appreciate this point, it may be necessary to state the sequence of facts. The High Court dismissed the second appeal of the appellant on September 5, 1975. Against this judgment, the appellant filed an applica tion for special leave in this Court on September 23, 1975. Six days later i.e. on September 29, 1975 Ordinance No. 26 of 1975 dated September 29. 1975 introduced section 13A by amend ing the Act. On October 28, 1975 the appellant filed a Civil Miscellaneous Petition in this Court praying that the Court may issue directions under the newly amended section 13A (c) of the Act. On November 14, 1975 this Court granted special leave. On December 11, 1975 another Civil Miscella neous Petition was filed by the appellant renewing his prayer for directions to be given by this Court under section 13A of the Amending Act. The significance of these Civil Mis cellaneous Petitions appears to have been that if the spe cial leave petition was not treated as an appeal, then the moment the special leave was granted by this Court the appeal stood admitted by this Court and, therefore, the second application was filed for directions under section 13A of the Act as amended. Mr. Agarwala counsel for the respondents has vehemently contended that section 13A of the Act would have absolutely no application to appeal by special leave filed in this Court. In order to appreciate 336 this point it may be necessary to examine the language and the circumstances under which section 13A was introduced. It would appear that before the introduction of section 13A by virtue of the. Ordinance there was no provision in the Act which prohibited the Court from passing any decree if at any stage the tenant was prepared to deposit the, entire rent, costs and interest as directed by the Court. The Legisla ture in pursuance of its socialistic policies attempted to liberalise the conditions of tenancies so as to give the tenants special protection against frivolous evictions. With this object in view, the Ordinance appears to have been passed which was later on replaced by an Act. In the state ment of objects and reasons accompanying.the amending Act it is mentioned that the Legislature decided to provide relief to tenants occupying premises in urban areas and in clause (6) 0f the said statement, the following observations are made: "In relation to pending suits and pro ceedings for ejectment on ground of defaults, an opportunity had been given to tenants to deposit the arrears of rent within thirty days and upon such deposit no decree for ejectment will be passed on such ground against them." Thus a perusal of clause (6) of the statement of Objects and reasons would clearly show that the intention of ,the Legislature was to confer certain benefits on the tenants to pending suits and proceedings for ejectment only on ground of defaults by giving them an opportunity to deposit the arrears within a specified time. It is nowhere mentioned in clause (6) that this benefit was to be extended beyond the frontiers of the State in appeals which Were not ordinary remedies but which were special remedies provided for under the Constitution. Thus the scope of the amendment was to confine the protection given to the tenants within the limits of the hierarchy of courts mentioned by the Act, and to the. Courts in the State of Rajasthan. It may be noticed that the statement of,objects and reasons does not even give a hint that the benefit conferred by section 13A 'would ' be available even in the execu tion proeedings after the decree had` been passed. We shall now analyse section 13A of the Act, against the background of the main objective of the Legislature. Section 13A of the ACt as introduced by Ordinance No. 26 of 1975 and later re placed by the Act runs thus: "13A. Special provisions relating to pending and other matters Notwithstanding anything to the contrary, in 'this Act as it ' existed before the commencement of the ordinance or in: any other law: (a) no court shall, in any proceeding. pending on the date of commencement of the amending ordinance pass any decree in favour of a landlord for eviction of a tenant on the ground of non payment of rent, if the tenant applies under clause (b) and pays to the landlord; or deposits in court, Within such time. such aggregate of the amount of rent in arrears, interest 337 thereon and full costs of the suit as may be directed by the court under and in accordance with that clause;. (b) in every such proceeding, the court shall on the application of the tenant made within thirty days from the date of commence ment of the amending ordinance, notwithstand ing any order to the contrary, determine the amount of rent in arrears upto the date of the order as also the amount of interest thereon at six per cent per annum and costs of the suit allowable to the landlord; and direct the tenant to pay the amount so determined within such time, not exceeding ninety days, as may be fixed by the ,court, and on such payment being made within the time fixed as afore said, the_proceeding shall be disposed of as if the tenant had not committed any default; (c) the provisions of clauses (a) and (b) mutatis mutandis apply to all appeals, or application for revisions, preferred or made after the commencement of the amending ordi nance, against decrees for eviction passed before such commencement with the variation that in clause (b), for the expression "from the date of commencement of the amending ordinance" the expression "from the date of the presentation of the memorandum of appeal or application for revision" shall be substi tuted; X X X Explanation: For the purpose of this section . (a) "amending ordinance" means the Rajasthan Premises (Control of Rent and Eviction) (Amendment) Ordinance, 1975; and (b) "Proceeding" means suit, appeal or application for revision. " Section 13A contemplates only three kinds of proceedings, namely, suits, appeals and applications for revisions and these proceedings must be under the Act ,itself. Clause. (a) of section 13A of the Act provides that no court after the commencement of the mending ordinance shall pass any decree on the ground of non payment of rent if the tenant applies and a s to the landlord the entire rent in arrears interest and full costs of the suit. Clause (b) requires that such an application is to be made within thirty days of the com mencement of the amending ordinance on,Which the Court would determine the rent in arrears and direct, interest to be paid at the rate of six per cent per annum. Clauses (a) and (b) obviously do not apply to the present case, because the proceedings were not pending in any court when the ordinance or the Act came into force. Reliance was, however, placed on the word "proceeding" as appearing in clauses (a) and (b) in 338 order to plead an argument that the word "proceeding" was wide enough to include not. only Suits, but appeals at all stages. This argument in our opinion is based on a serious misconception of the interpretation of the word "proceeding". The Legislature has not left the connotation of the word "proceeding" in doubt because clause (b) of the Explanation clearly indicates what "proceedings" contemplat ed by section 13A in clauses (a), (b) and (c) are. The Expla nations clearly shows that "proceeding" means suit, appeal or application for revision. A logical interpretation of clause (b) of the Explanation would clearly reveal that the Act itself has limited the scope of the proceeding to suits, appeals or applications for revision under the hierarchy of the statute. In other words, the Explanation refers only to Such proceedings as may be pending in any suit, appeal or application for revision under the Act. Section 22 of the Act runs thus: "22. Appeals and Revisions : (1) From every decree or order passed by a Court under this Act, an appeal shall lie to the Court to which appeals ordinarily lie from original decrees and orders passed by such former court. (2) No second appeal shall lie from any such decree or order; Provided that nothing herein contained shall affect the powers of the High Court for Rajasthan in revision; X X X X " Section 22 provides for an appeal to the Court where an appeal ordinarily ties, i.e. the Court of the District Judge in the instant case and thereafter an application in revi sion to the High Court. The use of the words "such proceed ing" in clause (b) of section 13A fortifies our conclusion that the proceedings contemplated by section 13A are really the pro ceedings referred to in Explanation which means proceedings in the nature of suits, appeals or applications for revision as referred to in section 22 of the Act. In these circumstances we are unable to agree with the learned counsel for the appellant that proceedings in this Court would fall within the ambit of clauses (a) and (b) of section 13A of the Act. It was then submitted that at any rate clause (c). of section 13A would apply to the facts of the present case and the appellant should be given the benefit of that provision. It is true that clause (e) applied the provisions of clauses (a) and (b) mutatis mutandis to appeals and applications for revision. It may be noticed, however, mat this benefit is not conferred even in the execution proceedings arising out of decrees passed in suits or appeals and upheld in revi sions. The true interpretation of clause (c) of section 13A would, therefore, be that this clause also contemplated the same proceedings as contemplated by clauses (a) and (b), namely the proceedings indicated in the Explanation. Thus the benefit conferred by clause (c) would apply only to appeals or applications for revisions filed under the 339 Act as provided by section 22 of the Act. The Legislature never intended to confer this benefit beyond the frontiers of the State. It was however, submitted that the word "appeal" is wide enough to include an appeal by special leave filed in this Court. It is, however, not possible to accept this conten tion. The amendment was passed some time in the year 1975 i.e. about 25 years after the Constitution had come into force. An appeal by special leave was a special remedy provided for by article 136 of the Constitution and the State Legislature of Rajasthan must be presumed to be aware of this special remedy as also the nomenclature of this remedy. If the intention was to extend the benefit to appeals for special leave it should have been so clearly stated in clause (c). Furthermore, the Rules flamed by the Supreme Court, the knowledge of which also must be ascribed to the State Legislature, make a clear cut distinc tion between an application filed in the Court for grant of special leave and a petition of appeal after the leave is granted. It was suggested that the application for special leave to appeal may be treated as the memorandum of appeal as referred to in clause (c) of section 13A. It is, however, not possible to accept this ,contention, because the constitu ents and ingredients of an application for special leave to appeal are quite different from those of a memorandum of appeal preferred to an appellate Court under O. XLI r. 1(2) of the Code of Civil Procedure. Under O. XVI r. 4 of the Supreme Court Rules, 1966 the petition for special leave is to contain only the necessary facts and not the grounds. It is true, r. 11 of O. XVI of the Supreme Court Rules provides that the petition for special leave would be treated as a petition of appeal after the special leave is granted, but that also cannot be equated with a memorandum of appeal as contemplated by clause (c) of section 13A of the Act. In contra distinction to the provisions of the Supreme Court Rules it would appear that O. XLI r. 1 (2) of the Code of Civil Procedure runs thus: "The memorandum shall set forth, con cisely and under distinct heads, the grounds of objection to the decree appealed from without any argument or narrative; and such grounds shall be numbered consecutively. " It would thus appear that the provisions of r. 1 (2) of O. XLI Code of Civil Procedure require that the memorandum of appeal has to set forth under the distinct heads the grounds of objections to the decree appealed from. No such requirement is to be found in the Supreme Court Rules either for an application for special leave to appeal or in the petition of appeal which is required to be field if certifi cate by High Court is granted. The Legislature must be presumed to be aware of the difference between an applica tion for special leave to appeal and a memorandum of appeal. If the intention was to extend the benefit of section 13A even to appeals before the Supreme Court, then apart from the word memorandum of appeal, the words "application for special leave to Supreme Court" should have been mentioned. The fact that clause (c) of section 13A merely mentions the words "from the date of the presentation of the memorandum of appeal or application for revision" clearly indicate that 340 the remedies contemplated by the Act are the remedies of appeal and revision as provided for by section 22 of the Act. In fact, as already pointed out, the benefit conferred by section 13A of the Act does not extend even to the. execution pro ceedings and in these circumstances it cannot be assumed that it would have applied to a Court which is beyond the frontiers of the State and to a remedy which has been pro vided not by the State Legislature but by the Constitution itself. For these reasons, therefore, we reject the argument of the appellant that clause (c) of section 13A of the Act would apply to the present appeal and that the appellant is, therefore,entitled to the benefit of this provision on the basis of the Civil MisCellaneous Petition filed by him. We are clearly of the opinion, on an interpretation of the various clauses of section 13A of the Act and the Explanation thereto that. the benefit under section 13A has been intended by the Legislature to be conferred only on the appellate and revisional courts and even execution proceedings have been excluded from the ambit Of the protection granted. For these reasons I agree with the judgment proposed by my brother Goswami, J., and dismiss the appeal but in the peculiar circumstances of the case without any order as to costs. P.B.R. Appeal dismissed.

Section 13A was introduced in Rajasthan Premises (Con trol of Rent and Eviction) Act, 1950 by an Ordinance on September 29, 1975, The Ordinance was later replaced by an Act. Clause (a)of the section provides that no Court shall, in any proceeding pending on the date of the commencement of the Amending Ordinance, pass any decree in favour of a landlord for eviction of a tenant on the ground of non payment of rent under certain circumstances. Clause (b) provides that in every such proceeding the Court shall, on the application of the tenant, made within 30 days from the date of the presentation of the memorandum of appeal or application for revision, determine the amount of rent in arrears. Clause (c) provides that the provisions of els. (a) & (b) shall, mutatis mutandis, apply to all appeals, or applications for revision, preferred or made after the commencement of the Amending Ordinance. Explanation (b) to the section defines a proceeding to mean a suit, appeal or application for revision. Section 22(1) provides that from every decree or order passed by the Court under the Act, an appeal shall lie to the Court to which appeals ordinarily lie :from original decrees and orders passed by such former Court. On the ground of non payment of rent, a decree of evic tion was passed against the appellant, who was the respond ent 's tenant. The High Court having affirmed the decree on appeal, the appellant filed an application for special leave to this Court on September 23, 1975. The Ordinance intro ducing section 19A was passed on September 29, 1975. This Court granted special leave on November. In appeal to this Court it was contended by the appel lant (1) that since the application for special leave was pending before this Court on the date of the commencement of the Ordinance, the case was governed by section 13A (a) and (b) of the Act; (2) in the alternative since, as a result of the grant of special leave, an appeal had been pending before this Court, the appellant was entitled to the protection of section 13A(c) of the Act. Dismissing the appeal, HELD: (Per Chandrachud and Goswami, JJ) (1)(a) In order to attract section 13A(a) a suit, appeal or application for revision must be pending on the date of the commencement of the Ordinance. An application for special leave under article 136 of the Constitution cannot be equated with the ordinary remedy of appeal as of right under any provision of law. It is an extraordinary right conferred under the Constitution, within the discretion of the Supreme Court and an application for special leave does not come within the contemplation of appeal pending before the Court under section 13A(a). The collocation of the words "suit, a. appeal or application for revision" used in the explanation to denote "proceeding", shows that the suits and regular appeals therefrom as provided under the ordinary law and applications for revision alone are intended. [329C & B] 325 (b) The expression "presentation of memorandum of appeal" under section 13A (c) chimes with the construction that the legislature clearly intended to include only the hierarchy of appeals under the Code of Civil Procedure. [330D] (c) Under section 13A(c) read with section 13A(b) in a pending appeal, the tenant has to make an application within 30 days "from the date of presentation of the memorandum of appeal". There is no provision in an appeal by special leave for presentation of memorandum of appeal, under r. 11 of O.XVI. of the Supreme Court Rules, on the grant of special leave, the petition for special leave is treated as the petition of appeal. In contrast under O.41 r. 1(1) of the Code of Civil Procedure, every appeal shall be preferred in the form of a memorandum signed by the appellant and pre sented to the Court. [329H] (d) The terminus a quo for the purpose of section 13A(c) is from the date of presentation of the memorandum of appeal. Since no petition of appeal has to be presented in the Supreme Court after the special leave is granted, such a contingency of appeal to this Court by way of special leave is not intended to be covered by section 13A(c). [330C] (2) Section 22 cannot assist the appellant in this case. While section 22(1 ) qualifies the decree or order as being "under this Act" section 13A does not describe "proceeding" to be under the Act. [330E; 332C] The Act provides for the institution of serious in two different forums namely, the lowest Court of competent jurisdiction, which is the Civil Court, and the other before a Magistrate on the executive side. [332F] Appeals or applications for revision under section 13A(c) relate only to decrees in suits for eviction based on the ground of non payment of rent. Such appeals or applications for revision under section 13A(c) are not contemplated under section 22. Decrees or orders passed by the Court under the Act, against which appeals and revisions are provided in section 22, do not take in decrees and orders passed in a suit for eviction. Usual rights of appeal and revision will be available in the latter class of suits. To hold otherwise will be to deny a right of second appeal to a litigant, whether it is landlord or tenant, against a decree in an eviction suit which is clearly not the intention of the legislature. Second appeal is only barred in case of de crees or orders passed under the Act. [332H] (Per section Murtaza Fazal Ali, J.) Proceedings in this Court would not fall within the ambit of cls. (a) and (b) of section 13A. [338F] (a) The Explanation to the section clearly shows that the word "proceeding" refers only to such proceedings as may be pending in any suit, appeal or application for revision under the Act. The use of the words "such proceedings" in section 13A(b) shows that the proceedings contemplated by section 13A are really proceedings referred to in the explanation, which means proceedings in the nature of suits, appeals or appli cations for revision as referred to in section 22. [338E F] (b) Section 13A(c) would not apply to the present case. The benefit conferred by el. (c) would apply only to appeals and applications for revision filed under the Act as provid ed by section 22. The true interpretation of cl. (c) would be that this clause contemplated the same proceedings as con templated by els. (a) and (b), namely, proceedings indicated in the explanation. [338G H] (c) An appeal by special leave is a special remedy provided by article 136 of the Constitution and the legislature must be presumed to be aware of this special remedy. If the intention was to extend the benefit to appeals for special leave, it should have been clearly stated in el. [339B] (d) The Supreme Court Rules make a clear cut distinction between an application filed for the grant of special leave and a petition of appeal, if the leave is granted. The constituents and ingredients of an application for special leave to appeal are quite different from those of a memoran dum of appeal under O.X.LI r. 1(2) of the Code of Civil Procedure. [339D] 326 (e) The provisions of O.XLI, r. 1(2) C.P.C. require that the memorandum of appeal has to set forth under distinct heads, the grounds of objections to the decree appealed from. No such requirement is to be found in the Supreme Court Rules either for an application for special leave to appeal or in the petition of appeal which is required to be filed if certificate by the High Court is granted. The legislature must be. presumed to be aware of the difference between an application for special leave to appeal and a memorandum of appeal. Though r. 11 of O.XVI of the Supreme Court Rules provides that the petition for special leave would be treat ed as a petition of appeal after the special leave is grant ed,it cannot be equated with a memorandum of appeal contem plated by section 13A(c) of the Act. [339G H] (f) The fact that section 13A(c) mentions the words "from the date of the presentation of the memorandum of appeal or application for revision" clearly indicates that the reme dies contemplated by the Act are remedies of appeal and revision as provided for by section 22 of the Act. [339H]

minal Appeal No. 207 of 1966. Appeal from the judgment and order dated August 10, 1966 of the Patna High Court in Criminal Appeal No. 14 of 1964. K.R. Chaudhuri, for the appellant. D. Goburdhun, for the respondent. The Judgment of the Court was delivered by Ramaswami, J. The question involved in this appeal is whether the appellant Akhtar Alam was a "public servant" within the meaning of section 5 (2) of the Prevention of Corruption Act (Act 11 of 1947 ) and section 21 of the Indian Penal Code. On or about December 11, 1962, the appellant was charged in the Court of the Special Judge of Patna for an offence. under section 5(2), read with section 5(1) of the Prevention of Corruption Act and section 161 of the Indian Penal Code. The case of the prosecution was that on July 8, 1961, the appellant committed these offences by obtaining a sum of Rs. 180/ for Sri A.D. Singh, Executive Engineer (Electrical) from Ramprit Singh, P.W. 2 by resorting to corrupt and illegal means or by otherwise abusing his position as public servant. It is said that on the morning of July 6, 1961, the Electrical Executive Engineer, Sri A.D. Singh, accompanied by his Head Clerk, the appellant paid a visit to Janta Oil Mills situated at Fatuhas. Ramprit Singh, P.W. 2 was the lessee of the Mills. The Executive Engineer met P.W. 2 in the mill premises and told him that the outer seal of the meter, technically called the body seal, was in a tampered condition. P.W. 2 maintained that the seal was not tampered but on a threat by the Executive Engineer, P.W. 2 was compelled to give a written statement that 684 the outer seal was tampered with. Thereafter the Executive Engineer cut the inner seal, technically known as the loop seal, of the meter and fixed two fresh seals on the meter, one in the terminal 'and the other in the body of the meter. The Executive Engineer and the appellant thereafter left the mill premises. At about 10 a.m. on the same day the appellant had gone again to the mill premises and told P.W. 6, Basudeo Singh, the Munshi of the proprietor that P.W. 2 the lessee 'and P.W. 9, Bishna Prasad Yadav, the proprietor of the mill should meet him at his office at Patna within two days and get the matter settled, otherwise they would be put to a big loss. Thereafter, P.W. 2 went to the office of the Anti Corruption Department at Patna and handed over a petition to P.W. 11 Girjanandan Sinha expressing his apprehension that the Executive Engineer or his Head Clerk, the appellant would demand some bribe from him. It is alleged that on July 8, 1961 a trap was laid and under the direction of the Deputy Superintendent of Police, P.W. 7 a raiding was organised. Ramprit, P.W. 2 along with other witnesses proceeded to the 'appellant 's office. After some conversation the appellant demanded money and P.W. 2 Ramprit gave him eighteen ten rupee currency notes, the serial numbers of which had been previously noted down by the Magistrate, P.W. 20. P.W. 16, Raghuraj was also present at the time. After the 'appellant had received money, the Deputy Superintendent of Police, P.W. 7 and other members of the raiding party arrived inside. The appellant thereafter dropped the bundle of currency notes on the floor below the table and made an attempt to get away but he was taken under arrest .and after his person was searched the currency notes were found lying on the floor near the seat. The Deputy Superintendent of Police, P.W. 7 picked up the currency notes and upon comparison he found them to bear the same serial numbers which had been noted down in the statement, exhibit 2. The Deputy Superintendent of Police then lodged the First Information Report, exhibit 11 .at the Gardanibagh police station. On the basis of that report investigation was made by Deputy Superintendent of Police Sri Ramlakhan Prasad, P.W. 19 and subsequently by Inspector Shahidhar Putt, P.W. 17 under the orders of the Sub Divisional Magistrate. After concluding the investigation the police submitted a chargesheet against the appellant. The appellant denied the charges and pleaded that the entire case had been fabricated against him by Raghuraj, P.W. 16 The Special Judge, however, accepted the prosecution case as true and convicted the appellant under section 5 (2) read with section 5(1 )(d) of the Prevention of Corruption Act and sentenced him to undergo rigorous imprisonment for five years. The appellant was ' also convicted and sentenced to undergo rigorous imprisonment for two years under section 161 of the Indian Penal Code. The appellant took the matter in appeal to the Patna High Court which dismissed the appeal and affirmed the judgment of the Special Judge. 685 This appeal is brought by special leave from the judgment of the Patna High Court dated August 10, 1966 in Criminal Appeal No. 134 of 1964. On behalf of the appellant Mr. K.R. Chaudhury did not challenge the findings of the High Court on questions of fact but the argument was put forward that upon the findings recorded by the High Court the appellant could not be convicted of the charges because he was not a "public servant" within the language of section 5(2) of the Prevention of Corruption Act or section 21 of the Indian Penal Code. Section 5(1)(d) of the Prevention of Corruption Act states: "5. (1)A public servant is said to commit the offence of criminal misconduct in the discharge of duty, (d) if he, by corrupt or illegal means or by otherwise abusing his position as a public servant, obtains for himself or for any other person any valuable thing or pecuniary advantage. " Section 5(2) is to the following effect: "(2) Any public servant who commits criminal misconduct in the discharge of his duty shall be punishable with imprisonment for a term which shall not be less than one year but which may extend to seven years and shall also be liable to fine: Provided that the Court may, for any special reasons recorded in writing, impose a sentence of imprisonment of less than one year. " Section 2 provides as follows: "For the purposes of this Act, 'public servant ' means a public servant as defined in section 21 of the Indian Penal Code. " By section 2 of the Criminal Law (Amendment) Act, 1958 (Act 11 of 1958) el. 12 was inserted in section 21 of the Indian Penal Code and Explanation 4 was added thereto. Section 2 was to the following effect: "2. In section 21 of the Indian Penal Code, (a) after clause Eleventh, the following clause shall be inserted, namely : Twelfth. Every officer in the service or pay of a local authority or of a corporation engaged in any trade or industry which is established by a Central, |Sup. 4Sup C.I./69 11 686 Provincial or State Act or of a Government company as defined in section 617 of the . (b) after Explanation 3, the following Explanation shall be inserted, namely : Explanation 4. The expression corporation engaged in any trade or industry ' includes a banking, insurance or financial corporation, a river valley corporation and a corporation for supplying power, light or water to the public. ' The scope of cl. (12) of section 21 of the Indian Penal Code was enlarged by section 2 of the Anti Corruption Laws (Amendment) Act, 1964 (Act 40 of 1964). By section 2 of the amendment Act of 1964, cl. (12) was substituted by 'a new clause in the following terms: "Twelfth. Every person (a) in the service or pay of the Government or remunerated by fees or commission for the performance of any public duty by the Government; (b) in the service or pay of a local authority a corporation established by or under a Central, Provincial or State Act or a Government Company as defined in section ' 617 of the . " By the amending Act Explanation 4 of section 21, Indian Penal Code was also omitted. In the present case, however, we are not concerned with the amendment effected by Act 40 of 1964 because the occurrence took place before the coming into force of this amending Act but after the enactment of the Criminal Law (Amendment) Act, 1958 (Act 11 of 1958) which came into force on February 27, 1958. It is not disputed in this case that the appellant was not a Government servant but he was the servant of the State Electricity Board constituted under the provisions of the (Act 54 of 1948). The State Electricity Board so constituted is not a department of the State Government. It is a body corporate having the power to appoint the Secretary and such other officers and servants as may be required to enable the Board to carry out the functions of the Board. Section 5( 1 ) of the Act states: "5. (1 ) The State Government shall, as soon as may be after the issue of the notification under subsection (4) of section 1, constitute by notification in the Official Gazette a State Electricity Board under such name as shall be specified in the notification. " 687 Section 12 provides for incorporation of the Board and reads as follows: "12. The Board shall be a body corporate by the name notified under sub section ( 1 ) of section 5, having perpetual succession and a common seal with power to acquire and hold property both movable and immovable, and shall by the said name sue and be sued. " Section 15 is to the following effect: "The Board may appoint a Secretary and such other officers and servants as may be required to enable the Board to carry out its functions under this Act: Provided that the appointment of the Secretary shall be subject to the ,approval of the State Government. " Section 81 enacts: "81. All members, officers and servants of the Board shall be deemed, when acting or purporting to act in pursuance of any of the provisions of this Act, to be public servants within the meaning of section 21 of the Indian Penal Code. " On a plain reading of section 81, the officers and servants of the Board are deemed to be public servants only when acting or purporting to act in pursuance of any of the provisions of the . So far as the receiving of a bribe is concerned, it cannot be brought within the scope of acting or purporting to act in pursuance of any of the provisions of the . Therefore, the appellant while taking the bribe, cannot be deemed to be a public servant within the meaning of section 21, Indian Penal Code in view of the language of section 81 of the . The question whether sanction of the Government was required under section 197 of the Criminal Procedure Code where any public servant is accused of an offence alleged to have been committed by him while acting or purporting to act in the discharge of his official duty came up for consideration by the Judicial Committee in cases under sections 161 and 409 of the Indian Penal Code against public servants. In Gill vs The King(1), it was held by the Judicial Committee that prosecution for taking a bribe under section 161, Indian Penal Code did not require sanction under section 197 because taking of a bribe was not acting or purporting to act in the discharge of the official duty of a public servant. Again in Hori Ram Singh vs The Crown(2), the Federal Court held that sanction was required for prosecution of a public servant for an (1) 75 I.A, 41. (2) 688 offence under section 477 A as his official capacity was involved in the very act complained of as amounting to a crime; but that no sanction was required for a charge under section 409, because the official capacity is material only in connection with the entrustment and does not necessarily enter into the later 'act of misappropriation or conversion which is the act complained of This view of the Federal Court was approved by the Judicial Committee in Gill 's case(1). The same view has been expressed by this Court in State of Maharashtra vs Jagatsing Charansingh(2) in which it was held that only when an officer or servant of a corporation was acting or purporting to act in pursuance of any of the provisions of the Transport Corporation Act, 1950 (Act 64 of 1950) or of any other law that he could be said to be a public servant within section 43 of that Act. Therefore a person taking a bribe could not be said to be a public servant within the meaning of section 21, Indian Penal Code in view of the language of s.43 of the Transport Corporation Act. Applying a similar line of reasoning to the present case, we are of opinion that the appellant cannot be deemed to be a public servant within the meaning of section 81 of the because he was not acting or purporting to act in pursuance of any of the provisions of that Act. We pass on to consider the alternative question raised on behalf of the respondent, namely, whether the appellant was a public servant within the meaning of the twelfth clause in section 21, Indian Penal Code as it stood after the Criminal Law (Amendment) Act, 1958 (Act 11 of 1958). Under this clause the words "public servant" include 'every officer in the service or pay of a local authority or of a corporation engaged in any trade or industry which is established by a Central, Provincial or State Act or of a Government company as defined in section 617 of the '. In view of Explanation 4 the expression 'corporation engaged in any trade or industry ' includes a banking, insurance 'or financial corporation, a river valley corporation and a corporation for supplying power, light Or water to the public. It is not disputed in the present case that the appellant was in the service of the State Electricity Board which falls within the language of Explanation 4. But it was contended for the appellant that its was performing only routine clerical duties and cannot be treated as an officer within the meaning of cl. (12) to section 21, Indian Penal Code. The question to be considered therefore is whether as Head Clerk employed under the State Electricity Board and attached to the office of the Executive Engineer, the appellant could be said to be an officer within the meaning of el. (12) of section 21, Indian Penal Code. In Reg. vs Ramajirao Jivbaji(3) it was held by West, J. that the word 'officer ' meant some person employed to exercise to some extent and in certain circumstances a delegated function (1)751.A. 41 (2) [1964]4S.C.R. 299. (3) 12 Born. H.C.R. 1. 689 of Government. He was either himself armed with some authority or representative character or his duties were immediately auxiliary to those of some one who was so armed. In the course of his judgment, West J. observed as follows: "Seeking the help of English law, we find, in Bacon 's Abridgement at Vol. 6, page 2, the article headed `of the nature of an officer, and the several kinds of officers, ' commencing thus: 'It is said that the word 'officium ' principally implies 'a duty, and, in the next place, the charge of such duty; and that it is a rule where one man bath to do with another 's affairs against his will, and without his leave, that this is an office, 'and he who is in it is an officer. ' And the next paragraph goes on to say: 'There is a difference between 'an office and an employment, every office being an employment; but there are employments which do not come under the denomination of offices; such as ,an agreement to make hay, herd a flock, & c.; which differ widely from that of steward of a manor, ' &c. The first of these paragraphs implies that an officer is one to whom is delegated. by the supreme authority, some portion of its regulating and coercitive powers, or who is appointed to repre sent the State in its relations to individual subjects. This is the central idea; and applying it to the clause which we have to construe, we think that the word 'officer ' there means some person employed to exercise, to some extent, and in certain circumstances, a delegated function of Government. He is either himself ,armed with some authority or representative character, or his duties are immediately auxiliary to those of some one who is so The decision in Reg. vs Ramajirao Jivbaji(1) was considered by the Calcutta High Court in Nazamuddin vs Queen Empress(a). The petitioner in that case was a peon attached to the office of the Superintendent of the Salt Department in the district of Mozafferpur and he had been convicted under section 161 Indian Penal Code. The contention urged on behalf of the petitioner was that he did not fall within the terms of the last portion of cl. (9) of section 21, Indian Penal Code. The contention was rejected and the learned Judges observed at page 346 of the Report 'as follows: "The Learned Judges in that case had to consider whether a lessee from Government was on the conditions of his lease a public servant, and, in doing so, they considered generally the meaning of the term 'officer '. (1) 12 Born. H.C.R. 1 (2) I.L.R.:28.Cal. 690 It was there held that an officer means 'some person employed to exercise, to some extent and in certain circumstances, a delegated function of Government. He is either armed with some authority or representative character, or his duties are immediately auxiliary to those of some person who is so armed. ' The meaning which we are asked to put on those words seems to us to be too narrow as applied to the present case. The peon who has been convicted as a public servant is in service and pay of the Government and he is attached to the office of the Superintendent of the Salt Department. The exact nature of his duties is not stated, because this objection was not taken at the trial, but we must take it that, from the nature of his appointment, it was his duty to carry out the orders of his official superior, who undoubtedly is a public servant, and in that capacity to assist the Superintendent in the performance of the public duties of his office. In that sense he would be an officer of Government, although he might not possibly exercise 'any delegated function of the Government '. Still his duties would be 'immediately auxiliary to those of the Superintendent who is so armed. ' We think that an 'officer in the service or pay of Government ' within the terms of section 21, Penal Code is one who is appointed to some office for the performance of some public duty. In this sense the peon would come within section 2 1, el. 9". In Emperor vs Karam Chand Gobind Ram(1), it was held by the Lahore High Court that a Head Clerk in the Supply Depot at Sialkot whose duty was to put up bills to his officer, vas a public officer within the meaning of section 21, cl. (9) of the Indian Penal Code. It was pointed out that even if 'a Head Clerk cannot be said to be employed to exercise to some extent, and in certain circumstances, a delegated function of Government, his duties were "immediately 'auxiliary to the Head of the Office or other officer empowered with official responsibility of accepting and passing his work". In G. A. Monterio vs The State of Ajmer(2), it was held by this Court that a person, who was a Class Iii servant and was employed as a metal examiner known as Chaser in the Railway Carriage Workshops and was working under the Works Manager who was an officer of the Government and the duties which he performed were immediately auxiliary to those of the Works Manager who was an officer in the service or pay of the Government and was therefore a public servant within the meaning of section 21 (9), Indian Penal Code and section 2, Prevention of Corruption Act. (1) A.I.R. 1943 Lab. (2) A.I.R. 1957 section 13. 691 The true test, therefore, in order to determine whether the appellant is ,an officer of the Corporation within the meaning of 21, cl. (12), Indian Penal Code, is: (1) whether he is in the service or pay of the Corporation, and (2) whether he is himself other armed with some authority or representative character by the Corporation; or whether his duties are immediately auxiliary to those of some one who is .armed with such authority or representative character; In the present case, the High Court has found that the appellant was a person performing duties immediately auxiliary to those of the Executive Engineer who was the lead of the office. The very designation "Head Clerk" denotes that there are other Clerks attached to the office who occupy subordinate positions in relation to the Head Clerk and the duties of he Head Clerk from the nature of things are bound to be immediately auxiliary to the Head of the office. Upon the facts found in the present case we are of the opinion hat the appellant was an officer in the service or pay of the Corporation as defined in section 21, cl. (12), Indian Penal Code and therefore a 'public servant ' within the meaning of that section 'and also of section 2 of the prevention of Corruption Act. For the reasons expressed we affirm the judgment of the High Court dated August 10, 1966 in Criminal Appeal No. 134 of 1964 and dismiss this appeal.

The appellant was the Head Clerk to the Executive Electrical Enginear of the State Electricity Board He was convicted under section 5(2) read with section 5(1)(d) of the Prevention of Corruption Act on the allegation that on July 8, 1961 he had committed an offence in obtaining a bribe for the Executive Engineer by resorting to corrupt and illegal means or by otherwise abusing his position 'as a public servant. An appeal against the conviction was dismissed by the High Court. In appeal to this Court by special leave, the High Court 's findings on questions of fact were not challenged but it was contended that upon these findings the appellant could not be convicted of the charges because he was not a "public servant" within the language of section 5(2) of the Prevention of Corruption Act or section 21 at the Indian Penal Code. It was further contended that the appellant was performing only routine clerical duties and could not be treated as an 'officer ' within the meaning of section 21(12)I.P '.C. HELD: On the facts found the appellant was an officer in the service or pay of a Corporation as defined in section 21(12), I.P.C. and therefore a public servant ' within the meaning of that section and also of section 2 of the Prevention of Corruption Act. [691 D] The true test in order to determine whether the appellant was 'an officer ' of the Corporation within the meaning of section 21(12), Indian Penal Code, would be: (1) whether he was in the service or pay of the Corporation, and (2) whether he was himself either armed with some authority or representative character by the Corporation; or whether his duties were immediately auxiliary to those of some one who was armed with such authority or representative character. In the present case, the High Court found that the appellant was a person performing duties immediately auxiliary to those of the Executive Engineer who was the Head of the Office. The very designation "Head Clerk" denotes that there are other clerks attached to the office who occupy subordinate positions in relation to the Head Clerk and the duties of the Head Clerk from the nature of things are bound to be immediately auxiliary to the Head of the Office. [691 A] Reg. vs Ramaiirao Jivbaji, ; Nazamuddin vs Queen Empress, I.L.R. ; Emperor vs Karam Chand Gobind Ram,A.I.R. ; and G. 4. Monterio vs The State of Ajmer, A.I.R.1957 S.C. 13; referred to. 683 Held Also: The appellant cannot be deemed to be a public servant within the meaning of section 81 of the because he was not acting or purporting to act in pursuance of any of the provisions of that Act. On a plain reading of section 81 of the the officers and servants of the State Electricity Board are deemed to be public servants only when acting or purporting to act in pursuance of any of the provisions of that Act. So far as the receiving of a bribe is concerned, it cannot be brought within the scope of acting or purporting to act in pursuance of any of the provisions of the Act. Therefore the appellant while taking the bribe, cannot be deemed to be a public servant within the meaning of section 21, I.P.C. in view of the language of section 81 of the . [687 E] Gill vs The King. 75 I. A. 41; Hori Ram Singh vs The Crown, ; and State of Maharashtra vs Jagatsing Charansingh, ; ; referred to.

Criminal Appeal No. 145 A of 1954. 972 Appeal under Article 132(1) of the Constitution of India from the Judgment and Order dated July 23, 1954, of the Madras High Court in Criminal Miscellaneous Petition No. 922 of 1954. Porus A. Mehta and R. H. Dhebar, for the appellants. B. Pocker and B. K. B. Naidu, for the respondent. April 11. The Judgment of the Court was delivered by IMAM J. The appellant obtained a certificate from the Madras High Court to the effect that the case involved a substantial question of law as to the interpretation of the Constitution under article 132(1), in consequence of which the present appeal is before us. The respondent had filed a petition in the High Court under section 491 of the Code of Criminal Procedure praying that directions in the nature of habeas corpus may be issued for his production before That Court to be dealt with according to law and for his release from imprisonment. The respondent had been arrested on June 1, 1954 in pursuance of a warrant issued on March 10, 1954 by the Collector of Malabar under section 48 of the Madras Revenue Recovery Act (Madras Act 11 of 1864) (hereinafter referred to as the Act). The circumstances, as stated in the affidavits filed by the Collector and the Income Tax Officer of Kozikhode in the High Court, which led to the respondent 's arrest, were, that he had been assessed to income tax for various assessment years and the total amount of tax remaining outstanding against him, in round figures, was Rs. 70,000. Some amount was recovered by the Collector in pursuance of a certificate issued by the Income Tax Officer under section 46(2) of the Indian Income Tax Act and bY the Income Tax Officer himself under section 46(5)A of the said Act. After deducting the amount so realised the arrears of income tax were about Rs. 61,668 and odd for the assessment Years 1943 44, 1945 46 to 1948 49. Meanwhile the Income Tax Officer had made enquiries into the affairs of the respondent and had discovered that he had sold certain properties of his between November 18, 1947 and March 25, 1948 to 973 the tune of about Rs. 23,100. Demand notice had been served upon him on November 6, 1947 and the series of transactions of sale started on November 18, 1947. Out of the said sum of Rs. 23,100, the respondent paid arrears of tax to the extent of Rs. 10,500 only. Enquiries also revealed that although the respondent had closed his business at Cannanore in August, 1947, he had set up a firm in 1948 at Tellichery carrying on an identical business in the name of V.P. Abdul Azeez & Bros. consisting of his one major and four minor sons. The respondent had alleged that the capital of this firm was mainly supplied from the sale of jewels belonging to his wife, that is, Abdul Azeez 's mother. He denied that the above mentioned firm belonged to him. In the assessment proceedings before the Income Tax Officer concerning the firm V.P. Abdul Azeez & Bros., the source of these jewels was gone into, but it was found that the same had not been proved and it was held that the business of V.P. Abdul Azeez & Bros. belonged to the respondent. All these facts were communicated to the Collector by the Income Tax Officer who made independent enquiries for himself and had reason to believe that the respondent was wilfully withholding payment of arrears of tax and had been guilty of fraudulent conduct in evading payment of tax. As a certificate had already been issued to him by the Income Tax Officer under section 46(2) of the Indian Income Tax Act, the Collector proceeded under section 48 of the Act to issue a warrant of arrest against the respondent in consequence of which he was arrested and lodged in Central Jail, Cannanore. In the High Court, the petition under section 491, Criminal Procedure Code, was heard by Mack and Krishna. swamy Nayudu JJ. which was allowed and they ordered that the respondent be set at liberty as his arrest was illegal. Mack J. thought that section 48 of the Act was ultra vires the Constitution as it offended article 22. He did not deal at length with the argument that section 48 offended article 21 as he was of the opinion that if that section was ultra vires, then the respondent had not been arrested in accordance with procedure, established by 974 Saw and his arrest and imprisonment had been unlawful. On the other hand, if section 48 was intra vires the Constitution, then the respondent had been lawfully deprived if his personal liberty. He was further of the opinion that section 46(2) of the Indian Income Tax Act was ultra vires as it offended article 14 of the Constitution. Krishnaswami Nayudu J. was of the opinion that s.46(2) of the Indian Income Tax Act read with section 48 of the Act offended article 14 of the Constitution. He was of the opinion that section 48 of the Act offended article 21 of the Constitution to the extent that it afforded no opportunity to the arrested person to appear before the Collector by himself or through a legal practitioner of his choice and to urge before him any defence open to him and that it did not provide for the production of the arrested person within 24 hours before a magistrate as required by article 22(2). Relying upon the decision of this Court in A. K. Gopalan vs The State Of Madras (1), he was of the opinion that the contention that the provisions of article 21 had been infringed did not require serious consideration because in so far as there was a law on the statute book on which the Collector had acted that would be sufficient to support the legality of the action taken by the Collector. On behalf of the appellant, it was contended that neither section 48 of the Act nor section 46(2) of the Indian Income Tax Act was in violation of articles 14, 19, 21 and 22 of the Constitution. Section 46(2) of the Indian Income Tax Act was a valid piece of legislation and under its provisions the Collector was authorized to recover the arrears of income tax as land revenue on receipt of a certificate from the Income Tax Officer. On behalf of the respondent it was contended that these sections of the Act and the Indian Income Tax Act did offend articles 14, 19, 21 and 22 of the Constitution. It was further contended that on a proper interpretation of section 46(2) of the Indian Income Tax Act the authority given to the Collector on receipt of the certificate from the Income Tax Officer was to recover the amount of arrears of Income tax, but there was no authority thereunder in the Collector to arrest (1) ; 975 the defaulting assessee. Even if the said section could be interpreted to give the power of arrest, arrest could only be made under section 48 of the Act. A proper reading of section 48 of the Act would indicate that the defaulter should be given an opportunity to be heard in his defence, previous to a warrant of arrest being issued against him, as the same could only issue if the Collector had reason to believe that the defaulter was wilfully withholding the arrears of tax or had been guilty of fraudulent conduct in order to evade payment. Such a belief could not be entertained by the Collector without first giving the defaulter an opportunity to be heard. The warrant of arrest issued against the respondent without hearing him in his defence wag invalid and the arrest of the respondent was illegal. The learned Advocate for the respondent further drew our attention to the fact that in section 48 there was no provision for the release of the defaulter if he paid up the arrears of revenue. What we have to consider in this appeal, at the outset, is, whether either section 48 of the Act or section 46(2) of the Indian Income Tax Act or both offend articles 14, 19, 21 and 22 of the Constitution. The decisions of this Court in Gopalan 's case, in The State of Punjab vs Ajaib Singh (1) and in Purshottam Govindji Halai vs Shree B. B. Desai, Additional Collector of Bombay(2) are to be borne in mind in deciding this question. It was held by the majority of the learned Judges in Gopalan 's case that the right "to move freely throughout the territory of India " referred to in article 19 (1) (d) of the Constitution was but one of the many attributes included in the concept of the right to " personal liberty " and when a person is lawfully deprived of his personal liberty without offending article 21, he cannot claim to exercise any of the right$ guaranteed by sub cls. (a) to (e) and (g) of article 19 (1), for those rights can only be exercised by a freeman. In that sense, therefore, article 19 (1) (d) has to be read as controlled by the provisions of article 21, and the view that article 19 guarantees the substantive right and article 21 prescribes a procedural protection is incorrect. (1) ; (2) ; 976 The decision in Gopalan 's case has been followed in this Court in a series of cases and that decision must now be taken as having settled once for all that the personal rights guaranteed by sub cls. (a) to (e) and (g) Of article 19 (1) are in a way dependent on the provisions of article 21 just as the right guaranteed by sub cl. (f) of article 19 (1) is subject to article 31. If the property itself is taken; lawfully under article 31, the right to hold or dispose of it perishes with it and article 19 (1) (f) cannot be invoked. Likewise, if life or personal liberty is taken away lawfully under article 21 no question of the exercise of fundamental rights under article 19 (1) (a) to (e) and (g) can be raised. Under article 21 " Procedure established by law " means procedure enacted by a law made by the State, that is to say, the Union Parliament or the Legislatures of the States. In the appeal before us, the principal question, therefore, is whether the respondent was deprived of his personal liberty in accordance with a procedure established by law, i.e., a valid law. If the law is valid then he has been lawfully deprived of his personal liberty and, in that situation, he cannot complain of the infraction of any of the fundamental rights mentioned in article 19(1) (a) to (e) or (g). In Ajaib Singh 's case, a person was taken into custody by the police and sent to the Officer in charge of the nearest camp under section 4 of the Abducted Persons (Recovery and Restoration) Act (Act LXV of 1949) and it was submitted that the said Act contravened the provisions, inter alia, of article 22 of the Constitution. None of these submissions were found to be valid. It was held, so far as article 22 is concerned, that the taking into custody was not arrest and detention within the meaning of article 22. Krishnaswami Nayudu J. in his judgment, attempted to distinguish the decision. With respect to the learned Judge the principle emerging out of the decision in Ajaib Singh 's case appears to us to be clear enough. The decision did not attempt to lay down in a precise and meticulous manner the scope and ambit of the fundamental rights or to enumerate exhaustively the cases that come within the protection of article 22. What was 977 clearly laid down was that the physical restraint put upon an abducted person in the process of recovering and taking that person into custody without any allegation or accusation of any actual or suspected or apprehended commission by that person of any offence of a criminal or quasi criminal nature or of any act prejudicial to the State or the public interest, cannot be regarded as an arrest or detention within the meaning of article 22. In the present case, the arrest was not in connection with any allegation or accusation of any actual or suspected or apprehended commission of any offence of a criminal or quasi criminal nature. It was really an arrest for a civil debt in the process or the mode prescribed by law for recovery of arrears of land revenue. In Purshottam Govindji Halai 's case, this Court held that there was no violation of article 21 of the Constitution where a person had been arrested under section 13 of the Bombay Land Revenue Act 1876 in pursuance of a warrant of arrest issued for recovery of the demand certified under section 46(2) of the Indian Income Tax Act, which did not offend article 14 of the Constitution, inasmuch as such arrest was under a procedure established by law, that is to say, section 13 of the said Act constituted a procedure established by law. Mr. Pocker, however, attempted to distinguish the case, because this Court was dealing with section 13 of the Bombay Act. The grounds stated in that case for declaring that section 46(2) of the Indian Income Tax Act was not ultra vires the Constitution, as it did not offend article 14, are equally applicable to the present case and we can find no true principle upon which we can distinguish that case from the present one. In our opinion, having regard to the previous decisions of this Court referred to above, neither section 48 of the Act nor section 46(2) of the Indian Income Tax Act violates articles 14, 19, 21 and 22 of the Constitution. We now proceed to consider the interpretation sought to be put by Mr. Pocker on section 46(2) of the Indian Income Tax Act and section 48 of the Act. He contended that section 46(2) of the Indian Income Tax Act merely authorised the Collector to recover the amount 126 978 of arrears of Income Tax, but it did not give him any authority to arrest the respondent. He submitted that the act of arrest was not a mode of recovery of the arrears of tax, but it was a punishment for failure to pay. We are unable to accept this interpretation. The authority given to the Collector by this section is to recover the arrears of tax as if it were an arrear of land revenue. The preamble of the Act clearly states that the laws relating to the collection of the public revenue should be consolidated and simplified and section 5 provides for the manner in which the arrears of revenue may be recovered. It reads, " Whenever revenue may be in arrear, it shall be lawful for the Collector, or other officer empowered by the Collector in that behalf, to proceed to recover the arrear, together with interest and costs of process, by the sale of the defaulter 's movable and immovable property, or by execution against the person of the defaulter in manner hereinafter provided." This section clearly sets out the mode of recovery of arrears of revenue, that is to say, either by the sale of the movable or immovable property of the defaulter, or by execution against his person in the manner provided by the Act. Section 48 provides that when arrears of revenue cannot be liquidated by the sale of the property of the defaulter then the Collector, if he has reason to believe that the defaulter is wilfully withholding payment of the arrears or has been guilty of fraudulent conduct in order to evade payment of tax, can lawfully cause the arrest and imprisonment of the defaulter. This section read with section 5, makes it abundantly clear that the arrest of the defaulter is one of the modes, by which the arrears of revenue can be recovered, to be resorted to if the said arrears cannot be liquidated by the sale of the defaulter 's property. There is not a suggestion in the entire section that the arrest is by way of punishment for mere default. Before the Collector can proceed to arrest the defaulter, not merely must the condition be satisfied that the arrears cannot be liquidated by the sale of the property of the defaulter but the Collector shall have reason to believe that the defaulter is wilfully withholding payment, or has been guilty of fraudulent conduct in order to evade 979 payment. When dues in the shape of money are to be realised by the procees of law and not by voluntary payment, the element of coercion in varying degrees must necessarily be found at all stages in the mode of recovery of the money due. The coercive element, perhaps in its severest form, is the act of arrest in order to make the defaulter pay his dues. When the Collector has reason to believe that withholding of payment is wilful, or that the defaulter has been guilty of fraudulent conduct in order to evade payment, obviously, it is on the supposition that the defaulter can make the payment, but is wilfully withholding it, or is fraudulently evading payment. In the Act there are several sections (e.g. sections 16, 18 and 21) which prescribe, in unambiguous language, punishment to be inflicted for certain acts done. It is clear, therefore, that where the Act intends to impose a punishment or to create an offence, it employs a language entirely different to that to be found in section 48. We are of the opinion, therefore, that where an arrest is made under section 48 after complying with its pro visions, the arrest is not for any offence committed or a punishment for defaulting in any payment. The mode of arrest is no more than a mode for recovery of the amount due. There is nothing in section 48 of the Act which requires the Collector to give the defaulter an opportunity to be heard before arresting him. It is true that the Collector must have reason to believe that the defaulter is wilfully withholding payment or has been guilty of fraudulent conduct in order to evade payment. The Collector, therefore, must have some material upon which he bases his belief a belief which must be rational belief and a court may look into that material in appropriate cases in order to find out if the conditions laid down in the section have been fulfilled or not. From the affidavits filed in the High Court by the Collector and the Income Tax Officer it is quite clear that there was material upon which the Collector could base his belief that the respondent was wilfully withholding payment of the arrears of tax and had been guilty of fraudulent conduct in order to 980 evade payment. The Collector was, therefore, justified in arresting the respondent. As pointed out by Mr. Pocker, section 48 of the Act does not in terms provide for the release of the defaulter if he pays up the arrears, but it is to be remembered that in addition to the powers under section 48 of the Act, the Collector has, under the proviso to section 46(2) of the Indian Income Tax Act, similar powers to that which a Civil Court has for recovery of an amount due under a decree. It was held in Purshottam Govindji Halai 's case that the proviso is not an alternative remedy open to the Collector but only confers additional powers on the Collector for the better and more effective application of the only mode of recovery authorized by sub see. (2) of section 46 of the Indian Income Tax Act. Under section 58 of the Civil Procedure Code a Civil Court must release the judgment debtor if the amount due is paid. Accordingly, the Collector has the power to release the defaulter if the amount due is paid and there is no substance in the submission of the learned Advocate. Moreover, one of the conditions precedent to action under section 48 is the existence of arrears of revenue. On payment of the arrears, that condition no longer exists and the debtor must clearly be entitled to release and freedom from arrest. It was urged that the respondent was a man of about 70 years at the time of his arrest and a 'Person suffering from serious ill health. Indeed, it is said, he is suffering from paralysis and that he should not be sent back to jail custody. We cannot in the present proceedings make such an order. The respondent may, if he is taken into custody again, approach the Collector for his release who could do so, in the circumstances set out in section 59 of the Code of Civil Procedure, in the exercise of his powers under the proviso to section 46(2) of the Indian Income Tax Act. The appeal is accordingly allowed with costs and the judgment of the High Court is set aside. It will be open to the Income Tax Officer of Kozikhode and the Collector of Malabar to take such steps against the 'respondent according to law as they may be advised. Appeal allowed.

The Income Tax Officer forwarded a certificate under section 46(2) of the Indian Income Tax Act to the Collector for recovering the arrears of Income Tax from the assesses as if they were arrears of land revenue. The Collector proceeded under section 48, Madras Revenue 971 Recovery Act, and had the assessee arrested and confined in jail. Upon a petition for a writ of habeas corpus the High Court ordered the release of the assessee holding that section 48 of the Madras Revenue Recovery Act and section 46(2) Of the Indian Income Tax Act were ultra vires. The Collector appealed. Held, that section 48 Of the Madras Revenue Recovery Act, and section 46(2) of the Indian Income Tax Act were not ultra vires and neither of them violated articles 14,19, 21 and 22 of the Constitution. Where the personal liberty of a person is lawfully taken away under article 21, i.e., in accordance with a procedure established by a valid law, no question of the exercise of fundamental rights under article 19(1)(a) to (e) and (g) can be raised. A.K. Gopalan vs The State of Madras, ; , followed. An arrest for a civil debt in the process of or in the mode prescribed by law for recovery of arrears of land revenue does not come within the protection of article 22. State of Punjab vs Ajaib Singh ; , followed. Section 46(2) of the Indian Income Tax Act does not offend article 14 and there is no violation of article 21 where a person is arrested under section 48, Madras Revenue Recovery Act, in pursuance of a warrant of arrest issued for the recovery of the demand certified under section 46(2) of the Indian Income Tax Act. Purshottam Govindji Halai vs Shri B. M. Desai, Additional Collector of Bombay, ; , followed. Section 46(2) of the Indian Income Tax Act gives authority to the Collector to recover arrears of tax as if it were an arrear of land revenue. Section 48 of the Madras Revenue Recovery Act read with section 5 make it clear that the arrest of the defaulter is one of the modes by which the arrears of land revenue can be recovered, to be resorted to if the said arrears cannot be liquidated by the sale of the defaulter 's property. Such an arrest is not for any offence committed or a punishment for defaulting in any payment. Section 48 of the Madras Revenue Recovery Act does not require the Collector to give the defaulter an opportunity to be heard before arresting him. But the Collector must have reason to believe that the defaulter is wilfully withholding payment or has been guilty of fraudulent conduct in order to evade payment. Such belief must be based upon some material, which a Court may look into in appropriate cases, to find out if the conditions laid down in the section have been fulfilled. The Collector has also the power to release the defaulter if the amount due is paid.

DICTION: Civil Appeal Nos. 4522 4529 of 1985 etc. etc From the Judgment and order dated 16.8.1985 of the Karnataka High Court in W P. Nos t5536 40/1982 and W P. Nos. 13981, 17071, . 17072. 19118 and 19285/ 1983. G. Ramaswami. Additional Solicitor General, R J Babu, R.F Nariman, Ranjan Karanjawala, Mrs. M. Karanjawala and Ejaz Maqbool for the Appellant in C.A. Nos 4522 29/1985 Shanti Bhushan, Kapil Sibal, Soli J. Sorabjee, G.B. Pai, V.A 353 Bobde, K.P. Kumar, R. Vasudevan, K.T. Anantharaman, Harish N. Salve, H.K. Dutt, Ms. Mridula Ray, O.C. Mathur, Ms. Meera Mathur and Ms. Lekha Mathur for the Petitioners in W.P. Nos. 36, 37, 39 and 358 of 1986. T.S. Krishnamurthi Iyer, section Padmanabhan, Soli J. Sorabjee, R.P. Srivastava, P. Parmeshwaran, R. Mohan, Harish N. Salve, Ms. M. Ray and H.K. Dutt for the Intervener in C.A. Nos. 4522 29 of 1985. Dr. Y.S. Chitale, M.Veerappa, Ashok Kumar Sharma and Atul Chitale for the Respondents. The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J. These appeals by certificates are from the judgment and order of the High Court of Karnataka dated 16th of August, 1985. By the impugned judgment and order the writ petitions filed by the Coffee Board and others were dismissed. In order to appreciate the questions involved in the decision, it may be noted that the appellant herein Coffee Board contended that the compulsory delivery of coffee under the extinguishing all marketing rights of the growers was 'compulsory acquisition ' and not sale or purchase to attract levy of purchase tax; it was further contended that the appellant was only a 'trustee ' or 'agent ' of growers not exigible to purchase tax and that all export sales were 'in the course of export ' immune to tax under Article 286 of the Constitution. It was held by the Division Bench of the Karnataka High Court that an element of consensuality subsists even in compulsory sales governed by law and once there is an element of consensuality, however minimal that may be, whether express or implied, then that would be sale or purchase for purposes of and the same would be exigible to sales or purchase tax as the case may be under the relevant Sales Tax Law of the country. The power conferred on the Board under section 25(2) of the , to which we will make reference later, to reject coffee offered for delivery or even the right of a buyer analogous to section 3; ' of the showed that there was an element of consensuality in the compulsory sales regulated by the Act. The amount paid by the Board to the grower under the Act was the value or price of coffee in conformity with the detailed accounting done thereto under 354 the Act. It was further held by the High Court that the amount paid to the grower was neither compensation nor dividend. The payment of price to the grower was an important element to determine the consensuality test to find out whether there was sale under section 4(1) of the . The Act also ensures periodical payments of price to the growers. The Rules provide for advancing loans to growers. Therefore, according to the Division Bench of the Karnataka High Court without any shadow of doubt these elements indicated that in the compulsory sale of coffee, there was an element of consensuality. When once the Board was held to be a 'dealer ' it also followed from the same that there was sale by the grower, purchase by the Board and then a sale by the Board. The purchases and the exports if any made by the Board thereafter on any principle would not be 'local sales ' within the State of Karnataka. Explanation 3(2)(ii) to section 2(1) of the Karnataka Sales Tax Act had hardly any relevance to hold that the later export sales were 'local sales ' to avoid liability under section 6 of the Karnataka Sales Tax Act. The direct export sales made by the appellant for the period in challenge were not 'in the course of export ' and they did not qualify for exemption from purchase tax under section 6 of the Karnataka Sales Tax Act. The levy of sales tax on coffee, it was held by the High Court fell, under Entry No. 43 of the second schedule of the Act and it was governed by section 5(3)(a) of the Act and not by section 5(1) of the Act. It was further held that under section 5 of the purchases and exports made by the Coffee Board are 'for export ' and not 'in the course of export ' and thus did not qualify for exemption under Article 286 of the Constitution of India. It was observed by the High Court that the Board did not purchase or take delivery of any specific coffee or goods of any grower and exported the same under prior contracts of sale. The Board did not purchase any specific coffee of any specific grower for purposes of direct exports at all. The purchases made and exportes made would be 'for export ' only and not in 'in the course of export ' to earn exemption under Article 286 of the Constitution of India. It was further held that sections 11 and 12 of the Act which regulate the levy and payment of Customs and Excise Duties when closely examined really established according to the High Court that what was grown by the growers and delivered to the Board was not at all compulsory acquisition but was sale. If it was compulsory acquisition and there was payment of compensation, then these provisions would not have found their places in the at all, according to the High Court. Levy of Customs and Excise Duties on compensation was something unheard, an incongruity and an anachronism in compulsory acquisition,according to the High Court. 355 On an analysis of all the provisions of the Act in general and sections 17 and 25 in particular it was held by the High Court that on the true principles of compulsory acquisition or eminent domain, it was difficult to hold that on compulsory delivery by growers to the Board, there would be compulsory acquisition of coffee by the Board. In order to determine the questions at issue, that is to say the nature of the transaction one has to in a case of this nature telescope into the history and project it into the dimensions of the present levy. In November 1935 the Indian Coffee Cess Act, 1935 (Act 14 of 1935) came into operation, for levying cess on coffee produced in and exported out of India, for promoting the consumption in India and elsewhere of coffee produced in India and also for promoting agricultural and technological research in the interests of the coffee industry in India. The purpose seems to have been to develop the coffee industry, popularise the same and win a market in the international field. On 14th of September, 1940 Coffee Market Expansion ordinance (No. XIII of 1940) was promulgated by the Central Government and the Pool Marketing Scheme for coffee introduced in India for the first time. An 'internal sale quota ' was to be allotted to each coffee estate upto which the owner could sell his coffee in the Indian Market. Coffee in excess of the internal sale quota allotted and grown on the estates which were henceforth to be registered, were required to be compulsorily delivered to the surplus pool of the Coffee Market Expansion Board set up under the ordinance. The Pool Marketing Scheme was inspired by the pool marketing schemes for agricultural produce under Australian statutes. On or about 2nd March, 1942 the Coffee Market Expansion Act, 1942 (the title of the Act was later changed to in 1955) (hereinafter referred to as "the Act") was enacted and the ordinance repealed. The Act was to remain in operation for the duration of the second world war and a period of one year thereafter. The Act, inter alia, added a new sub section (6) to section 25 of the Act, specifically providing for extinguishment of all the rights of the owners of the registered coffee estates in the coffee delivered by them to the surplus pool of the Coffee Board (hereinafter referred to as 'the Board ') set up under the Act, except the right to receive payments referred to in section 34 of the Act. Under section 34 of the Act the Coffee Board was required to pay to the registered owners who had delivered coffee for inclusion in the surplus pool such payments out of the Pool Fund (comprising of the monies realised from the sale of coffee pooled with the Board) as the Board may think proper, the amount so paid being dependent upon the quantity and the kind of the coffee delivered to the Board 356 on or about 26th March, 1943 the Act was amended, inter alia, to enable the Coffee Board with the previous approval of the Central Government not to allow any internal sale quota to the growers. Since 1943 in each year the Board with the previous sanction of the Central Government has decided that no internal sale quota should be allowed. Sections 38A and 38B were added making failure to deliver coffee to the Board an offence to be penalised by fine and confiscation of the quantities not delivered. Power was also conferred on the Coffee Board to seize coffee required to be but not delivered to the Board. Ever since 1943, internal sale quotas have not been al1owed and all the coffee grown on estates in the areas to which Section 25(1) of the Act was applicable was required to be compulsorily pooled. The surplus pool referred to in the Act was now in fact the pool of practically all coffee produced in India, it is not necessary to refer to the actual quantities available in the internal pool in different years though a table to that effect was placed before us by the learned Additional Solicitor General, Sree G. Ramaswamy. On the 11th of March, 1947 the Coffee Market Expansion (Amendment) Act IV of 1947 was enacted. The life of the Act was extended without any time limit and, inter alia, changes were made in the constitution of the Board providing for representation of labour. On 1st August, 1955 the Coffee Market Expansion (Amendment) Act, 1954 was brought into force. The object of the was modified from 'the continuation of the provisions made under the Coffee Market Expansion ordinance, 1940 for assistance to the coffee industry by regulating the sale of coffee in India and by other means ' to "Development under the control of the union of the coffee industry". It was highlighted before us in the course of the submission that the pool system of marketing is a unique feature of the coffee industry in India. The principal features, according to the learned Additional Solicitor General, of this system are: (a) Compulsory registration of all lands planted with coffee (section 14 of the ). (b) Mandatory delivery of all coffee grown in the registered estates except the quantities permitted by the Board to be retained for domestic consumption and for seed purposes, (see section 25(1) of the ). Estates situated in remote areas specified in the notification issued by the Central Government under the proviso to section 25(1) of the are exempt from this provision. (c) Seizure by the Board of coffee wrongly withheld from the pool. Prosecution for failure to deliver and confiscation of quantity not delivered. (d) Delivery to be effected at such times and at such places as designated by the Board (section 25(2)); the extinguishment on delivery of all rights of the growers in respect of the coffee delivered to the Board excepting the right to receive payment under section 34 of 357 the Act. (section 25(6)). (e) Sale of coffee in the pool by the Board in the domestic market and for export through auctions and other channels in regulated quantities and at convenient intervals. (section 26(1)). (f) Payment to growers in such amounts and at such times as decided by the Board (section 34). The payment to be made on the basis of the value as determined by the price differential scale (section 24(4)), and in proportion to the value of such coffee to the total realisations in the pool (section 34(2)). (g) Sale or contracts to sell coffee by growers in the years in which internal sale quota was not allotted were prohibited by section 17 of the Act. All contracts for the sale of coffees at variance with the provisions of the Act were declared as void by section 47 of the Act. Learned Additional Solicitor General sought to urge before us that the framers of the Act made a conscious distinction between (i) mandatory delivery of coffee to the Coffee Board under section 25(1) and (ii) purchase of coffee by the Coffee Board from the growers exempted from mandatory delivery and from out of the internal sale quota during the years when such quotas were allotted under section 26(2) and (iii) sale of coffee by the growers in the Indian Market whenever internal sale quotas were allotted under sections 17 and 22. It was highlighted that the Board has no capital of its own and it did not have any Reserve Fund. The estates on which coffee is grown are not owned by the Board. The Board is required to maintain two separate funds one General Fund and the other Pool Fund. Our attention was drawn to the fact that the Pool Fund consists of amounts realised from the sale of coffee marketed by the Board. The accounts of the Pool Fund are required to be maintained separately for each coffee season. The coffee season is from July to June of the following year. The sales realisations, less the costs of storing, curing and marketing the coffee, are to be utilised for making payments to growers who had delivered coffee in that season, in proportion to the value of the coffee delivered by them. The value is determined with reference to the kind, quality and quantity of coffee delivered by the growers There are various other features which have to be borne in mind on the maintenance of the separate funds. It may be highlighted, however, that the General Fund consisted principally of the amounts paid to the Board by the Central Government from out of appropriations made by the Parliament annually. This fund was to be utilised for meeting the costs of administration, research, measures for the welfare of plantation labour, promotion of coffee consumption and developmental assistance to coffee estates. After the was enacted the production of coffee and the quantities exported and the value of the exports have increased greatly. 358 It may be mentioned that the production of coffee was less than 15,000 tonnes in 1940. The production in the year 1984 85 was about 1,93,000 tonnes. Over 50% of the coffee grown in the country is grown in the State of Karnataka. There are 1,12,153 coffee estates in the country of which 1,04,958 estates are less than l0 acres in size and 3,62,689 persons were employed on the estates in 1982 83. Over 59,000 tonnes of coffee of the value of about Rs.209 crores was ex ported in the year 1984 85. The Madras High Court in the case of Indian Coffee Board vs / State of Madras, S S.T.C. 292 held that the Coffee Board was a 'dealer ' under the Madras General Sales Tax Act, 1939 and inter alia, held that there was no contract, express or implied, between the coffee grower and the Board and that the object and scheme of the Act were analogous to the statutes in Australia, providing for compulsory acquisition of pool marketing of agricultural produce. So far as the Madras High Court held that the Indian Coffee Board was a dealer we accept the same. The observation that there was no contract was made in the context of agency contract between the Coffee Board and the grower. In or about 1957 Karnataka Sales Tax Act, 1957 was enacted and the Mysore Sales Tax Act, 1948 repealed. 'Sale ' is defined in section 2(t) and 'dealer ' in section 2(k) of the said Act. Growers of agricultural produce are not 'dealers ' by reason of the Exception to section 2(k) of the said Act. This position was not disputed before us. Section S of the Act provides for levy of sales tax. Coffee is mentioned at item 43 in Schedule II to the Karnataka Sales Tax Act. Sales tax on coffee is a single point tax payable on the first sale in the State. The basic rate of tax is l0% in Karnataka. The rate in Tamil Nadu, Andhra Pradesh and Kerala is 6%. The question involved in these appeals and the writ petitions is the exigibility of tax on sale if there be any, by the growers of the coffee to the Board. Basically, it must depend upon what is sale in the general context as also in the context of the relevant provisions of the Act namely, the Karnataka Sales Tax Act, 1957, as amended from time to time, (hereinafter called the Karnataka Act) and the Central , (hereinafter called the Central Act). We must, however, examine these in the context of general law, namely, the and the concept of sale in general. The essential object of the contract of sale is the exchange of property for a money price. There must be a transfer of property, or an agreement to transfer it, from one party, the seller, to the other, the buyer, in 359 consideration of a money payment or a promise thereof by the buyer. Lord Denning, M.R., in C.E.B. Draper & Sons Ltd. vs Edward Turner & Son Ltd., , at page 432, observed as follows: "I know that often times a contract for sale is spoken of as a sale. But the word 'sale ' properly connotes the transfer of the absolute or general property in a thing for a price in money (see: Benjamin on sale, 2nd ed. (1873) p. 1 quoted in Kirkness vs John Hudson & Co., , 708, 719. In this Act of 1926 I think that 'sale ' is used in its proper sense to denote the transfer of property in the goods. The sale takes place at the time when the property passes from the seller to the buyer and it takes place at the place where the goods are at that time. Lord Denning was speaking for the English Act of 1926 for the sale of Goods Act. D In the , (hereinafter called the ' ') Contract of sale of goods is defined under section 4(1) as a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price. It also stipulates by sub section (4) of section 4 that an agreement to sell becomes a sale when the time elapses or the conditions are fulfilled subject to which the property in the goods is to be transferred. Benjamin 's Sale of Goods (2nd Edition) states that leaving aside the battle of forms, sale is a transfer of property in the goods by one, the seller, to the other, the buyer. F Under the Karnataka Sales Tax Act, sale is defined under section 2(t) as: "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 case or for deferred payment or other valuable consideration, but does not include a mortgage, hypothecation, charge or pledge. " The Central Act defines "sale" as under in section 2(g): 360 "Sale" with its grammatical variations and cognate expressions, means any transfer of property in goods by one person to another for case or for deferred payment or for any other valuable consideration, and includes a transfer of goods on the hire purchase or other system of payment by instalments, but does not include a mortgage or hypothecation of or a charge or pledge on goods." Coffee Board is a 'dealer ' duly registered as such under the Sales Tax Acts of all the States in which it holds auctions/maintains depots/ runs coffee houses. The Board is also registered as a 'dealer ' under the . The Board collects and remits sales tax on all the coffee sold by it for domestic consumption to the State in which the sale takes place. Coffee is sold through auctions held in the States of Karnataka, Tamil Nadu and Andhra Pradesh, and also through the Board 's own depots located in nine States. Sale is also effected by way of allotments to cooperative societies. The Board directly exports coffee and also sells coffee to registered exporters through separate export auctions. It may be mentioned that over fifty per cent of the coffee is produced in Karnataka and most of the Robusta variety of coffee is produced in Kerala. All the coffee produced in these States cannot be sold within the State where the coffee is produced. Coffee meant for export has also to be stored at convenient places. The Board, therefore, transfers coffee from one State to another. Sales tax is not payable or paid on the transfer of such coffee. In order to appreciate the actual controversy and the point at issue in the instant case, it is vital to appreciate the real nature of the transaction. In 1966 this Court in the case of State of Kerala vs Bhavani Tea Produce Co.; , , (an unanimous decision of a Bench of five learned judges) which arose under the Madras Plantations Agricultural Income Tax Act, 1955, held that when growers delivered coffee under section 25 of the Act to the Board all their rights therein were extinguished and the coffee vested exclusively in the Board. This Court observed that when growers delivered coffee to the Board, though the grower "does not actually sell" the coffee to the Board, there was a 'sale ' by operation of law. This was in connection with section 25 of the Act. The Court, however, did not hold that there was a taxable 'sale ' by the grower to the Board in the year in question. The sale, according to this Court in that case took place in earlier years in which the Agricultural Income Tax Act did not operate. All the States in which coffee is grown and all the persons concerned with the coffee industry, it is asserted on behalf of the Additional Solicitor General, NIRANJAN 361 understood this decision as laying down that the 'sale by operation of law ' mentioned therein only meant the 'compulsory acquisition ' of the coffee by the Coffee Board. We are, however, bound by the clear ratio of this decision. The Court considered this question "was there a sale to the Coffee Board?" at page 99 of the Paper Book and after discussing clearly said the answer must be in the affirmative. It was rightly argued, in our opinion, by Dr. Chitale on behalf of the respondents that the question whether there was sale or not or whether the Coffee Board was a trustee or an agent could not have been determined by this Court, as it was done in this case unless the question was specifically raised and determined. We cannot also by pass this decision by the argument of the learned Additional Solicitor General that section 10 of the Act had not been considered or how it was understood by some. This decision in our opinion concludes all the issues in the instant appeal. In 1970 purchase tax was introduced. The Karnataka Sales Tax Act was amended by Karnataka Act 9 of 1970 and section 6 was substituted. The new section 6 provided for the levy of purchase tax on every dealer who in the course of his business purchased any taxable goods in circumstances in which no tax under section 5 was leviable and, inter alia, despatched these to a place outside the State, at the same rate at which tax would have been leviable on the sale price of such goods under section 5 of the Karnataka Act. The delivery of coffee by the coffee growers to the Coffee Board not being treated a purchase by the Board, the State did not demand any tax from the Board in respect of such deliveries. Demands were raised for the first time in 1983. Assessments for the years upto 1975 were completed without any demand for purchase tax being raised. This Court on or about 15th of April, 1980 in the case of Consolidated Coffee Ltd. and Anr. vs Coffee Board, Bangalore etc. ; , held that sale of coffee at export auctions were sales which preceded the actual export and thus exempt from sales tax under section 5(3) of the . The Court also directed the State Governments to refund the amounts collected as sales tax on such sales and set a time limit for effecting such refunds. The Karnataka Government, as a consequence, became liable to refund to the Coffee Board about Rs.7 crores which amount in turn was to be refunded by the Board of Directors to the exporters. In 1981 the Commissioner of Sales Tax, Karnataka informed the Board by a letter that the mandatory delivery of coffee to the Board by the grower would be 362 regarded as 'sale ' and that the Board should pay purchase tax as the coffee growers, being agriculturists are not 'dealers '. It is the case of the Coffee Board that no such claim had been made at any time in the past in any of the States in India. The Commissioner issued a show cause notice proposing to re open the assessment for the year 1974 75. In June 1982 pre assessment notice was sent by the authorities proposing to assess the Board to purchase tax for the assessment year 1975 76 and a sum of Rs.3.5 crores was demanded as purchase tax on the coffee transferred from Karnataka to outside the State either as stock transfers or as exports directly to buyers abroad. In August 1982 Coffee Board along with two coffee growers filed writ petitions being writ petition Nos. 15536 to 15540 of 1982 in the High Court of Karnataka praying for a declaration that the mandatory delivery of coffee under section 25(i) of the Act was not sale and that section 2(t) of the Karnataka Sales Tax Act required to be struck down if the same encompassed compulsory acquisition also. The show cause notice and the preassessment notice were also challenged and prayers were made for quashing the same. The High Court granted interim stay. In the meantime on or about 3rd of February, 1983 Constitution (46th Amendment) Act, 1983 came into force and the definition of "Tax on sale or purchase of goods" was added by insertion of clause 29A in Article 366. This definition is prospective in operation. Subsequent to 3rd of February, 1983, the Karnataka Sales Tax Act was amended by Act 10 of and Act 8/1984. The definition of 'sale ' in section 2(t), however, was not amended. That definition was amended with effect from 1st of August, 1985 by the Karnataka Act 27 of 1985. After hearing the State Government, the High Court made absolute the stay of further proceedings pursuant to the show cause notice of the Commissioner proposing to re open the assessment for the year 1974 75. The Court modified the stay order regarding the pre assessment notice and permitted the completion of assessment reserving liberty to the Coffee Board to move the High Court after the assessment was completed. On 31st of May, 1983 assessment order was made for the year 1975 76. On or about 17th of June, 1983 demand for Rs.3.5 crores as arrears of tax for the assessment year 1975 76 was issued to the Coffee Board. On 2nd July, 1983, the High Court stayed the assessment demand for purchase tax for the assessment year 1975 76. On or about 18th of June, 1983 the assessment order was issued for the year 1976 77. The Board was assessed on a taxable turnover of Rs.92.99 crores and Rs. 10.18 crores was assessed as tax. Of this sum, Rs.8.06 crores is the demand on account of purchase tax. Thereafter notice demanding payment of Rs.8.06 crores a 363 arrears of tax for the assessment year 1976 77 was issued. The Coffee Board filed a writ petition in August, 1983 being Writ Petition No. 13981 of 1983 challenging the assessment and the demand for the purchase tax for the assessment year 1976 77. Rule was issued and the assessment as also demand for purchase tax was stayed . In the meantime, notice of demand for Rs.8.08 crores as arrears of tax for the assessment year 1977 78 was issued. In September, 1983 Writ Petition No. 17071 of 1983 was filed by the Coffee Board for the assessment year 1977 78. Rule was issued. Assessment and demand for purchase tax was stayed. Similarly, Writ Petition No. 17072 of 1983 was filed by the Coffee Board regarding assessment year 1978 79. Rule was issued. Assessment and demand for purchase tax was stayed. In the meantime in October, 1983, there was another Writ Petition No. 19285 of 1983 filed challenging the demand for the purchase tax for the year 1979 80. Rule was issued. Assessment and demand was stayed. Writ Petition No . 19118 of 1983 was filed challenging the demand of purchase tax for the year 1980 81. Rule was issued. Assessment and demand for purchase tax was stayed. All these writ petitions in January, 1984 were referred to the Division Bench for hearing and disposal. It may be mentioned here that in or about May, 1984 the Coffee Board started for the first time to collect contingency deposits to cover purchase tax liability, if any, for the period 3.2.83 onwards subsequent to the 46th Amendment to a limited extent. This was by a circular. It is stated that the Board withheld about Rs.6.8 crores from the pool payment to growers for the season 1982 83 for meeting in part the liability, if any, for the purchase tax for the period subsequent to 3.2.1983. The Court however, in 1985 directed the appellant Coffee Board to remit to the State Government Rs.6.8 crores. The High Court also directed the Board to remit to the State Government Rs.1.5 crores collected by the Board as contingency deposits between May and December, 1984. The State Government undertook to return these monies with interest, in the event of the writ petitions being allowed. By the judgment delivered on 16th August, 1985, the High Court dismissed the writ petitions by a common judgment and various sums of money for the various years became payable as purchase tax. The said judgment is reported in Indian Law Reports, Karnataka, Vol. 36 at page 1365. These appeals challenge the said decision. In view of the decision of the High Court several questions were canvassed in these appeals. The questions were (1) Was there transfer of coffee to the Board from the coffee growers or acquisition? (ii) Was 364 there any element of sale involved? (iii) Was the Coffee Board trustee or agent for the coffee growers for sale to the export market, and (iv) if it is sale, is it in the course of export of the goods to the territory outside India? The first and the basic question that requires to be considered in these appeals is whether the acquisition of coffee by the Board is compulsory acquisition or is it purchase or sale? As mentioned all the questions were answered by this Court in Bhavani Tea Produce Co 's case (supra) against the appellant. We were, however, invited to compare the transaction in question with transactions in Peanuts Board vs The Rockhampton Harbour Board, 48 Commonwealth Law Reports 266). Was there any mutuality? In this connection it is necessary to analyse and compare the decision of this Court in Vishnu Agencies (Pvt.) Ltd. etc. vs Commercial Tax officer and others etc. , [1978] 2 S.C.R. 433 and to what extent the principles enunciated in the said decision affect the position. In order to address ourselves to the problem posed before this Court, we must bear in mind the history and the provisions of the Coffee Market Expansion Act, 1942, under which the Board was constituted, which we have already noted. The control of marketing of farm produce for the economic benefit of the producers and to bring about collective marketing of the produce is a recognised feature of Governments of several countries, particularly, United States of America, Britain and Australia. The object was to prevent unhealthy competition between the producers, to secure the best price for the produce in the local market, to conserve for local consumption as much produce as was needed and to make available the surplus for export outside the States and also to foreign markets. The method usually adopted to achieve the object is to establish a marketing board with power to control the price, to obtain possession of the produce and to pool it with a view to collective marketing. The legislation in this behalf is compendiously described as "pooling legislation" and is based on the fundamental idea that the collectivist economy is superior to individualistic economy. There are therefore, different marketing boards for different kinds of produce, such as sugar, dairy produce, wheat, lime fruit, apples, pears and so on. The Indian Coffee Market Expansion Act was modelled somewhat on the lines which obtained in other countries and was intended to control the development of the coffee industry and to regulate the export and sale of coffee. If, however, the transaction amounts to sale or purchase under the relevant Act then that is the end of the matter. All parties drew our attention to the decision in the case of Vishnu Agencies Pvt. Ltd. (supra). There the Court was concerned 365 with the Cement Control order and the transactions taking place under the provisions of that control order. The Cement Control order was promulgated under the West Bengal Cement Control Act, 1948 which prohibited storage for sale and sale by a seller and purchase by a consumer of cement except in accordance with the conditions specified in the licence issued by a designated officer. It also provided that no person should sell cement at a higher price than the notified price and no person to whom a written order had been issued shall refuse to sell cement "at a price not exceeding the notified price". Any contravention of the order became punishable with imprisonment or fine or both. Under the A.P. Procurement (Levy and Restriction on Sale) order, 1967, (Civil Appeals Nos. 2488 to 2497 of 1972) every miller carrying on rice milling operation was required to sell to the agent or an officer duly authorised by the Government, minimum quantities of rice fixed by the Government at the notified price, and no miller or other person who gets his paddy milled in any rice mill can move or otherwise dispose of the rice recovered by milling at such rice mill except in accordance with the directions of the Collector. Breach of these provisions became punishable. It was held dismissing the appeals that sale of cement in the former case by the allottees to the permitholders and the transactions between the growers and procuring agents as well as those between the rice millers on the one hand and the wholesalers or retailers on the other, in the latter case, were sales exigible to sales tax in the respective States. It was observed by Beg, C.J. that the transaction in those cases were sales and were exigible to tax on the ratio of Indian Steel and Wire Products Ltd., Andhra Sugar Ltd., and Karam Chand Thapar, ; In cases like New India Sugar Mills, the substance of the concept of a sale itself disappeared because the transaction was nothing more than the execution of an order. The Chief Justice emphasised that deprivation of property for a compensation called price did not amount to a sale when all that was done was to carry out an order so that the transaction was substantially a compulsory acquisition. On the other hand, a merely regulatory law, even if it circumscribed the area of free choice, did not take away the basic character or core of sale from the transaction. Such a law which governs a class obliges a seller to deal only with parties holding licences who may buy particular or allotted quantities of goods at specified prices, but an essential element of choice was still left to the parties between whom agreements took place. The agreement, despite considerable compulsive elements regulating or restricting the area of his choice, might still retain the basic character of a transaction of sale. In the former type of cases, the binding character of the transaction arose from the order directed to particular parties asking them 366 to deliver specified goods and not from a general order or law applicable to a class. In the latter type of cases, the legal tie which binds the parties to perform their obligations remains contractual. The regulatory law merely adds other obligations, such as the one to enter into such a tie between the parties. Although the regulatory law might specify the terms, such as price, the regulation is subsidiary to the essential character of the transaction which is consensual and contractual. The parties to the contract must agree upon the same thing in the same sense. Agreement on mutuality of consideration, ordinarily arising from an offer and acceptance, imports to it enforceability in courts of law. Mere regulation or restriction of the field of choice does not take away the contractual or essentially consensual binding core or character of the transaction. Analysing the Act, it was observed that according to the definition of "sale" in the two Acts the transactions between the appellants in that case and the allottees or nominees, as the case may be, were patently sales because in one case the property in the cement and in the other property in the paddy and rice was transferred for cash consideration by the appellants. When the essential goods are in short supply, various types of orders are issued under the with a view to making the goods available to the consumer at a fair price. Such orders sometimes provide that a person in need of an essential commodity like cement, cotton, coal or iron and steel must apply to the prescribed authority for a permit for obtaining the commodity. Those wanting to engage in the business of supplying the commodity are also required to possess a dealer 's licence. The permit holder can obtain the supply of goods, to the extent of the quantity specified in the permit and from the named dealer only and at a controlled price. The dealer who is asked to supply the stated quantity to the particular permit holder has no option but to supply the stated quantity of goods at the controlled price. Then the decisions in State of Madras vs Gannon Dunkerley & Co. Ltd., ; and New India Sugar Mills vs Commissioner of Sales Tax, Bihar, [1963] Suppl. 2 S.C.R.459 were discussed and the correctness of the view taken in the former case was doubted and the majority opinion in the latter case was overruled. It was submitted by the learned Additional Solicitor General that these cases, namely, Bhavani Tea Estate (supra) and Vishnu Agencies (supra) would have no application within the set up of the because the provisions of the statute expressly provided that there could be no sale or contract of sale, yet the High Court had for purposes of Sales Tax assumed (notwithstanding the statutory prohibi 367 tion) that the transaction contemplated by the statute in the present case, the mandatory delivery, would be a sale. It was submitted that where a statute prohibited a registered owner from selling or contracting to sell coffee from any registered estate, there could be no implication of any purchase on the part of the Coffee Board of the coffee delivered pursuant to the mandatory provisions of section 25(1) of the Act. It was urged that section 17 of the read with sections 25 and 47 enacts what since 1944 is a total prohibition against the sale of coffee by growers and corresponding purchase of coffee from growers. In view of section 17 read with section 25, purchase by the Coffee Board of coffee delivered under section 25(1) was also impliedly prohibited. It is in view of this express prohibition of sale and corresponding implied prohibition of purchase that the Act provided the only method of disposal of coffee, viz., by the delivery of all coffee to the Coffee Board with no rights attached on such delivery, save and except the statutory right under section 34. It was also argued that the Legislature has made a conscious difference between acquisition of coffee by compulsory delivery by the growers under Section 25(1) of the Act and purchase of coffee by the Board under Section 26(2) and, as such, compulsory delivery of coffee under Section 25(1) cannot constitute a sale transaction as known to law between the growers and the Coffee Board. We are, however, unable to accept the submissions of the learned Additional Solicitor General. All the four essential elements of sale (1) parties competent to contract, (2) mutual consent though minimal, by growing coffee under the conditions imposed by the Act, (3) transfer of property in the goods and (4) payment of price though deferred, are present in the transaction in question. As regards the provisions under Section 26(2) empowering the Coffee Board to purchase additional coffee not delivered for inclusion in the surplus pool, it is only a supplementary provision enabling the Coffee Board to have a second avenue of purchase, the first avenue being the right to purchase coffee under the compulsory delivery system formulated under Section 25(1) of the Act. The scheme of the Act is to provide for a single channel for sale of coffee grown in the registered estates. Hence, the Act directs the entire coffee produced except the quantity allotted for internal sale quota, if any, to be sold to the Coffee Board through the modality of compulsory delivery and imposes a corresponding obligation on the Coffee Board to compulsorily purchase the coffee delivered to the pool, except: (1) where the coffee delivered is found to be unfit for human 368 consumption; and (2) where the coffee estate is situated in a far off and remote place or the coffee grown in an estate is so negligible as to make the sale of coffee through compulsory delivery an arduous task and an uneconomical provision. Since all persons including the Coffee Board are prohibited from purchasing/selling coffee in law, there could be no sale or purchase to attract the imposition of sales/purchase tax it was urged. Even if there was compulsion there would be a sale as was the position in Vishnu Agencies (supra). This Court therein approved the minority opinion of Hidayatullah, J. in New India Sugar Mills vs Commissioner of Sales Tax (supra). In the nature of the transactions contemplated under the Act mutual assent either express or implied is not totally absent in this case in the transactions under the Act. Coffee growers have a volition or option, though minimal or nominal to enter into the coffee growing trade. Coffee growing was not compulsory. If any one decides to grow coffee or continue to grow coffee, he must transact in terms of the regulation imposed for the benefit of the coffee growing industry. Section 25 of the Act provides the Board with the right to reject coffee if it is not upto the standard. Value to be paid as contemplated by the Act is the price of the Coffee. Fixation of price is regulation but is a matter of dealing between the parties. There is no time fixed for delivery of coffee either to the Board or the curer. These indicate consensuality which is not totally absent in the transaction. It was urged that regard having been to the sovereign nature of the power exercised by the Coffee Board and the scheme of the , the ratio of Vishnu Agencies (supra) will not apply to the acquisition of coffee under section 25(1) by the . It is in this connection appropriate to refer to the question of compulsory acquisition and this naturally leads to the problem of exercising eminent domain by the State. It is trite knowledge that eminent domain is an essential attribute of sovereignty of every state and authorities are universal in support of the definition of eminent domain as the power of the sovereign to take property for public use without the owner 's consent upon making just compensation. Nichols on Eminent Domain (1950 Edition) a classic authority on the subject, defines 'eminent domain ' as 'the power of the sovereign to take property for public use without the owner 's consent '; see para 1.11 page 2 of Vol. 1 which elaborates the same in these words: 369 ". This definition expresses the meaning of the power in its irreducible terms: (a) Power to take, (b) Without the owner 's consent, (c) For the public use. All else that may be found in the numerous definitions which have received judicial recognition is merely by way of limitation or qualification of the power. As a matter of pure logic it might be argued that inclusion of the term 'for the public use ' is also by way of limitation. In this connection, however, it should be pointed out that from the very beginning of the exercise of the power the concept of the 'Public use ' has been so inextricably related to a proper exercise of the power that such element must be considered as essential in any statement of its meaning. The 'public use ' element is set forth in some definitions as the 'general welfare ', the 'welfare of the public ', the 'public good ', the 'public benefit ' or 'public utility or necessity '. It must be admitted, despite the logical accuracy of the foregoing definition and despite the fact that the payment of compensation is not an essential element of the meaning of eminent domain, that it is an essential element of the valid exercise of such power. Courts have defined eminent domain so as to include this universal limitation as an essential constituent of its meaning. It is much too late in the historical development of this principle to find fault with such judicial utterances. The relationship between the individual 's right to compensation and the sovereign 's power to condemn is discussed in Thayer 's cases on Constitutional Law. But while this obligation (to make compensation) is thus well established and clear let it be particularly noticed upon what ground it stands, viz., upon the natural rights of the individual. On the other hand, the right of the State to take springs from a different source, viz, a necessity of government. These two, therefore, have not the same origin; they do not come, for instance, from any implied contract between the state and the individual, that the former shall have the property, if it will make compensation; the right is no mere right of pre emption, and it has no condition of compensation annexed to it, either precedent or subsequent. But, there is a right to take, and 370 attach to it as an incident, an obligation to make compensation; this latter, morally speaking, follows the other, indeed like a shadow, but it is yet distinct from it, and flows from another source. " It is concluded thus: "Accordingly, it is now generally considered that the power of eminent domain is not a property right, or an exercise by the state of an ultimate ownership in the soil, but that it is based upon the sovereignty of the state. As the sovereign power of the state is broad enough to cover the enactment of any law affecting persons or property within its jurisdiction which is not prohibited by some clause of the Constitution of the United States, and as the taking of property within the jurisdiction of a state for the public use upon payment of compensation is not prohibited by the constitution of the United States, it necessarily follows that it is within the sovereign power of a state, and it needs no additional justification. " Cooley in his treatise on the Constitutional Limitations Chapter XV expressed the same view at page 524 of the book in these words: ". More accurately, it is the rightful authority which must rest in every sovereignty to control and regulate those rights of a public nature which pertain to its citizens in common and to appropriate and control individual property for the public benefit, as the public safety, convenience or necessity may demand." In Charanjit Lal Chowdhury vs The Union of India and others; , , Mukherjea, J. as the learned Chief Justice then was, while examining the scope and ambit of Article 31 of the Constitution observed as follows: "It is a right inherent in every sovereign to take and appropriate private property belonging to individual citizens for public use. This right, which is described as eminent domain in American law, is like the power of taxation, and offspring of political necessity, and it is supposed to be based upon an implied reservation by Government that private property acquired by its citizens under its pro 371 tection may be taken or its use controlled for public benefit irrespective of the wishes of the owner. " This Court in the State of Karnataka and another etc. vs Ranganatha Reddy and another etc. ; , held that the power of acquisition could be exercised both in respect of immovable and movable properties. While conceding the power of acquisition of coffee in exercise of eminent domain, the scheme contemplated under the Act was not an exercise of eminent domain power. The Act was to regulate the development of coffee industry in the country. The object was not to acquire coffee grown and vest the same in the Board. The Board is only an instrument to implement the Act. The High Court in its judgment has rightly observed that the Board has been chosen as the instrumentality for the administration of the Act. The role of the Board of this type has been noted in three Australian decisions which must be taken note of. It is appropriate at this stage to refer to the decision of the Australian High Court, in Peanuts Board vs The Rockhampton Harbour Board, (supra). The question posed before the High Court was in relation to Section 92 of the Constitution Act of Commonwealth of Australia and the decision is instructive, though not in point. Rich, J. Observed at pages 275 to 277 of the report as follows: "It therefore remains only to consider whether the operative instruments affecting to deal with peanuts do or do not interfere with the freedom of inter State trade. This should be done weighing compulsory acquisition as a matter perhaps characterizing the enactments, but not of necessity determining their effect. The feature which at once challenges attention is that these instruments provide a means of marketing. They are concerned with establishing a compulsory pool through which growers producing peanuts for sale must dispose of their product for distribution and receive their reward. The pith and substance of the enactments is the establishment of collective sale and distribution of the proceeds of the total crop and the concomitant abolition of the grower 's freedom to dispose of his product voluntarily in the course of trade and commerce, whether foreign, inter State of intra State. Section 15 of the Act of 1926 provides that "all the commodity" shall be 372 delivered by the growers to the marketing board, and that "all the commodity" so delivered shall be deemed to have been delivered to the board for sale by the board, "who shall account to the growers thereof for the proceeds thereof after making all lawful deductions therefrom for expenses and outgoings and deductions of all kinds in consequence of such delivery and sale or otherwise under these Acts" (sec. 15(1), (2), as modified by the order in Council). Sub section 3 of section 15 penalizes the sale or delivery of any of the "commodity" to, or the purchase or the receipt of any of the "commodity" from, any person except the board. These provisions operate even although the Governor in Council does not resort to compulsory acquisition. It was said by Mr. Mitchell that the provisions authorizing the borrowing of money constituted the chief purpose of the compulsory acquisition. If this means that the control of the marketing of peanuts is a subordinate or consequential purpose of the instruments, I cannot agree. The ability to borrow upon the whole crop may afford an advantage, if not an incentive, in the concentration of the "commodity" in the hands of one marketing authority. But the weight attached to supposed advantages arising from the policy adopted in these enactments is not material. What is material is whether the scope and object of the enactments as gathered from their contents are to deal with trade and commerce including inter State trade and commerce. In examining this question one cannot fail to observe that compulsory acquisition is resorted to as a measure towards ensuring that the whole crop grown in Queensland is available for collective marketing by the central authority. The case is not one in which a State seeks to acquire the total production of something it requires for itself and its citizens. It is interposing in the course of trade in the "commodity" an organization established for the purpose of carrying out one of the functions of trade. In my opinion the enactment controls directly the commercial dealing in Peanuts by the grower and aims at, and would, apart from section 92 accomplish, the complete destruction of his freedom of commercial disposition of his product. Part of this freedom is guaranteed by section 92. Accordingly the Primary Producers ' organization and Marketing Act 1926 30 and the order in Council thereunder are ineffectual to prevent the grower of peanuts from disposing 373 of them in inter State trade and commerce and the appellant Board had no title to the peanuts the subject matter of this action. " In Milk Board (New South Wales) vs Metropolitan Cream Pty. Ltd., ; , Chief Justice Latham at page 131 of the report observed as follows: R "It is true that the decision in the Peanut Board Case ; was approved in James vs The Commonwealth, ; , but it is important to consider carefully the precise words in which this approval was expressed. They were as follows: "The producers of the peanuts, it was held, were prevented by the Act from engaging in inter State and other trade in the commodity. The Act embodied, so the majority of the court held, a compulsory marketing scheme, entirely restrictive of any freedom of action on the part of the producers; it involved a compulsory regulation and control of all trade, domestic, inter State and foreign; on the basis of that view, the principles laid down by this board were applied by the Court" Justice McTiernan observed at page 158 of the report as follows: "It is clear that the Milk Act does not profess to expropriate in order to hinder or burden the passing of milk, and the other products which the word 'milk ' is expressed to include, from other States; and there is no ground for the contention that any such burden or hindrance is imposed under the disguise of expropriation. The Act replaces an individualist economy by a collectivist one for the distribution of milk within the area containing the most densely populated part of the State; and all that can be presumed is that the substitution was deemed by the legislature to be an expedient one for reasons only of health, hygiene, efficiency and the economic benefit of farmers in the milk producing districts. I agree, therefore, that the operation of section 26 is not inconsistent with section 92 of the Constitution. " The aforesaid observations are most apposite. In the light aforesaid along with the provisions of section 17 and section 25 of the 374 Act, it cannot be said in the Act, there is any compulsory acquisition. We accept the submission of the learned Additional Solicitor General that it is not necessary that every member of the public should benefit from property that is compulsorily acquired. But in essence the scheme envisaged in sale and not compulsory acquisition. It has also to be borne in mind that the term 'sale ' and 'purchase ' have been used in some of the provisions and that is indicative that no compulsory acquisition was intended. Section 34 of the Act reads as follows: " 34(1) The Board shall at such times as it thinks fit make to registered owners who have delivered coffee for inclusion in the surplus pool such payments out of the Pool funds as it may think proper. (2) The sum of all payments made under sub section ( 1) to any one registered owner shall bear to the sum of the payments made to all registered owners the same proportion as the value of coffee delivered by him out of the year 's crop to the surplus pool bears to the value of all coffee delivered to the surplus pool out of that year 's crop. " The High Court has referred to the provisions of section 34(2) of the Act and observed that the said provisions ensure periodical payments of price to the growers. The Rules provide for advancing loans to the growers. Without a shadow of doubt these elements indicate, according to the High Court, that in the compulsory sale of coffee, there was an element of consensuality. We are in agreement that there is consensuality in the scheme of the section. The High Court has referred to section 25(2) of the and observed that the power conferred by section 25(2) of the must be read subject to the very requirement of that and all other provisions of the Act. When a grower sells coffee that has become totally unfit for human consumption for one or the other valid reason, such a grower cannot compel the Board to purchase such coffee on the ground that it was coffee and thus endanger public safety and also pay its value or price. In the very nature of things, these things cannot be foreseen or enumerated exhaustively. The High Court was of the view that if a grower delivered coffee to the Board, the extinguished his title and absolutely vested the same in the Board, however, preserving 375 his right for payment of its value or its price in accordance with the provisions of that Act. According to the High Court the amount paid by the Board to the grower under the Act is the value or price of coffee in conformity with the detailed accounting done thereto under the . The High Court was right. The High Court went on to observe that the amount paid to the grower was neither compensation nor dividend. The payment of price to the grower is an important element to determine the consensuality in the sale and the sale itself is under section 4(1) of the . Therefore, the High Court was of the view that neither section 25(2) read with section 17 nor the provisions for payment of compensation indicate that coffee becomes the property of the Coffee Board not by consent but by the operation of law. The levy of duties of excise and customs under sections 11 and 12 of the are inconsistent with the concept of compulsory acquisition. Section 13(4) of the clearly fixes the liability for payment of duty of excise on the registered owner of the estate producing coffee. The Board is required to deduct the amount of duty payable by such owner from the payment to the grower under section 34 of the Act. The duty payable by the grower is a first charge on such Pool payment becoming due to the grower from the Board. Section 11 of the Act provides for levy of duty of customs on coffee exported out of India. This duty is payable to the Customs authorities at the time of actual export. The levy and collection of this duty is not unrelated to the delivery of the coffee by the growers to the Board or the pool payments made by the Board to the growers. The duty of excise as also the duty of customs are duties levied by Parliament in exercise of its powers of taxation. It is not a levy imposed by the Board. It is a fact that the revenue realised from the levy of these duties form part of the Consolidated Fund of India and can be utilised for any purpose. It may be utilised for the purpose of the only if Parliament by appropriation made by law in this regard so provides. The true principle or basis in Vishnu Agencies case applies to this case. Offer and acceptance need not always be in an elementary form, nor does the law of contract or of sale of goods require that consent to a contract must be express. Offer and acceptance can be spelt out from the conduct of the parties which cover not only their acts but omissions as well. The limitations imposed by the Control order on the normal right of the dealers and consumers to supply and obtain goods, the obligations imposed on the parties and the penalties prescribed by the order do not militate against the position that eventually, the parties must be deemed to have completed the transaction under an agreement by 376 which one party binds itself to supply the stated quantity of goods to the other at a price not higher than the notified price and the other party consents to accept the goods on the terms and conditions mentioned in the permit or the order of allotment issued in its favour by the concerned authority. A contract whether express or implied between the parties for the transfer of the property in the goods for a price paid or promised is an essential requirement for a 'sale '. In the absence of a contract whether express or implied, it is true, there cannot be any sale in the eyes of law. However, as we see the position and the scheme of the Act, in the instant case, there was contract as contemplated between the growers and the Coffee Board. This Court applied in Vishnu Agencies 's case (supra) the consensual test laid down in the earlier decision of this Court in the State of Madras vs Gannon Dunkerley, ; in this regard. In law there cannot be a sale whether or not compulsory, in the absence of a contract express or implied. The position of the Coffee Board so far as sale is concerned is explained by the Madras High Court very lucidly in The Indian Coffee Board, Batlagundu vs The State of Madras (supra), where the High Court expressed the view that the Indian Coffee Board which derived its existence from the Coffee Market Expansion Act is a dealer within the meaning of section 2(b) of the Madras General Sales Tax Act, 1939, and is therefore, liable to sales tax on its turnover. The High Court held that the Board was not a constituted representative of the producer and it did not hold the goods on behalf of the producer. After the goods enter the pool after delivery, they become the absolute property of the Board and the producer, a registered owner, has no right or claim to the goods except to a share in the sale proceeds after the goods are sold in accordance with the provisions of the Act. It was said by the learned Additional Solicitor General that the cultivation of coffee in India was over a century old and numerous plantations existed long prior to the enactment of the . There was no act of volition on the part of the growers in taking to coffee cultivation and subjecting themselves to the provisions of the Act by taking up such cultivation. The cultivation of coffee can be carried on only in certain types of soil and in high elevations. The land suited for coffee cultivation cannot be used for growing other crops on a similar scale. Coffee is a perennial crop. The growers have no choice in growing coffee one year and then changing to a different crop in the following year. Coffee plants have a life ranging from 30 to 70 years, the average life of the plant being 40 years. Coffee estates require 377 constant attention and expenses have to be incurred for manuring, cultural operations, application of pesticides, etc. at regular intervals. Removal of old and diseased plants and replanting them with superior disease resistant varieties is also necessary and is done each year. The coffee grower has thus no choice at all continuing to be a coffee cultivator, it was argued. The cultivation of coffee is not in any way comparable to the cultivation of sugarcane, the cultivation of which can be discontinued at will. Such practical difficulties, however, do not in essence make any difference. Because coffee is grown on the estate, the owner of the land can be presumed to have consented to surrender his produce to the Board it was submitted. But the surrender is thus clearly an act of volition. The planting of the seeds of a coffee plant by a grower can be regarded as his act of volition in respect of the surrender to the Board of the coffee yielded by the plant. The coffee growers being agriculturists are not dealers and therefore are not liable to pay any sales tax or purchase tax, it was submitted. The demand for purchase tax is in effect a demand on the growers who were exempt from such levy, as the monies required for paying the tax if the same is lawful has necessarily to come out of the monies otherwise payable to the growers. The object of the pool marketing system is not to deprive the growers of a fair compensation for their produce by making them suffer a tax which they would not otherwise be required to suffer. An analysis of the different provisions of the makes it clear that there was no sale to attract exigibility to duty, it was submitted. We are unable to accept these submissions. Section 6 of the Karnataka Sales Tax Act, 1957 meets the situation created by such circumstances. This was examined by this Court in State of Tamil Nadu vs N.K. Kamaleshwara; , which examined section 7A of Tamil Nadu General Sales Tax Act, 1959 which was in pari materia with section 6 of the Karnataka Sales Tax Act. In that view of the matter section 6 of the Karnataka Act would he attracted The alternative submission of the appellant was that the Coffee Board was a trustee or agent of the growers. We are unable to accept this submission either. There is no trust created in the scheme of the Act in the Coffee Board; it is a statutory obligation imposed on the Coffee Board and does not make it a trustee in any event. It is also not possible to accept the submission that the will not be applicable to any sale by the Coffee Board because it was an 378 export sale by the Coffee Board. In Consolidated Coffee Ltd. & Another vs Bangalore etc. , (supra) it has been held that there must be a prior agreement at the time when the transaction of sale takes place. No such prior agreement existed in this case. In New India Sugar Mills Ltd. vs Commissioner of Sales tax Bihar (supra), Hidayatullah, J. as the Chief Justice then was, observed that so long as the parties trade under controls at fixed price and accept these as any other law of the realm because they must be deemed to have contracted at a fixed price both sides having or deemed to have agreed to such price. Consent under the law of contract need not be expressed, it can be implied. This is the position under the scheme of the . It has to be emphasised like the Vishnu Agencies 's case a person for all practical purposes is free to become or not to become a grower of coffee. So it is also covered by the ratio of Vishnu Agencies Pvt. Ltd. In the aforesaid view of the matter, we are of the opinion that the imposition of tax in a manner done by the Sales tax Authorities which had been upheld by the High Court is correct and the High Court was right. The appeals fail and are dismissed. There, will, however, be no order as to costs Civil Writ Petition No. 358 of 1986 under Article 32 of the Constitution of India is dismissed. Writ Petition No. 36 of 1986, we are of the opinion that we cannot go into in the contentions in this petition. The rights and obligations of the parties, inter se between the petitioners and the Coffee Board may be agitated in appropriate proceedings. Writ Petition No. 37 of 1986. This writ petition is dismissed without prejudice to the rights of the petitioner to agitate the question of liability of the petitioner, vis a vis, Coffee Board in respect of the sales tax due and payable on the transactions between the parties in appropriate proceedings. Civil Writ Petition No. 39 of 1986. There will be no order in this petition. But it is made clear that this is without prejudice to the right of the parties taking appropriate proceedings if necessary for determination of the liabilities inter se between the petitioners and the Coffee Board for the amount of sales tax payable. Parties in these writ petitions will pay and bear their own costs. Interim orders, if any, are all vacated.

The appellant Coffee Board filed writ petitions in the High Court praying for a declaration that the mandatory delivery of the Coffee under section 25(i) of the , was not sale and that section 2(t) of the Karnataka Sales Tax Act, 1957 required to be struck down if the same encompassed compulsory acquisition also, and challenging the show cause notice, proposing to re open the tax assessment and the pre assessment notice proposing to assess the Board to purchase tax on the Coffee transferred from Karnataka to outside the State. The Coffee Board has also filed in the High Court writ petitions, challenging the assessments and the demands for the purchase tax. The appellant Coffee Board had contended that the compulsory delivery of Coffee under the extinguishing all the marketing rights of the growers was 'compulsory acquisition ' and not sale or purchase to attract levy of purchase tax and that the appellant was only a 'trustee ' or agent of the growers not exigible to purchase tax and that all the export sales were in the course of export immune to tax under Article 286 of the Constitution. It was held by the High Court that an element of consensuality subsisted even in compulsory sales governed by law and once there was an element of consensuality even though minimal, that would be sale or purchase for purposes of Sale of Goods Act and the same would be exigible to sales or purchase tax under the relevant Sales Tax law of the country. On an analysis of all the provisions of the in general and sections 17 and 25 in particular, the High Court held that on the true principles of compulsory acquisition or eminent domain, it was difficult to hold that on compulsory delivery by growers to the Board, there would be compulsory acquisition of coffee by the Coffee Board. The High Court dismissed all the writ petitions by a common judgment. The Coffee Board filed appeals in this Court by 349 certificate against the decision of the High Court. The writ petitions filed in this Court were for the determination of the rights, obligations and liability between the petitioners and the Coffee Board in respect of the sales tax due and payable on the transactions between the parties. Dismissing the appeals and the Writ Petitions Nos. 358 and 37 of 1986 and disposing of the Writ Petitions Nos. 36 and 39 of 1986, the Court. ^ HELD: The question involved in these appeals and the writ petitions was the exigibility of tax on sale, if any, by the growers of the coffee to the Coffee Board. Basically, it must depend upon what is sale in the general context as also in the context of the relevant provisions of the Karnataka Sales Tax Act 1957 as amended from time to time, and the . These, however, must be examined in the context of general law, namely, the and the concept of sale in general. [358F G] Coffee Board is a 'dealer ' registered as such under the and the Sales Tax Acts of all the States in which it holds auctions/maintains depots runs coffee houses. It collects and remits sales tax on all the coffee sold by it to the State in which the sale takes place. It transfers coffee from one State to another. [360B,E] This Court (Bench of Five Judges) in the case of State of Kerala vs Bhavani Tea Produce Co., ; , which arose under the Madras Plantations Agricultural Income Tax Act, held that when growers delivered coffee to the Board, all their rights therein were extinguished and the Coffee vested in the Board. The Court, however did not hold that there was a taxable 'sale ' by the grower to the Board in the year in question. The Court in this case was bound by the clear ratio of that decision and it could not by pass the same. That decision concludes all the issues in this case. Several questions were canvassed in these appeals in view of the decision of the High Court, and all the questions were answered by this Court in the Bhavani Tea Produce Co. 's case (supra) against the appellant. [360F G; 364B] All the four essential elements of sale (1) parties competent of contract, (2) mutual consent, though minimal, by growing coffee under the conditions imposed by the (The Act), (3) transfer of property in the goods and (4) payment of price though deferred were present in the transaction in question. As regards the provision under section 26(2) empowering the Coffee Board to purchase additional 350 coffee not delivered for inclusion in the surplus pool, it is only a supplementary provision enabling the Coffee Board to have a second avenue of purchase, the first avenue being the right to purchase coffee under a compulsory delivery system formulated under section 25(1) of the Act. The scheme of the Act is to provide for a single channel for sale of coffee grown in the registered estates. The Act directs the entire coffee produced except the quantity allotted for internal sale quota, if any, to be sold to the Coffee Board through the modality of compulsory delivery and imposes a corresponding obligation on the Coffee Board to compulsorily purchase the coffee delivered to the pool, except (1) where the coffee delivered is found to be unfit for human consumption, and (2) where the coffee estate is situated in a far off and remote place or the coffee grown in an estate is so negligible as to make the sale of coffee through compulsory delivery an arduous task and an uneconomical provision. [367E H; 368A B] In the nature of transactions contemplated under the Act, mutual assent either express or implied is not totally absent in this case in the transactions under the Act. Coffee growers have a volition or option, though minimal or nominal to enter into the coffee growing trade. If any one decides to grow coffee, he must transact in terms of the regulation imposed for the benefit of the coffee growing industry. Section 25 of the Act provides the Board with the right to reject coffee if it is not upto the standard. Value to be paid as contemplated by the Act is the price of the coffee. There is no time fixed for delivery of coffee either to the Board or the curer. These indicate consensuality not totally absent in the transaction. [368C E] The scheme contemplated under the Act was not an exercise of eminent domain power. The Act was to regulate the development of coffee industry in the country. The object was not to acquire coffee grown and vest the same in the Coffee Board. The Board is only an instrument to implement the Act. The High Court had rightly observed that the Board has been chosen as the instrumentality for the administration of the Act. It cannot be said in the Act, there is any compulsory acquisition. In essence, the scheme envisages sale and not compulsory acquisition. The terms 'sale ' and 'purchase ' have been used in some of the provisions and that is indicative that no compulsory acquisition was intended. The levy of duties of excise and customs under sections 11 and 12 of the are inconsistent with the concept of compulsory acquisition. Section 13(4) of the clearly fixes the liability for 351 payment of duty of excise on the registered owner of the estate producing coffee. The Board is required to deduct the amount of duty payable by such owner from the payment to the grower under section 34 of the Act. The duty payable by the grower is a first charge on such pool payment becoming due to the grower from the Board. Section 11 of the Act provides for levy of duty of customs on coffee exported out of India. This duty is payable to the Customs Authorities at the time of actual export. The levy and collection of this duty are not unrelated to the delivery of coffee by the growers to the Board of the payments made by the Board to the growers. The duty of excise as also the duty of customs are duties levied by Parliament. It is not a levy imposed by the Board. The revenue realised from levy of these duties forms part of the Consolidated Fund of India, which may be utilised for the purpose of the only if the Parliament by law so provides. The true principle or basis in Vishnu Agencies (Pvt.) Ltd. vs Commercial Tax officer and others, etc. ; , , applies to this case. Offer and acceptance need not always be in an elementary form, nor does the law of contract or sale of goods require that consent to a contract must be express. Offer and acceptance can be spelt out from the conduct of the parties which cover not only their acts but omissions as well. The limitations imposed by the Control order on the normal right of the dealers and consumers to supply and obtain goods, the obligation imposed on the parties and the penalties prescribed by the order do not militate against the position that eventually, the parties must be deemed to have completed the transaction under an agreement by which one party binds itself to supply the stated quantity of goods to the other at a price not higher than the notified price and the other party consents to accept the goods on the terms and conditions mentioned in the permit or the order of allotment issued in its favour by the concerned authority. [375C H; 376A B] A contract, express or implied, for the transfer of the property in the goods for a price paid or promised is an essential requirement for a 'sale '. In the absence of a contract, express or implied, there cannot be any sale in law; however, in this case, as the scheme of the Act is, there was contract contemplated between the growers and the Coffee Board. In law, there cannot be a sale whether or not compulsory in the absence of a contract express or implied. [376B C] The imposition of tax in the manner done by the Sales Tax Authorities upheld by the High Court was correct and the High Court was right. The appeals failed. [378D] 352 Civil Writ Petition No. 358 of 1986 was dismissed. Writ Petition No. 36 of 1986, the Court could not go into the contentions in this petition. The rights and obligations of the parties inter se between the petitioners and the Coffee Board might be agitated in appropriate proceedings. Writ Petition 37 of 1986 was dismissed without prejudice to the rights of the petitioners to agitate the question of liability of the petitioner vis a vis the Coffee Board in respect of the Sales Tax due and payable on the transactions between the parties in appropriate proceedings. In Civil Writ Petition No. 39 of 1986, the Court passed no order; this was without prejudice to the right of the parties taking appropriate proceedings if necessary for the determination of the liabilities inter se between the petitioners and the Coffee Board for the amount of the Sales Tax payable. [378E G] Indian Coffee Board vs State of Madras, 5 S.T.C. 292; C.E.B. Draper & Sons Ltd. vs Edward Turner & Son Ltd., ; State of Kerala vs Bhavani Tea Produce Co., ; ; Consolidated Coffee Ltd. & Anr. vs Coffee Board, Bangalore, etc. ; , ; Peanuts Board vs The Rockhampton Harbour Board, 48 Commonwealth Law Reports 266; Vishnu Agencies (Pvt.) Ltd. etc. vs Commercial Tax officer and others etc. ; , ; Indian Steel and Wire Products Ltd., Andhra Sugar Ltd. and Karam Chand Thapar, ; ; State of Madras vs Gannon Dunkerley & Co. Ltd., ; ; New India Sugar Mills vs Commissioner of Sales Tax, Bihar, [ 19631 Suppl. 2 S.C.R. 459; Charanjit Lal Choudhury vs The Union of India & Ors., ; ; State of Karnataka and another etc. vs Ranganatha Reddy and Anr. ; , ; Milk Board (New South Wales) vs Metropolitan Cream Pty. Ltd., ; and State of Tamil Nadu vs N. K. Kamaleshwara, 119761 1 S.C.R. 38, referred to.

Civil Appeal No. 468 of 1988. From the Order dated 7.7.1987 of the Customs Excise and Gold (Control) Appellate Tribunal, New Delhi in Appeal No. 383/83 D. G. Ramaswami, Additional Solicitor General, Ms. Indu Malhotra and Mrs. Sushma Suri, for the Appellant. The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J. This is an appeal under Section 35L(b) of the Central Excise and Salt Act, 1944 (hereinafter called 'the Act '). The appeal is directed against the Order of the Customs Excise and Gold (Control) Appellate Tribunal (hereinafter called 'the CEGAT '). The respondent herein filed a classification list on 16th March, 1982 seeking approval of Sawn timber and dried timber as non excisable. The submission of the respondent was that timber logs were only sawn into sizes and these did not tantamount to any manufacture. However, the Assistant Collector, Madras, held that the conversion of timber logs into sawn timber satisfied the conditions of manufacture insofar as the conversion of timber logs into sawn timber involves transformation whereby a new and different article with the distinct name, character or use emerges which is different from timber logs. It was held accordingly that excise duty @ 8% ad valorem under Tariff Item 68 of the erstwhile Central Excise Tariff was leviable. The respondent filed an appeal before the Collector of Appeals who concurred with the Assistant Collector upholding the duty. Aggrieved thereby the respondent filed an appeal before the CEGAT. 365 The Tribunal in the Judgment under appeal, relied on its decision in the case of Sanghvi Enterprises, Jammu, Tawi vs Collector of Central Excise, Chandigarh, [1984] Vol. and the Karnataka High Court in the case of Y. Moideen Kunhi & Ors. vs Collector of Central Excise, Bangalore & Ors., [1986] Vol. and came to the conclusion that no new product emerges by sawing of timber into several sizes. In the premises the Tribunal allowed the appeal of the respondent. Hence, this appeal. It is well settled that excise duty becomes chargeable only when a new and different article emerges having a distinct name, character and use. See in this connection the observations of this Court in Union of India vs Delhi Cloth & General Mills, ; and South Bihar Sugar Mills Ltd. etc. vs Union of India Ors. [1968] 3 SCR 21. This principle is well settled. This is a question of fact depending upon the relevant material whether as a result of activity, a new and different article emerges having a distinct name, character and use. The use of expression 'manufacture ' was explained in the case of Allenburry Engineers Pvt. Ltd. vs Ramakrishna Dalmia & Ors., ; In State of Orissa & Ors. vs The Titaghur Paper Mills Co. Ltd. & Anr., ; which was a decision on the Orissa Sales Tax Act, this question was considered in the background of the fact whether planks, cut into sizes, etc., sawed out of logs, are different from logs in its nascent state. It may be worthwhile to note that 'manufacture ' implies a change, but every change is not manufacture and yet every change of an article is the result of treatment, labour and manipulation. But something more was necessary and there must be transformation; a new and different article must emerge having a distinct name, character or use. See Union of India vs Delhi Cloth Mills (supra) at page 596 of the report. Having regard to the facts found in this case by the Tribunal, which ultimately is the final fact finding authority, we are of the opinion that regard being had to the principles for determining the questions which were correctly applied in the decision of the Tribunal, in the facts of this case, the conclusion of the Tribunal is unassailable. In the premises there is no merit in this appeal and the same is accordingly dismissed. N.P.V. Appeal dismissed.

% The respondent firm filed a classification list before the Assistant Collector, Excise, and sought approval for treating sawn timber and dried timber as non excisable on the ground that sawing of timber logs into sizes did not amount to manufacture. The Assistant Collector held that conversion of the timber logs into sawn timber satisfied the conditions of manufacture since it involved transformation, whereby a new and different article with the distinct name, character or use, which was different from the timber logs, emerged, and, therefore, excise duty was leviable under Tariff Item 68. On appeal, the Collector concurred with the Assistant Collector. Allowing the appeal of the respondent, the Customs, Excise and Gold (Control) Appellate Tribunal held that no new product emerged by sawing of timber into several sizes. Hence the appeal by the Revenue under Section 35(L) of the . Dismissing the appeal by the State, ^ HELD: 1.1 Excise duty becomes chargeable only when a new and different article emerges having a distinct name, character and use. This is a question of fact depending upon the relevant material whether, as a result of activity, a new and different article emerges having a distinct name, character and use. [365B D] 1.2 'Manufacture ' implies a change, but every change is not manufacture and yet every change of an article is the result of treatment, labour and manipulation. But something more was necessary and there must be transformation; a new and different article must emerge having a distinct name, character or use. [365E F] 364 Having regard to the facts of the case, as found by the Tribunal which was the final fact finding authority and regard being had to the principles for determining the questions which were correctly applied by the Tribunal, the conclusion of the Tribunal that no new product emerged by sawing of timber into several sizes is unassailable. [365F G] Union of India vs Delhi Cloth General Mills, ; ; Allenburry Engineers Pvt. Ltd. vs Ramakrishna Dalmia & Ors., ; and State of Orissa & Ors. vs The Titaghur Paper Mills Co. Ltd. & Anr., ; , referred to.

N: Criminal Appeal Nos. 107 108 of 1985 From the Judgment and Order dated 20.12.1984 of the Rajasthan High Court in D.B. Civil Habeas Corpus Petition Nos. 1489 and 1575 of 1984. 87 N.L. Jain, Advocate General and Badri Das Sharma for the Appellants. Ram Jethmalani and Miss Rani Jethmalani for the Respondent. M.R. Sharma, Dalveer Bhandari and R.N. Poddar for the Intervener, Union of India. The Judgment of the Court was delivered by RANGANATH MISRA, J. The respondent, an Advocate, was ordered to be detained by the Government of Rajasthan under section 3(2) of the (hereinafter referred to as the Act), on August 14, 1984, and he was actually taken into custody and detained on the following day. The grounds of detention were supplied to him when he was detained. Respondent challenged his detention before the Rajasthan High Court by filing two applications under Article 226 of the Constitution on several grounds. Both the writ applications were clubbed and heard together and disposed of by a common judgment. The High Court found that the representation of the detenu respondent had not been placed before the Advisory Board within three weeks as required by section 10 of the Act and such violation vitiated the continued detention of the respondent. It also found that the Advisory Board had not considered the documentary evidence produced by the detenu and the opinion formed by the Board that the respondent should be detained was, therefore, not an appropriate one. The Court took the view that the materials in the record which had been considered by the Advisory Board in formulating its recommendation to the State Government had not been transmitted to the Government and the same was not available before the State Government when it made the order of confirmation. The Court was also of the further view that the contents of the intelligence reports referred to in the grounds of detention had not been supplied to the detenu and he had, therefore, been deprived of the opportunity of making an effective representation against his detention. On these findings the High Court held that the detention of the respondent cannot be upheld and the order of detention dated August 14, 1984, and the subsequent order dated October 22, 1984, directing him to be detained for one year be quashed. The Court further directed: "In the interest of justice and in the interest of National Security, without curtailing seriously individual liberty, we give the following directions: 88 (1) that the detenu Shamsher Singh being entitled to liberty on account of the above order of ours will be released from the Central Jail, Ajmer; (2) that the detenu Shamsher Singh would be none theless kept either under house arrest or in a place like Dak Bungalow or Circuit House at Ajmer or a nearby place within the radius of 50 kms. with the members of his family, which would consist of his wife and three minor sons; (3) that if the detenu is kept under house arrest, the expenses will be borne by the detenu, but if he is kept in some Dak Bangalow or other Circuit House, then his expenses will be borne by the State; (4) that the authorities would permit interview with other relatives also, if the detenu is kept outside his house. In case no stay order is received staying the operation of the judgment of this Court, the detenu shall be released on expiry of three weeks, i.e. on 11.1.85. " This Court granted special leave to appeal against the judgment of the High Court by its order dated January 18, 1985. In the mean time, the High Court had suspended the operation of its order till January 21, 1985, and while granting special leave, this Court stayed operation of the judgment. Learned Advocate General of the appellant State appearing in support of the appeal maintained that each of the four grounds accepted by the High Court in quashing the detention is wrong and not sustainable as a ground for such quashing while Mr. Jethmalani appearing for the respondent supported the reasonings and the ultimate conclusion of the High Court. We have already stated that the High Court formulated the reasons for its order in the shape of four conclusions and we propose to deal with them seriatim for convenience. The first ground of attack advanced by the respondent against the order which impressed the High Court is that there has been 89 violation in complying with the provisions of section 10 of the Act. Indisputably the respondent was taken into custody on August 15, 1984. On August 22, 1984, the State Government placed before the Advisory Board the grounds on which the order of detention had been made. By then no representation had been made by the detenu and, therefore, there was no occasion for causing that also to be placed before the Board. The respondent made a representation on August 28, 1984, which was received by the Superintendent of the Central Jail where the detenu had been lodged and the same was received by the State Government on August 30, 1984. There is no dispute that the representation was placed before the Advisory Board on September 6, 1984. As far as relevant, section 10 of the Act provides: ". in every case where a detention order has been made under this Act, the appropriate Government shall, within three weeks from the date of detention of a person under the order, place before the Advisory Board constituted by it under section 9, the grounds on which the order has been made and the representation, if any, made by the person affected by the order . " It is the contention of the respondent that his representation against the detention has been placed before the Advisory Board a day too late inasmuch as while section 10 requires the placing to be done within three weeks from the date of detention, the representation has been placed before the Advisory Board on the 22nd day. There was no dispute before the High Court nor is there any challenge before us that there has been a day 's delay in placing the representation of the respondent before the Board. The High Court has accepted the respondent 's submission that the requirement under section 10 of the Act was mandatory and failure to place before the Advisory Board the representation of the respondent has vitiated the detention. While Mr. Jethmalani appearing for the respondent reiterates that stand, learned Advocate General in support of the appeal has contended that as a fact there has been compliance of section 10 of the Act within a week of commencement of the detention and as by than no representation from the respondent had been received, the same could not be placed before the Board along with the grounds of detention. The State Government received the representation on the 30th August, 1984, and after looking 90 into the contents, caused it to be placed before the Board with due haste and that was done on September 6, 1984. On the basis of the reference made on the 22nd August, 1984, the Advisory Board had already fixed the consideration of the respondent 's detention at the meeting on September 10, 1984, and as a fact, four days before the date of hearing fixed by the Board the representation was before it. As a fact, no adjournment had to be given in the matter of consideration of the representation of the respondent on account of a day 's delay in the placing of the representation before the Board. Learned Advocate General further submitted that when a representation from the detenu is received against his detention by the detaining authority (here the State Government), the contents of the representation are intended to be perused so that the detaining authority may consider whether continuing the detention is proper and expedient. At that stage it is open to the detaining authority to rescind the order of detention and in that event no further reference to the Advisory Board is warranted. Since the detaining authority is not a mere post office being required to receive the representation and have it placed before the Advisory Board a little time is bound to be taken in dealing with the representation. Taking a practical view of the situation some time is bound to lapse between the receipt of the representation and the forwarding of the same for being placed before the Board. A day 's delay in such process cannot indeed be taken to be fatal so as to warrant the quashing of the detention. A Constitution Bench in A. K. Roy etc. vs Union of India Anr.,(1) has upheld the vires of the Act. It was pointed out in Ichhu Devi Choraria vs Union of India & Ors.(2) that "the burden of showing that the detention is in accordance with the procedure established by law has always been placed by this Court on the detaining authority because Article 21 of the Constitution provides in clear and explicit terms that no one shall be deprived of his life or personal liberty except in accordance with procedure established by law. This constitutional right of life and personal liberty is placed on such a high pedestal by this Court that it has always insisted that whenever there is any deprivation of life or personal liberty, the authority responsible for such deprivation must satisfy the Court that it has acted in accordance with the law. This is an area where the Court has been most strict and scrupulous in ensuring observance with the 91 requirements of the law, and even where a requirement of the law is breached in the slightest measure, the Court has not hesitated to strike down the order of detention or to direct the release of the detenu even though the detention may have been valid till the breach occurred. " This Court in Khudi Ram Das vs State of West Bengal & Ors., (1) said: "The constitutional imperatives enacted in this article (22) are two fold: (1) the detaining authority must, as soon as may be, that is, as soon as practicable after the detention, communicate to the detenu the grounds on which the order of detention has been made, and (2) the detaining authority must afford the detenu the earliest opportunity of making a representation against the order of detention. These are the barest minimum safeguards which must be observed before an executive authority can be permitted to preventively detain a person and thereby drown his right of personal liberty in the name of public good and social security. " The view indicate in these decisions is well accepted and the same is not open to doubt or dispute. We have already pointed out that within a week of detention of the respondent a reference to the Advisory Board had actually been made in this case but without the respondent 's representation as the same had not been made by then. Section 10 stipulates that the grounds on which the order has been made and also the representation of the detenu, if any, have to be placed before the Board when the reference is made. The legislative scheme contained in this section envisages the situation that there may be a case where no representation at all is made or within the time contemplated under section 10, the representation has not been forthcoming. We agree with the submission of Mr. Jethmalani that the obligation cast under section 10 of the Act is paramount and the strictness with which such a mandate has to be complied with is absolute. While making of the reference under section 10 with the grounds of detention is a must, furnishing of the representation is conditional upon it having been made and receipt thereof by the appropriate Government. Though 92 under the general scheme of the Act definite and different periods have been prescribed for compliance with the step to step treatment of the matter, there is no obligation cast on the detenu to make a representation within any definite time. We are, therefore, prepared to accept the submission of the learned Advocate General that while considering the compliance with section 10 of the Act emphasis has to be laid on making of the reference and forwarding of the grounds of detention, and the placing of the representation has to be judged on different basis. We may not be understood to be of the view that it is open to the appropriate Government to withhold the placement of the representation unduly or indefinitely. When the reference is received and the grounds of detention are available, the Board proceeds to fix a date of hearing for consideration of the justification of detention. The procedure of the Advisory Board contained in section 11 of the Act indicates that the Board is to consider the materials placed before it and is entitled to call for such information as it may deem necessary from the appropriate Government or from any other person concerned and after hearing the detenu, if he wants to be heard in person, has to report to the appropriate Government within seven weeks from the date of detention in the manner indicatad in the remaining sub sections of that section. While dealing with this aspect of the matter it is to be borne in mind that section 10 requires the reference to be placed before the Board within three weeks and section 11 requires the report to be submitted to the appropriate Government within seven weeks. The legislative scheme in fixing the limit of three weeks in section 10 and the further limit of seven weeks in section 11 allows at least four weeks ' time to the Board to deal with the matter. The Board on receipt of the reference on August 22, 1984, directed its sitting to be convened for September 10, 1984, for considering the justifiability of the respondent 's detention. This had apparently been done on the basis of the reference from the appropriate Government but without the representation but the representation was received by the Board in the mean time on September 6, 1984. The first meeting of the Advisory Board was thus fixed within four weeks from the date of detention and the consideration of the matter by the Board was not required to be adjourned on account of any delay in receiving the copy of the representation of the detenu. We agree with the submission of Mr. Jethmalani that it is obligatory for the appropriate Government to forward the representation, when received, to the Board without delay because unless on 93 the basis of the representation the appropriate Government rescinds the order of detention, the representation is a document intended for the Board. Where the representation has been received the same should, as expeditiously as possible, reach the Board. In this case the State Government received the representation on August 30, 1984, and placed the same before the Board on September 6, 1984. Six clear days have intervened between the receipt of the representation by Government and the placing thereof before the Board. Admittedly, if the representation had reached the Board by September 5, 1984, respondent would not be entitled to raise any objection. Can it, on the facts of the case and in the circumstances indicated, be said to be non compliance with section 10 of the Act? Mr. Jethmalani placed before us a passage from Broom 's Legal Maxims (p. 162), 10th Edn., where the doctrine of impossibility of performance (lex non cogit ad imporsibilia) has been discussed. It has been indicated therein that however mandatory the provision may be, where it is impossible of compliance that would be a sufficient excuse for non compliance, particularly when it is a question of the time factor. Keeping the attendant circumstances of this case in view, we find it difficult to hold that the time taken by the State Government can amount to withholding of the representation which resulted in non compliance of section 10 of the Act so as to vitiate the detention. It is useful to refer to a paragraph from a judgment of this Court in Frances Corolie Mullin vs W. C. Khambra & Ors,(1) while we are on this point. A Division Bench was dealing with a COFEPOSA detention. Section 8 of the COFEPOSA requires the appropriate Government to make a reference to the Board within five weeks from the date of detention. While dealing with an argument referring to this aspect of the matter, the Court observed: "The four principles enunciated by the Court in Jayanarayan Sukul vs State of West Bengal ; , as well as other principles enunciated in other cases, an analysis will show, are aimed at shielding personal freedom against indifference, insensibility, routine and red tape and thus to secure to the detenu the right to make an effective representation. We agree: (1) the detaining authority must provide the detenu a very early opportunity to make a representation, (2) the detaining 94 authority must consider the representation as soon as possible, and this, preferably must be before the representation is forwarded to the Advisory Board, (3) the representation must be forwarded to the Advisory Board before the Board makes its report, and (4) the consideration by the detaining authority of the representation must be entirely independent of the hearing by the Board or its report, expedition being essential at every stage. We, however, hasten to add that the time imperative can never be absolute or obsessive. The Court 's observations are not to be so understood. There has to be lee way, depending on the necessities (we refrain from using the word 'circumstances ') of the case. One may well imagine, a case where a detenu does not make a representation before the Board makes its report making it impossible for the detaining authority either to consider it or to forward it to the Board in time or a case where a detenu makes a representation to the detaining authority so shortly before the Advisory Board takes up the reference that the detaining authority cannot consider the representation before then but may merely forward it to the Board without himself considering it. Several such situations may arise compelling departure from the time imperative. But no allowance can be made for lethargic indifference. No allowance can be made for needless procrastination. But allowance must surely be made for necessary consultation where legal intricacies and factual ramifications are involved. " It is useful at this stage also to refer to a later decision of another Division Bench of this Court in Raisuddin alias Babu Tamchi vs State of Uttar Pradesh & Anr.(1) That was a case of detention under the Act and there was a delay of six days between the receipt by the District Magistrate (the detaining authority) of the comments from the Superintendent of Police on the representation and despatch of the representation to the State Government. While negativing the contention founded on delay and the resultant effect on the order of detention, this Court observed: "In this context we consider it necessary to emphasise that the question whether the representation 95 submitted by a detenu has been dealt with all reasonable promptness and diligence is to be decided not by the application of any rigid or inflexible rule or set formula nor by a mere arithmetical counting of dates, but by a careful scrutiny of the facts and circumstances of each case; if on such examination it is found that there was any remissness, indifference or avoidable delay on the part of the detaining authority/State Government in dealing with the representation, the Court will undoubtedly treat it as a factor vitiating the continued detention of the detenu; on the other hand, if the Court is satisfied that the delay was occasioned not by any lack of diligence or promptness of attention on the part of the party concerned, but due to unavoidable circumstances or reasons entirely beyond his control, such delay will not be treated as furnishing a ground for the grant of relief to the detenu against his continued detention. " We agree with the principle indicated above and in our opinion, in the facts of the present case, it cannot be said that there has been any negligence or remissness on the part of the State Government in dealing with the representation of the detenu or in the matter of causing the same to be placed before the Advisory Board. We are impressed by the fact that no prejudice has been caused to the detenu on account of the delay of a day beyond the statutory period in placing the representation before the Advisory Board inasmuch as the Advisory Board had caused the matter to be heard on the 10th September 1984 and before the appointed date the representation was before the Board. The first ground on which the High Court came to hold that the detention was invalid has, therefore, to be negatived. The next contention advanced on behalf of the respondent which has been accepted by the High Court in support of its conclusion against the detention is that the Advisory Board did not consider the documentary evidence produced by the detenu. Under section 11 (2) of the Act the report of the Advisory Board has to specify in a separate part thereof the opinion of the Board as to whether or not there is sufficient cause for the detention of the person concerned and as sub section (4) provides, the proceedings of the Board and its report, except that part of the report in which the opinion of the Advisory Board is specified, shall be confidential. In view of the 96 specific plea raised by the detenu and the argument advanced before the High Court that the Board had not considered the documentary evidence, the State Government placed the report before the High Court and the same has been also placed before us as a part of the record. On a reference to the report we find that the Advisory Board in the instant case was constituted by three Judges of the High Court, one of them being the Chairman. That would justify our assumption that the members of the Board by their professional ability and acumen were capable to assess the matter in a proper way and form an objective opinion on the basis of materials produced. The detailed conclusion with reasons given by the Board has also been disclosed. That shows that the detenu made before the Board very lengthy arguments and cited a number of authorities in support of his submissions. The detenu in the instant case is a practising advocate and we are impressed by the learned Advocate General 's submission that we could assume that such a practising advocate must have very properly placed his points before the Board. The Board is not required to write out a judgment wherein one would expect mention of the respective pleas, materials produced by the parties, specification of contentions advanced and reasons for the conclusion as may have been drawn. What is required is the unbiased and impartial conclusion on the materials available with reference to the grounds of detention as to whether the detention order when made and the continued detention of the person concerned are justified. The High Court, in our view, had no justification to accept the submission of the detenu that the documentary evidence produced by the detenu had not been considered by the Board. The second ground accepted by the High Court has, therefore, to be repelled as not sustainable. We proceed to examine the next ground, viz., that all the records had not been sent to the State Government by the Board and, therefore, such records were not available for consideration of the State Government at the time of confirmation of the detention. There is no dispute that the Board had not sent the entire record to the State Government. Under section 11(2) of the Act, the Board is required to submit its report and there is no obligation cast by the Act that the entire record of the Board should be placed before the State Government. It is, however, not disputed by learned Advocate General that the report of the Board is only a recommendation and 97 the ultimate decision on the basis of the report as to what further action has to be taken is for the State Government to make. Section 12 in its two sub sections indicates two alternative courses open to the State Government on the basis of the report. If the Board is of the view that there is no sufficient cause for detention of the person, the appropriate Government is obliged to revoke the detention and release the detenu. On the other hand, where the Board is of the view that there is sufficient cause for the detention of the person, the appropriate Government may confirm the detention order and continue the detention. The two provisions have been expressed in different languages. Where the report is against the detention no option is left to the State Government and a duty is cast on it to release the detenu. When the Board recommends that there is sufficient cause for detention, the State Government may confirm the detention or even revoke it. Since the final order has to be made by the State Government, we are inclined to accept the submission of Mr. Jethmalani that the entire record or at least all relevant materials should be available to the State Government when it proceeds to apply its mind to decide whether the detention should be continued or revoked. This view is in accord with produce and is also judicially supported by a decision of this Court. In Nand Lal Bajaj vs The State of Punjab & Anr.(1), this Court observed: "We were informed that the Advisory Board did not forward the record of its proceedings to the State Government. If that be so, then the procedure adopted was not in consonance with the procedure established by law. The State Government while confirming the detention order under section 12 of the Act has not only to peruse the report of the Advisory Board; but also to apply its mind to the material on record. If the record itself was not before the State Government, it follows that the order passed by the State Government under section 12 of the Act was without due application of mind. This is a serious infirmity in the case which makes the continued detention of the detenu illegal. " We have already indicated that the procedure established by law does not require the entire record to be sent by the Board to the State Government; yet it is certainly proper that the record should 98 be available for being looked into in such manner as the confirming authority considers appropriate before the final decision one way or the other is taken. The grounds of detention were available with the State Government. Materials referred to in the grounds of detention were also available in the file. The only materials which the State Government did not have before it are the documents which the detenu claims to have produced before the Board. With a view to forming a prima facie impression that there was any material document which would have a bearing on the question at issue, we sent for the record and the same has been produced before us. On looking into the documents produced by the detenu before the Board, we have come to the conclusion that this did not contain any material which could persuade the State Government to act in a different way. We are cognizant of the position that it is for the State Government and not for this Court to act as the confirming authority and non compliance with the procedure laid down by law makes the order of detention liable to be quashed. But we have also already said that non placing of the record of the Board before the appropriate Government is not a failure of compliance with the prescribed procedure. It is, therefore, that we looked at the record to find out if it can be said to be a defect having material bearing on the question and a matter of prejudice so far as the detenu is concerned. We reiterate by agreeing with the view of our learned Brother Sen, J. expressed in Nand Lal Bajaj 's case (supra) that the appropriate Government should have the entire material before it along with the report of the Board when it is called upon to consider whether to confirm or not to confirm the detention on the basis of the report of the Board under section 12(1) of the Act. The Board should therefore, forward the record containing the papers placed before it at the hearing of the matter along with its report so that the matter can be attended by the State Government with due despatch and on taking a full view of the matter. Our conclusion with reference to the third ground, therefore, is that the High Court was not right in the facts of the case to hold that the order of confirmation of detention was bad. The respondent contended and the High Court accepted the submission that not providing copies of intelligence reports to the detenu, though the same had been relied upon in the grounds of detention, vitiated the order of detention. The grounds of detention were divided into two groups, one labelled as criminal activities and the other as extremist activities. Against extremist activities it was 99 further indicated, ' on the basis of confidential reports '. The facts by way of accusations were detailed but copies of the reports as such were not furnished. It is the settled position in law and learned Advocate General did not attempt to contend to the contrary that the detenu has to be supplied all materials relied upon in making the order of detention with a view to being provided an adequate opportunity of making an effective representation. Personal freedom is an invaluable treasure and the founding fathers took great care to protect it by making appropriate provisions in the Constitution. Simultaneously taking into consideration the peculiar situations prevailing in the country, the right of the State to order preventive detention was also provided therein. In order that personal freedom may not be curtailed beyond necessity and the executive administration may not make it an empty guarantee, detailed provisions were made in Article 22 providing an effective procedure in the matter of making of representation and scrutiny of the materials in the presence of the detenu and even hearing him, if he so desired, by an independent Board with adequate judicial bias. While that is so, the detenu is not entitled to a disclosure of the confidential source of information used in the grounds or utilised for the making of the order. What is necessary for the making of an effective representation is the disclosure of the material and not the source thereof. By indicating that the facts have been gathered from confidential reports, a suggestive disclosure of the source has also been made. The Constitution Bench in the case of State of Punjab & Ors. vs Jagdev Singh Talwandi,(1) dealt with this aspect of the matter. The learned Chief Justice, speaking for the Court, observed: "It was further argued by the learned counsel that the detaining authority should have disclosed the evidence on the basis of which the order of detention was passed because, in the absence of knowledge of such evidence, the respondent could not have made an effective representation against the order of detention. There is no substance in this contention. It is not the law that the evidence gathered by the detaining authority against the detenu must also be furnished to him". Reference was made to Beni Madhob Shaw vs State of West Bengal(2) Har Jas Dev Singh vs State of Punjab(3), and Vakil Singh vs 100 State of J & K.(1), and the learned Chief Justice proceeded to state: "These cases show that the detenu is not entitled to be informed of the source of information received against him or the evidence which may have been collected against him as, for example, the evidence corroborating that the report of the C.I.D. is true and correct. His right is to receive every material particular without which a full and effective representation cannot be made. If the order of detention refers to or relies upon any document, statement or other material, copies thereof have, of course, to be supplied to the detenu as held by this Court in Ichhu Devi Choraria (supra). " In view of what has been said by the Constitution Bench, there was no force in the submission of the respondent that there has been an infraction of the law in not supplying the respondent copies of the reports or disclosing the source thereof. The respondent had actually been given in the grounds all material details necessary for making an effective representation. The fourth ground accepted by the High Court in support of its order is also not tenable in law. As all the grounds accepted by the High Court for its conclusion are not sustainable for reasons discussed above, the order of the High Court quashing the detention is not supportable. The appeal is allowed and the order of the High Court is set aside. In course of the hearing, Mr. Jethmalani had drawn our attention to the fact that many detenus like the respondent have been and are being released, and the respondent who has already under gone more than two thirds of the period should be released. That is a matter entirely for the detaining authority to decide and we hope and trust that notwithstanding the reversal of the decision of the High Court, the State Government will proceed to review the matter expeditiously and make such appropriate directions as it consider fit. N.V.K. Appeal allowed.

The respondent, an Advocate, was ordered to be detained by the State Government under Section 3(2) of the National Security Act, 1950. He was taken into custody and detained. The grounds of detention were supplied to him when he was detained. The respondent challenged his detention in the High Court. The High Court found: (1) that the representation of the detenu respondent had not been placed before the Advisory Board within three weeks as required by section 10 of the Act and such violation vitiated the continued detention of the respondent. (2) that the Advisory Board had not considered the documentary evidence produced by the detenu and therefore the opinion formed by the Board that the respondent should be detained was not an appropriate one, (3) that the materials in the record which had been considered by the Advisory Board in formulating its recommendation to the State Government had not been transmitted to the Government, and the same was not available before the State Government, when it made the order of confirmation, (4) that the contents of the intelligence reports referred to in the grounds of detention had not been supplied to the detenu and he had, therefore, been deprived of the opportunity of making an effective representation against his detention. The High Court consequently held that the detention of the respondent cannot be upheld, and directed the order of detention directing him to be detained for one year be quashed. In the appeal to this Court, it was contended on behalf of the State appellant, that the four grounds accepted by the High Court in quashing the detention was wrong and not sustainable as a ground for such quashing. It was further contended that as a fact there had been compliance of section 10 of the Act within a week of commencement of the detention and as by then no representation from the respondent had been received, the same could not be placed before the Board along with the grounds of detention. The respondent is a practising advocate and must have therefore properly placed his points 84 before the Advisory Board. As the Board had not been sent the entire records, all the records were not available for the consideration of the State Government at the time of confirmation of the detention. The respondent had actually been given in the grounds all the material details necessary for making an effective representation. Allowing the Appeal, ^ HELD : 1(a) While making of the reference under section 10 with the grounds of detention is a must, furnishing of the representation is conditional upon it having been made and receipt thereof by the appropriate Government. Though under the general scheme of the Act definite and different periods have been prescribed for compliance with the step to step treatment of the matter, there is no obligation cast on the detenu to make a representation within any definite time. [91 H; 92 A] (b) The procedure of the Advisory Board contained in section 11 of the Act indicates that the Board is to consider the materials placed before it and is entitled to call for such information as it may deem necessary from the appropriate Government or from any other person concerned and after hearing the detenu, if he wants to be heard in person, has to report to the appropriate Government within seven weeks from the date of detention. [92 D E] (c) The legislative scheme in fixing the limit of three weeks in section 10 and the further limit of seven weeks in section 11, allows at least four weeks ' time to the Board to deal with the matter. [92 E] (d) It is obligatory for the appropriate Government to forward the representation, when received, to the Board without delay because unless on the basis of the representation the appropriate Government rescinds the order of detention, the representation is a document intended for the Board. Where the representation has been received the same should, as expeditiously as possible, reach the Board. [92 H; 93 A] In the instant case the Board on receipt of the reference on August 22, 1984, directed its sitting to be convened for September 10,1984 for considering the justifiability of the respondents detention. The State Government received the representation on August 30,1984, and placed the same before the Board on September 6,1984. Six clear days had intervened between the receipt of the representation by Government and the placing thereof before the Board. Admittedly, if the representation had reached the Board by September 5, 1984, the respondent would not be entitled to raise any objection. Keeping the attendant circumstances in view, it is difficult to hold that the time taken by the State Government can amount to withholding of the representation which resulted in non compliance of section 10 of the Act so as to vitiate the detention. It cannot also be said that there has been any negligence or remissness on the part of the State Government in dealing with the representation of the detenu or in the matter of causing the same to be placed before the Advisory Board. No prejudice has been caused to the detenu on account of the delay of a day 85 beyond the statutory period in placing the representation before the Advisory Board inasmuch as the Advisory Board had caused the matter to be heard on the 10th September, 1984 and before the appointed date the representation was before the Board. B; D; 95 D E] A.K. Roy, etc. vs Union of Indian & Anr. , ; ; Ichhu Devi Choraria vs Union of India & Ors., ; ; Khudi Ram Das vs State of West Bengai & Ors.,[1975] 2 S.C.R. 832; Frances Coralie Mullin vs W.C. Khambra & Ors.,[1980] 2 S.C.R. 1095 and Raisuddin alias Babu Tamchi vs State of Uttar Pradesh & Anr., ; ; referred to. 2(a) Under section 11(2) of the Act the report of the Advisory Board has to specify in a separate part thereof the opinion of the Board as to whether or not there is sufficient cause for the detention of the person concerned and sub section (4) provides, the proceedings of the Board and its report, except that part of the report in which the opinion of the Advisory Board is specified shall be confidential. [95 G H] (b) The Board is not required to write out a judgment. What is the unbiased and impartial conclusion on the materials available with reference to the grounds of detention as to whether the detention order when made and the continued detention of the person concerned are justified. [96 E] In the instant case, the Advisory Board was constituted by three Judges of the High Court, one of them being the Chairman. That justifies the assumption that the members of the Board by their professional ability and acumen were capable to assess the matter in a proper way and form an objective opinion on the basis of materials produced. The detailed conclusions with reasons given by the Board show that the detenu made before the Board very lengthy arguments and cited a number of authorities in support of his submissions. The High Court had therefore no justification to accept the submission of the detenu that the documentary evidence produced by the detenu had not been considered by the Board. [96 B C; 96 F] 3. (a) Under section 11(2) of the Act, the Board is required to submit its report and there is no obligation cast by the Act that the entire record of Board should be placed before the State Government. Section 12 in its two subsections indicates two alternative courses open to the State Government on the basis of the report. If the Board is of the view that there is no sufficient cause for detention of the person, the appropriate Government is obliged to revoke the detention and release the detenu. On the other hand, where the Board is of the view that there is sufficient cause for the detention of the person, the appropriate Government may confirm the detention order and continue the detention. The two provisions have been expressed in different language. [96 G H; 97 A B] Nand Lal Bajaj vs State of Punjab & Anr. 1981 Cr. L.J. 1501, referred to. 86 (b) The procedure established by law does not require the entire record to be sent by the Board to the State Government; yet it is certainly proper that the record should be available for being looked into in such manner as the confirming authority considers appropriate before the final decision one way or the other is taken. The grounds of detention were divided into two groups, one labelled as criminal activities and the other as extremist activities. [97 H; 98 A] In the instant case, the documents produced by the detenu before the Board did not contain any material which could persuade the State Government to act in a different way. The High Court was therefore not right to hold that the order of confirmation of detention was bad. [98 F G] 4. (a) Personal freedom is an invaluable treasure and the founding fathers took great care to protect it by making appropriate provisions in the Constitution. Simultaneously taking into consideration the peculiar situations prevailing in the country, the right of the State to order preventive detention was also provided therein. In order that personal freedom may not be curtailed beyond necessity and the executive administration may not make it an empty guarantee, detailed provisions were made in Article 22 providing an effective procedure in the matter of making of representation and scrutiny of the materials in the presence of the detenu and even hearing him, if he so desired, by an independent Board with adequate judicial bias. [99 B C] (b) The detenu is not entitled to a disclosure of the confidential source of information used in the grounds or utilised for the making of the order What is necessary for the making of an effective representation is the disclosure of the material and not the source thereof By indicating that the facts have been gathered from confidential reports, a suggestive disclosure of the source has also been made. [99 D E] State of Punjab & Ors. vs Jagdev Singh Talwandi, ; ; Beni Madhob Shaw vs State of West Bengal, AIR 1973 SC 2455; Har Jas Dev Singh vs State of Punjab, ; and Vakil Singh vs State of J & K, AIR 1974 SC 2337, referred to. In the instant case, the grounds of detention were divided into two groups, one labelled as criminal activities and the other as extremist activities. Against extremist activities it was further indicated, 'on the basis of confidential reports '. The facts by way of accusations were detailed, but copies of the reports as such were not furnished. The respondent had actually been given in the grounds all material details necessary for making an effective representation. [98 H; 99 A]

ition No. 1702 of 1986. (Under Article 32 of the Constitution of India) K.M.M. Khan Amicus Curiae for the Petitioner. O.P. Sharma, Mrs. Subhadra and P. Parmeshwaran for the Respondents. The Judgment of the Court was delivered by B.C. RAY, J. The petitioner who was a Havaldar in the Army (No. 4 142276) has moved this writ petition praying for an order directing the respondent Nos. 1 to 3 to give pensionary benefit to the petitioner as he has served about 19 years in the army as a Havaldar. The petitioner has stated that in the first spell he has served in Kumaon Regiment from November, 1939 to August, 1947 during the second world war. He was released from the army service in August, 1947 in the rank of Havaldar (No. 16235). The petitioner was again recalled during Kashmir operations, in the Kumaon Regiment and he served in the Army Supply Corps (MT) from July, 1948 to July, 1953 in the rank of Havaldar (DUR No. 6556074). The petitioner further stated that he was recalled from Army Supply Corps (MT) by Kumaon Regiment and transferred to impart training in the Lok Sahayak Sena of K.R.C. Platoon No. 28 where he served from July, 1953 to July, 1956 in the rank of Havaldar. As his job was to impart military training to Lok Sahayak Sena which is like NCC, he retained a regular army No. 4142276. The petitioner stated that in an alleged incident of storing illicit arms in his house, there was a police raid and all his papers 771 were taken away by the police and as such he had no papers left with him to prove his service in the regular army except a statement of accounts QE 11/56, a copy of which has been annexed as annexure P 2. It has been stated that the petitioner was intimated by a letter dated 27.9.1983 issued by the District Sanik Welfare and Resettlement office, Almora in reply to his representation for pension that he has not been in the army service for a period of 15 years as required, to be entitled to get pension according to Army Pension Rules. His claim for army pension was, therefore, rejected: This letter has been annexed as annexure P 5 to the writ petition. The petitioner has stated in the writ petition that his service rendered in the LSS (third spell) should be treated as service in the army and he having served for more than 15 years in the army is entitled to pension. An affidavit in opposition has been filed on behalf of the respondents sworn by Capt. P.E. Joseph. In para 1 of the said affidavit it has been stated that the petitioner was originally enrolled with the Kumaon Regiment on 24th November, 1940 and discharged from service with effect from 26th October, 1946. He was subsequently re enrolled in ASC (MT) with Army No. 6556074 on 8th March, 1948 and discharged from there on 20th May, 1952. It has been further stated that in the third spell of service he was re enrolled with the Kumaon Regiment on 2nd March, 1955 for Lok Sahayak Sena and allotted Army No. 4142276. He was discharged from there on 2nd September, 1957. It has been further stated in para 3 of the said affidavit that the claim of the petitioner that he was in army service for over 19 years was not based on facts. It has been further stated that his service in the first two spells is 10 years and 54 days only and even if his service with 29 LSS is counted towards qualifying service his total service would be less than 15 years. So he will not be entitled to pension as per the extent army rules. The petitioner on the other hand was unable to produce relevant documents in support of his statement regarding the period of his service in the army rendered both in the first and second spell of service. It appears from a letter dated 21st October, 1982 issued by the Lieutenant, Sahayak Abhilekh Adhikari, Asstt. Record officer for OIC Records that the service rendered by the petitioner in LSS cannot be counted towards pension as the members of that unit are not treated as army personnel. This letter has been annexed as annexure 'D ' to the counter affidavit. It has been further stated in the affidavit that since the individual has not served in the army as an incumbent for more than 15 years, he is not entitled to any pension as contemplated under the army rules. 772 A supplementary counter affidavit on behalf of the respondents verified by 2nd Lieutenant Jagdish Singh, Records Kumaon Regiment, Ranikhet has been filed wherein it has been stated in para 9 that the petitioner having not completed the required 15 years of service, was not entitled to pension as per prevalent rules. It also appears from the letter dated 3rd February, 1987 issued under the signature of Major, Senior Record officer for officer in Charge addressed to the organisation Directorate, Adjutant General 's Branch, Army Headquarters that since the petitioner had not completed 15 years pensionable service in both the spells, he was not entitled to service pension as per the existing orders. It has been further stated therein that the petitioner 's service in 28 National Volunteer Force (LSS) training team was not countable towards pension for which necessary clarification had already been given by the CDA(P), Allahabad vide letter dated 21st October, 1982. The respondents at the time of hearing produced the relevant records wherefrom it appears that the petitioner has not completed 15 years of army service as his service in the LSS can not be treated as army service. It is also evident that the statements of the petitioner regarding the periods of service rendered by him in the first and the second spell are inconsistent with his record of service as mentioned in the letter dated February 3, 1987, annexed as annexure 'B ' to the supplementary counter affidavit filed on behalf of the respondents as well as from the letter issued under the signatures of Sahayak Abhilekh Adhikari, Asstt. Record officer for OIC Records dated October 16, 1981, annexed as annexure P 4 to the writ petition The army regulation Nos. 126 and 132 were also placed before us in this connection. We are constrained to hold that the petitioner has not rendered 15 years of army service to be able to get the benefit of army pension as required under the army rules. Writ Petition is therefore, dismissed. There will however. be no order as to costs. P.S .S. Petition dismissed.

Regulation No. 132 of Pension Regulation for the Army, 1961 (Part I) prescribes minimum qualifying colour service of fifteen years for earning service pension. Regulation No. 126 provides for counting of former service. The petitioner 's representation for pension was rejected on the ground that he had not been in the Army service for a period of 15 years as required under the Army Pension Rules. In the writ petition the petitioner claimed that he had served in the Army from November 1939 to August 1948, when he was released in the rank of Havaldar, that he was again recalled and served in the Army Supply Corps (MT) from July 1948 to July 1953 in the rank of Havaldar, when he was again recalled by the Kumaon Regiment and served in the Lok Sahayak Sena from July 1953 to July 1956 in the rank of Havaldar. He further stated that service rendered by him in the LSS (third spell) should be treated as services in the army and he having served for more than 15 years m the army was entitled to pension. His claim that he was in the army service for over 19 years, was contested by the respondents, who stated that the petitioner was enrolled in the Army on November 24, 1940 and discharged from service with effect from October 26, 1946, that he was subsequently re enrolled in ASC (MT) with Army on March 8, 1948 and discharged from there on May 20, 1952, and that he has re enrolled with the Kumaon Regiment on March 2, 1955 for Lok Sahayak Sena and discharged from there on September 2, 1957. It was further stated that the service rendered by him in LSS was not countable towards pension and that his service in the first two spells was 10 years and 54 days only. The petitioner could not produce relevant documents in support of his statement. 770 Dismissing the writ petition, ^ HELD: The petitioner has not rendered 15 years of army service to be able to get the benefit of army pension as required under the army rules. [772F] The statements of the petitioner regarding the periods of service rendered by him in the first and the second spell are inconsistent with his record of service produced by the respondents at the hearing. [772D E] His service in the National Volunteer Force (LSS) cannot be treated as army service countable towards pension. [772D]

ivil Appeal Nos. 191 193 of 1978. Appeals by Special Leave from the Judgment and Order dated 28 12 77 of the Assistant Commissioner of Sales Tax, Indore in R. C. No. IND/1/X/XIX/5 in case No. 118/72 73 for the period 1 8 71 to 31 7 72, R. C. No. IND/I/1344 (Central) in Case No. 84/72 73 for the period 1 8 71 to 31 7 72 and R. C. No. IND/I/X/XIX/5 (TOT) 1100 in Case No. 118/72 73 for the period 15 11 71 to 31 7 72 and rectified by orders dated 7 1 1978. V. section Desai (CA 191/78), B. R. Agarwala and P. G. Gokhale for the Appellant. section K. Gambhir for the Respondent. The Judgment of the Court was delivered by BHAGWATI, J. These appeals by special leave raise common questions of law and it would be convenient to dispose them of by a single judgment. The assessee effected certain transactions of sale of cement in accordance with the provisions of the Cement Control Order during the assessment period Ist August, 1971 to 31st July, 1972 and in the course of the assessment of the assessee to sales tax under the Madhya Pradesh General Sales Tax Act, 1958 and , a question arose whether the amount of freight which was included in the 'free on rail destination railway station ' price, but which was paid by the purchasers and hence deducted from the price shown in the invoices sent to the purchasers, formed part of the sale price so as to be liable to be included in the taxable turnover of the assessee. The assessee, proceeding on the basis that the amount of freight did not form part of the sale price and was not includible in the taxable turnover did not show it in the returns, but the Assistant Commissioner of Sales Tax took the view that having regard to the provisions of the Cement Control Order, the amount of freight formed part of the sale price and was includible in the taxable turnover of the assessee and on this view, he passed two orders of assessment, one under the and the other under the Madhya Pradesh General Sales Tax Act, 1958, including the amount of freight in the taxable turnover of the assessee and levying tax upon it and also imposing heavy penalty on the assessee on the ground that the assessee had failed to disclose in its returns the amount of freight as forming part of the taxable turnover. The same position obtained also in regard to the assessment period 15th November, 1971 to 31st July, 1972 and a similar order bringing the amount of freight to tax and imposing heavy penalty on the assessee was passed by the Assistant Commissioner of Sales Tax under the Madhya Pradesh General Sales Tax Act, 1958. Since the question as to whether in respect of transactions of sale of cement governed by the Cement Control Order, the amount of freight formed part of the sale price and was liable to be included in the taxable turnover of the dealer, was pending decision in this Court, the assessee 1101 preferred appeals directly to this Court by special leave against the Orders of assessment made by the Assistant Commissioner of Sales Tax. The assessee challenged in the appeals not only the inclusion of the amount of freight in the taxable turnover of the assessee, but also the imposition of penalty for not showing the amount of freight as forming part of the taxable turnover in the returns. So far as the first question is concerned, namely, whether the amount of freight formed part of the sale price and was includible in the taxable turnover of the assessee so as to be exigible to sales tax, it stands concluded by a recent decision given by this Court in Hindustan Sugar Mills vs State of Rajasthan & Ors.(1) It has been held by this Court in that case that by reason of the provisions of the Cement Control Order, 1967, which governed the transactions of sale of cement entered into by the assessee with the purchasers, the amount of freight formed part of the sale price within the meaning of the first part of the definition of that term contained in sec. 2 (p) of the Rajasthan Sales Tax Act, 1954 and section 2(h) of the and was includible in the taxable turnover of the assessee. The definition of 'sale price ' in section 2(o) of the Madhya Pradesh General Sales Tax Act, 1958 is materially in the same terms as section 2(p) of the Rajasthan Sales Tax Act, 1954, and this decision must therefore equally apply under the Madhya Pradesh General Sales Tax Act, 1958 and it must be held that the amount of freight formed part of the sale price within the meaning of the first part of the definition of that term in section 2(o) of the Madhya Pradesh General Sales Tax Act 1958 and section 2(h) of the and was rightly included in the taxable turnover of the assessee. We may point out that the observations made by this Court in the Order dated 31st August, 1979 allowing the Review Application of the assessee in Hindustan Sugar Mills case (supra) are equally applicable in the present case and the State will do what is fair and just to the appellant as indicated by this Court in that Order. The next question that arises for consideration is whether the Assistant Commissioner of Sales Tax was right in imposing penalty on the assessee for not showing the amount of freight as forming part of the taxable turnover in its returns. The penalty was imposed under section 43 of the Madhya Pradesh General Sales Tax Act, 1958 and section 9 sub section (2) of the on the 1102 ground that the assessee had furnished false returns by not including the amount of freight in the taxable turnover disclosed in the returns. Now it is difficult to see how the assessee could be said to have filed 'false ' returns, when what the assessee did, namely, not including the amount of freight in the taxable turnover was under a bonafide belief that the amount of freight did not form part of the sale price and was not includible in the taxable turnover. The contention of the assessee throughout was that on a proper construction of the definition of 'sale price ' in section 2(o) of the Madhya Pradesh General Sales Tax Act, 1958 and section 2(h) of the , the amount of freight did not fall within the definition and was not liable to be included in the taxable turnover. This was the reason why the assessee did not include the amount of freight in the taxable turnover in the returns filed by it. Now, it cannot be said that this was a frivolous contention taken up merely for the purpose of avoiding liability to pay tax. It was a highly arguable contention which required serious consideration by the Court and the belief entertained by the assessee that it was not liable to include the amount of freight in the taxable turnover could not be said to be malafide or unreasonable. What section 43 of the Madhya Pradesh General Sales Tax Act, 1958 requires is that the assessee should have filed a 'false ' return and a return cannot be said to be 'false ' unless there is an element of deliberateness in it. It is possible that even where the incorrectness of the return is claimed to be due to want of care on the part of the assessee and there is no reasonable explanation forthcoming from the assessee for such want of care, the Court may, in a given case, infer deliberateness and the return may be liable to be branded as a false return. But where the assessee does not include a particular item in the taxable turnover under a bonafide belief that he is not liable so to include it, it would not be right to condemn the return as a 'false ' return inviting imposition of penalty. This view which is being taken by us is supported by the decision of this Court in Hindustan Steel Limited vs State of Orissa(1) where it has been held that "even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute. ." It is elementary that section 43 of the Madhya Pradesh General Sales Tax Act, 1958 providing for imposition of penalty is penal in character and unless the filing of an inaccurate return is accompanied by a guilty mind, the section cannot be invoked for imposing penalty. If the view canvassed on behalf of the Revenue were accepted, the re 1103 sult would be that even if the assessee raises a bonafide contention that a particular item is not liable to be included in the taxable turnover, he would have to show it as forming part of the taxable turnover in his return and pay tax upon it on pain of being held liable for penalty in case his contention is ultimately found by the Court to be not acceptable. That surely could never have been intended by the Legislature. We are, therefore, of the view that the assessee could not be said to have filed 'false ' returns when it did not include the amount of freight in the taxable turnover shown in the returns and the Assistant Commissioner of Sales Tax was not justified in imposing penalty on the assessee under section 43 of the Madhya Pradesh General Sales Tax, 1958 and section 9 sub section (2) of the . We accordingly reject the appeals in so far they are directed against the inclusion of the amount of freight in the taxable turnover of the assessee but allow the appeals in so far as they relate to imposition of penalty of freight in the taxable turnover of the assessee but allow the appeals in so far as they relate to imposition of penalty and set aside the Orders passed by the Assistant Commissioner of Sales Tax imposing penalty on the assessee. There will be no order as to costs of the appeals. N. V. K. Appeals partly allowed.

The assessee (appellant) effected certain transactions of sale of cement in accordance with the provisions of the Cement Control order. The amount of freight which was included in the 'free on rail destination railway station ' price and which was paid by the purchaser was deducted from the price shown in the invoices sent to the purchasers. The assessee proceeding on the basis that the amount of freight did not form part of the sale price and was not includible in the taxable turnover did not show it in the returns submitted by it. The Assistant Commissioner of Sales Tax took the view that having regard to the provisions of the Cement Control Order, the amount of freight formed part of the sale price and was includible in the taxable turnover of the assessee, and passed two orders of assessment, one under the and the other under the Madhya Pradesh General Sales Tax Act, 1958, including the amount of freight in the taxable turnover of the assessee and levying tax upon it and also imposing heavy penalty on the assessee on the ground that the assessee had failed to disclose in its returns the amount of freight as forming part of the taxable turnover. In appeals to this Court on the questions of: (1) inclusion of the amount of freight in the taxable turnover of the assessee and (2) imposition of penalty for not showing the amount of freight as forming part of the taxable turnover in the returns. ^ HELD: 1. (i) The amount of freight formed part of the sale price within the meaning of the first part of the definition of that term in Section 2(o) of the Madhya Pradesh General Sales Tax Act, 1958 and Section 2(h) of the ' and was rightly included in the taxable turnover of the assessee. [1101E] (ii) In Hindustan Sugar Mills vs State of Rajasthan this Court held that by reason of the provisions of the Cement Control Order, 1967, which governed the transactions of sale of cement entered into by the assessee the amount of freight formed part of the sale price within the meaning 1099 of the first part of the definition of that term contained in Section 2(p) of the Rajasthan Sales Tax Act, 1954 and Section 2(h) of the and was includible in the taxable turnover of the assessee. The said decision must equally apply under the Madhya Pradesh General Sales Tax Act, 1958, as the definition of 'sale price ' in Section 2(o) of the Madhya Pradesh General Sales Tax Act, 1958 is materially in the same terms as Section 2(p) of the Rajasthan Sales Tax Act, 1954. [1101C E] 2(i) The Assistant Commissioner of Sales Tax was not justified in imposing penalty on the assessee under Section 43 of the Madhya Pradesh General Sales Tax Act, 1958 and section 9 sub section (2) of the of 1956 as the assessee could not be said to have filed 'false ' returns when it did not include the amount of freight in the taxable turnover shown in the returns. [1103C, B] (ii) Section 43 of the Madhya Pradesh General Sales Tax Act, 1958 providing for imposition of penalty requires that the assessee should have filed a 'false ' return and a return cannot be said to be 'false ' unless there is an element of deliberateness in it. The Section being penal in character, unless the filing of an inaccurate return is accompanied by a guilty mind, the section cannot be invoked for imposing penalty. [1102D, 1102H] (iii) Where the assessee does not include a particular item in the taxable turnover under a bonafide belief that he is not liable so to include it, it would not be right to condemn the return as a 'false ' return inviting imposition of penalty. [1102F] Hindustan Steel Ltd. vs State of Orissa, 25 S.T.C. 211, referred to. In the instant case, the assessee did not include the amount of freight in the taxable turnover under a bonafide belief that the amount of freight did not form part of the sale price and was not includible in the taxable turnover. The contention of the assessee through out was that on a proper construction of the definition of 'sale price ' in Section 2(o) of the Madhya Pradesh General Sales Tax Act, 1958 and Section 2(h) of the , the amount of freight did not fall within the definition and was not liable to be included in the taxable turnover. It cannot be said that this was a frivolous contention taken up merely for the purpose of avoiding liability to tax. This was a highly arguable contention. The belief entertained by the assessee that it was not liable to include the amount of freight in the taxable turnover could not be said to be malafide or unreasonable. It cannot, therefore, be said that the assessee filed 'false ' returns necessitating imposition of penalty. [1102A D,E]

vil Appeals Nos. 1166 72 of 1985 etc. From the Judgment and Order dated 24.1.85 of the Punjab & Haryana High Court in C.W.P. Nos. 698 to 703 and 733 of 1984. Raja Ram Aggarwal, B. Sen, Dr. Devi Paul, D.S. Tawatia, Soli J. Sorabjee, Kapil Sibal and S.K. Dholakia, A.N. Haka sar, D.N. Misra, Mukul Mudgal, Ravinder Narain, P.K. Ram, section Sukumaran, section Ganesh, Mahabir Singh, H.S. Anand. R. Karania wala, Mrs. Manik Karanjawala, A.S. Bhasme and A.M. Khanwil kar for the Appearing Parties. The following Judgments of the Court were delivered: SABYASACHI MUKHARJI, J. Except civil appeals Nos. 416263 of 1988, in these appeals along with the special leave petitions and the writ petition, we are concerned with Sections 9(1) and 24(3) as well as the penalty proceedings initiated under Section 50 of the Haryana General Sales Tax Act, 1974 (hereinafter referred to as 'the Act '). So far as civil appeals Nos. 4 162 63 of 1988 are concerned, these involve the scope, effect and validity of Section 13AA of the Bombay Sales 523 Tax Act. 1959 (hereinafter referred to as 'the Bombay Act ') as introduced by the Maharashtra Act No. XXVIII of 1982. It will, therefore, be desirable first to deal with the ques tion of the Act, and then with the provisions of the Bombay Act as mentioned hereinbefore. The appellant/petitioner Goodyear India Ltd., was engaged at all relevant times, inter alia, in the manufac ture and sale of automobile tyres and tubes. It manufactured the said tyres and tubes at its factory at Ballabhgarh in the district of Faridabad in the State of Haryana. For the said manufacturing activity the appellant had, from time to time, to purchase various kinds of raw materials both within the State and outside the State. It is stated that about 7 to 10% of the total needs of raw materials on an all India basis were locally procured by the appellant from Haryana itself. The raw materials purchased in Haryana were: (i) pigments (partly), (ii) chemicals (partly), (iii) wires (partly), (iv) carbon black (partly), (v) rubber (partly), and (vi) fabric (partly). The rest of the requirements were imported from other States. The appellant had its depots at different places in the State of Haryana as well as in other States. After manufacturing the said tyres and tubes, about 10 to 12% of the total manufactured products used to be sold in the State of Haryana either locally or in the course of inter State trade & commerce or in the course of export outside the country and also sold locally against Declara tion Form No. ST 15. It was stated that at the relevant time the local sales including sales in the course of inter State trade & commerce and in the course of export from the State of Haryana was about 30 to 35%. The appellant was a regis tered dealer both under the Haryana Act and the , and had been submitting its quarterly returns and paying the sales tax in accordance with law, according to the appellant. In 1979, the assessing authority, Farida bad, imposed upon the appellant the purchase tax under Sec tion 9 of the Act for the assessment year 1973 74 and subse quently for the years 1974 75 and 1975 76 as well on the despatches made by the appellant on the manufactured goods to its various depots outside the State. Subsequently, the relevant revenue authorities sought to impose purchase tax under Section 9(1) of the Act and imposed purchase tax on despatches of manufactured goods, namely, tyres and tubes, to its various depots in other States. This led to the filing of various writ petitions in the Punjab & Haryana High Court by the appellant/petitioner. In respect of the assessment years 1976 77 to 1979 80. these questions were considered by the Punjab and Haryana High Court, and the writ. petitions were decided in favour of the appellant on December 524 4, 1982. The said decision being the decision in Goodyear India Ltd. vs The State of Haryana & Anr. is reported in 53 STC 163. The Division Bench of the High Court in the said decision held that both on principle and precedent, a mere despatch of goods out of the State by a dealer to his own branch while retaining both title and possession thereof, does not come within the ambit of the phrase "disposes of the manufactured goods in any manner otherwise than by way of sale", as employed in section 9(1)(a)(ii) of the Act. The High Court further held that the decision of this Court in The State of Tamil Nadu vs M.K. Kandaswami, [1975] 36 STC 191 was no warrant for the proposition that a mere despatch of goods was within the ambit of disposing them of. The High Court also distinguished the decision of this Court in Ganesh Prasad Dixit vs Commissioner of Sales Tax, M.P., [1969] 24 STC 343, and held that Notification No. S.O. 119/H.A. 20/73/Ss. 9 & 15/74 dated July 19, 1974 issued under Section 9 (prior to its amendment by Act No. 11 of 1979) was ultra vires of Section 9 of the Act. It was held that whereas the section provided only for the levy of purchase tax on the disposal of manufactured goods, the impugned notification by making a mere despatch of goods to the dealers themselves taxable, in essence, legislates and imposes a substantive tax which it obviously could not. It was held that this was contrary to and in conflict with the provisions of section 9. The High Court referred to the relevant portion of unamended Section 9 of the Act with which it was confronted and the notification. In order to appreciate the said decision and the position, it will be appropriate to set out the said provisions, namely, the unamended provisions of Section 9 as well as the notifica tion: "9. Where a dealer liable to pay tax under this Act purchases goods other than those specified in Schedule B from any source in the State and (a) uses them in the State in the manufacture of, (i) goods specified in Schedule B or (ii) any other goods and disposes of the manufactured goods in any manner otherwise than by way of sale whether within the state or in the course of inter State trade or commerce or within the meaning of sub section (1) of Section 5 of the , in the course of export out of the territory of India, 525 (b) exports them, in the circumstances in which no tax is pay able under any other provision of this Act, there shall be levied, subject to the provi sions of section 17, a tax on the purchase of such goods at such rate as may be notified under section 15. " The relevant notification was as follows: "Notification No. S.O. 119/H. A. 20/73/Ss. 9 and 15/74 dated the 19th July, 1974. In exercise of the powers conferred by section 9 and subsection (1) of section 15 of the Haryana General Sales Tax Act, 1973, the Governor of Haryana hereby directs that the rate of tax payable by all dealers in respect of the purchases of goods other than goods specified in Schedules C and D or goods liable to tax at the first stage notified as such under section 18 of the said Act, if used by them for purposes other than those for which such goods were sold to them shall be the rate of tax leviable on the sale of such goods: Provided that where any such dealer, instead of using such goods for the purpose for which they were sold to him, despatches such goods or goods manufactured therefrom at any time for consumption or sale outside the State of Haryana to his branch or commission agent or any other person on his behalf in any other State and such branch, commission agent or other person is a registered dealer in that State and produces a certificate from the assessing authority of that State or produces his own affidavit and the affidavit of the consignee of such goods duly attested by a Magistrate or Oath Commissioner or Notary Public in the form appended to this notifica tion to the effect that the goods in question have been so despatched and received and entered in the account books of the consignee, the rate of tax on such goods shall be three paise in a rupee on the purchase value of the goods so despatched." The High Court, as stated before, referred to section 9 and held that the expression 'disposes of ' was not basically a term of legal art and, therefore, it was proper and neces sary to first turn to its ordinary 526 meaning in order to determine whether a mere despatch of goods by a dealer to himself would connote 'disposal of ' such goods by him. The High Court referred to the dictionary meaning of 'disposes of ' in Webster 's Third New Internation al Dictionary. Reference was also made to 27 Corpus Juris Secundum, P. 345, and ultimately it came to the conclusion that the phrase 'disposes of ' or 'disposal ' cannot be possi bly equated with the mere despatch of goods by a dealer to himself. After referring to the relevant provisions with which this Court was concerned in Kandaswami 's case (supra), the High Court held that that case was no warrant for con struing the expression 'despatch ' as synonymous to 'dispos al '. On the other hand, the court held that the decision of this Court emphasises that the expression 'disposal ' of goods is separate and distinct from despatch thereof. Ac cording to the High Court, the same position was applicable to Ganesh Prasad Dixit 's case (supra), and in those circum stances held that the term 'disposes of ' cannot be synony mous with 'disposal ', and once that is held then the notifi cation mentioned above travelled far beyond what is provided in Section 9 of the Act, while the said provision provided only for levy of purchase tax on disposal of manufactured goods. The High Court observed as follows: "Once it is held as above, the impugned Notification No. S.O. 119/H.A. 20/73/Ss. 9 and 15/74 dated 19th July, 1974 (annexure P 2), plainly travels far beyond the parent section 9 of the Act. Whereas the said provision provided only for the levy of a purchase tax on the disposal of manufactured goods, the notification by making a mere despatch of goods to the dealers themselves taxable in essence, legislates and imposes a substantive tax which it obviously cannot. Indeed, its terms run contrary to and are in direct conflict with the provisions of section 9 itself. There is thus no option but to hold that the notification, which is a composite one, is ultra vires of section 9 of the Act and is hereby struck down. " The High Court also noted that though the challenged assessment orders were appealable, however, as the challenge was to the very validity of the notification which was obviously beyond the scope of the appellate authority, the writ petitions were entertainable as the assessment was based on the notification which was frontally challenged. As a result, the High Court quashed the notification and set aside the assessment orders. The said decision is under challenge in appeal to this Court. 527 It may be mentioned that sub section (1) of section 9 of the Act had been introduced by the Haryana Act, 55 of 1976 in the Act. After the aforesaid decision of the High Court, the Haryana Legislature intervened and enacted the Haryana General Sales Tax (Amendment & Validation) Act, 1983 by which Section 9 of the principal Act was amended as follows: "Amendment of Section 9 of Haryana Act 20 of 1973 in Section 9 of the principal Act, (a) in sub section (1) , (i) for clause (b), the following clause shall be substituted and shall be deemed to have been substituted for the period commencing from the 27th day of May, 1971, and ending with the 8th day of April, 1979, namely: "(b) purchases goods, other than those speci fied in Schedule B, from any source in the State and uses them in the State in the manu facture of any other goods and either disposes of the manufactured goods to a place outside the State in any manner otherwise than by way of sale in the course of inter State trade or commerce or in the course of export outside the territory of India within the meaning of Sub section (1) of Section 5 of the ; or", (ii) after clause (b), the following clause shall be deemed to have been inserted with effect from the 9th day of April, 1979, name ly: "(bb) purchases goods, other than those speci fied in Schedule B except milk, from any source in the State and uses them in the State in the manufacture of any other goods and either disposes of the manufactured goods in any manner otherwise than by way of sale in the State or despatches the manufactured goods to a place outside the State in any manner otherwise than by way of Sale in the course of inter State trade or commerce or in the course of export outside the territory of India within the meaning of Sub Section (1) of Section 5 of the ; or"; 528 {iii) the following proviso shall be added, namely: "Provided that no tax shall be leviable under this section on scientific goods and guar gum, manufactured in the state and sold by him in the course of export outside the territory of India within the meaning of Sub section (3) of Section . of the ."; and (b) in sub section (3), the words "other than Railway premises" shah be omitted." After the aforesaid amendment the writ petitions were filed in the High Court by Bata India Ltd. In the meantime, the petitioner Company also filed writ petitions for the assessment years 1973 74 to 1975 76 and 1980 81 in the High Court challenging the assessment. The High Court decided these matters on August 2, 1983. The said decision Bata India Ltd. vs The State of Haryana & Anr. has been reported in 1983 Vol. 54 STC 226. The High Court held that "mere despatch of goods to a place outside the State in any manner otherwise than by way of sale in the course of inter State trade or commerce" is synonymous with or is in any case included within the ambit of the consignment of goods either to the person making it or to any other person in the course of inter State trade or commerce as specified in Article 269(1)(h) and Entry No. 92 B of List 1 of the 7th Schedule to the Constitution. Hence, the levy of sales or purchase tax on such a despatch or consignment of goods and matters ancillary or subsidiary thereto, will be within the exclu sive legislative competence of Parliament to the total exclusion of the State Legislature. Therefore, section 9(1)(b) of the Haryana General Sales Tax Act, 1973, as amended by the Haryana General Sales Tax (Amendment & Vali dation) Act, 1983, insofar as it levies a purchase tax on the consignment of goods outside the State in the course of inter State trade or commerce is beyond the legislative competence of the State of Haryana and is void and inopera tive. It was held that the retrospective validation of the notification of 19th July, 1974 referred to hereinbefore, and the consequential validation of all actions taken there under were liable to be quashed. The High Court further held that mere manufacture and consignment of goods outside the State to himself by a manufacturer is not sale or disposal thereof with the result that it will not be within the ambit of Entry No. 54 of List II of the 7th Schedule to the Con stitution. Consequently, it was held that irrespective of the 46th Amendment, an attempt to tax the mere consignment or despatch of manufactured goods outside the State in the course of inter State trade 529 or commerce will not come within the ambit of Entry No. 54 of List II of the 7th Schedule, and consequently of the competence of the respective State Legislatures. Even before the 46th Amendment, the mere consignment of goods in the course of inter State trade or commerce was beyond the scope of the said Entry and thus not within the legislative compe tence of the States and was entirely within the parliamen tary field of. legislation by .virtue of Article 248 and the residuary Entry No. 97 of List I. The High Court was of the view that neither the original purchase of goods nor the manufacture thereof into the end product by itself attracts purchase tax and consequently are not even remotely the taxable events. What directly and pristinely attracts the tax and can be truly labelled as the taxing event under section 9(1)(b) of the Act is the three fold exigency of; (i) disposal of the manufactured goods in any manner otherwise than by way of sale in the State; or (ii) despatch of the manufactured goods to a place outside the State in any manner otherwise than by way of sale in the course of inter State trade or commerce, or (iii) disposal or despatch of the manufactured goods in the course of export outside the territory of India. It was these three exigencies only which were the taxable events in the amended section 9(1)(b) of the Act. Consequently, in a Statute where the taxable event is the despatch or consignment of goods outside the State, the same would come squarely within the wide sweep of Entry No. 92B of List I of the Constitution, and thus excludes taxation by the States. The High Court was of the view that section 9 of the Act must be strictly construed as it was a charging section. If the charging section travels beyond the legislative Entry and thereby transgresses the legislative field, then the same cannot possibly be sustained. The constitutional changes brought by the 46th Amendment in article 269 of the Constitution read with the insertion of Entry No. 92B in the Union List, leave no doubt that the legislative arena of tax on the consignment of goods (whether to one 's ownself or to any other person) in the course of inter State trade or commerce and all ancillary or complementary or consequential matters, are now declared to be exclusively reserved for parliamentary legislation and any intrusion into this field by the State Legislatures would be barred. In my opinion, the High Court correctly noted in the said decision that the provisions of constitutional change have to be construed, and such problems should not be viewed in narrow isolationism but on a much wider. spectrum and the principles laid down in Heydon 's case 530 ; are instructive. Hence, in a situation of this nature, it was just and proper to see what was the position before the 46th Amendment of the Constitution, and find out what was the mischief that was sought to be reme died and then discover the true rationale for such a remedy. In Black Clawson International Ltd. vs Papierwerke Waldhof Aschaffenburg Ag. , ; , Lord Reid observed as follows: "One must first read the words in the context of the Act as a whole, but one is entitled to go beyond that. The general rule in construing any document is that one should put oneself 'in the shoes ' of the maker or makers and take into account relevant facts known to them when the document was made. The same must apply to Acts of Parliament subject to one qualifica tion. An Act is addressed to all the lieges and it would seem wrong to take into account anything that was not public knowledge at the time. That may be common knowledge at the time or it may be some published information which Parliament can be presumed to have had in mind. It has always been said to be impor tant to consider the mischief which the Act was apparently intended to remedy. The word 'mischief ' is traditional. I would expand it in this way. In addition to reading the Act you look at the facts presumed to be known to Parliament when the Bill which became the Act in question was before it, and you consider whether there is disclosed some unsatisfactory state of affairs which Parliament can properly be supposed to have intended to remedy by the Act . " The state of affairs that the Parliament has sought to remedy by the 46th Amendment of the Constitution, was that prior to the promulgation each State attempted to subject the same transaction to tax on the nexus doctrine under its sales tax laws. Consequently, on the basis of one or the other element of the territorial nexus, the same transaction had to suffer tax in different States with the inevitable hardship to trade and consumers in the same or different States. The framers of the Constitution being fully aware of the problems sought to check the same by a somewhat complex constitutional scheme and by imposing restrictions on the States ' power with regard to levy tax on the sale or pur chase of goods under article 286. The High Court in the judg ment referred to hereinbefore, mentioned these factors. It is in 531 this background that article 269 was amended and clause (3) was added to it. The effect, inter alia, is that the power to levy tax on the sale or purchase of goods is now referable to the legislative power vested in the States by virtue of Entry No. 54 in List II of the 7th Schedule. However, this legislative authority of the States is restricted by three limitations contained in Articles 286(1)(a), 286(1)(b) & 286(3) of the Constitution. It may be mentioned that Parlia ment by the 6th Amendment to the Constitution, enacted the , with the object to formulate principles for determining when a sale or purchase of goods takes place in the course of inter State trade or commerce or outside a State or in the course of import into or export from India, to provide for the levy, collection and distri bution of taxes on sales of goods in the course of inter State trade or commerce and to declare certain goods to be of special importance and specify the restrictions and conditions to which State laws imposing taxes on the sale or purchase of such goods shall be subject. In this connection, the High Court referred to the various propositions as mentioned by the Law Commission in its 61st Report rendered in May, 1974. It is not necessary to set out the same in detail. It was in the aforesaid historical background that the High Court construed the provisions in question and came to the conclusion that a plain reading of these would leave little manner of doubt that the legislative power to tax consignment transfers of goods from one branch of an insti tution to another branch thereof outside the State and all matters incidental, ancillary or complementary thereto were then declared to be vested in the Union of India to the total exclusion of the States. The High Court referred to the observations of this Court in Khyerbari Tea Co. Ltd. vs State of Assam; , ; Navinchandra Mafatlal vs The Commissioner of Income tax, Bombay City, [1955] SCR 829 and Waverly Jute Mills Co. Ltd. vs Raymon & Co. (1) Pvt. Ltd.; , , and concluded that Entry 92B enabled the Union of India not only to tax the consignment of goods in the strict sense but also embraced all ancillary and complementary areas as well to the exclusion of the State Legislature therefrom. In the aforesaid light the High Court construed section 9(1)(b) of the Haryana Act, 1983. Analy sing the provisions in detail it observed that Section 9 of the Act was a charging section for the levy of purchase tax. It imposed liability for payment of purchase tax, therefore, it should be distinguished from the machinery section. The High Court examined the real nature of the business outside the State and found that there was merely a change in the physical situs of the goods without any change in the basic incidents of ownership and control. Therefore, in its true nature a mere despatch of goods outside the State to another branch of the original institution is not and never 532 can be the equivalent of a sale either as a term of art in the existing sales tax legislation and not remotely so in common parlance, and construing section 9(1)(b) of the Act, the High Court was of the view that the real taxing event is the despatch of the manufactured goods to a place outside the, State in any manner otherwise than by way of sale in the course of inter State trade or commerce. The High Court found that there was no distinction between the despatch as defined in the said amended section and the consignment of goods by the manufacturer to himself or any other person in the course of inter State trade or commerce, and referred to the meanings of the expressions 'despatch ' and 'consign ', which are similar and almost interchangeable when used in specific commercial sense. The High Court referred to Webster 's New International Diction ary, Shorter Oxford English Dictionary and also to Random House dictionary for their meanings. On construction, the High Court came to the conclusion that the amended provi sions of section 9(1)(b) of the Act attempt to levy an identical tax in the garb of a levy on the despatch of manufactured goods to places outside the State of Haryana, and therefore intruded and trespassed into an arena exclu sively meant for taxation by the Union of India. The High Court also viewed from another point of view, namely, who was liable as it was the consignment of goods which attract ed the liability of purchase tax and in pristine essence was the "taxable event" under section 9(1)(b) of the Act. The High Court also analysed it from the point of view that under section 9(1)(b), where a dealer purchases goods for the express purpose of manufacturing other goods within the State, then in strict sense such purchase by itself did not attract any tax under the provisions. Hence, the High Court set aside the amended provision so far as it sought to levy purchase tax on the consignment of goods outside the State in the course of inter State trade or commerce, consequently it also set aside the retrospective validation of the noti fication and the consequential validation of all actions taken thereunder. Special leave petitions were filed in this Court against the said decision of the High Court. These are special leave petitions Nos. 8397 to 8402 of 1983. During the pendency of the special leave petitions, show cause notices were issued by the assessing authority in respect of the assessment years 1973 74 to 1980 81 (except for 1978 79 & 1979 80) and also for 1982 83 asking the petitioner to show cause why in addition to purchase tax, it should not be liable to penalty as well. The petitioner Company again filed writ petitions in Punjab & Haryana High Court chal lenging the validity of those notices. It appears that in the meantime, a Full Bench of the High Court decided the question again in the case of Des Raj Pushap 533 Kumar Gulati vs The State of Punjab & Anr. This decision was rendered on January 24, 1985, and is reported in 58 STC 393. The assessment years involved in all appeals are 1973 74 to 1982 83. According to the Full Bench, the taxing event is the act of purchase and not the Act of despatch or con signment as held in Bata India Ltd., (supra). In the prem ises, it was held that section 9(1)(b) as amended, was neither invalid nor ultra vires and overruled the decision of Bata India Ltd. The writ petitions filed were also dis missed. The petitioner Company filed special leave petitions against the aforesaid judgment of the Punjab & Haryana High Court which were admitted in Civil Appeals Nos. 1166 72/85. Goodyear India also filed writ petition No. 3834 of 1985 in respect of the assessment year 1981 82, as the notices for assessment and penalty were received after the decision of Punjab & Haryana High Court in Des Raj Pushap Kumar 's case (supra). The said decision was passed in appeal against the decision of the said court in Goodyear India reported in 53 STC 163, number being 1514 (NT) of 1984. All these questions are the subjectmatters of these appeals. It is well settled that what is the taxable event or what necessitates taxation in an appropriate Statute, must be found out by construing the provisions. The essential task is to find out what is the taxable event. In what is considered to be indirect tax, there is a marked distinction between the consequence of manufacture and the consequence of sale. It is well to remember that in construing the expres sions of the Constitution to judge whether the provisions like Section 9(1)(b) of the Act, are within the competence of the State Legislature, one must bear in mind that the Constitution is to be construed not in a narrow or pedantic sense. Constitution is not to be construed as mere law but as the machinery by which laws are to be made. It was ob served by Lord Wright in James vs Commonwealth of Australia, at 614, that the rules which apply to the interpretation of other Statutes, however, apply equally to the interpretation of a constitutional enactment. In this context, Lord Wright referred to the observations of the Australian High Court in The Attorney General for the State of New South Wales vs The Brewery Employees Union etc. ; , where it was observed that the words of the Constitution must be interpreted on the same principles as any ordinary law, and these principles compel us to consider the nature and scope of the Act, and to remember that the Constitution is a mechanism under which laws 534 are to be made, and not a mere Act which declares what the law is to be. Hence, such mechanism should be interpreted broadly, bearing in mind in appropriate cases, that the Supreme Court like ours is a nice balance of jurisdictions. A Constitutional Court, one must bear in mind, will not strengthen, but only derogate from its position if it seeks to do anything but declare the law; but it may rightly reflect that a Constitution is a living and organic thing, which of all instruments has the greatest claim to be con strued broadly and liberally. See the observations of Gwyer, C.J. in Re: Central Provinces & Berar Sales of Motor Spirit and Lubricants Taxation Act, 1938, AIR 1939 PC 1 at 4). Mr. Justice Sulaiman in his judgment at p. 22 of the report observed that the power to tax the sale of goods is quite distinct from any right to impose taxes on use or consump tion. It cannot be exercised at the earlier stage of produc tion nor at the later stage of use or consumption, but only at the stage of sale, (emphasis supplied). The essence of a tax on goods manufactured or produced is that the right to levy it accrues by virtue of their manufacture. On the other hand, a duty on the sale of goods cannot be levied merely because goods have been manufactured or produced. Nor can it be levied merely because the goods have been consumed or used or even destroyed. The right to levy the duty would not at all come into existence before the time of the sale. In this connection, reference may be made to the observations of Chief Justice Gwyer in The Province of Madras vs M/s. Boddu Paidanna & Sons, AIR 1942 FC 33. Mr Raja Ram Agarwala, learned counsel for the appellant/assessees, contended before us that it is neces sary to find out or identify the taxable event. If on a true and proper construction of the amended provisions of section 9(1)(b) it is the despatch or consignment of the goods that is the taxable event as contended by the petitioners and appellants, then the power is beyond the State 's competence. If, on the other hand, it is the purchase of the goods that is the taxable event as held by the Full Bench of the High Court, then it will be within its competence. The Full Bench in Des Raj Pushap Kumar 's case (supra) has relied on the background of the facts and the circumstances which necessi tated the introduction of the amendment. Mr. Tewatia, learned counsel appearing for the State canvassed before us the historical perspective and stated that Haryana State came into being as a result of the Punjab State Reorganisation Act, 1966, therefore, part of the legislative history of the taxing Statute like any other Statute is shared by the Haryana State with the Punjab State, and as such it is proper to notice the concept of purchase tax as it 535 evolved in the State of Punjab. Purchase tax was introduced in the State of Punjab for the first time by the East Punjab General Sales Tax (Amendment) Act, 1958. Section 2(ff) was introduced for the first time to define the expression 'purchase '. The definition of the term 'dealer ' was changed to include therein a purchaser of goods also. The definition of the term 'taxable turnover ' was also altered. Some deal ers who crushed oil seeds, were called upon to pay purchase tax on the raw material purchased by them on the ground that the raw material had not been subjected to a manufacturing process as the process of crushing oil seeds did not involve a process of manufacturing. He referred to the fact that Punjab had originally exempted purchase tax on the purchase of raw material by the dealers if such raw material was to be used for the manufacture of goods for sale in Punjab and thus generate more revenue to the State as a result of the sales tax on such manufactured goods. But when the dealers started avoiding this condition for sale in Punjab by var ious ingenious devices after having escaped the payment of purchase tax on the raw material purchased by them, the Legislature amended the Act and Punjab Act No. 18 of 1960 was brought on the statute book w.e.f. April 1, 1960. Sec tion 2(ff) of the Act was amended and it provided that all the goods mentioned in Schedule C when purchased shall be exigible to purchase tax and thus the concession given to the manufacturers was withdrawn. Explaining this background, Mr. Tewatia contended that section 9, sub section (i) of the Act envisages payment of tax at such rate as may be notified under Section 15 on the purchase of goods from any source within the State by a dealer liable to pay tax under the Act when such goods, not being Schedule 'B ' goods, were consumed either in producing Schedule 'B ' goods or when the manufac tured goods were other than Schedule 'B ' goods, the same not being sold within the State or in the course of inter State trade or commerce, or in the course of export outside the territory of India, or the purchased goods were exported outside the State. After referring to the relevant provisions and the provisions of section 9(1)(b), Mr Tewatia emphasised that the contingency contemplated by "or despatches the manufac tured goods to a place outside the State in any manner otherwise than by way of sale in the course of inter State trade or commerce or in the course of export outside the territory of India within the meaning of section 5(1) of the ; or" as well as clause (c) of section 9(1) which encompasses "purchases goods, other than those specified in Schedule B, from any source in the State and exports them, in the circumstances in which no tax is payable under any other provision of 536 this Act, there shall be levied, subject to the provisions of Section 17, a tax on the purchase of such goods at such rate as may be notified under Section 15.", have to be judged for determining their validity in the true historical perspective as well as bearing in mind the remedial aspect of the provisions for the purpose of which these were enact ed. Therefore, the main question is whether the tax envis aged by section 9(1) is a tax on purchase/sale of given goods or is a tax on the despatch/ consignment of such goods and that depends on, as to whether the taxable event is a purchase/sale of goods or despatch/consignment of such goods. As mentioned hereinbefore, Mr. Tewatia laid great deal of emphasis on the background of the provisions of section 9(1). He urged that the said section is both a taxing as well as a remedial provision, as would be evident from the scheme of the Act. The legislative policy was to see that all goods except non taxable goods i.e. Schedule 'B ' goods, must yield tax/revenue to the State in the hands of a dealer, at one stage or the other, according to Mr. Tewatia. He analysed the scheme and referred us to section 6 along with section 27 of the Act, and then submitted that the provision of section 9(1) along with subsection (3) of section 24 of the Act are both composite provisions, i.e. they are both charging provisions as also remedial provi sions. According to him, such composite provisions of a fiscal Statute deserve to be interpreted properly and in such a manner as to further remedy and thus effectuate the legislative intent and suppress the mischief intended to be curbed. Reliance was placed by the High Court as well as Mr. Tewatia before us on the observations of this Court in The State of Tamil Nadu vs Kandaswami, (supra), where at p. 198 of the Sales Tax Cases, this Court while dealing with sec tion 7A of the Tamil Nadu (Amendment) Act, observed that it was at once a charging as well as a remedial provision. Its main object was to plug leakage and prevent evasion of tax. In interpreting such a provision, a construction which would defeat its purpose and, in effect, obliterate it from the statute book, should be eschewed. If more than one construc tion is possible, that which preserves its workability and efficacy is to be preferred to the one which would render it otiose or sterile, observed this Court in that case. While bearing the aforesaid principle in mind, it has to be exam ined as to how far the application of this provision can be construed with the well settled principle of fiscal legisla tion and the terms and conditions of the present legisla tion. It has been said and said on numerous occasions that fiscal laws must be strictly construed, words must say what these mean, nothing should be presumed or implied, these must say so. The true test must always be the language used. 537 On behalf of the assessee, Mr. Rajaram Agarwala, howev er, further contended that the ratio of Kandaswami 's case (supra) to which Mr. Tewatia referred, must be understood in the light of the question involved in that case. The said decision of this Court was concerned with the limited point as to whether the Madras High Court was right in observing "whether one could say that the sale which is exempted is liable to tax and then assume that because of exemption, the tax is not payable". This Court held that the language of section 7A of the said Act was far from clear as to its intention and did not concern with the identification of the taxing event. Furthermore, it has to be borne in mind, as emphasised by Mr. Agarwala, that if at all the taxing event was spelt out, it was on the assumption that the goods in question were generally taxable and these were to be put to tax under section 7A of the Tamil Nadu Act, if these came to be purchased without payment of tax and then sought to be dealt with in any manner as to escape payment of State sales/purchase tax within the State. Mr. Tewatia drew our attention to the observations of this Court in Kandaswami 's case (supra) to prove that the observations in Malabar Fruit Products Co. vs The Sales Tax Officer, Palai, 30 STC 537, where these questions were decided by Justice Poti of the Kerala High Court, who spelt out that the taxing event was not the event of despatch but the event of purchase/sale of goods. It has, however, to be borne in mind that the questions involved in Malabar Fruit Products ' case and Kandaswami 's case (supra) were not con cerned with the actual argument with which we are concerned in the instant matter. It is well settled that a precedent is an authority only for what it actually decides and not for what may remotely or even logically follows from it. See Quinn vs Leathem, ; and The State of Orissa vs Sudhansu Sekhar Misra & Ors., ; Therefore, the ratio of the said decision cannot be properly applied in construing the provisions of section 9(1)(b) in this case to determine what is the taxable event. It was contended by Mr. Rajaram Agarwala that clause (b) of Section 9(1) dealt with non exempted goods purchased in the State, used in the manufacture of any goods whether exempted or not, but when despatched outside the State of Haryana i.e. by way of stock transfer consignment will attract the tax liability under this section, hence, the event of despatch or consignment is the immediate cause which attracts the tax liability under section 9. The quali ty or the character of goods which should be liable to tax under section 9 in clause (1)(a) is the non exempted goods purchased in the State; while 538 under the first part of clause (b) the quality of goods liable to tax is the non exempted goods purchased in the State and under the second part of clause (b), the quality of goods must be non exempted goods purchased and manufac tured in the State, whether exempted or not in the State which is liable to tax on despatch outside Haryana; and under clause (c) the goods purchased in Haryana without undergoing any further change or use is the quality of goods liable to tax when exported. The submission of the State is that the taxable event is the purchase of goods in Haryana while the obligation to pay is postponed on the fulfilment of certain conditions. The further argument is that there is a general liability to purchase tax which the dealer avoids on furnishing a Decla ration in S.T. Form 15 as provided by section 24 at the time of purchase, wherein certain conditions are mentioned and when those conditions are not fulfilled, those revive. It was further argued that the conditions are incorporated in section 9 of the Act. For testing which of the contentions are nearer to find out the exact taxable event, certain indicias and illustrations may be seen. Their analysis will indicate that there is no liability to pay sales tax under the Haryana Act on the purchaser. It is admitted that on such sales the selling dealer is liable to pay sales tax. On such purchases, the sale and purchase being the two sides of the same coin, no purchase tax is imposed under the Act. This has been the accepted position by the State also for, while replying to the question of double taxation counsel for the State admitted that sales as well as purchase tax is to be imposeable under the scheme of the Act which are of two sides. Hence, it was rightly urged by Mr. Rajaram Agar wala that the first contention for attracting the applica bility of section 9(i), "whether a dealer is liable to pay tax under this Act purchases goods", is missing when the section (1) talks of a dealer liable to pay tax under the Act, obviously it is with reference to his purchasing activ ity and if on that activity no purchase tax is payable, section 9(1) would not be applicable. To accept the submissions advanced by Mr. Tewatia, assumptions and presumptions are to be made. It is not permissible to do so in a fiscal provision. See in this connection the observations of this Court in C.S.T.U.P. vs The Modi Sugar Mills Ltd.; , and Baidyanath Ayurved Bhawan (P) Ltd., Jhansi vs Excise Commissioner, U.P. & Ors. ; , at 592. In that background it must be noted that section 9 of the Act nowhere makes a reference to section 24 or any declaration furnished by the purchasing dealer on the basis of which he was granted temporary exemp tion and thereby revival of 539 the original purchase tax on the breach of declaration as such. Section 9 of the Act opens with the expression "where a dealer liable to pay tax under this Act" and not "whether a dealer has paid tax or has not paid tax". The phrase 'liable to pay tax ' under the Act must relate to liability to pay sales tax on such purchases. It is well settled that the main test for determining the taxable event is that on the happening of which the charge is affixed. The realisation often is postponed to further date. The quantification of the levy and the recov ery of tax is also postponed in some cases. It is well settled that there are three stages in the imposition of tax. There is the declaration of liability, that is the part of the Statute which 'determines what persons in respect of what property are liable. Next, there is the assessment. Liability does not depend on assessment, that exhypothesi has already been fixed. But assessment particularises the exact sum which a person is liable to pay. Lastly comes the method of recovery if the person taxed does not voluntarily pay. Reference may be made to the observations of Lord Dunedin in Whitney vs Commissioner of Inland Revenue, at p. 52 and of the Federal Court in Chatturam & Ors. vs C.I.T., Bihar, 15 ITR FC 302 at 308. Taxable event is that which on its occurrence creates or attracts the liability to tax. Such liability does not exist or accrue at any earlier or later point of time. The identi fication of the subject matter of a tax is to be found in the charging section. In this connection, one has to analyse the provisions of section 9(2)(b) as well as section 9(1)(b) and 9(1)(c). Analysing the section, it appears to us that the two conditions specified, before the event of despatch outside the State as mentioned in section 9(1)(b), namely, (i) purchase of goods in the State and (ii) using them for the manufacture of any other goods in the State, are only descriptive of the goods liable to tax under Section 9(1)(b) in the event of despatch outside the State. If the goods do not answer both the descriptions cumulatively, even though these are despatched outside the State of Haryana, the purchase of those goods would not be put to tax under sec tion 9(1)(b). The focal point in the expression "goods, the sale or purchase of which is liable to tax under the Act", is the character and class of goods in relation to exigibil ity. In this connection, reference may be made to the obser vations of this Court in Andhra Sugars Ltd. vs State of Andhra Pradesh, ; On a clear analysis of the said section, it appears that section 9(1)(b) has to be judged as and when liability accrues under that section. The liability to pay tax under this section does not accrue on purchasing the goods simpliciter, but only when these are despatched or consigned out of 540 the State of Haryana. In all these cases, it is necessary to find out the true nature of the tax. Analysing the section, if one looks to the alleged purchase tax under section 9, one gets the conclusion that the section itself does not provide for imposition of the purchase tax on the transac tion of purchase of the taxable goods but when further the said taxable goods are used up and turned into independent taxable goods, losing its original identity, and thereafter when the manufactured goods are despatched outside the State of Haryana and only then tax is levied and liability to pay tax is created. It is the cumulative effect of that event which occasions or causes the tax to be imposed, to draw a familiar analogy it is the last straw on the camel 's back. In this connection, reference may be made to the obser vations of Justice Vivian Bose in The Tata Iron & Steel Co. Ltd. vs The State of Bihar, ; at 1381, where he observed as follows: "I would therefore reject the nexus theory in so far as it means that any one sale can have existence and entity simultaneously in many different places. The States may tax the sale but may not disintegrate it, and, under the guise of taxing the sale in truth and in fact, tax its various elements, one its head and one its tail, one its entrails and one its limbs by a legislative fiction that deems that the whole is within its claws simply because, after tearing it apart, it finds a hand or a foot or a heart or a liver still quivering in its grasp. Nexus, of course, there must be but nexus of the entire entity that is called a sale, wherever it is deemed to be situate. Fiction again. Of course, it is fiction, but it is a fiction as to situs imposed by the Constitution Act and by the Supreme Court that speaks for it in these matters and only one fiction, not a dozen little ones. " It is, therefore, necessary in all cases to find out what is the essence of the duty which is attracted. A taxa ble event is that which is closely related to imposition. In the instant section, there is such close relationship only with despatch. Therefore, the goods purchased are used in manufacture of new independent commodity and thereafter the said manufactured goods are despatched outside the State of Haryana. In this series of transactions the original trans action is completely eclipsed or ceases to exist when the levy is imposed at the third stage of despatch of manufac ture. In the instant case the levy has no direct connection with the transaction of purchase of raw materials, it has only a remote connection of lineage. It may be indirectly and very 541 remotely connected with the transaction of the purchase of raw material wherein the present levy would lose its charac ter of purchase tax on the said transaction. Mr. Rajaram Agarwala submitted that the measure of tax is with reference to the value of purchased goods in the State of Haryana. As mentioned before, reference has been made to the decision of Kandaswami 's case (supra), where this Court dealt with section 7A of the Tamil Nadu Act, which was not identical but similar to section 9 of the Act. There at p. 196 of the report, this Court observed as fol lows: ". Difficulty in interpretation has been experienced only with regard to that part of the sub section which relates to ingredients (4) & (5). The High Court has taken the view that the expression "goods, the sale or pur chase of which is liable to tax under this Act", and the phrase "purchases . in circum stances in which no tax is payable under Sections 3, 4 or 5 are a "contradiction in terms". Ingredients Nos. 4 & 5 are as follows: "4. The goods purchased are "goods, the sale or purchase of which is liable to tax under this Act". Such purchase is, "in circumstances, in which no tax is payable under sections 3, 4 or 5, as the case may be;" The relevant ingredient involved, as mentioned at page No. 196, was as under: "6. The dealer either (a) consumes such goods in the manufacture of other goods for sale or otherwise or (b) despatches all such goods in any manner other than by way of sale in the State or (c) despatches them to a place outside the State except as a direct result of sale or purchase in the course of inter State trade or commerce. " This ingredient was neither argued nor was considered, so the 542 passing reference based on the phraseology of the section is not the dictum of Kandaswami 's case. Secondly, in section 9, in the instant case, the raw materials purchased or used in the manufacture of new goods and thereafter those new goods were despatched outside the State of Haryana whereupon the tax was levied. This important factor is wholly missing in Section 7A of the Tamil Nadu Act, which was considered in Kandaswami 's case. In that decision, this Court approved the Kerala High Court 's decision in Malabar Fruit Products, (supra), which was confined to the interpretation of the words 'goods ', the sale or purchase under the Act. A deci sion on a question which has not been argued cannot be treated as a precedent. See the observations of this Court in Rajput Ruda Maha & Ors. vs State of Gujarat, [1980] 2 SCR 353 at 356. The decision of the Division Bench of the Kerala High Court in Yusuf Shabeer & Ors. vs State of Kerala & Ors., 32 STC 359 is clearly distinguishable. In Ganesh Prasad Dixit 's case (supra) the question of constitutional validity was not argued. A reference was made by Mr. Tewatia to the decision of the High Court in The Coffee Board vs Commissioner of Commercial Taxes & Ors., 60 STC 142 and the decision of this Court in Coffee Board, Karnataka vs Commis sioner of Commercial Taxes, Karnataka, 70 STC 162. In these cases the question involved was the acquisition of coffee by the Coffee Board under compulsory acquisition or purchase or sale of goods. That question is entirely different from the question with which we are concerned in these appeals. Prior to 46 the Amendment, Entry 54 of List II of the 7th Schedule of the Constitution of India which demarcated the exclusive field of State Legislation, read with Article 246(3) of the Constitution conferred power on the State Legislature to impose tax on the transactions of sale or purchase of goods. The said Entry read as follows: "Taxes on the sale or purchase of goods other than Newspapers, subject to the provisions of Entry 92 A of List I". Entry 92A of List I, which is in the exclusive domain of the Union, was to the following extent: "Taxes on the sale or purchase of goods other than Newspapers, where such sale or purchase takes place in the course of inter State trade or commerce." The mere consignment of goods by a manufacturer to his own branches outside the State does not in any way amount to a sale or 543 disposal of the goods as such. The consignment or despatch of goods is neither a sale nor a purchase. The first judg ment in case of Goodyear India was on December 4, 1982 when it was held that the Notification was beyond the Act, as the word 'disposal ' did not include the word 'mere despatch ' as mentioned in the notification. The Constitution (46th Amend ment) Act, 1982 came into force on February 2, 1983, whereby section 9 was amended. This amendment was after 46th Consti tutional Amendment Act, 1982. The 46th Constitution Amend ment Act in the Statement of Objects & Reasons, inter alia, stated as follows: "There were reports from State Government to whom revenues from sales tax have been as signed, as to the large scale avoidance of Central Sales Tax leviable on inter State sales of goods through the device of consign ment of goods from one State to another and as to the leakage of local Sales Tax in works contracts, hire purchase transactions, lease of films etc. Though, Parliament could levy a tax on these transactions, as tax on sales has all along been treated as an item of revenue to be assigned to the States, in regard to these transactions which are semble sales also, it is considered that the same policy should be adopted. " The Law Commission of India in its 61st Report made, as indicated before, certain recommendations, and noticed that the provisions of existing were insuf ficient to tax the consignment transfers from branch to another, as it was beyond the concept of sale, and its recommendations are contained in paragraph 2.23 of Chapter II (at page 66), it recommended that the definition of sale in the , after carrying out the requi site Constitution Amendment be amended somewhat on the lines indicated by them in their report. The Union of India, in part, accepted the recommendations but instead of amending the definition of sales in , inserted a new Entry in the Union List in the shape of Entry 92B and also inserted a new sub clause (4) after subclause (g) in article 269 (1) of the Constitution. The Parliament also amend ed clause (3) of Article 269. It appears to us that the effect of the aforesaid amend ment is that the field of taxation on the consignment/des patch of goods in the course of inter State trade or com merce expressly come within the purview of the legislative competence of the Parliament. It is wellsettled that the nomenclature of the Act is not conclusive and for 544 determining the true character and nature of a particular tax, with reference to the legislative competence of a particular Legislature, the Court will look into its pith and substance. See the observations of Governor General in Council vs Province of Madras, [1945] 72 IA 91. There, Lord Simonds observed as follows: " . . For in a Federal Constitution, in which there is a division of legislative powers between Central and provincial legisla tures it appears to be inevitable that contro versy should arise; Whether one or other legislature is not exceeding its own, and encroaching on the others Constitutional Legislative Power, and in such a controversy it is a principle, which their Lordships do not hesitate to apply in the present case, that it is not the name of the tax, but its real nature, "it is pith and substance", as it has some times been said which must determine into what category it fails. " We must, therefore, look not to the form but to the substance of the levy. See the observations of the Federal Court in Ralla Ram vs The Province of East Punjab, AIR 1949 FC 81. Therefore, the nomenclature given by the Haryana Legis lature is not decisive. One has to find out whether in pith and substance, a consignment tax is sought to be imposed, a tax on despatch in the course of inter State trade or com merce. I have no hesitation in holding that it is a tax on despatch. Inter state trade or commerce, it has been empha sised, is of great national importance and is vital to the federal structure of our country. As the imposition of consignment tax requires very deep consideration of all its aspects and certain amount of consensus among the States concerned, especially with regard to the rates, grant of exemption, and ratio relating to distribution of proceeds amongst the States inter se, the actual imposition of tax is bound to take some time till an agreeable solution is found, but that would not make the consignment tax to be in sus pended animation in the State, and make us hold that a tax which is in essence a tax on consignment should be taxed by the States by the plea either that otherwise there is ample scope of evasion and further States are without much re sources in these days when there is such a tremendous demand on the revenue of the States. It is well settled that the Entries in the Constitution only demarcate the legislative fields of the respective legislatures and do 545 not confer legislative powers as such. The tax on despatch of goods outside the territory of the State certainly is in the course of inter State trade or commerce, and in other words, amounts to imposition of consignment tax, and hence the latter part of section 9(1)(b) is ultra vires and void. In these cases, we are concerned with the validity of the latter part of section 9(1)(b) of the Haryana Act which imposes a tax on despatch of manufactured goods outside the territories of Haryana. If it is accepted that section 9(1)(b) is ultra vires, the penalty proceedings would auto matically go as they are in substance, based on the viola tion of section 9(1)(b) of the Act and the consequent pro ceedings flowing therefrom. It is in that context that in writ petition No. 3834 of 1985, Mr. Soli Sorabjee urged that the attempt and action of the State in imposing tax and attempt to penalise are bad. In this connection, it may be mentioned that before the Full Bench of the Punjab & Haryana High Court on behalf of the State, a statement was made, which has been recorded in 58 STC 393 at p. 408, as follows: "Counsel appearing for the State of Haryana made a statement that if the Full Bench held that Bata India Limited 's, case (1983)54 STC 226 did not lay down the correct law and the amendment effected by Act No. 11 of 1984 to Section 9 was intra vires, then the provision of sub section (3) of section 24 regarding the rate of tax shall not be enforced and only the old rate will be leviable. " In view of the aforesaid statement, no higher rate except the old rate admissible factually would be applica ble. Section 24(3) was introduced by the Haryana Act with retrospective effect from May 27, 1971, which is as follows: "Notwithstanding any other provisions of this Act or any Judgment, decree or order of any Court or other authority to the contrary if a dealer who purchases goods, without payment of tax under Sub section (1) and fails to use the goods so purchased for the purpose specified therein he shall be liable to pay tax on the purchase value of such goods, at the rates notified under Section 15 without prejudice to the provisions of Section 50 provided that the tax 546 shall not be levied where tax is payable on such goods under any other provision of this Act. " This provision without making any change in the substan tive provision purports to give a direction to ignore the judgment, in other words, purports to overrule the judg ments, namely, Goodyear and Bata India, which is beyond the legislative competence of the State Legislature and this provision is void in view of the decision of this Court. See Shri Prithvi Cotton Mills Ltd. vs Broach Borough Municipali ty, [1969] 2 SCC 283 at 286. For the same reason, applying the main section instead of section 9(1), section 24 should also fail as amended. Civil appeal No. 15 15/84 is also liable to be dismissed in view of the judgment of this Court in Dy. Commissioner of Sales Tax (Law), Board of Revenue (Taxes) vs M/s. Thomas Stephen & Co. Ltd., Quilon, ; , where this Court observed that "disposal means transfer of title in the goods to any other person", and therefore it would not include mere despatch to own self or to its agents or to its branch offices or depots. In the premises, the decision of the Punjab & Haryana High Court in Goodyear India Ltd., 53 STC 163 is correct on merits as well. In the aforesaid view of the matter, it cannot be held that section 9(1) and sub section (3) of section 24 are constitutionally valid. In civil appeals Nos. 1633 (NT) of 1985 and 3033/86 which are the appeals by the Food Corporation of India, Mr. Sen submitted that the FCI is a service agency of the Govt. of India and is discharging the statutory functions of distribution of foodgrains by procuring/purchasing from the surplus States and despatching the same to the deficit States in accordance with the policy of the Govt. of India. He further submitted that the Corporation procures food grains from the farmers through commission agents in the Mandis of Haryana and despatch them to its own branches in the deficit States of the country. The Corporation branches in the recipient States supply these stocks to the State agencies/fair price shops and also pay tax as per the provi sions of the Sales Tax law of the respective States. Some of the stocks are distributed within Haryana for the Public Distribution System (PDS) for which sales tax is charged and deposited with the Sales Tax depot as per the provisions of the Haryana General Sales Tax Act. In case the stocks are also sold in the course of inter State trade or commerce, central sales tax is levied and deposited with the Haryana Sales Tax authorities. Some of the grains are also exported out of India on which there is exemption on payment of any tax. 547 In fact, the points at which the tax is to be levied have been indicated in Schedule 'D ' to the Act. It is clear from the perusal of the Schedule that in case of Paddy, the taxable event is the last purchase. Similarly, in case of rice the taxable event is the first sale point in the State. In case of wheat and other cereals the point of taxation is the last sale to the consumer by a dealer liable to pay tax under the Act. In respect of inter State despatch of wheat and other foodgrains by FCI to its own branches, tax is attracted at the time of despatch under section 9(1)(c) of the Haryana Act. Section 9 is, therefore, the charging section for taxation in case where the goods are purchased for export. There is no other provision for levy of purchase or sales tax in such cases of export. Incidentally, "export" has been defined in section 2(e) of the Act which reads as follows: "2(e) "export" means the taking out of goods from the State to any place outside it other wise than by way of sale in the course of inter State trade or commerce or in the course of export out of the territory of India;" No tax is payable under the Haryana Act when exports outside the State take place either in the course of inter State sale or export out of the territory of India. No tax is therefore payable in regard to export outside India but the tax is payable for sale in the course of inter State trade and commerce i.e. under the . It is only when the goods are despatched/consigned to the depots of the FCI in other States that tax is levied under section 9 of the Haryana Act. This is in addition to the sales tax paid by the FCI on the sale of grains in the recipient States. On perusal of sections 14 & 15 of the , it becomes clear that wheat is one of the commodities specified as 'declared goods ' and in respect of which the intention is clear that the tax is payable only once on the declared goods. In the case of inter State sale if any tax has been paid earlier on declared goods inside the State the same is to be refunded to the dealer who is paying tax on such inter State sales. On these transactions no tax is liable in the recipient State, while in case of inter State despatches, the tax is leviable twice. The appeals of. the FCI are confined to section 9(1)(c), which insofar as it purports to tax export, is beyond the legisla tive competence of the State of Haryana. On behalf of the State in Bata Co. Ltd. vs State of Haryana (supra), the submission of the State was on the basis that it had power to tax consignment or despatches of goods. But after the 46th Amend 548 ment, the State Legislature is incompetent to legislate about consignments/despatches otherwise than by way of sale under which no purchase/sales tax is leviable under the Haryana Act. It is the Parliament alone which is legisla tively competent to enact a legislation on consignment. Now, it is necessary to deal with civil appeals Nos. 4 162 63/85 which deal with the validity of section 13 AA of the Bombay Sales Tax Act. These appeals are by Hindustan Lever Ltd. and Wipro Products the appellants herein. The appellants, at all material times, manufacture, make and deal in vanaspati, soaps, etc., chemicals and agro chemicals, and they used to purchase various types of VNE oils for their manufacture of vanaspati, soaps and other products. Since the appellants had a wide net of distribution of their products all over India, they appointed 40 and more clearing and forwarding agents in the country. The appellant used to despatch the goods so manufactured from their factory to the clearing and forwarding agents. They also used to purchase VNE oils and other raw materials and paid 4% tax by way of purchase tax under section 3 of the Bombay Sales Tax Act, 1959 (hereinaf ter called 'the Bombay Act '). The raw materials are used in the manufacture of said goods and as the said manufactured goods are despatched outside the State to the several dis tributing agencies, the appellant companies were held to be liable to pay, under section 13 AA of the Act, an additional tax @ 2% on purchase of the said goods. The question, therefore, that arises, is: whether the levy of additional tax at 2% under Section 13 AA of the Act is a tax on purchases failing under Entry 54 of List II of the 7th Schedule or it is a tax on the despatch of consign ment of the manufactured goods outside the State. In case of latter, the State Legislature will have no power to impose any tax on such consignment or despatch of goods outside the State. If it is the former, then it will be valid. The question is that under the true constructions of section 13 AA of the Act, on which the imposition of tax is made, or in other words, what is the incidence of that taxation or taxable event? In both these appeals, namely, civil appeals No. 4162/ 88 and 4163/88, the appellants M/s Wipro Products Ltd. and Hindustan Lever Ltd. are contending that the levy is bad. The issue involved in both the appeals is the con stitutional validity and legality of the provisions of section 13 AA of the Act, which was introduced into the Act by the Maharashtra Act XXVIII of 1982. The appellant 549 had a factory at Amalnar in Jalgaon district in the State of Maharashtra wherein it uses non essential oil purchased by it for the manufacture and transport. The finished products, namely, vanaspati manufactured by the appellant used to be despatched to their various marketing depots in the State of Maharashtra, Madhya Pradesh, Karnataka, Andhra Pradesh, U.P., Tamil Nadu and Kerala etc. On July 1, 1981 the rate of purchase tax payable on VNE oils (falling under Schedule C, part I at Entry 35) purchased within the State of Maharash tra from non registered dealers increased from 3% to 4%, by the Maharashtra Act 32 of 1981. Section 13 AA was introduced into the Act providing for levy of 2% additional purchase tax on the purchase of goods, input goods, specified in part I of the Schedule from a non registered dealer if such goods were used in the manu facture of taxable goods within Maharashtra and thereafter the manufactured goods were transferred outside Maharashtra in the manner indicated in the said section. The appellants filed writ petitions. An order was passed by the Bombay High Court on July 19, 1988 in respect of these two writ petitions by the Wipro Products as well as Hindustan Lever Ltd. The decision of the High Court is reported in [1989] 72 STC 69. Dismissing the petitions of the appellants the High Court held that (i) three different phases are contemplated in section 13 AA of the Act, namely, the initial purchase of the raw material, the consumption thereof in the manufacture of taxable goods, and the despatch of the manufactured goods outside the State. If the goods purchased remain in the same form within the State, the question of levying additional tax would not arise. The High Court came to the conclusion that there was no ground to hold that the additional tax was levied on the despatch of goods and was unconnected with the initial transaction of purchase, as it was required to be paid in addition to the sales or purchase tax paid or pay able in respect of the same goods which had been so pur chased before the conditions specified in section 13 AA are fulfilled, (ii) in the context of the other provisions of the Act, a sort of concession is given at the time of pur chase on the quantum of tax payable on the purchase of goods which fall under Part I of Schedule C. However, there is a clear mandate of law, which is clearly understood between seller and buyer, that though tax at the concessional rate is paid, the obligation to pay the additional tax on the happening of certain events, namely, use of such goods in manufacture of finished goods, and despatch of finished goods outside the State, is undertaken 550 by the purchaser; and (iii) implicit in the low rates of tax prescribed on raw material attributable to goods in Part I of Schedule C is the condition precedent that to avail of this concession the goods in question are required to be sold in the State after being used in the manufacture of other taxable goods. The High Court, further, was of the opinion that a manufacturer who purchases raw material at a concessional rate on the strength of declaration in Form 15 cannot transfer the goods manufactured out of such raw material outside the State. The High Court held that if he does so, he is liable to pay purchase tax at the full rate on the raw material under section 14. According to the High Court, similarly, a manufacturer who purchases goods covered in Part III of Schedule C, uses them in the manufacture of other taxable goods which he despatches outside the State, is liable to pay tax at rates ranging from 6% to 15%. Sec tion 13 AA, therefore, far from being discriminatory, serves to wipe out any discrimination between the two categories of manufacturers mentioned above and manufacturers purchasing raw material covered by Part I of Schedule C, according to the revenue. The High Court was of the opinion that the additional purchase tax leviable under section 13 AA of the Bombay Act, is on the purchase value of VNE oil used in the manufacture of goods transferred outside the State and not on the value of the manufactured goods so transferred. It further held that the tax levied under section 13 AA of the Bombay Act, falls squarely and exclusively under Entry 54 of the State List in the 7th Schedule to the Constitution of India and the State Legislature was competent to levy it. It does not even remotely fall under Entry 92B of the Union List, according to the High Court. The High Court was also of the view that the goods taxed under section 13 AA of the Bombay Act, are consumed in the State as raw material in the process of producing other commodities. Hence, there was no question of any hindrance to a free flow of trade bringing into operation Article 301 of the Constitution. According to the High Court, the peti tioners had not brought forth any material to show how the free flow of trade has been affected by this additional rate of tax; and held that section 13AA is not violative of Article 14 of the Constitution; and that section 13AA of the Bombay Act and the orders requiring the appellants to pay additional tax @ 2% on purchase of VNE oil used by them as raw material in the manufacture of goods despatched outside the State, were valid. The High Court in the judgment under appeal has set out the relevant provisions of the Act, which was enacted to consolidate and 551 amend the law relating to levy of tax on the sale or pur chase of certain goods in the State of Bombay. Section 2 contains some of the definitions. Section 24 deals with authorisations of turnover etc. Section 13AA of the Bombay Act with which the High Court and these appeals are con cerned, is in the following terms: "13 AA. Purchase tax payable on goods in Schedule C, Part I, when manufactured goods are transferred to outside branches. Where a dealer, who is liable to pay tax under this Act, purchases any goods speci fied in Part I of Schedule C, directly or through Commission agent, from a person who is or is not a Registered dealer and uses such goods in the manufacture of taxable goods and despatches the goods, so manufactured, to his own place of business or to his agent 's place of business situated outside the State within India, then such dealer shall be liable to pay, in addition to the sales tax paid or payable, or as the case may be, the purchase tax levied or leviable under the other provi sions of this Act in respect of purchases of such goods, a purchase tax at the rate of two paise in the rupee on the purchase price of the goods so used in the manufacture, and accordingly the dealer shall include purchase price of such goods in his turnover of pur chases in his return under section 32, which he is to furnish next thereafter. " The questions involved in these appeals are: whether section 13AA of the Bombay Act is beyond the legislative competence of the State Legislature; and it is violative of Article 14 of the Constitution; and thirdly, whether the said provision is violative of Article 301 of the Constitu tion. It was contended on behalf of the appeallant that section 13AA of the Act is a charging section and imposes a charge of an additional rate of 2% in the rupee if the following conditions laid down therein are satisfied: (i) the charge is levied upon a dealer who is liable to pay tax under the Act; (ii) such a dealer purchases any goods speci fied in Part I of Schedule C, directly or through commission agent, from a person who is or is not a registered dealer; (iii) the goods so purchased are used in the manufacture of taxable goods; and (iv) the goods which are so manufactured (and not the goods on which purchase tax had been paid) are despatched to the dealer 's own place of business or to his agent 's place of business situated outside the State. 552 According to the appellant, the said section lays down the person who is liable to pay tax, the goods on which the same is leviable and the taxable event which would attract the liability of additional tax of two paise in the rupee, namely the despatch or consignment of goods by the dealer/manufacturer outside the State. According to Dr. Pal, counsel for the appellant, the taxable event is not the purchase of goods as such which is the raw material, but it is the despatch or consignment of goods manufactured by the dealer/manufacturer to its own branch outside the state; and that thus manufactured goods are different from commercial commodity, distinct and sepa rate from the raw materials on which purchase tax has al ready been paid. It is well settled, it was reiterated before:us, that in case of excise duty, the taxable event is the manufacture of goods and the duty is not directly on the goods but on the manufacture thereof. In case of sales tax, taxable event is the sale of goods. Hence, though both excise duty and sales tax are levied with reference to the goods, the two are different imposts, in one case the impo sition is on the act of manufacture or production while in case of other the imposition is on the act of sale. But in neither case the impost is a tax directly on the goods. See in this connection, the observations of this Court in re: The Bill to amend section 20 of the and section 3 of the Central Excises & Salt Act, 1944; , at 821 and M/s. Guruswarny & Co. vs State of Mysore, [ at 562. The power to tax the sale or purchase of goods is dif ferent from the right to impose taxes on use or consumption. According to Dr. Pal such power to levy sales tax cannot be exercised at the earlier stage of import or manufacture/production nor the said power can be exercised at the later stage of use or consumption but only at the stage of sale or purchase. In respect of sales tax, the right to levy duty would not at all come into being before the time of sale/purchase. Sales tax cannot be imposed unless the goods are actually sold and may not be leviable if there is a transfer in some other form. See in this connection the observations of the Federal Court in Mukunda Murari Chakravarti & Ors. vs Pabitramoy Ghosh & Ors., at 22. Therefore, in this case it is necessary to ascertain what is the taxable event under section 13 AA of the Act which attracts duty. A taxing event is that event the occurrence of which immediately attracts the levy or the charge of tax. In the fiscal legislations normally a charge is created. The mischief of taxation occurs on the happening of the taxable event. Diffe 553 rent taxes have different taxable events. In the instant case, Dr. Pal canvassed before us that the incidence of the levy of additional tax of two paise in the rupee is not on the purchase of goods but such a levy is attracted only when (a) the goods which so purchased on payment of pur chase tax are used in the manufacture of taxable goods; and (b) the goods so manufactured are despatched to his own place of business or to his agent 's place of business out side the State. Therefore, the incidence of tax is attracted not merely on the purchase but only when the goods so pur chased arc used in the manufacture of taxable goods and are despatched outside the State. In our opinion, it was rightly submitted that it is the effect of section 13AA of the Act. It was further highlighted by Dr. Pal on behalf. of the assessee that additional tax is not levied on the goods purchased on payment of purchase tax and despatched outside the State. The goods which are purchased on payment of purchase tax are used in the manufacture of taxable goods. What is despatched is not the raw material which have been purchased on payment of purchase tax but a completely dif ferent commodity, namely, vanaspati and soap. If the raw materials as such purchased on payment of purchase tax are despatched outside the State, the additional tax under section 13 AA of the Act is not attracted. Hence, the inci dence of additional tax has no nexus with the purchase of the raw materials, as was contended by Mr. S.K. Dholakia, appearing for the State and as held by the High Court. Purchase tax under section 3 of the Act is attracted when the taxable event i.e. the purchase of goods occurs, but the taxable event for the imposition of additional tax of two paise in the rupee occurs only when the goods so purchased are used in the manufacture of taxable goods and such taxable goods are despatched outside the State by a dealer manufacturer. Dr. Pal drew our attention to some of the observations of this Court in Kedarnath Jute Mfg. Co. Ltd. vs Commissioner of Income tax (Central), Calcutta, 82 ITR SC 363 and State of Madhya Pradesh & Ors. vs Shyama Charan Shukla, 29 STC SC 215 at 218 219. On the other hand, Mr. Dholakia submitted that the submission of the appellant proceeded on the assumption that the liability to pay is the same as the obligation to pay but this was wrong. These two are different. It was submitted that the obligation to pay is not the same thing as liability to tax; and that it was wrong to proceed on the basis that because 'obligation to pay ' is a later event, 'the despatch of goods ' is the taxa ble event. This is a fallacy, according to Mr. Dholakia. In this connection, reliance was placed on the observations of this Court in R.C. Jail vs Union of India, [1962] Suppl. 3 SCR 436, where this Court reiterated that subject always to the legislative com 554 petence of the enacting authority, the tax can be levied at a convenient stage, so long as the character of the impost is not lost. The method of collection does not affect the essence of the machinery of collection for administrative convenience. Reliance was also placed on the observations of Union of India vs Bombay Tyre International Ltd., ; It was submitted by Mr. Dholakia that the correct ap proach is to first determine whether the State Legislature, having regard to Entry 54 of List II to the 7th Schedule to the Constitution, can levy tax on purchase of a class of goods, which class is to be identified by reference to the condition of use of such goods into other taxable goods and despatch of such taxable goods outside the State. He submit ted that if it is accepted that the State could have the power to tax purchases of goods meant for use into manufac ture of other taxable goods and despatch outside thereafter, then next question is whether the State enactment (like section 13AA of the Bombay Act) is so formulated as to come within the framework described. He admitted that even if it did, it would still have to be subject to (a) the doctrine of pith and substance, (b) the fundamental rights, and (c) Article 301. According to Mr. Dholakia, the Act contains a charging section which is section 3. It levies tax on turnover of sales and purchases within section 2(36) and 2(35) respec tively of the said Act. Section 13 of the Act levies tax on purchases in accordance with rates prescribed in Schedule C if the goods are purchased from an unregistered dealer. Section 13A levies a concessional tax on purchases if the goods are purchased from a registered dealer, provided a declaration in the prescribed form is given under section 12(b) of the Act, if the purchaser buys directly, or one under section 12(d) if the purchaser buys through a commis sion agent. In both the forms the relevant conditions are: (a) that the goods fall within Part ii of Schedule C; and (b) that the goods bought would be used for manufacture of other taxable goods within the State and sold within the State. Mr. Dholakia submitted that on giving the aforesaid declaration, the purchaser would have to pay only 4% tax. The rates prescribed in Schedule C are as under: Schedule 'C ' Part Minimum Rate Maximum Rate I 2% 4% II 6% 15% 555 The effect of section 13A without section 13 AA, accord ing to Mr. Dholakia, was that only those who bought goods which fell into Part II, would have benefitted by the decla ration, since the rate mentioned in section 13A was 4%. Hence, those buying goods falling within Part I of Schedule C had not to give any declaration under section 12(b) or 12(d), as the case may be, and still manufacture the taxable goods and despatch them outside the State. According to him, as a result of this situation, two results emerged, i.e. (i) the State lost revenue because the goods manufactured with the help of the infrastructure provided by the State escaped further tax, by goods being resold outside the State; and (ii) the purchasers of raw materials used by the manufactur ers for producing new taxable goods, were not being treated equitably because those whose purchases of goods which fell into Part II had to give a declaration to get the benefit of reduced rate. On the other hand, those whose purchases of goods fell in Part I, need not give such a declaration. According to him, from the standpoint of the object of encouraging resale within the State, the classification in form of Part I and II had no rational nexus. Therefore, that construction should be made which may make section 13 AA of the Act, to avoid this mischief. According to Mr. Dholakia, section 13AA speaks of the requirement of additional purchase tax from those who have paid purchase tax, if the object of the purchases is to use the goods falling in Part I of Schedule C for manufacture of taxable goods and the despatch of such goods outside the State. He alleged it to be a fair and reasonable construc tion and it will subserve the purpose of the amendment. It is well settled that reasonable construction should be followed and literal construction may be avoided if that defeats the manifest object and purpose of the Act. See Commissioner of Wealth tax, Bihar & Orissa vs Kripashankar Dayashankar Worah, at 768 and Income tax Commis sioners for city of London vs Gibbs, 10 ITR Suppl. 121 HL at 132. Mr. Dholakia further submitted that the Statement of Objects & Reasons also helps this construction. In our opinion, he rightly submitted that because the accounts had to be maintained in a particular manner, is no criterion or evidence for determining when the liability arises. The law is that the liability to tax would be determined with refer ence to the interpretation of the Statute which creates it. It cannot be determined by referring to another Statute. As contended by both the sides, it is well settled that the doctrine of pith and substance means that if an enactment substantially falls within the powers expressly conferred by the Constitution upon the Legislature 556 which enacted it, it cannot be held to be invalid merely because it incidentally encroches upon matters assigned to another Legislature. See Kerala State Electricity Board vs Indian Aluminium Co, [1976] SCR 552 and Prafulla Kumar Mukherjee & Ors. vs Bank of Commerce Ltd., AIR 1947 PC 60 at 65. Therefore, the proper question which one should address to oneself is, whether section 13AA is in pith and sub stance, not levying tax on purchase but one levying tax on consignment. Depending upon the answer to the question, the validity of the action can be judged. Mr. Dholakia submitted that the Act is in pith and substance, an Act levying tax on purchase and not one levying tax on consignment, and re ferred to the observations of this Court in State of Karna taka vs Shri Ranganatha Reddy; , According to him, the consignment contemplated in section 13 AA is only of manufactured goods and no tax is levied under sec tion 13AA in respect of such manufactured goods. He empha sised as aforesaid. It is well settled that while determin ing nature of a tax, though the standard or the measure on which the tax is levied may be a relevant consideration, it is not the conclusive consideration. One must have regard to such other matters as decided by the Privy Council in Gover nor General in Council vs Province of Madras, (supra) not by the name of tax but to its real nature, its pith and sub stance which must determine into what category it fails. See the observations of R.R. Engineering Co. vs Zila Parishad Bareilly & Anr., ; ; in re: A reference under the Govt. of Ireland Act, 1920, at 358 and Navnitlal C. Javeri vs K.K. Sen, Appellate Asstt. Commis sioner of Income Tax, 'D ' Range, Bombay; , at 915. On an analysis we find that the goods which are des patched are different products from the goods on the pur chase of which purchase tax was paid. The Maharashtra legis lation has to be viewed in the context of 46th Amendment to the Constitution. The 46th Amendment introduced Article 269 (1)(h) which lays down that the proceeds of the tax on consignment of goods (whether the consignment is to the person making it or to any other person) where such consign ment takes place in the course of inter State trade or commerce, will be assigned to the States. The said Amendment also introduced Entry No. 92B in List I of the 7th Schedule. The said Amendment was made on the consideration of the 61st Report of the Law Commission. Entry 92B in List I of the 7th Schedule and Article 269(1)(h) of the Constitution bring within its sweep the consignment of goods by a person either to himself or to any other person in the course of inter State trade or 557 commerce. Article 269(3) gives the power to Parliament to formulate the principles for determining when a consignment of goods takes place in the course of inter State trade or commerce. If Entry 92B in List I is to be given the widest interpretation, as it should be, it would be clear that the constitutional changes introduced by the 46th Amendment in Article 269 read with the Entry, the tax on consignment of goods now comes within the exclusive legislative field of Parliament. The true test to find out what is the pith and substance of the legislation is to ascertain the true intent of the Act which will determine the validity of the Act. If the Parliament in exercise of its plenary power under Entry 92B of List I imposes any tax on the despatch or consignment of goods, Parliament will be competent to do so. It is, therefore, not possible to accept the argument that the chargeable event was lying dormant and is activated only on the occurrence of the event of despatch. The argument on the construction of the enactment is misconceived. The charging event is the event the occurrence of which immediately attracts the charge. Taxable event cannot be postponed to the occurrence of the subsequent condition. In that event, it would be the subsequent condition the occurrence of which would attract the charge which will be taxable event. If that is so, then it is a duty on despatch. In that view of the matter, this charge cannot be sustained. As mentioned hereinbefore, the section has been chal lenged as being violative of Article 14 of the Constitution. This attack is based on the discrimination between the two types of taxes but in the way we have construed the section, in our opinion, this question does not survive. It was further submitted by Dr. Pal that section 13AA of the Act is violative of Article 301 of the Constitution. It makes a discrimination between the dealer/manufacturer who despatch es the goods outside the State and the other dealer/manufac turer. Both the dealer/ manufacturers purchase the goods on payment of purchase tax and use them in the manufacture of taxable goods. The incidence of additional tax on the pur chase of goods is attracted only when such manufactured goods are despatched outside the State. If a dealer/manufac turer has to despatch the goods outside the State, he has to pay a higher rate of tax and thus he is discriminated as compared to the other dealer/manufacturer who purchases the raw material on payment of 4% purchase tax, but despatches the raw material straightaway outside the State and uses them in the manufacturer of goods outside the State. The High Court held that there was no violation of Article 301 of the Constitution. Reference was made to the decision of this Court in Atiabari Tea Co. Ltd. vs The State of Assam & Ors., ; ; 558 The Automobile Transport (Rajasthan) Ltd. vs The State of Rajasthan, [1963] 1 SCR 491; Andhra Sugars Ltd. vs State of Andhra Pradesh, (supra), State of Madras vs N.K. Nataraja Mudaliar, ; and State of Kerala vs A.B. Abdul Khadir & Ors., ; One has to determine: does the impugned provision amount to restriction directly and immediately, on the trade or commerce movement? As was observed by this Court in Kalyani Stores vs The State of Orissa & Ors. , ; , imposition of a duty or tax in every case would not tanta mount per se to any infringement of Article 301 of the Constitution. Only such restrictions or impediments which directly or immediately impede free flow of trade, commerce and intercourse fall within the prohibition imposed by Article 301. A tax in certain cases may directly and immedi ately restrict or hamper the flow of trade, but every impo sition of tax does not do so. Every case must be judged on its own facts and its own setting of time and circumstances. Unless the court first comes to the finding on the available material whether or not there is an infringement of the guarantee under Article 301 the further question as to whether the Statute is saved under Article 304(b) does not arise. The goods taxed do not leave the State in the shape of raw material, which change their form in the State itself and there is no question of any direct, immediate or sub stantial hindrance to a free flow of trade. On the evidence adduced, we are in agreement with the High Court that the challenge to the imposition in the background of Article 301 cannot be sustained and, therefore, no question whether such imposition is saved under Article 304(b) of the Constitution arises. In the aforesaid view of the matter and for the reasons mentioned hereinbefore, it must be held that so far as the appeals in respect of the Haryana Act are concerned, the High Court was right in the view it took in Goodyear India Ltd 's case, 53 STC 163 as well as the views expressed by the High Court in Bata India Ltd. vs The State of Haryana & Anr., 54 STC 226 are correct and are affirmed. The views of the High Court expressed in Des Raj Pushap Kumar Gulati 's case (supra) are incorrect for the reasons mentioned herein before. The last mentioned judgment and the judgment and orders following passed by the Punjab & Haryana High Court are, therefore, set aside. In the premises, Civil Appeals Nos. 1166 72/85 (M/s Goodyear India Ltd. vs State of Har yana & Anr.), Civil Appeal No. 1173 77 (NT)/85 (Gedore (I) Pvt. Ltd. vs State of Haryana & Anr.), civil appeal No. 2674/86 (M/s. Kelvinator of India Ltd. & Anr. vs State of Haryana & Ors.), Civil Appeal No. 1633 (NT)/85 F.C.I. vs State of Haryana & Anr.) and 559 Civil Appeal No. 3033 (NT)/86 F.C.I., Karnal vs The State of Haryana & Ors.) are allowed and the judgment and order of the High Court are set aside. Civil Appeals Nos. 15 12 (NT)/84 [State of Haryana & Anr. vs Gedore Tools (P) Ltd.] and 1515/84 [State of Haryana & Anr. vs Goodyear India Ltd. ] are dismissed. Special leave petitions Nos. 83988402/83 are dismissed, and for the rea sons mentioned hereinbefore, civil appeal Nos. 4162/88 (M/s. Wipro Products Ltd. vs State of Maharashtra & Anr. and 4163/88 [Hindustan Lever Ltd. & Anr. vs State of Maharashtra & Anr. ] are allowed and the judgment and order of the High Court passed therein, are hereby set aside. In the facts and the, circumstances of this case, the parties will pay and bear the respective costs. So far as the civil appeals Nos. 1633/85 and 3033/86 are concerned, wherein the appellants are the Food Corpn. of India, I allow these appeals and setting aside the judgment of the High Court on the ground that tax on despatch or consignment was not within the competence of the State Legislature. I am, however, not dealing with or expressing any opinion on the other contentions of the F.C.I. that in view of the nature of its business it was not liable to tax in respect of the sales tax. This contention will be decided in the appropri ate proceedings. So far as the contention regarding penalty under the Haryana Act, these proceedings fail because the charging provisions fail. In so far as the penalty proceedings are impugned on other grounds apart from the failure of the charging provisions, I am expressing no opinion on these aspects. RANGANATHAN, J. I agree but wish to add a few words. The question raised in these appeals is a fairly tick lish one. Simply stated, Section 9 of the Haryana General Sales Tax Act, 1973 as well as section 13AA of the Bombay Sales Tax Act, 1959, purport only to levy a purchase tax. The tax, however, becomes exigible not on the occasion or event of purchase but only later. It materialises only if the purchaser (a) utilises the goods purchased in the manu facture of taxable goods and (b) despatches the goods so manufactured (otherwise than by way of sale) to a place of business situated outside the State. The legislation, howev er, is careful to impose the tax only on the price at which the raw materials are purchased and not on the 560 value of the manufactured goods consigned outside the State. The States describe the tax as one levied on the purchase of a class of goods viz. those purchased in the State and utilised as raw material in the manufacture of goods which are consigned outside the State otherwise than by way of sale. On the other hand, according to the respondentsasses sees, this is nothing but a tax on consignment of goods manufactured in the State to places outside the State, camouflaged as a purchase tax, by quantifying the levy of the tax with reference to the purchase price of the goods purchased in the State and utilised in the manufacture. To me it appeared as plausible to describe the levy as a tax on purchase of goods inside the State (which attaches itself only in certain eventualities) as to describe it as a tax on goods consigned outside the State but limited to the value of the raw material purchased inside the State and utilised therein. 1, therefore, had considerable doubts not only during the arguments but even some time thereafter as to whether so long as the tax purports to be a tax on purchases and has a nexus, though a little distant, with purchase of goods in the State, the State Government 's competence to impose such a tax should not be upheld. But, on deeper thought, I am inclined to agree with the conclusion of my learned brother. It is one thing to levy a purchase tax where the character and class of goods in respect of which the tax is levied is described in a particular manner (vide, Andhra Sugars Ltd. & Anr. vs State, ; and a case like the present where the tax, though described as purchase tax, actually becomes effective with reference to a totally different class of goods and, that too, only on the happening of an event which is unrelated to the act of purchase. The "taxable event", if one might use the expres sion often used in this context, is the consignment of the manufactured goods and not the purchase. I also agree with my learned brother that the decision in State of Tamil Nadu vs Kandaswami, [1975] 36 S.T.C. 191, though rendered in the context of an analogous provision, does not touch the issue in the present case. The above distinction becomes significant particularly in the background of the constitutional amendments referred to in the judgment of my learned brother. These indicate that there were efforts at sales tax avoidance by sending goods manufactured in a State out of raw materials purchased inside to other States by way of consignments rather than by way of sales attracting tax. This situation lends force to the contention of the assessees that the States, unable to tax the exodus directly, attempted to do so indirectly by linking the levy ostensibly to the "purchases" in the State. 561 Viewing the impugned statutory provisions from the perspectives indicated above, I agree with my learned broth er that the appeals have to be allowed as held by him. T.N.A. Appeals and petitions disposed of.

The appellant/petitioner company Good Year India Limit ed a registered dealer both under the Haryana General Sales Tax Act, 1973 and , was manufac turing automobile tyres and tubes at Ballabgarh in the State of Haryana. For the said manufacturing activity it was purchasing various kinds of raw materials both within the State and from outside the State of Haryana. The Company was despatching these manufactured goods viz. tyres and tubes to its own branches and sales depots outside the State of Haryana. The assessing authority imposed upon the appellant company the purchase tax under section 9 of the Haryana General Sales Tax Act, 1973 in view of the despatches made by it of the manufactured goods to its various depots out side the State. The petitioner company filed writ petition in the Punjab and Haryana High Court challenging the validity of the Notification levying the tax. A Division Bench of the High Court allowed the petition holding that disposal of goods being separate and 'distinct from despatch thereof, a mere despatch of goods out Of the State by a dealer to his own branch while retaining both 'the title and possession there of does not come within the ambit of the phrase "disposes of the manufactured goods in any manner otherwise than by way of sale", as employed in Section 9(i)(a)(ii) of the Act. Accordingly the High Court set aside the assessment orders and quashed the impugned Notification as ultra vires of section 9 on the ground that whereas Section 9 provided only for the levy of purchase tax On the disposal of the manufac tured goods, the impugned Notification makes mere despatch of goods to the dealer themselves taxable. To override the effect of the said judgment the Haryana Legislature enacted Haryana General Sales Tax (Amendment and Validation) Act 1983 where by Section 9 of the Act was amended with retro spective effect to include within its sweep the despatch of manufactured goods to a place outside the State in any manner otherwise than by way of sale. The impugned Notifica tion and the con 513 sequential action taken thereunder were also validated. The petitioner company filed writ petitions challenging the assessments. The High Court allowed the petitions hold ing section 9(1)(b) of the Haryana General Sales Tax Act 1973 as amended by the Haryana General Sales Tax (Amendment and Validation) Act, 1983 in so far as it levied a purchase tax on the consignment of goods outside the State in the course of inter State trade or commerce was beyond the legislative competence of the State of Haryana and was void and inoperative because it intruded and trespassed into an arena exclusively meant for taxation by the Union of India under Entry 92 B of List I of the Seventh Schedule. Accord ingly the High Court set aside the amended provisions of section 9 as also the retrospective validation of the Noti fication and the consequential validation of all actions taken thereunder. Against this decision of the High Court, State of Haryana preferred Special Leave Petitions in this Court. During the pendency of these Special Leave Petitions, the assessing authority issued Show cause notices asking the petitioner company to show cause why in addition to the purchase tax, it should not be liable to penalty as well. The Petitioner company again filed writ petitions in the Punjab & Haryana High Court challenging the validity of these notices. In the meantime a Full Bench of the High Court decided the question again and overruling the decision of the earlier Division Bench held that the taxing event was the act of purchase and not the act of despatch of the consignment. The Full Bench of the High Court held that section 9(1)(b) as amended was neither invalid nor ultra vires. Against the aforesaid judgment of the Full Bench the Petitioner Company filed appeals in this Court. All these questions are the subject matters of these appeals. In the connected appeals, the Food Corporation of India was procuring food grains from the farmers through commis sion agents in tile mandis of Haryana and despatching them to its own branches in the deficit State of the country. The Corporation branches in the recipient States were supplying these stocks to the State agencies/Fair Price Shops and were also paying tax as per the provisions of the Sales Tax law of the respective States. Some of the stocks were distribut ed within the State of Haryana for the public distribution system for which sales tax was charged. and deposited with the sales tax depots as per the Haryana General Sales Tax Act, 1973. In respect of the inter State despatch of wheat and other food grains by the Food Corporation of India to its own branches tax was attracted at the time of despatch 514 under section 9(1)(c) of the Haryana Act. The Food Corpora tion of India impugned the levy of tax. In the other connected appeals the appellant companies Hindustan Lever Ltd. and Wipro Products were manufacturing vanaspati, soaps, chemicals and agro chemi cals. For the said manufacturing activities, they were purchasing non essential vegetable oil (VNE oil) and other raw materials and were paying purchase tax @4% under section 3 of the Bombay Sales Tax Act, 1959. The VNE oil was subse quently used by the appellant companies in the manufacture of vanaspati and soaps. The finished products manufactured by the appellant companies viz. vanaspati and soaps used to be despatched outside the State of Maharashtra to their clearing and forwarding agents. The assessing authority levied additional purchase tax @ 2% under section 13 AA of the Act on the purchase of said goods VNE oil. The appellant companies filed writ petitions in the High Court challenging the orders of the assessing authority levying the additional tax of 2% and also the vires of section 13 AA of the Bombay Sales Tax Act, 1959 under which the additional tax was levied, contending that the addition al tax of 2% levied on raw materials, where the finished goods manufactured therefrom were despatched outside the State was in the nature of consignment tax which was not within the legislative competence of the State Legislature. The High Court dismissed the petitions holding (i) the additional purchase tax levied under section 13 AA of the Act was on the purchase value of VNE oil used in the manu facturing of goods transferred outside the State and not on the value of the manufactured goods so transferred; (ii) the State Legislature was competent to levy the tax under Entry 54 of the State List in the Seventh Schedule to the Consti tution, and (iii) Section 13 AA was not violative of either Article 14 or Article 301 of the Constitution of India. Against the decision of the High Court appellant compa nies filed appeal in this Court. Disposing of the matters, this Court, HELD: (Per Mukharji, J.) 1. Analysing section 9 of the Haryana General Sales Tax Act, 515 1973 it is clear that the two conditions specified, before the event of despatch outside the State as mentioned in section 9(1)(b), namely, (i) purchase of goods in the State and (ii) using them for the manufacture of any other goods in the State, are only descriptive of the goods liable to tax under Section 9(1)(b) in the event of despatch outside the State. If the goods do not answer both the descriptions cumulatively, even though these are despatched outside the State of Haryana, the purchase of those goods would not be put to tax under Section 9(1)(b). The liability to pay tax under section 9(1)(b) does not accrue on purchasing the goods simpliciter, but only when these are despatched or consigned out of the State of Haryana. The section itself does not provide for imposition of the purchase tax on the transaction of purchase of the taxable goods but when fur ther the said taxable goods are used up and turned into independent taxable goods, losing its original identity, and thereafter when the manufactured goods are despatched out side the State ' of Haryana and only then tax is levied and liability to pay tax is created. It is the cumulative effect of that event which occasions or causes the tax to be im posed. [539F H; 540A B] 1.1 A taxable event is that which is closely related to imposition. In the instant section viz. section 9(1)(b) there is such close relationship only with despatch. The goods purchased are used in manufacture of new independent commodity and thereafter the said manufactured goods are despatched outside the State of Haryana. In this series of transactions the original transaction is completely eclipsed or cease to exist when the levy is imposed at the third stage of despatch of manufacture. The levy has no direct connection with the transaction of purchase of raw materi als, it has only a remote connection of lineage. The mere consignment of goods by a manufacturer to his own branches outside the State does not in any way amount to a sale or disposal of the goods as such. The consignment or despatch of goods is neither a sale nor a purchase. The tax imposed under Section 9(1)(b) is a tax on despatch. The tax on despatch of goods outside the territory of the State cer tainly is in the course of inter State trade or commerce and amounts to imposition of consignment tax, and hence the latter part of section 9(1)(b) is ultra vires and void. [540G H; 542H; 543A; 544E; 545A] Tata Iron & Steel Co. vs State of Bihar, ; , referred to. Good Year India Ltd. vs State of Haryana, 53 STC 163 and Bata India Ltd. vs State of Haryana & Anr., 54 STC 226, approved. 516 Des Raj Pushap Kumar Gulati vs The State of Punjab, 58 STC 393, overruled. Yusuf Shabeer & Ors. vs State of Kerala & Ors., 32 STC 359; Coffee Board vs Commissioner of Commercial Taxes & Ors., 60 STC 142 and Coffee Board, Karnataka vs Commissioner of Commercial Taxes, Karnataka, 70 STC 162, distinguished. State of Tamil Nadu vs M.K. Kandaswami, 36 STC 191; Ganesh Prasad Dixit vs Commissioner of Sales Tax, M.P., [1969] 24 STC 343 and Malabar Fruit & Company vs Sales Tax Officer, Pallai, 30 STC 537, distinguished. 1.2 The effect of the Constitution (Forty sixth Amend ment) Act, 1982 is that the field of taxation on the con signment/despatch of goods in the course of inter State trade or commerce expressly comes within the purview of the legislative competence of the Parliament. [543H] 2. If section 9(1)(b) is ultra vires, the penalty pro ceedings would automatically go as they are in substance, based on the violation of section 9(1)(b) of the Act and the consequent proceedings flowing therefrom. [545B] 3. Section 24(3) of the Haryana General Sales Tax Act, 1973 without making any change in the substantive provision purports to give a direction to ignore the judgments in Goodyear and Bata India Ltd. cases. This provision is void. [546B] Shri Prithvi Cotton Mills Ltd. vs Broach Borough Munici pality, [1969] 2 SCC 283 and Dy. Commissioner of Sales Tax (Law) Board of Revenue (Taxes) vs M/s Thomas Stephen & Co. Ltd. Quilon; , , followed. In respect of inter State despatch of wheat and other food grains by Food Corporation of India to its own branch es, tax is attracted at the time of despatch under Section 9(1)(c) of the Haryana Act. Section 9 is the charging sec tion for taxation in case where the goods are purchased for export. There is no other provision for levy of purchase or sales tax in such cases of export. [547B] 4.1 No tax is payable under the Haryana Act when exports outside the State take place either in the course of inter State sale or export out of the territory of India. But the tax is payable for sale in the course 517 of inter State trade and commerce i.e. under the . It is only when the goods are despatched/consigned to the depots of the FCI in other States that tax is levied under section 9 of the Haryana Act. This is in addition to the sales tax paid by the FCI on the sale of grains in the recipient States. In view of sections 14 & 15 of the , it becomes clear that wheat is one of the commodities specified as 'declared goods ' and in respect of which the intention is clear that the tax is payable only once on the declared goods. In the case of inter State sale if any tax has been paid earlier on declared goods inside the State the same is to be refunded to the dealer who is paying tax on such inter State Sales. On these transactions no tax is liable in the recipient State, while in case of inter State despatch es, the tax is leviable twice. Section 9(1)(c), which inso far as it purports to tax, exports, is beyond the legisla tive competence of the State of Haryana. [547E G] 5. The incidence of the levy of additional tax of two paise in the rupee under Section 13 AA of the Bombay Sales Tax Act, 1959 is not on the purchase of goods, but such a levy is attracted only when (a) the goods which so pur chased on payment of purchase tax are used in the manufac ture of taxable goods; and (b) the goods so manufactured are despatched to his own place of business or to his agent 's place of business outside the State. Therefore, the inci dence of tax is attracted not merely on the purchase but only when the goods so purchased are used in the manufacture of taxable goods and are despatched outside the State. The incidence of additional tax has no nexus with the purchase of the raw materials. [553A B; D] 5.1 Purchase tax under section 3 of the Act is attracted when the taxable event i.e. the purchase of goods occurs but the taxable event for the imposition of additional tax of two paise in the rupee occurs only when the goods so pur chased are used in the manufacture of taxable goods and such taxable goods are despatched outside the State by a dealer manufacturer. The goods which are despatched are different products from the goods on the purchase of which purchase tax was paid. It is therefore not possible to accept the argument that the chargeable event was lying dormant and is activated only on the occurrence of the event of despatch. [553E; 556F; 557C] 5.2 The charging event is the event the occurrence of which immediately attracts the charge. Taxable event cannot be postponed to the occurrence of the subsequent condition. In that event, it would be the subsequent condition the occurrence of which would attract the Charge which will be taxable event. Therefore the charge under 518 section 13 AA is a duty on despatch. Accordingly this charge can not be sustained.[557D] The Bill to amend section 20 of the and section 3 of the Central Excises & Salt Act, [1944]; , ; M/s Guruswamy & Co. vs State of Mysore, ; Mukunda Murari Chakravarti & Ors. vs Pabitramoy Ghosh & Ors., ; Kedar Nath Jute Mfg. Co. Ltd. vs C.I.T., 82 ITR SC 363; State of M.P. vs Shyam Charan Shukla, 29 STC SC 215; R.C. Jail vs Union of India, [1962] Suppl. 3 SCR 436; Union of India vs Bombay Tyre International Ltd., ; and State of Karnataka vs Shri Ranganatha Reddy, ; , referred to. Wipro Products vs State of Maharashtra, [1989] 72 STC 69 Bom. , Reversed. 5.3 Imposition of a duty or tax in every case would not tantamount per se to any infringement of Article 301 of the Constitution. Only such restrictions or impediments which directly or immediately impede free flow of trade, commerce and intercourse fail within the prohibition imposed by Article 301. A tax in certain cases may directly and immedi ately restrict or hamper the flow of trade. but every impo sition of tax does not do so. Every case must be judged on its own facts and its own setting of time and circumstances. Unless the court first comes to the finding on the available material whether or not there is an infringement of the guarantee under Article 301 the further question as to whether the Statute is saved under Article 304(b) does not arise. [558B C] 5.4 In the instant case. the goods taxed do not leave the State in the shape of raw material, which change their form in the State itself and there is no question of any direct, immediate or substantial hindrance to a free flow of trade. Therefore Section 13 AA of the Bombay Sales Tax Act 1959 is not violative of Article 301. [558D E] Atiabari Tea Co. Ltd. vs The State of Assam & Ors., ; ; The Automobile Transport (Rajasthan) Ltd. vs The State of Rajasthan, [1963] 1 SCR 491; Andhra Sugars Ltd. vs State of Andhra Pradesh, ; ; State of Madras vs N.K. Nataraja Mudaliar, ; and State of Kerala vs A.B. Abdul Khadir & Ors., ; , referred to. Kalyani Stores vs The State of Orissa & Ors., ; , relied on. 519 6. The provisions of constitutional changes have to be construed not in a narrow isolationism but on a much wider spectrum and the principles laid down in Heydon 's case are instructive. [529H; 530A] Black Clawson International Ltd. vs Papierwerke Waldhof Aschaffenburg, ; , referred. Heydon 's case; , , relied on. In construing the expressions of the Constitution to judge whether the provisions of a statute are within the competence of the State Legislature, one must bear in mind that the Constitution is to be construed not in a narrow or pedantic sense. The Constitution is not to be construed as mere law but as the machinery by which laws are to be made. [533F] James vs Commonwealth of Australia, ; The Attorney General for the State of New South Wales vs The Brewery Employees Union etc. ; , ; Re. Central Provinces & Berar Sales of Motor Spirit and Lubri cants Taxation Act 1938, A.I.R. 1939 F.C.I. and The Province of Madras vs M/s Boddu Paidanna & Sons, A.I.R. 1942 F.C. 33, referred to. The nomenclature of the Act is not conclusive and for determining the true character and nature of a particular tax, with reference to the legislative competence of a particular Legislature, the Court will look into its pith and substance. [543H; 544A] Governor General in Council vs Province of Madras, [1945] 72 I.A. 91 and Ralla Ram vs The Province of East Punjab, A.I.R. 1949 F.C. 81, referred to. The doctrine of pith and substance means that if an enactment substantially falls within the power expressly conferred by the Constitution upon the Legislature which enacted it, it cannot be held to be invalid merely because it incidentally encroaches upon matters assigned to another legislature. [555H; 556A] Kerala State Electricity Board vs Indian Aluminium Co., [1976] 1 S.C.R. 552 and Prafulla Kumar Mukherjee & Ors. vs Bank of Commerce, A.I.R. 1947 PC 60, referred to. 9.1 The true test to find out what is pith and substance of the 520 legislation is to ascertain the true intent of the Act which will determine the validity of the Act. [577B] 10. There are three stages in the imposition of tax. There is the declaration of liability, that is the part of the Statute which determines what persons in respect of what property are liable. Next, there is the assessment Liabili ty does not depend on assessment, that exhypothesi has already been fixed. But assessment particularises the exact sum which a person is liable to pay. Lastly comes the method of recovery if the person taxed does not voluntarily pay. [539B C] Whitney vs Commissioner of Inland Revenue, [1926] A.C. 37 and Chatturam & Ors. vs C.I.T., Bihar, 15 I.T.R. F.C. 302, referred to. While determining nature of a tax, though the stand ard or the measure on which the tax is levied may be a relevant consideration, it is not the conclusive considera tion. [556C] Governor General in Council vs Province of Madras, [1945] 72 I.A. 91; R.R. Engineering Co. vs Zila Parishad Bareilly & Anr., ; ; In Re A reference under the Government of Ireland Act, 1920, and Navnitlal C. Javeri vs K.K. Sen, Appellate Asstt. Commis sioner of Income Tax 'D ' Range Bombay; , , referred to. The liability to tax would be determined with reference to the interpretation of the Statute which creates it. It cannot be determined by referring to another Statute. [555G] 13. In fiscal legislations normally a charge is creat ed. The. mischief of taxation occurs on the happening of the taxable event. Different taxes have different taxable events. A taxing event is that event the occurrence of which immediately attracts the levy or the charge of tax. What is the taxable event or what necessitates taxation in an appro priate Statute must be found by construing the provisions. The main test for determining the taxable event is that on the happening of which the charge is affixed. [552H; 553A: 552G: 533E; 539B] 14. Fiscal laws must be strictly construed. n is not permissible to make assumptions and presumptions in a fiscal provision. [536H; 538G] C.S.T., U.P. vs The Modi Sugar Mills Ltd., ; and Baidyanath Ayurved Bhawan (P) Ltd., Jhansi, vs Excise Commis 521 sioner, U.P. & Ors., ; , referred to. While interpreting a Statute a reasonable construc tion should be followed and literal construction may be avoided if that defeats the manifest object and purpose of the Act. [555F] Commissioner of Wealth tax, Bihar & Orissa vs Kripashan kar Dayashankar Worah, and Income Tax Commis sioners for City of London vs Gibbs, 10 I.T.R. (Suppl.) 121 H.L., referred to. The Entries in the Constitution only demarcate and legislative fields of the respective legislatures and do not confer legislative powers as such. [544H; 545A] 17. A precedent is an authority only for what it actual ly decides and not for what may remotely or even logically follows from it. [537E] Quinn vs Leathem, ; and The State of Orissa vs Sudhansu Sekhar Misra & Ors., ; , followed. 17.1 A decision on a question which has not been argued cannot be treated as a precedent. [542B] Rajput Ruda Maha & Ors. vs State of Gujarat, [1980] 2 S.C.R. 353, followed. (Per Ranganathan, J.) (Concurring) 1. Section 9 of the Haryana General Sales Tax Act, 1973 as well as section 13 AA of the Bombay Sales Tax Act, 1959 purport only to levy a purchase tax. The tax, however, becomes exigible not on the occasion or event of purchase but only later. It materialises only if the purchaser (a) utilises the goods purchased in the manufacture of taxable goods, and (b) despatches the goods so manufactured (other wise then by way of sale) to a place of business situated outside the State. The legislation, however, is careful to impose the tax only on the price at which the raw materials are purchased and not on the value of the manufactured goods consigned outside the State. [559G H; 560A] 2. It is one thing to levy a purchase tax where the character and class of goods in respect of which the tax is levied is described in a particular manner and a case like the present where the tax, though described as purchase tax, actually becomes effective with reference to 522 a totally different class of goods and, that too, only on the happening of an event which is unrelated to the act of purchase. [560D E] 2.1 The "taxable event", if one might use the expression often used in this context, is the consignment of the manu factured goods and not the purchase. [560E] 2.2 The background of the Constitutional (Forty sixth Amendment) indicates that there were efforts at sales tax avoidance by sending goods manufactured in a State out of raw materials purchased inside to other States by way of consignments rather than by way of sales attracting tax. This situation lends force to the view that the State, unable to tax the exodus directly, attempted to do so indi rectly by linking the levy ostensibly to the "purchases" in the State. [560G H] Andhra Sugar Ltd. & Anr. vs State, ; , re ferred to. State of Tamil Nadu vs Kandaswami, [1975] 36 S.T.C. 191, distinguished.

Civil Appeal No. 89 of 1953. 132 Appeal from the Judgment and Decree dated the 28th day of March, 1949, of the High Court of Judicature at Madras in Appeal No. 654 of 1945, arising out of the Judgment and Decree dated the 23rd day of July, 1945, of the Court of the District Judge, Bellary, in Original Suit No. 17 of 1944. K. section Krishnaswami Iyengar (K. R. Chowdhury, D. Gundu Rao, A. Rama Rao and Rajinder Narain, with him) for the appellant. B.Somayya (M. V. Ganapathi and Ganpat Rai, with him) for respondent No. 1. 1954. April 15. The Judgment of the Court was delivered by MUKHERJEA J. This appeal arises out of a suit, commenced by the plaintiff respondent, in the Court of the District Judge of Bellary, being Original Suit No. 17 of 1944, for establishment of his title to one half share of the land described in the schedule to the plaint and for recovery of possession of the same after partition with defendant No. 1, who is the appellant before us. The suit was dismissed by the trial Judge by his judgment dated the 23rd of July, 1945. On an appeal being taken against that decision by the plaintiff to the High Court of Madras, a Division Bench of the High Court by its judgment dated the 28th of March, 1949, allowed the appeal and reversed the judgment of the trial Court. , The defendant No. 1 has now come up on appeal to this Court on the strength of a certificate granted by the High Court under article 133 of the Constitution read with sections 109 and 1 10 of the Civil Procedure Code. To appreciate the contentions that have been raised before us it may be necessary to give a short resume of the material facts. The land in suit, which has an area of a little over 9 acres, was admittedly the property of one Basappa who died some time before 1918, leaving three daughters, to wit Paramma, Pompamma and Hampamma. Under a settlement entered into with the immediate reversioner of Basappa which is evidenced by two registered deeds Exhibits P 2 and P 3 executed respectively in the years 1918 and 1919, the three sisters got about 15 to 16 acres of wet land 133 in absolute right. Hampamma subsequently took away her one third share in these lands and we are not concerned with her any further in this litigation. Paramma and Pompamma continued to enjoy the remaining two thirds share of the property and it is this two thirds ,share comprising 9 acres 49 cents of wet land which forms the subject matter of the present suit. Pompamma married one Nagana Gowd and after giving birth to two sons to wit Siddalingana and Chenabasa vana, she died in the year 1923. It is not disputed that her share in the lands mentioned above devolved upon these two sons. After Pompamma 's death, Nagana married again and stayed with his second wife in his ancestral village, while these two infant sons of Pompamma remained at village Kampli with Paramma, their mother 's sister, who reared them up as her own sons. On the 22nd June, 1923, Paramma executed a deed of gift in favour of the two sons of her sister by which she conveyed to the latter her own share in the. suit property. The result was that the two sons of Pompamma got the entirety of the 9 acres 49 cents of land which as owned jointly by their mother and their mother 's sister Paramma. Shortly after this gift was made, Siddalingana, the elder son of Pompamma, died in the year 1924 and the plaintiff 's case is that his half share in the disputed property devolved upon his father Nagkna under the Hindu law of inheritance. It is admitted however that Paramma continued to possess the entirety of the land on behalf of the younger son Chenabasavana who is defendant No. 1 in the suit On the 25th August, 1946, there was a lease deed Exhibit D 1, and its counter part Exhibit D 2, executed by and between Paramma on the one hand and Nagana as the father and guardian of the infant Chenabasavana on the other by which the infant represented by his father purported to grant a lease of the entire property to Paramma for a period of 12 years at a rental of Rs. 500 a year. Two rent receipts passed by Nagana to Paramma in token of the receipt of rents, reserved by this lease, on behalf of Chenabasavana have been proved in this case, Exhibits D 4 and D4 1, and they are of the years 1927 and 1932 respectively. 134 It appears that in 1934 Nagana instituted a suit as guardian of his infant son Chenabasavana in the Munsif 's Court at Hospet to recover a sum of Rs. 500 as rent from Paramma on the basis of the lease mentioned above. The suit was decreed ex parte and the decree was discharged later on by a document Exhibit D 3, dated the 14th of November, 1934, executed by Nagana, which contains a recital that as Paramma had borrowed much money to purchase lands for the minor, all future rents payable under the lease were also to be considered as fully paid. It is in evidence and not disputed, that near about this time Nagana became financially involved and on the 27th of August, 1935, he executed a deed of mortgage by conditional sale in respect of half share of the disputed land in favour of defendant No. 2 to secure an advance of Rs. 3,000. The document recites that the half share of the land which was kept as. security devolved upon the mortgagor on the death of his son Siddalingana and "that he was in possession of the same. On the 16th July, 1936, Nagana sold the mortgaged property by,a deed of sale (Exhibit P 6) to the mortgagee himself: or a consideration of Rs. 3,000 which was the principal sum due under the mortgage. It is admitted that the purchaser did not and could not obtain possession of the property at any time since then and on the 2nd May, 1944, he sold the property to the 'plaintiff by a conveyance which is Exhibit P 1. On the 18th July, 1944, the plaintiff brought the present suit against Chenabasavana as defendant No. I for recovery of a demarcated half share of the disputed property after partition with the latter on the strength of the purchase mentioned above and his own vendor was impleaded as defendant No. 2 in the suit. The suit was contested by defendant No. 1 and a number of pleas were taken by him in his written statement. The substantial defence put forward was of a two fold character. It was contended in the first place that under the deed of gift executed by Paramma in favour of defendant No. I and his deceased brother Siddalingana, the donees became joint tenants with rights of survivorship Consequently on the death of 135 Siddalingana his interest devolved upon defendant No. 1 and not on his father. The other and the more material defence raised was that the plaintiff 's suit was barred, as he was never in possession of the property and the defendant No. 1 acquired a good title by adverse possession. Both these points were decided against the plaintiff by the learned District Judge who tried the suit. It was held that the deed of gift executed by Paramma conferred no right on Nagana as the heir of his son and such rights if any were specifically disclaimed by Nagana by the lease deed and also by the receipts which he granted to Paramma as the guardian of his minor son. It was held further that the plaintiff 's suit was bound to fail as he or his predecessors were never in possession of the property within 12 years from the date of the suit. The plaintiff indeed was an alienee of a co tenant but it was held that the ordinary rule of one co owner being presumed to hold on behalf of the others could not apply to the present case. , as Nagana disclaimed his rights as a co owner and purported to act only on behalf of his infant son Chenabasavana whose exclusive title to the lands he definitely acknowledged. In view of these findings the trial Judge dismissed the plaintiff 's suit. Thereupon the plaintiff took an appeal against this decision to the High Court of Madras and the appeal was heard by a Division Bench consisting of Rajamannar C.J. and Balakrishna Ayyar J. The learned Judges held, differing from the trial Court, that the two sons of Pompamma took their shares in their mother 's property which devolved upon them by inheritance, its well as in the property which they obtained under the deed of gift executed in their favour by Paramma, as tenants in common and not as joint tenants and consequently on the death of Siddalingana his interest vested in his father Nagana and not in his brother, the defendant No. I. On the other question the High Court held that though. Nagana by his acts and conduct in connection with the execution of the lease deed did exhibit an animus to hold the property solely on behalf of Chenabasavana to the exclusion of himself, yet this animus did not last beyond 1935 when he 136 asserted his own right as a co sharer to half shire of the plaint property by executing the mortgage deed in favour of defendant No. 2. In these circumstances it was held that the defendant No. 1 did not acquire title by adverse possession and the plaintiff was entitled to succeed. The defendant No. 1 has now come up on appeal to this Court. Mr. Ayyangar appearing in support of the appeal has not pressed before us the contention that was raised on behalf of his client in the Courts below, that as the two brothers took the property as joint tenants and not as tenants in common, the interest of Siddalingana passed on his death to his brother, the defendant No. 1, and not to Nagana. We must take it therefore that after the death of Siddalingana, Nagana became a co owner of the disputed property with his minor son Chenabasavana. As the plaintiff purports to derive his title from Nagana, he can be said to have established his title as a co owner with defendant No. I and this being the position, the presumption of law would be that the possession of one co owner was on behalf of the other also unless actual ouster was proved. To defeat the claims of the plaintiff therefore it is incumbent upon defendant No. I to prove that he held the property adversely to his co owner for the statutory period. The peculiarity of the present cage is that here the joint owners of the property were the father and his infant son, of whom the father himself was the guardian and th e infant could not act in law except through the guardian. It is conceded on behalf of the appellant that the mere fact that the father did not participate in the profits of the property which was left to the management of Paramrna on behalf of the infant could not by itself make the possession of the son adverse to his father. But the acts and conduct of the father in connection with the lease deed of 1926 and the subsequent granting of receipts in terms thereof undoubtedly point to something more than mere non participation in the enjoyment of profits of the property on absence of objection to the exclusive enjoyment there of by Paramma on behalf of the infant, In granting the 137 lease on behalf of the infant the father definitely asserted the exclusive title of his son to the property and by implication denied his own rights as a co owner thereto. In law the possession of the lessee is the possession of the lessor and consequently ever since 1926 when Paramma began to possess the property as a lessee in terms of the ease deed, her possession in law was the possession of the infant alone to the exclusion of Nagana, the father. The fact that Nagana consented to such exclusion is immaterial. There can be in law, under certain circumstances, adverse possession with the consent of the true owner. A common illustration of this rule is furnished 'by the class of cases where the legal owner of a property transfers the same to another without the requisite legal formalities and though the transferee does not acquire a legal title to it by the transfer, yet if he gets possession of the property though with the consent of the transferor that possession becomes adverse to the owner and if continued for the statutory period creates a title in him. We are not satisfied from the materials in this case that Nagana was ignorant of his rights as heir of his deceased son when he executed the lease in the year 1926. , But even if he was, as the exclusive possession of the infant was exercised with the full knowledge and consent of the father who openly acknowledged the title of his son, such possession could not but be adverse to the father. The learned Judges of the High Court seem to be of the opinion that the possession of the minor could be regarded as adverse from the date of the execution of the lease, as the father by being a party to the said document, did exhibit an animus to possess the common property on behalf of the minor alone to the exclusion of himself. But according to the learned Judges this animus ceased as soon as Nagana executed the mortgage deed in 1935, asserting his right as, joint owner of the property in dispute and the adverse possession of the son forthwith came to an end. With this view we are unable to agree. Once it is held that the, possession of a co sharer has become adverse to the other co sharer as a result of ouster, the mere assertion of his joint title by the 138 dispossessed co sharer would not interrupt the running of adverse possession. He must actually and effectively break up the exclusive possession of his co sharer by re entry upon the property or by resuming possession in such manner as it was possible to do. It may also check the running of time if the co sharer who is in exclusive possession acknowledges the title of his coowner or discontinues his exclusive possession of the property. On the materials on the record, none of these things seems to have been proved in the present case. Resumption of physical possession or re entry upon the property was absolutely out of the question, as the property was in the possession of a lessee. The lease, it should be noted, was executed in 1926 and we have two rent receipts of the years 1927 and 1932 respectively by v which Nagana acknowledged receipt of rents on behalf of his infant son in terms of the lease deed. The rent suit in 1934 was also brought by him in his capacity as guardian of defendant No. 1 and the document Exhibit D 3 by which the decree in that suit was discharged and a receipt was given in advance for all the subsequent rents point definitely to the conclusion that the entire rent for the whole period of 12 years was paid to and was accepted on behalf of Chenabasavana and Nagana neither received any por tion of it nor laid any claim to the same. During the whole period of the lease and up to the present day the minor is admittedly in possession of the property and no act or conduct on his part has been proved either within the period of limitation or even after that which might be regarded as an acknowledgment of the title of his father as co owner. In our opinion the fact that the father who had allowed himself to be dispossessed by his son exhibited later on his animus to treat the property as the joint property of himself and his son cannot arrest the running of adverse possession in favour of the son. A mere mental act on the part of the person dispossessed unaccompanied by any change of possession cannot affect the continuity of adverse possession of the deseizor. The view taken by the High Court probably rests on the supposition that as, it was the father, who, acting 139 on behalf of his son, asserted the exclusive title of the son to the property in denial of his own rights, it was open to the father again if he so chose to resile from that position and make a fresh declaration that property was not the sole property of the son but belonged to him as well; and this subsequent act would annul the consequences of his previous act. This reasoning does not appear to us to be sound. The father 's acts in connection with the lease were entirely in his capacity as guardian of his son. In the eye of the law they were the acts of the son, but the creation of the mortage in 1935 was not the act of the father on behalf of his son, it was the personal act of the father himself qua co proprietor of the son and the interest of one being adverse to the other such acts could not be held to be acts of the son performed through the father. It is extremely doubtful whether qua guardian the father could make such declaration at all. Any change of intention on the part of the guardian can be brought home to the minor through the guardian alone and the minor can react to it again only through the guardian. It may be proper in such cases for the father to renounce his guardianship before he could assert any right of his own against his ward; but it is not necessary for us to go into that question, as the mortgage in this case was made by the father no I t as guardian of the minor at all. It was no more than a declaration, by a person who was dispossessed by his co sharer, of his joint title to the property and as has been already pointed out, as it did not involve any change of possession it did not affect the adverse possession of the deseizor. In our opinion therefore the view taken by the learned Judges of the High Court is not proper and cannot be sustained. The result is that the appeal is allowed; the ,judgment and decree of the High Court are set aside and those of the District Judge restored. The appellant will have his costs in all the Courts. Appeal allowed.

Once it is hold that a possession of a co sharer has become adverse to the other co sharer as a result of ouster, the mere assertion of his joint title by the dispossessed co sharer would not interrupt the running of adverse possession. He must actually and effectively break up the exclusive possession of his co sharer by re entry upon the property or by resuming possession in such manner as it was possible to do. It may also check the running of time if the co sharer who is in exclusive possession acknowledges the title of his co owner or discontinues his exclusive possession of the property. The fact that one co sharer who bad allowed himself to be dispossessed by another co sharer as a result of ouster exhibited later on his animus to treat the property as the joint property of himself and his co sharer cannot arrest the running of adverse possession in favour of the co sharer. A mere mental act on the part of the person dispossessed unaccompanied by any change of possession cannot affect the continuity of adverse possession of the deseizor.

ivil Appeal Nos. 227 and 228/ 1976. (From the Judgment and Order dated 8 1 1976 of the Patna High Court in C.W.J.C. No. 1053 and 1054 of 1975). 252 L.M. Singhvi, Sri Narain and K.J. John, for the appellants. L.N. Sinha, Sol. U.P. Singh and Shambhu Nath Jha, for the respondents. The Judgment of the Court was delivered by BEG, C.J. These appeals are before us after certifica tion of the cases, raising identical questions of law as fit for appeal to this Court, dealt with by one judgment and orders of a Division Bench of the, Patna High Court on two writ petitions. The petitions were directed against orders of the State Government passed in 1974 revising the rate of royalty payable by the petitioners appellants under a lease of 1970, and, after that, cancelling the lease by a letter of ' 15th March, 1975. The petitioners ' case was that the revision of the rate of royalty payable by the petitioners for the lease to, collect and exploit sal seeds from the forest area was illegal during the subsistence of the lease, and thereafter, cancellation of the lease itself was illegal for various reasons. Primarily, the case of the petitioners is that of a breach of contract for which the State would be liable ordinarily to pay damages if it had broken it. If the petitioners could establish some right, either contrac tual or equitable, to continue in possession, the State could be prevented, by appropriate proceedings, from ousting the petitioners from the forest land from which the peti tioners have been gathering sal seeds. The petitioners had also set up mala fides on the part of the Conservator of Forests, in enhancing the royalty unreasonably and then cancelling the lease, allegedly acting under the influence of friends and associates of the Forest Minister of Bihar. The relevant clause relating to revision of royalty in the written contract reads as follows : "The rate of royalty will be revised every three years ' cycle in consultation with the lessee and the decision will be binding on the lessee". Apparently, there is no restriction, under the terms of the contract, upon the amount by which the royalty could be increased by a revision after a three years ' cycle under this clause. The lessee is only entitled, under the con tract, to be consulted before a revision. But, the decision of the Governmental authorities to enhance is binding upon him after that. Hence, if this was the only term of the contract on this question, the petitioners could not complain of unreasonable enhancement in the revised rate of royalty. Under clause 4 of the lease, the lessee had to establish a factory within the State of Bihar for processing of sal seeds and extraction of oil therefrom within period of five years from the date of the agreement, failing which the agreement itself was to terminate. The questions which apparently arose appertained to action alleged by the State to fall within the terms of the agreement between the par ties regulated by the duly signed contract which was presum ably executed in compliance with the provisions of Article 299 of the Constitution. Prima facie, therefore, the appel lants can only get their 253 remedies, if they can obtain any at all, through ordinary suits for damages or for injunctions to restrain breaches of contract provided they could show how the contracts were broken or were going to be broken. The writ petitions, however, raise questions relating not only to action lying within the sphere regulated by the law of contract, but, according to the petitioners, by constitutional provisions relating to the exercise of the executive powers of the State Government contained in Arti cle 298 which reads as follows : "298. The executive power of the Union and of each State shall extend to the carrying on of any trade or business and to the acquisition, holding and disposal of property and the making of contracts for any purpose: Provided that (a) the said executive power of the Union shall, in so far as such trade or business or such purpose is not one with respect to which Parliament may make laws, be subject in each State to legislation by the State; and (b) the said executive power of each State shall, in so far as such trade or business or such purpose is not one with respect to which the State Legislature may make laws be subject to legislation by Parliament". It is urged vehemently by Dr. L.M. Singhvi, appearing on behalf of the petitioners appellants, that the State, acting in its executive capacity through its Government or its officers, even in the contractual field, cannot escape the obligations imposed upon it by Part III of the Constitution. The only article, however, in Part III of the Constitution relied upon by Dr. Singhvi is Article 14 which says: "14. The State shall not deny to any person equality before the law or the equal protection of the laws within the territory of India". It can be and has been urged on behalf of the State that Governmental authorities when acting in the contractual field, could not be controlled by Article 14 of the Consti tution at all. When the State had entered into contracts with citizens who carry on their trade and pay the royal ties. In accordance with the agreements reached between the State and citizens, it does not exercise any special governmental or statutory powers. In such cases, the State as well as the citizen with whom it contracts are both equally subjected to the law of contract. It has been urged on behalf of the respondent State that there has been nO breach of contract in the cases before us. The State is, according to the learned Solicitor General, appearing for the State of Bihar, not claiming to be above the law of contract governing all parties which subject themselves to the law of contract. The dispute whether there is or there i.s not a breach of contract should, according to the con tention on behalf of the State, be determined by ordinary civil courts as in every case 254 between ordinary litigants who cannot invoke the powers of the High Courts under Article 226 of the Constitution simply because there is a dispute whether an agreement has been broken or not. Equal subjection of all parties, including the State, to the same procedural requirements, when such disputes are to be adjudicated upon, means that the State should be placed on the same footing as an ordinary liti gant. It should neither enjoy special benefits and privi leges, nor be subjected to special burdens and disadvan tages. This should, it is urged, follow from a strict application of Article 14 if the State were to be, as a party to a contract and a litigant, placed on the same footing as other .parties who enter into such contracts. It is true that the special provisions of Article 299 of the Constitution are there to protect public interest so that 'the contracts by or on behalf of the Government have to comply with the special requirements of form. But, once the State enters into the contractual sphere after the require ments of form, contained in Article 299, have been complied with, does it have to take its place, in the eye of law, side by side with ordinary parties and litigants or has it any special obligations or privileges attached to it even when it acts within this field ? Dr. Singhvi 's argument that the State Government had some special obligations attached to it would have appeared more plausible if it could be shown that the State or its officers or agents had practised some discrimination against the petitioners appellants at the very threshold or at the time of entry into the field of contract so as to exclude them from consideration when compared with others on any unreasonable or unsustainable ground struck by Article 14 of the Constitution. It is true that the Article 14 of the Constitution imports a limitation or imposes an obligation upon the State 's executive power under Article 298 of the Constitution. All constitutional powers carry corresponding obligations with them. This is the rule of law which regu lates the operation of organs of Government functioning under a Constitution. And, this is exactly what was meant to be laid down by this Court in Erusian Equipment & Chemi cals Ltd. vs State of West Bengal & Anr.,(1) on which learned counsel for the appellants sought to rely strongly. It was held there (at p. 677) : "Under Article 298 of the Constitution the Executive power of the Union and the State shall extend to the carrying on of any trade and to the acquisition, holding and dis posal of the property and the making of con tracts for any purpose. The State can carry on executive function by making a law or without making a law. The exercise of such powers and functions in trade by the State is subject to Part HI of the Constitution. Article 14 speaks. of equality before the law and equal protection of the laws. Equality of opportunity should apply to matters of public contracts. The State has the right to trade. The State has therefore the duty to observe equality. An ordinary individual (1) ; at 677. 255 can choose not to deal with any person. The Government cannot choose to exclude persons by discrimination. The order of black listing has the effect of depriving a person of equal ity of opportunity in the matter of public contract. A person who is on the approved list is. unable to enter into advantageous rela tions with the Government because of the order of black listing. A person who has been dealing with the Government in the matter of sale and purchases of materials has a legiti mate interest or expectation. When the State sets to the prejudice of a person it has to be supported by legality". It is thus clear that the Erusian Equipment & Chemicals Ltd. 's case (supra) involved discrimination at the very threshold or at the time of entry into the field o,f consid eration of persons. with whom the Government could contract at all. At this stage, no doubt, the State acts purely in its executive capacity and is bound by the obligations which dealings of the State with the individual citizens import into every transaction entered into in exercise of its constitutional powers. But, after the State or its agents have entered into the field of ordinary contract, the rela tions are no longer governed by the constitutional provi sions but by the legally valid contract which determines rights and obligations of the parties inter se. No question arises of violation of Article 14 or of any other constitu tional provision when the State of its agents, purporting to act within this field, perform any act. In this sphere,_ they can only claim rights conferred upon them by contract and are bound by the terms of the contract only unless some statute steps in and confers some special statutory power or obligation on the State in the contractual field which is apart from contract. In the cases before us the contracts do not contain any statutory terms or obligations and no statutory power of obligation which could attract the application of Article 14 of the Constitution is involved here. Even in cases where the question is of choice or consideration of compet ing claims before an entry into the field of contract facts have to be investigated and found before the question ,of a violation of Article 14 could arise. If those facts are disputed and require assessment of evidence the correctness of which can ,only be tested satisfactorily by taking de tailed evidence, involving examination and cross examina tion of witnesses, the case could not be conveniently or satisfactorily decided in proceedings under Article '226 of the Constitution. Such proceedings are summary proceedings reserved for extraordinary cases where the exceptional and what are described as, perhaps not quite accurately, "pre rogative" powers of the Court are invoked. We are certain that the cases before us are not such in which powers under Article 226 of the Constitution could 'be invoked. The Patna High Court had, very rightly divided the types of cases 'in which breaches of alleged obligation by the State units agents can be set up into three types. These were stated as follows : "(i) Where a petitioner makes a grievance of breach of promise on the part of the State in cases where an assurance 256 or promise made by the State he has acted to his prejudice and predicament, but the agree ment is short of a contract within the meaning of article 299 of the Constitution; (ii) Where the contract entered into between the person aggrieved and the State is in exercise of a statutory power under certain Act or Rules framed thereunder and the petitioner alleges a breach on the pan of State; and (iii) Where the contract entered into between the State, and the person aggrieved is non statutory and purely contractual and the rights and liabilities of the parties are governed by the terms of the contract, and the petitioner complains about breach of such contract by the State. " It rightly held that the cases such as Union of India vs M/s. AngloAfghan Agencies,(1) and Century Spinning & Manu facturing Co. Ltd. vs Ulhasnagar Municipal Council(2); and Robertson vs Minister of Pensions,(3) belong to the first category where it could be held that public bodies or the State are as much bound as private individual are to carry out obligations incurred by them because parties seeking to bind the authorities have altered their position to their disadvantage or have acted to their detriment on the strength of the representations made by these authorities. The High Court thought that in such cases the obligation could sometimes be appropriately enforced on a Writ Petition even though the obligation was equitable only. We do not propose to express an opinion here on the question whether such an obligation could be enforced in proceedings under Article 226 of the Constitution now. is enough to observe that the cases before us do not belong to this category. The Patna High Court also distinguished cases which belong to the second category, such as K.N. Guruswami vs The State of Mysore;(4) ' D.F. South Kheri vs Ram Sanehi Singh;(5) and M/s. Shree Krishna Gyanoday Sugar Ltd. vs The State of Bihar,(6) where the breach complained of was of a statutory obligation. It correctly pointed out that the cases before us do not belong to this class either. It then, very rightly, held that the cases now before us should be placed in the third category where questions of pure alleged breaches of contract are involved. It held, upon the strength of Umakant Saran vs The State of Bihar;(7) and Lekhrai Sathram Das vs N.M. Shah;(8) and B.K. Sinha vs State of Bihar(9) that no writ order can issue under Article 226 of the Constitution in such cases "to compel the authorities to remedy are a breach of contract pure and simple". (1) ; (2) A.I.R. 1971 S.C. 1021. (3) [1949] 1 King 's Bench 227. (4) ; (5) A.I.R. 1973 S.C. 205. (6) (7) A.I.R. 1973 S.C. 964. (8) ; (9) A.I.R. 1974 Patna 230. 257 Learned counsel for the appellants has, however, relied upon a passage from Lekhraj Sathram Das 's case (supra) where this Court observed (at p. 231); " . until and unless in the breach is involved violation of certain legal and public duties or violation of statutory duties to the remedy of which the petitioner is entitled by issuance of a writ of mandamus, mere breach of contract cannot be remedied by the Court in exercise of its powers under Article 226 of the Constitution". Learned counsel contends that in the cases before us breaches of public duty are involved. The submission made before us is that, whenever a State or its agents or offi cers deal with the citizen, either when making a transaction or, after making it, acting in exercise of powers under the terms of contract between the parties, there is a dealing between the State and the citizen which involves performance of "certain legal and public duties. " If we were to accept this very wide proposition every case of a breach of con tract by the State or its agents or its officers would call for interference under Article 226 of the Constitution. We do. not consider this to be a sound proposition at all. Learned counsel for the appellants cited certain author ities in an attempt to support his submission that the State and its Officers are clothed with special Constitutional obligations, including those under Article 14 of the Consti tution, in all their dealings with the public even when a contract is there to regulate such dealings. The authori ties cited were: D.F. South Kheri vs Ram Sanehi Singh (supra) where all that was decided, relying upon K.N. Gurus wamy vs The State of Mysore (supra), was that, where the source of a right was contractual but the action complained of was the purported exercise of a statutory power, relief could be claimed under Article 226; and, Calcutta Gas Co. (Proprietary) Ltd. vs State of West Bengal & Ors,(1) where the real question considered was whether the petition er had a locus standi to question the validity of an enact ment; Basheshat Nath vs The Commissioner of Income Tax, Delhi & Rajasthan and Anr.,(2) which has nothing to do with any breach of contract but only lays down that "Article 14 protects us from both legislative and administrative tyranny of discrimination"; State of M.P. & Anr. vs Thakur Bharat Singh.(3) which lays that even executive action must not be exercised arbitrarily but must have the authority of law to support it; S.S. Sawhney v.D. Ramarathnam, Assistant Pass port Officer. of India, New Delhi & Ors. ,(4) which repeats requirements of action which satisfy Article 14 and 21 of the Constitution where compliance with these provi sions is obligatory. (2) [1959] Suppl. 1 S.C.R. 528 at 551. (3) ; (4) 2 4365CI/77 258 We do not think that any of these cases could assist the appellants or is at all relevant. None of these cases lays down that, when the State or the officers purport to operate within the contractual field and the only grievance of the citizen could be that the contract between the parties is broken by the action complained of, the appropriate remedy is by way of a petition under Article 226 of the Constitu tion and not an ordinary suit. There is a formidable array of authority against any such a proposition. In Lekhraj Sathramdas Lalwani vs M.M. Shah, Deputy Custodian cum Managing Officer, Bombay & Ors., (supra) this Court said (at p. 337); "In our opinion, any duty or obligation falling upon a public servant out of a con tract entered into by him as such public servant cannot be enforced by the machinery of a writ under article 226 of the Constitution". In Banchhanidhi Rath vs The State of Orissa & Ors(1) this Court declared (at p. 845): "If a right is claimed in terms of a contract such a right cannot be enforced in a writ petition." In Har Shankar & Ors. etc. etc. vs The Dy. Excise & Taxation Commr. & Ors. ,(2) a Constitution Bench of this Court ob served (at p. 265): "The appellant have displayed ingenuity in their search for invalidating circumstances but a writ petition is not an appropriate remedy for impeaching con tractual obligations". Learned Solicitor General, appearing for the State, contended that there could be no aspect of Article 14 of the Constitution "involved in a case where no comparison of the facts and circumstances of a particular petitioner 's case with those of other persons said to be similarly situated is involved. In such a case, he submitted, there was no possibility of inferring a discrimination. In reply, learned counsel for the appellants sought to direct our attention towards some allegations showing that there was discrimination between appellants and other parties gov erned by similar contracts in other areas. We doubt very much whether the doctrine of discrimination can be at all availed of against the State 's section purporting to be taken solely within the contractual field when n6 aspect of any statutory or ConStitutional obligation appears either from incontrovertible facts or applicable legal provisions. Indeed, it has been held fin C.K. Achutan vs State of 'Ker ala & Ors.,(3) that no question of a violation of Article 14 arises even where one out of the several persons ' is: se lected by the State for a particular contractual transac tion. Learned counsel for the appellants submitted that there was a conflict between what was laid down here and the law declared by this Court in Erusian Equipment & Chemicals .Ltd. 's case (supra). We think that the two cases are distinguishable on facts. The propositions of law laid down in the two cases must be read in the context of facts established in each case. In any event, A.I.R. 1972 S.C. 843 at 845. (2) ; at 265 (3) [1959] Suppl. (1) S.C.R. 787. 259 the cases before us do. not raise any question of discrimi nation alleged at the stage of entry into the contractual area which could attract the application of Article 14. In the cases.before us, allegations on which a violation of Article 14 could be based are neither properly made nor established. Before any adjudication on the question wheth er Article 14 of the Constitution could possibly be said to have been violated, as between persons governed by similar contracts, they must be properly put in issue and estab lished. Even if the appellants could be said to have raised any aspect of Article 14 of the Constitution and this Arti cle could at all be held to operate within the contractual field whenever the State enters into such contracts, which we gravely doubt, such questions of fact do not appear to have been argued before the High Court. And, in any event, they are of such a nature that they cannot be satisfactorily decided without a detailed adduction of evidence, which is only possible in ordinary civil suits, to establish that the State, acting in its executive capacity through its Offi cers, has discriminated between parties identically situat ed. On the allegations and affidavit evidence before us we cannot reach such a conclusion. Moreover, as we have al ready indicated earlier, the correct view is that it is the contract and not the executive power, regulated by the Constitution, which governs the relations of the parties on facts apparent in the cases before us. The real object of the appellants seems to be to hold up any adjudication on the cases before us by taking shelter behind Article 14 so that the stay orders obtained by them, presumably on representations made to this Court that no aspect of enforcement of Article 14 of the Constitution 'was involved. We think that to accede to the prayer on behalf of the appellants to. adjourn the hearing of these cases until after the Emergency is lifted and. yet to continue the stay orders is to permit a circumvention of the Constitutional mandate contained in Article 359 and to countenance a gross abuse of the processes of the Court. A rather desparate argument which has been addressed to us on behalf of the appellants is that they were entitled to an opportunity to. show cause against the cancellation of the leases. It was urged, on the strength of A.K. Kraipak & Ors. etc. vs Union of India & Ors. ,(1) that the distinction made between administrative and quasi judicial action is thin and a vanishing one. This argument appears to. us to be wholly irrelevant inasmuch as a question of the distinc tion between an administrative and quasi judicial decision can only arise in the exercise of powers under statutory provisions. Rules of natural justice are attached to the performance of certain functions regulated by statutes or rules made thereunder involving decisions affecting rights of parties. When a contract is sought to be terminated by the Officers of the State, purporting to act under the terms of an agreement between parties, such action is not taken in purported exercise of a statutory power at all. In Additional District Magistrate, Jabalpur, vs Shiva kant Shukla,(2)it was pointed out (at p. 1288): (1) (2) ; at 1288. 260 "The principles of natural justice which are so implied must always hang, if one may so put it, on pegs of statutory provisions or necessarily follow from them. They can also be said sometimes to be implied as necessary parts of the protection of equality and equal protection of laws conferred by Article 14 of the Constitution where one of the pillars of Dicey 's principles of the Rule of Law is found embodied. Sometimes, they may be implied and read the legislation dealing with rights protected by Article 19 of the Constitution. They could at times, be so implied because 'restrictions on rights conferred by Article 19 of the Constitution have to be reasonable". The limitations imposed by rules of natural justice cannot operate upon powers which are governed by the terms of an agreement exclusively. The only question which normally arises in such cases is whether the action com plained of is or is not in consonence with the terms of the agreement. As already pointed out by us, even if by some stretch of imagination some case of unequal or discrimina tory treatment by the officers of the State of persons governed by similar contracts is sought to be made out ', a satisfactory adjudication upon the unusual facts of such a case would necessitate proper pleadings supported by accept able evidence. In that case, the interim stay order or injunction could not be justified at all because so long as a Residential Order, under Article 359 of the Constitution, is operative, the enforcement of fundamental rights falling under Article 14 is suspended. In such cases even if a petition or suit is entertained and kept pending no stay order could be passed because that would amount to indirect ly enforcing the fundamental rights conferred by Article 14 of the Constitution. It is only where a prima facie case for an injunction or stay can be made out, quite apart from a right covered by Article 14 of the Constitution or by any other fundamental right whose enforcement may have been suspended, that an injunction or stay could be granted at all on suitable 'terms. As we have already said it was on such an assumption that this Court had, apparently, granted the interim stay which must now be discharged. Consequently, we dismiss these appeals with costs throughout, and discharge the stay orders. S R. Appeals dismissed.

A contract called a "lease" to collect and exploit sal seeds from forest area was entered into in 1970, between the respondent State and the appellants in 1970. Clause (3) in the written contract executed in accordance with the provi sions of article 299 of the Constitution provided for the revision of the. rate of royalty at the expiry of every three years in consultation with the lessee and was to be binding on the lessee. Under clause (4) of the. lease, the lessee. had to establish a factory within the, State of Bihar for processing of sal seeds and extraction of oil therefrom within a period of five. years from the date. of the, agreement, failing which the agreement itself was to terminate. In 1974, the respondent State revised the rate of royalty payable, by the appellants and after that, can celled the lease by a letter dated 15th, March 1975. The writ petitions challenging the said orders were dismissed by the Patna High Court. On appeals by certificates, the appellants contended: (i) the State acting in its executive capacity through its Government or its officers even in the contractual field cannot escape the obligation imposed upon it by Part III of the Constitution; (ii). Article 14 of the Constitution has been infringed and (iii) Principles. of natural justice have. been violated as no opportunity to show cause against the cancellation of lease was given. Dismissing the appeals the Court, HELD: (1) Article. 14 of the Constitution imports a limitation or imposes an obligation upon the States execu tive power under article 298 of the Constitution. The rule of law which regulates. the operation are organs of Government functioning under the Constitution is that all constitution al powers carry ' corresponding obligations with them. [254 E F] Erusian Equipment & Chemicals Ltd. vs State of West Bengal and Anr. 1975(2) SCR 674 at 677, referred to. (2) The State acts purely in its executive capacity and is bound by the obligations which dealings of the State with the individual citizens import into every transaction en tered into in exercise of its constitutional powers, only at the time of entry into the field of consideration of per sons with whom the Government could contract at all. But, after the State or its agents have entered into the field of ordinary contract the relations are no longer governed by the constitutional provisions but by the legally valid contract which determines rights and obligations of the parties inter se. [255 C D] 250 (3 ) Article 14 or of any other constitutional provision is not violated when the State or its agents purporting to act within the contractual field perform. any act. In this sphere they can only claim rights conferred upon them by contract and are bound by the terms of the contract only unless some statute steps in and confers some special statu tory power or obligation on the State in the contractual field which is apart from contract. In the instant case, the contracts do not contain any statutory terms or obliga tions and no statutory ' power or obligation which could attract the application of article 14 of the Constitution is involved. [255 D E, 260 E F] (4) The doctrine of discrimination cannot be availed of against the State 's action purporting to be taken solely within the contractual field when no aspect of any statutory or constitutional obligation appears either from incontro vertible facts or of facts. The appellants ', cases do not raise any question of discrimination alleged at the stage of entry into the contractual area which could attract the application of Article 14. [258 F G, 259 A] C.K. Achuthan vs State of Kerala and Ors. 1959 Supp. (1) SCR 787, applied. Erusian Equipment & Chemicals vs State of West Bengal & Ant. , distinguished. (5) Before any adjudication on the question whether Article 14 of the Constitution could possibly be held to have been violated as between persons governed by similar contracts, they must be properly put in issue and estab lished. The question whether Article 14 could at all be held to operate within the. contractual field whenever the State enters into such contracts is such that it cannot be decided without a detailed adduction of evidence which is only possible in ordinary civil suits, to establish that the State, acting in its executive capacity through its offi cers, has discriminated between parties identically situat ed. In the instant case allegations on which a violation of article 14 could be based are neither properly made nor estab lished. It is the contract and not the executive power regulated by the Constitution which governed the relations of the parties. [259 A D] (6) Proceedings under article 226 are, summary proceedings reserved for extraordinary cases where the exceptional and what are described perhaps not quite accurately as "preroga tive" powers of the court are invoked. If the facts are disputed and require assessment of evidence, the correctness of which can only be tested satisfactorily by taking de tailed evidence involving examination and cross examination of witnesses, the case could not be conveniently or satis factorily decided in proceedings under article 226 of the Constitution. Even in cases where the question is of choice or consideration of competing claims before an entry into the field of contract facts have to be investigated and found before the question of violation of article 14 could arise. The appellants ' cases are not such in which powers under Article 226 of the Constitution could be invoked. [255 E G] Lekhraj Satnam Das Lalvani vs M.M. Shah, Deputy Custodi an cum Managing Officer ; ; Banchhanidhi Rath vs The State of Orissa & Ors. AIR 1972 SC 843 @ 845 and Har Shankar & Ors. vs The Dy. Excise. & Taxation Corotar. & Ors. 3 ; @ 265, reiterated. D.F. South Kheri vs Ram Sangi Singh AIR 1973 SC 205; K.N. Guruswamy vs State of Mysore, ; ; Calcutta Gas Co. (Proprietary) Ltd. vs State of West Bengal & Ors. ; Basheshat Nath vs Commissioner of Income Tax, 1959 Supp. (1) SCR 528; State of M.P. vs Thakur Bharat Singh 1967(2) SCR 454 and S.S. Sawhney D. Ramarathnam, Assistant Pass port Officer, Govt. of India, New Delhi & Ors. , held not applicable. (7) The Patna High Court had very rightly divided the types of cases in which breaches of alleged obligation by the State or its agents can be set up into three types: (i) Where a petitioner makes a grievance of breach of an obliga tion of the State in cases where on an assurance or repre sentation of, the State, he has acted to his prejudice and detriment but the agreement is 251 short of a contract within the meaning of article 299 of the Constitution; (ii) Where the contract entered into between the person aggrieved and the State is in exercise of a statutory power under certain Act or Rules framed thereunder and the petitioner alleges a breach on the part of the State; (iii) Where the contract entered into between the State and the person aggrieved is nonstatutory and purely contractual and the rights and liabilities of the parties are governed by the terms of the contract and the petitioner complains about breach of such contract by the State. The High Court rightly held that the appellants cases should be placed in the third category where questions of pure alleged breaches of contract are involved and that no writ or order can issue under Article 226 of the Constitution in such cases to compel the authorities to remedy a breach of con tract pure and simple [255 H, 256 A B, F G] Umakant Saran vs The State of Bihar AIR. and Lekhraj Satram Das vs N.M. Shah ; , followed. B.K. Sinha vs State of Bihar AIR 1974 Patna 230, approved. Union of India vs M/s. Anglo Afgan Agencies ; ; Century Spinning and Manufacturing Company Ltd. vs Ulhasnagar Municipal Council AIR 1971 SC 1021; Robertson vs Minister of Pensions (1949)(1) K.B. 227; K.N. Guruswamy vs State of Mysore AIR ; ; D.F. South Kheri vs Ram Sanghi Singh AIR 1973 SC 205; M/s. Shrikrishna Gyanaday Sugar Ltd. vs The State of Bihar , distin guished and held inapplicable. (8) The object of the appellants is to hold up any adjudication on the cases, by taking shelter behind Article 14 so that the stay orders obtained by them may continue. To accede to the prayer to adjourn the hearing of the cases until after the emergency is lifted and yet to continue the stay orders is to permit circumvention of the constitutional mandate contained in article 359 and to countenance gross abuse of the process of the court. [259 D E] (9) The interim stay or order or injunction could not be justified at all because so long as the Presidential Order under article 359 of the. Constitution is operative, the en forcement of Fundamental Rights falling under Art.14 of the Constitution is suspended. In such cases even if a petition or a suit is entertained and can be pending no stay order could be passed because that would amount to indirectly enforcing the Fundamental Rights conterred by article 14 of the Constitution. It is only where a prima facie case for an injunction of stay can be made out, uqite apart from a right governed by article 14 of the Constitution or of any other Fundamental Rights whose enforcement may have been suspend ed, that an injunction could be granted at all in suitable cases on suitable terms. [260 C E] Additional District Magistrate, Jabalpur vs Shivkant Shukla ; @ 1288 1976 Supp. SCR, 172 re ferred to. (10) The appellants are not entitled to an opportunity to show cause against the cancellation of the leases. The question of distinguishing between an administrative and quasi judicial decision can only arise in the exercise of powers exercised under statutory provisions. Rules of natural justice are attached to the performance of certain functions regulated by statutes or rules made thereunder involving decisions affecting rights of parties. When a contract is sought to be terminated by the officers of the State purporting to act under the terms of an agreement between parties, such action is not taken in purported exercise of an agreement between parties, such action is not taken in purported exercise cannot operate upon powers which are governed by the terms of an agreement exclusively. The only question which normally arises in such cases is whether the action complained of is or is not in consonance with the terms of the agreement. [259 F H, 260 C]

Appeal No. 136 of 1964. 415 Appeal from the judgment and order dated February 24, 1961 of the Bombay High Court in Misc. Application No. 333 of 1960. A. V. Viswanatha Sastri, T. A. Ramachandra, J. B. Dadachanji, 0. C. Mathur and Ravinder Narain, for the appellant. R. Ganapathy lyer, R. H. Dheber and R. section Sachthey, for the respondent. The Judgment of the Court was delivered by Sikri, J. This is an appeal on a certificate granted by the High Court of Bombay against its judgment dated February 24, 1961, dismissing the petition filed by the appellant under article 226 of the Constitution of India. This appeal raises a short question as to the construction of section 49E of the Indian IncomeTax Act, 1922, hereinafter referred to as the Act. Before we deal with this question, it is necessary to set out the relevant facts. The appellant, at the material time, carried on business not only in India but also outside India, i.e. Ceylon, the former States of Kolhapur and Kapurthala and other places. It is not necessary to give the facts relating to the income in Ceylon and Kolhapur because if the facts relating to the income made in Kapurthala are stated, these will bring out the real controversy between the appellant and the Revenue. We may mention that it is common ground that the facts relating to Ceylon income and Kolhapur income are substantially similar. On July 9, 1954, the appellant wrote a letter to the Income Tax Officer, Companies Circle, Bombay, stating that for the assessment year 1949 50, it was entitled to refund on the income taxed in Kapurthala State. It attached an original certificate for tax showing payment of Rs. 37,828/11/ , and requested that a refund order be passed at an early date. On June 27, 1956, the Income Tax Officer rejected the claim on the ground that the claim filed by the appellant was not within the time limit of four years laid down in r. 5 of Income Tax (Double Taxation Relief) (Indian States) Rules 1939 hereinafter called the Indian States Rules. On December 18, 1956, the appellant filed a revision, under section 33A of the Act, against the said order, before the Com missioner of Income Tax, Bombay. The appellant stated in the petition that "unfortunately the Company 's assessment for the year in question was completed by the Income Tax Officer on 416 the last day of the financial year 1953 54, i.e., 31 3 1954 being the last date on which their claim for double income tax relief should have been lodged. In absence of the assessment order being received by the Company it was not physically practicable for the assessee to lodge its claim for double income tax relief and as such the time prescribed under Section 50 had already expired when the assessment order was received by the company. " The Commissioner made some enquiries. The appellant, in its letter dated June 30, 1958, replied that no provisional claim for double income tax relief was made by the appellant within the time prescribed. The appellant reiterated its own plea that it was not "physically practicable" for the assessee to lodge its claim for double tax relief within the time prescribed. The Commissioner, however, rejected the petition. He observed that "the assessment in the Kapurthala State was made on 20 3 1950, i.e., much before the assessment was completed by the Bombay Income tax Officer. Nothing prevented the petitioner, therefore, from filing a provisional claim before the period of limitation was over. At least, it should have made such a claim before the Income Tax Officer at the time of assessment. I regret I cannot condone the delay in filing the claim as there is no provision under Section 50 for such condonation. " The appellant then approached the Central Board of Revenue. The Central Board of Revenue, by its letter dated December 31, 1958, declined to interfere in the matter. The appellant did not take any steps to apply to the High Court under article 226 for quashing the above orders of the Commissioner of Income Tax or the Central Board of Revenue. On August 28, 1959, the Income Tax Officer issued three notices of demand under section 29 of the Act in respect of the Assessment years 1949 50, 1950 51 and 1951 52. The appellant then wrote a letter dated September 4, 1959, requesting the IncomeTax Officer to set off the refunds to which the appellant was entitled pursuant to the Provisions of Income Tax (Double Taxation Relief) (Ceylon) Rules, 1942, and read with the provisions of sections 49A and 48 of the Income Tax Act, in respect of the assessment years 1942 43, 1943 44 and 1944 45, relating to Ceylon, and the assessment year 1947 48 and 1949 50 relating to Kolhapur and Kapurthala, against the said demands. In this letter the appellant gave arguments in support of its request. In short, the argument was that although the applications claiming those refunds were submitted beyond the prescribed time limit, nevertheless the appellant had a right still, pursuant to the the provisions of section 49E, to call upon the Income Tax Officer to 417 set off the refunds found to be due to the appellant against the tax demands raised by the Income Tax Officer on the appellant. The appellant also approached the Central Board of Revenue,. urging similar points. The Central Board of Revenue, however, by its letter dated June 24, 1960, declined to interfere in the matter. The appellant then on October 7, 1960, filed a petition under article 226 of the Constitution. After giving the relevant facts and submissions, the appellant prayed that the High Court be pleased to issue a writ in the nature of Mandamits or a writ, direction or order under article 226 of the Constitution, directing the respondents to set off the refunds due to the petitioner under the aforesaid double taxation relief rules against the tax payable by it for the assessment year 1955 56. It appears that in the meantime the petitioner had paid tax for the assessment years 1949 50 and 1950 51, and the demand for Rs. 89,000.58 for the assessment year 1951 52 was kept in abeyance, and later when the assessment for 1955 56 was completed, the Income Tax Officers had agreed to keep in abeyance Rs. 79,430.19 out of the total demand relating to the assessment year 1955 56, till the decision of the Central Board of Revenue. The second prayer was that the High Court be pleased to issue writs in the nature of Prohibition or other direction or order under article 226 of the Constitution prohibiting the respondents, their officers, servants and agents from demanding or recovering from the petitioner the tax payable by it for the assessment year 195556 without first setting off against that tax the refunds due to the petitioner under the aforesaid double tax relief rules. It will be noticed that no prayer was made for quashing the order of the Commissioner, dated August 23, 1958, and the order of the Central Board of Revenue dated December 31, 1958. It was indeed contended by Mr. section P. Mehta, the learned counsel for the appellant before the High Court that the appellant was not challenging the orders of the Income Tax Officer rejecting his application for refund, but was only challenging the orders made by them rejecting its application for grant of set off. Mr. Viswanatha Sastri, the learned counsel for the appellant first urged that as compliance with r. 5 of the Indian States Rules, 1939 was physically impossible, r. 5 did not apply, and consequently the refund due to the appellant notwithstanding r. 5. But we cannot go into the question whether r. 5 was rightly or wrongly applied by the Income Tax authorities. The 418 orders dated August 23, 1958 and December 31, 1958, cannot be attacked in these proceedings. Therefore, we must proceed on the basis that those orders were validly passed. We express no opinion whether the view of the Income Tax authorities that r. 5 was applicable in the circumstances of the case was correct or not. This takes us to the construction of section 49E. Section 49E reads thus : "49E. Power to set off amount of refunds against tax remaining payable. Where under any of the provisions of this Act, a refund is found to be due to any person, the Income tax Officer, Appellant Assistant Commissioner or Commissioner, as the case may be may, in lieu of payment of the refund, set off the amount to be refunded, or any part of that amount against the tax, interest or penalty if any, remaining payable by the person to whom the refund is due. " The High Court held that section 49E of the Act did not give :any assistance to the appellant because, according to it, there ,must be prior adjudication in favour of the appellant. The High Court observed that "the expression found to be due" clearly means that there must, prior to the date set off is claimed, be an adjudication whereunder an amount is found due by way of refund to the person claiming set off." Mr. Sastri contends that it is not necessary that there should be a prior adjudication to enable a person to claim set off. He says that the Income Tax Officer can decide the question whether refund is due or not when an application for refund is made to him. On the facts, he says that it is clear that the appellant is entitled to refund under r. 3 of Indian States Rules, 1939, and the Income Tax Officer has only to calculate the relief due and then set it off. The learned counsel for the respondent, Mr. Ganapath lyer, on the other hand, contends that the orders of the Commissioner and the Central Board of Revenue having become final, there was no obligation on the Income Tax Officer to make any payment of refund, and he says that it is a condition precedent to the applicability of section 49E that the Income Tax Officer must be under an obligation to make a payment. He points out that the expression "in lieu of payment of the refund ' clearly indicates that the Income Tax Officer must be under an obligation to make a payment of refund. He further contends 419 that the refund is not due under the Act but under the said Rules, and therefore, section 49E does not apply. There is no difficulty in refuting the contention of the learned counsel for the Revenue that the refund, if due, was due under the provisions of the Act. Section 59(5) provides that the rules made under this section shall have effect as if enacted under this Act. This provision thus makes the Indian State Rules, 1939, part of the Act, and consequently if a refund is due under the Rules, it would be refund due under the Act within the meaning, of section 49E. The question then arises as to whether there should be a prior adjudication existing before a set off can be allowed under 49E, and whether there is any other condition which is necessary to be fulfilled before the section becomes applicable. We are of the opinion that it is not necessary that there should be a prior adjudication before a claim can be allowed under section 49E.There is nothing to debar the Income Tax Officer from determining the question whether a refund is due or not when an application is made to him under section 49E. The words "is found" do not necessarily lead to the conclusion that there must be a prior adjudication. But this is not enough to sustain the claim of the, appellant. It must ,till show that a refund is due to it. The words "found to be due" in section 49E may possibly cover a case where the claim to refund has been held barred under r. 5 of the Indian State Rules but that this is not the correct meaning is made clear by the expression "in lieu of payment". This expression, according to us, connotes that payment is outstanding, i.e. that there is subsisting obligation on the Income Tax Officer to pay. If a claim to refund is barred by a final order, it cannot be said that there. is a subsisting obligation to make a payment. The expression "in lieu of" was construed in Stubbs vs Director of Public Prosecutions(1). It was held there that where a liability has to be discharged by, A in lieu of B, there must he a binding obligation on B to do it before A can be charged with it. In our opinion, there must be a subsisting obligation to make the payment of refund before a person is entitled to claim a set off under section 49E. In this case in view of the orders of the Commissioner and the Central Board of Revenue mentioned above there was no subsisting obli gation to pay, and therefore, the claim of the appellant must (1) 420 Therefore, agreeing with the High Court, we hold that section 49E of the Act is of no assistance to the appellant and that the petition was rightly dismissed by the High Court. The appeal accordingly fails and is dismissed, but in the circumstances of the case there will be no order as to costs. Appeal dismissed.

The appellant company made a claim under section 5 of the Income tax (Double Taxation Relief) (Indian States) Rules, 1939, for refund of the income tax paid by it in an Indian State. The claim was rejected by the Income tax Officer as time barred. The Commissioner of Income tax and the Central Board of Revenue refused to interfere and the appellant sought no further legal remedy against their orders. Subsequently on certain tax demands being made by the Income tax Officer, the appellant made representation that the amounts in respect of which application had earlier been made under r. 5 should be set off against the demand as provided by section 49E of the Indian Income tax Act, 1922. The Income tax authorities having rejected this claim also, the appellant went to the High Court under article 226 of the Constitution. The High Court held that the expression found to be due" in section 49E clearly meant that there must be, prior to the claim of set off, an adjudication whereunder an amount is found due by way of refund to the person claiming set off. Since there was no such adjudication in the appellant 's favour, the writ petition was dismissed. However a certificate of fitness under article 133(1) (c) was granted to the appellant. HELD : (i) It is not necessary that there should be a prior adjudication before a claim can be allowed under section 49E. There is nothing to debar the Income tax Officer from determining the question whether a refund is due or not when an application is made to him under section 49E. The words "is found" do not necessarily lead to the conclusion that there must be a prior adjudication. [419 D E] (ii) The set off under section 49E must however be "in lieu of payment ' which expression connotes that payment is outstanding i.e. there is a subsisting obligation on the Income tax Officer to pay. If a claim to refund is barred by a final order, it cannot be said that there is a subsisting obligation to make the payment. [419 F G] Stubbs vs Director of Public Prosecutions , relied on. (iii) In the present case the orders of the Commissioner and the Central Board of Revenue rejecting the appellant 's claim under r. 5 of the Indian State Rules had become final. They were not challenged even in the petition under article 226. There was thus no subsisting obligation on the part of the Income tax Officer to make payment to the appellant, and the claim of the appellant under section 49E must therefore, fail. [419 G H]

Appeal No. 2162 of 1966. Appeal from the judgment and order dated September 6, 9, 1963 of the Gujarat High Court in Income tax Reference No. 9 of 1963. B. Sen, A. N. Kirpal, R. N. Sachthey and section P. Nayar, for the appellant. I. N. Shroff, for the respondent. The Judgment of the Court was delivered by Shah, J. By an agreement dated October 29, 1928 Ciba (India) Ltd. hereinafter called 'the principals ' appointed one Tejaji Farasram Kharawalla selling agent for the District of Ahmedabad in respect of certain kinds of dyes and dye stuffs, and agreed to pay him commission at the rate of 12 1/2% on sales by him of dyes and dye stuffs of the principals. The commission was to include " all charges in connection with the upkeep of offices and godown, turnover rebates and contingency expenses etc. " The terms relating to commission were modified by agreement dated August 20, 1935 and out of the commission agreed to be paid, 71% was to be treated as the selling commission and 5% was to be treated as compensation in lieu of the contingency expenses which the selling agent had to meet, "such as commission to Dyeing Masters, agents etc.". The rights of the selling agent were assigned with the consent of the principals to the respondent Company with effect from October 27, 1947. In assessing the income of the Company for the assessment year 1949 50, the Income tax Officer included in the taxable income Rs. 58,025/ being the difference between Rs. 1,90,538/ received by the Company as "5% commission" and Rs. 1,32,512/ spent by the Company for meeting the charges which the selling agent was to meet. The Income tax Appellate Tribunal, however, upheld the contention of the Company that in the computation of the income of the Company, the "5% commission" was wholly exempt by virtue of section 4 (3)(vi) of the Income tax Act, 1922. The Commissioner then moved the Tribunal to draw up a statement of the case and to refer the following question to the High Court of Judicature at Bombay: "Whether on the facts of the case, a portion viz. 5 of the selling agency commission of 12 1/2% received by the assessee company from M/s Ciba Ltd. in the course of carrying on the selling agency business is exempt from tax under section 413(vi) of the Act?" But the Tribunal only referred the following question: "Whether the assessee company held an office or employment of profit within the meaning of section 4(3)(vi) of the Indian Income tax Act?" 39 The application preferred by the Commissioner to the High Court for calling upon the tribunal to submit a statement on the question originally submitted was rejected, and the High Court answered the question referred by the Tribunal in the affirmative, observing that it had been conclusively determined by their earlier decision in Tejaji Farasram Kharawalla vs Commissioner of Income tax, Bombay (Mofussil)(1) which arose out of a proceeding for assessment to tax of the income of the original selling agent under the same agency agreement. It appears that in so observing the Court was under some misapprehension, for the question referred by the Tribunal had not been decided in the earlier judgment. Against the order passed by the High Court recording an answer in the affirmative on the question referred by the Tribunal and against the order dismissing the notice of motion, the Commissioner appealed to this Court. This Court set aside the order passed by the High Court dismissing the application of the Commissioner and without expressing any opinion on the correctness or otherwise of the answer recorded by the High Court on the question referred by the Tribunal, remanded the case to the High Court with a direction that the Tribunal be called upon to state a case on the question raised in the application of the Commis sioner. The case was then heard by the High Court of Gujarat to which it stood transferred because of the reorganisation of the State of Bombay. The High Court of Gujarat held that the "5% commission" received by the Company represented a special allowance to meet expenditure "such as commission to Dyeing Masters, agents etc.", and was on that account exempt from tax. The High Court also held that the Company held an office or employment of profit. The Commissioner has again appealed to this Court against the answers recorded by the High Court on the original and supplementary question. Section 4(3)(vi) of the Indian Income tax Act, 1922, as it stood in the year of assessment read as follows: "Any income, profits or gains failing within the following classes shall not be included in the total income of the person receiving them: (vi) Any special allowance, benefit or perquisite specifically granted to meet expenses wholly and necessarily incurred in the performance of the duties of an office or employment of profit. " The clause grants exemption in respect of expenses "incurred": but on that account an allowance granted to meet expenses to be incurred in future in the performance of the duties of an (1) 40 office or employment of profit is not outside the exemption claimed. In the context in which the expression "incurred" occurs, it undoubtedly, means "incurred or to be incurred". To qualify for exemption the allowance must it is clear be granted to meet expenses incurred or to be incurred wholly and necessarily in the performance of the duties of an office or employment of profit. But the purpose for which the allowance is granted, in our judgment, is alone not determinative of the claim to exemption. An allowance though made to a person holding an office or employment of profit intended for appropriation towards expenditure incurred or to be incurred in the discharge of the duties, does not constitute any real income of the grantee. It is in truth expenditure incurred by the employer through the agency of the grantee. The intention of the framers of the Act was to grant exemption in respect of amounts received by the assessee, not for his own benefit, but for the specific purpose of meeting the expenses wholly and necessarily incurred or to be incurred in the performance of his duties as an agent. It would, therefore, be reasonable to hold that the allowance granted to meet the expenses wholly and necessarily incurred or to be incurred in the performance of the duties of the office or employment of the grantee alone qualifies for exemption under the Act, and any surplus remaining in the hands of the grantee after meeting the expenses does not bear the character of the allowance for meeting expenses but for performing the duties of the office or employment. This would be so even if the employer has disabled himself from demanding refund of the amount not expended for meeting the expenses incurred or to be incurred in the performance of the duties of an office or employment of profit, and the surplus remaining in the hands of the grantee acquires for the purpose of the Incometax Act the character of additional remuneration. We are unable to agree with the decision of the Bombay High Court in Tejaji Farasram Kharawalla 's case(1) that the object with which the grant is made by the employer determines the claim to exemption under section 4(3)(vi) of the Income tax Act. The observations made by Chagla, C.J., at p. 267 that "what is emphasized in this sub clause section 4(3)(vi) is the purpose of the grant, the object with which the grant was made. Once it is established that the grant was for that particular purpose, it is no longer necessary for the assessee to prove that in fact he expended that grant for the purpose for which it was given. He may spend more, or he may spend less, but qua that grant which is given. for a particular purpose, he is entitled to the exemption", do not, in our judgment, give due effect to the key words "to meet expenses wholly and necessarily incurred in the performance of the duties of an office or employment of profit. " What is exempted is not the consideration paid for meeting the expenditure incurred ' or to be incurred in the performance of the duties of an office or (1) 41 employment:the exemption operates only in respect of a special allowance or benefit specifically granted to meet expenses wholly and necessarily incurred in the discharge of the duties of the office or employment. The judgment of the Allahabad High Court in Commissioner of Income tax, U. P. vs Sharma & Company(1) and especially the observations of Pathak, J., on which reliance was placed by counsel, for the Company may also be referred to. In Sharma & Company 's case(1) the assessee firm which was the sole selling agent of a "cotton mill", received a sum exceeding Rs. 67,000/ from the owners of the mills for the purpose of meeting the expenses in connection with the management of a retail cloth shop on behalf of the mill and actually spent only Rs. 12,641/ . The claim of the firm that it was entitled to exemption from liability to pay tax under section 44(3)(vi) of the Act (before it was amended in 1955) even in respect of the balance retained by it was upheld by the High Court of Allahabad. Pathak, J., observed that section 4(3)(vi), as it then stood, required the Income tax Officer to enquire whether the purpose of the grant was covered by the language of the clause, and he was not concerned to determine whether the amount granted was actually expended by the recipient. The learned Judge in so holding was impressed by two considerations: that the expression "incurred" means incurred already, or to be incurred in future; and that income tax being an annual tax in a case where the allowance is an ad hoc allowance which is to cover a period longer than or ending after the year of account, or is a periodical allowance, the Income tax Officer may under the Act exempt expenditure incurred in the year of account and no more, and thereby the intention of the employer would be wholly frustrated and the employee may be called upon to pay tax on a receipt which is not his income. The expression "incurred" means for reasons already set out incurred or to be incurred. But that has no bearing on the question whether the unexpended surplus in the hands of the employee is taxable. And we do not feel impressed by the second consideration. The allowance may be in respect of a period longer than the accounting year or which runs into the succeeding accounting year or years. But on that account the whole receipt reduced by the expenses actually incurred in the year of account is not liable to be brought to tax. If it appears from a review of the circumstances that a special allowance is made for a period longer than the year of account, or that the period covered by the grant of a special allowance extends beyond the close of the account year, it would, in our judgment, be the duty of the income tax Officer to determine the amount allowed in respect of the year of account in which the expenditure has been incurred, and the difference between the amount so determined and the amount actually expended would alone be brought to tax. (1) 42 It may be noted that the Parliament has by the Finance Act, 1955, with effect from April 1, 1955, recast cl. (vi) of section 4(3) of the Income tax Act, 1922 and has expressly provided that the special allowance granted to meet expenses wholly and necessarily incurred in the performance of the duties of an office or employment of profit to the extent to which such expenses are actually incurred for that purpose, was exempt from tax. The Legislature, by the amendment made it clear that only the expenses actually incurred by the assessee will be exempted under section 4(3)(vi). But the principle that an amount granted to cover expenses to be incurred for a period which extends beyond the year of account in which the grant is received will be allocated between the year of account and the period outside the year of account will apply to the Act as amended. There is no doubt that the selling agent under the agreement with the principals holds an employment for profit. No argument to the contrary was advanced before us. It is unnecessary therefore to consider the elaborate judgment of the High Court on the question whether the selling agent holds an office within the meaning of section 4(3) (vi) of the Act. The appeal is therefore allowed and the answer recorded by the High Court to the supplementary question is discharged, and the following answer to the supplementary question is recorded: "That portion of 5 per cent of the selling agency commission received by the assessee company is exempt under section 4 (3) (vi) of the Income tax Act, 1922, which is wholly and necessarily incurred in the year of account in the performance of the duties of the company as selling agent. " There will be no order as to costs in this appeal in this Court and in the High Court. G.C. Appeal allowed.

The respondents were selling agents for the goods manufactured by another company. They were paid 7 1/2% on the sales as selling commission and 5% as contingency expenses. The question in income tax proceedings was whether the amount not spent out of the grant for contingency expenses was exempt from taxation by virtue of s, 4(3) (vi) of the Indian Income tax Act, 1922. The High Court in reference held that the "5% commission" received by the respondents represented a special allowance to meet expenditure and was on that account exempt from tax. The Revenue appealed. HELD,: (i) In the context in which: the expression 'incurred ' occurs in section 4(3) (vi) it undoubtedly means 'incurred or to be incurred '. To qualify for exemption the allowance must be granted to meet expenses incurred or to be incurred wholly and necessarily in the performance of the duties of an office or employment of profit. [41A] (ii) In framing section 4(3) (vi) the intention of the framers of the Act was to grant exemption in respect of amounts received by the assesses, not for his own benefits but for the specific purpose of meeting the expenses wholly and necessarily incurred or to be incurred in the performance of his duties as agent. It would therefore be reasonable to hold that the allowance granted to meet the expenses wholly and necessarily incurred or to be incurred in the Performance of the duties of the office or employment of the grantee alone qualifies for exemption under the Act, and any surplus remaining in the hands of the grantee after meeting the expenses does not bear the character of the allowance for meeting expenses. This would be so even if the employer has disabled himself from demanding refund of the amount not expended for meeting the expenses incurred or to be incurred in the performance of the duties of an office of employment or profit, and the surplus remaining in the hands of the grantee acquires for the purpose of the Income tax Act the character of additional remuneration. [40C E] Tejaji Farasram Kharawala vs Commissioner of Income tax. Bombay (Mofussil), , disapproved. (iii) The allowance may be in respect of a period longer than the accounting year or years. But on that account the whole receipt reduced by the expenses actually incurred in the year of account is not liable to be brought to tax in that year. In such a case it will be the duty of the Income tax Officer to determine the amount allowed in respect of the year of account in which the expenditure has been incurred and the difference between the amount so determind and the amount actually expended would alone be brought to tax. [41G] The position in this respect remains the same even after the amendment of section 4(3) (vi) by the Finance Act, 1955. [41B] 38 Commissioner of Income tax, U.P. vs Sharma & Company. , disapproved.

Appeal No. 1984 of 1968. (Appeal by Special Leave from Judgment and Decree dated 4.12.1967 of the Allahabad High Court in Second Appeal No. 3224 of 1963 ) S.C. Manchanda, M.L. Chitravanshi and M.V. Goswami, for the appellants. J.P. Goyal, V.C. Prashar and Shreepal Singh, for respond ents. The Judgment of the Court was delivered by BEG, C. J. This is the defendant 's appeal by special leave against the judgment and decree of the Allahabad High Court decreeing the suit of the plaintiff respondent for partition and separate possession of 2/3 share of House No. 397 in Katra, Allahabad. The plaintiff claimed to be the sole heir of the auction purchaser of the house in Octo ber, 1937, at a Court sale in execution of a mortgage de cree. The house had been mortgaged by Sharda Prasad repre senting the line of one son of Kalyan Chand, the common ancestor and original owner, and Sheo Shankar and Sangam Lal representing the line of another son of Kalyan Chand. Kripa Shanker, now represented by the two appellants, his widow and son, was said to be a minor, and although, his brothers acted on his behalf, the defendants alleged that the loan and the mortgage were not binding upon him for want of legal necessity. Shital Prasad, a son of Kalyan Chand, was not a party to the mortgage deed. Hence, Sital Prasad 's share could not be said to have been sold. On 12th Septem ber, 1938, symbolical possession was taken by the auction purchaser, and, again in 1946, in proceeding for execution of a decree. But, the house continued to be in the occupa tion of Kripa Shanker, the husband of the appellant Raj Rani and the father of the appellant Kali Charan. Devika Rani, widow of Shital prasad, who had filed a suit in 1937 for the declaration of her rights to 1/3 of the house, after her objections under Order XXI, Rule 100 of the Code of Civil Procedure had been dismissed, and obtained a decree from the appellate Court on 22nd 20 January, 1941, with the result that Shital Prasad 's 1/3 share went out, had not been impleaded in the suit now before us. In 1945, the respondent auction purchaser (now represented by son, Respondent No. 1 ) had filed a suit against Kripa Shanker and another for a declaration of his rights in respect of 2/3 share in another house and the ejectment of Kripa Shanker and Prayag Das from that house. Although that suit was in respect of another house, the defendants alleged that, in that suit, the auction purchaser had said that the house in dispute in the case now before us was also in possession of Kripa Shanker as a trespasser. Kripaa Shanker died in 1953 leaving the appellants in pos session as his heirs. The suit now before us was filed on 10th August, 1959. It was alleged there that, although the auction purchaser had obtained possession of the whole house, yet, Smt. Devika Rani, the widow of Shital Prasad having continued in possession over 1/3 share, her claim to that portion had been accepted so that it was no longer in dispute. But, it was alleged that the auction purchaser has been in posses sion over 2/3 part of the house together with Devika Rani who had 1/3 share in the house. It was also alleged that, after the death of Devika Rani, one Sankata Prasad, defend ant No. 3, had started giving himself out as the owner of 1/3 share, on the basis of a giftdeed of 1953 ' in his fa vour, and that defendant No. 1, Raj Rani, had been giving out that Sankata Prasad had executed a sale deed in favour of Kripa Shanker, defendant No. 2. In para 8 of the plant, however, it is alleged: "The defendants had no concern with the 2/3 share in the said house themselves or through any other person nor were they ever in possession or in occupa tion of any part of above owners". It is also alleged in the plaint that the plaintiff auction purchaser 's son had been, and, before him the auction purchaser had been in possession of the house. Furthermore it is alleged that "Raj Rani had, in collusion with Sankata Prasad, defendant No. 3, Obtained a false sale deed in favour of defendant No. 2 in respect of the 1/3 share of the said house and misled some tenants in the said house and illegally prevented them from paying to the plaintiff his share in the rent". The plaintiff, therefore, claimed to be entitled to recover the rents also of amounts wrongly realised by the defendants 1 and 2, the appellants before us. In paragraph 10 of the plaint, it Was stated that the defendants did not pay any taxes to the Municipal Board which had to file suit for their recovery which were decreed. The plaintiff, howev er, alleged that he had paid up the decretal amounts in excess of the 2/3 share which belonged to the plaintiff. The plaintiff also alleged that he was being obstructed in looking after the house and realising rents. Hence, accord ing to the plaintiff, he had to serve a notice dated 23rd April, 1959, asking the defendants to partition the proper ty. The plaintiff alleged that the cause of action "accrued to the plaintiff firstly in 1956 and after that on the end of each month when the defendants illegally received plain tiff 's share in the rent from the tenants and did not pay to the plaintiff and then on 15 11 58. When the plaintiff has to pay excess amount to the Municipal Board on account of the defendants and the on 23 4 59 and, lastly, in May, 1959, when the defendants refused to partition the plaintiff 's share in the said house, within the juris diction of this Court and this Court has the jurisdiction to try this suit". The defendants appellants had denied any concern with the mortgage. Apparently, their case was that as the husband of Raj Rani, appellant No. 1 and the father of Kali Charan, appellant No. 2, was a minor at the time of the alleged mortgage and his brother, not having borrowed the money for any legal, necessary, could not bind Kripa. Shan ker or his heirs. Furthermore, the defendants pleaded that, even if the house ' had been sold in execution of the mort gage decree, the defendants appellants "have been openly denying the rights of the plaintiff and had been ' in adverse possession and occupation of the property for more than 12 years so that even if the plaintiff or his predecessors had any right, it had been extinguished by the operation of law of limitation". The first question, on pleadings set out above, for the trial. Court to determine was: has the plaintiff come with a plea of dispossession by the defendants so that Article 142 of the old Limitation Act was applicable to. The case, or, had the defendants, having set up the plea of adverse pos session, to establish an ouster in order to discharge their burden of proof under Article 144 of the Limitation Act ? In view of section 3 of the old Limitation Act, it was incumbent on the Court to determine whether the Suit was filed within time, even if the plea of limitation had not been taken, when the question had been raised. Section 3 (1) provided: "3 (1). Subject to the provision contained in sections 4 to 24 (inclusive), every suit instituted, appeal preferred, and application made after the prescribed period shall be dismissed, although limitation has not been set up as a defence." The correct procedure for the Court to adopt was not only to frame an issue on the question of limitation but to determine whether it was governed by Article 142 or by Article 144 of the Limitation Act. The trial Court did frame an issue indicating that Article 142 was applicable. This was issue No. 2 framed as follows: "Whether the suit is within limitation"? The trial Court observed: "It is also. true that if the suit of the plaintiff is not established to be within limitation, that is to say that, if the possession of the plain tiff is not even within 12 years, the suit must fail as the rights of the plaintiffs would be deemed to have been extinguished by the adverse possession of defendants 1 and 2, or their Predecessor in interest, namely, Kripa Shankar". All this shows that the trial 'Court was applying Article 142 of the old Limitation Act. We do not, however, find any finding given by the trial Court on ' the question whether, and, if so when and how, the plaintiff was in actual or constructive pos session of any part of the house. If Article 142 applied, it meant that the plaintiff had admitted dispossession. If this was the case, the following finding by the trial Court on the trial of the plaintiff seems to us to be premature: 22 "Now it will be noted that there has not been any partition between the plaintiff on the one hand and the other one third share holder Smt. Deoka or her successor in interest on the other hand. Deoka was admittedly a relation of Kripa Shanker and there is nothing unusual if Smt. Deoka had allowed Kripa Shanker to continue to live in the suit premises under the protection of her 1/3 share. The consistent Municipal receipts, the litigation with tenants, and over all the title deeds of the plaintiff; they all go to lend support to the plaintiff 's case". In the first appeal against that judgment, it was again not decided anywhere what Article of the Limitation Act applied to the case. It appears to us that the appellate Court had also not come to the grips with the real question to be determined. It said: "It was alleged that Kripa Shanker had taken possession over the house. The learned counsel for the appellant argued that these documents showed that Kripa Shanker was in possession over the entire house and that Bhagwan Das never obtained actual possession over it and only symbolical possession was delivered to him in this suit, It must be borne in mind that Bhagwan Das was owner to only 2/3rd share and 1/3rd belonged to Mst. Deoki, who was real aunt of Kripa Shanker, and unless Bhagwan Das had got his share parti tioned, he could not obtain actual possession over any portion of the house and as such only symbolical possession was delivered to him. The question only is whether he remained in joint possession or not ? It is contended from the side of the appellants that he was not in possession and Kripa Shanker was in adverse possession at least from 1945, and that this suit was filed in 1959, that is after more than 12 years when the defendant appellants had already perfected their title by adverse possession. This symbolical possession was delivered on 21st of November, 1946. This suit was filed in 1959 that is more than 12 years after and, therefore, there is force in the contention that it must be proved that Bhagwan Das was in joint possession. Bhag wan Das was a co sharer along with Mst. Deoki. Deoki 's share ultimately came to the defendant appellant in 1957 and as such in 1957 the defendant appellant became co sharer with the plaintiff respondent. In 1957, 12 years had not passed and even if it is assumed that Bhagwan Das or the plaintiff respondent was not in joint possession, their right had not ceased in 1957. It was observed by the Supreme Court of India in the case P. Laxmi Reddy vs L. Laxmi Reddy (in 1957 A.I.R. Supreme Court 314), 'the burden of making out ouster is on the person claiming to displace the lawful title Of co heir by his adverse possession '. " If the plaintiff 's assertion was that the defendants had dispossessed him it did not matter whether the defendants represented a 23 co sharer or not. In that event, the plaintiff 's case would certainly be deemed to be one in which the assertion of dispossession was there. In the case before us, it appears that the rights of Kripa Shanker, on the plaintiff 's asser tion that he had been a party to the mortgage, had come to an end by the sale of his rights in the property and deliv ery of possession to the auction purchaser. His heirs could only be in adverse possession and not holding through Kripa Shanker on the plaintiff 's own assertions. In fact, they have not claimed to be holding through Kripa Shanker. In any event, the allegations in the plaint appear to us to amount to an allegation that, by asserting their own owner ship and inducing the tenants not to pay rents to the plain tiff, the defendants had dispossessed the plaintiff. In such a case, even if a defendant in actual possession could be deemed to be initially a co sharer, the plaintiff would be really asserting that the co sharer had dispossessed or ousted him. Hence an ouster having been admitted in the plaint, the burden would lie 'upon the plaintiff of proving his Case that the ouster had taken place within twelve years. On any other view, the distinction between articles 142 and 144 of the former Limitation Act, which is important in this case, would vanish. In a case between co sharers, Bindhyachal Chand & Ors. vs Ram Gharib Chand & Ors,(1) a "Full Bench of the Allahabad High Court had examined the difficulties which arise when a co sharer sues another on the allegation that he had been dispossessed. Sulaiman, C.J., pointed out that article 144 was a residuary article Which applied to suits for posses sion of immovable property which could not fall elsewhere. As regards the distinction between articles 142 and 144, he observed (at p. 997): "No doubt in many cases the distinction is very fine,and the line of demarcation be tween dispossession and adverse possession is thin. But, the question in each case is one of burden of proof, and it is incumbent on the plaintiff, when he admits his disposses sion, to establish his possession within twelve years". He went on to point out (at p. 998): "Ordinarily, the possession of one co owner, who is entitled to joint possession of the whole property, is refer able to his title, and he cannot ask the Court to presumethat his possession was illegal or adverse to the other co owner. It follows that if one co owner is in actual possession of the joint property, and the other co owner is either absent or is not in actual possession, the latter would still be in constructive possession of his property through his co owner. There would be prima facie no case, where the possession of one co owner was illegal and was necessarily adverse to that of the other co owner. The presumption would be that they are both in joint possession. But, it cannot be denied that one co owner can dispossess another (1)A.I.R.1934 All. 3 240SCI/77 24 co owner and can exercise adverse possession over a joint property. If, therefore, the plaintiff, a co owner, admitsthat he has been dispossessed and that, at any rate, for a short period prior to the suit, the possession of his co owner was adverse to him, then he cannot fall back on a mere presumption of joint possession in his favour and succeed without showing any other circumstances whatsoever". The following observations of the learned Chief Justice are also useful (at p. 998): "Personally speaking, I do not think that the plaintiff can by cleverly drafting his plaint evade the burden of proof which article 142 casts upon one who is suing for pos session on the ground of dispossession. When a plaintiff falsely alleges that he is in possession and wants a relief, to which the owner in possession is entitled, e.g., for partition, injunction, joint possession, etc., and it is found that he was in fact not in possession but had been dispossessed, techni cally speaking, the suit would fail under section 42, Specific Relief Act and would be dismissed on the ground that he had omitted to ask for a consequential relief and had failed to prove his case. But, a Court may allow him to change his ground and give him a decree for possession, treating his claim as one for recovery of possession on the basis of dispos session, provided he succeeds in showing that his dispossession took place within 12 years". It seems to us that, in the case now before us, the High Court, on a second appeal to it, also failed to determine the crucial question of actual or even constructive pos session of the plaintiff within twelve years. It said: "The argument advanced before me is that after the decree in suit No. 57 of 1945 the possession of Kripa Shanker became adverse and, as the suit for partition was not fried with 12 years of the date of the decree, the suit was barred by limitation. A large number of authorities were cited before me on the point. It was urged that if a member of an undivided Hindu family sells his undivided share and the alience does not bring a suit for partition and possession over his share within 12 years of the date of the alienation the possession of the alienor and all the other coparceners would be adverse and the suit for partition after the expiry of 12 years from the date of the alienation would be barred by time. Some of the authorities cited by the learned counsel for the appellant, to which I do not consider it necessary to refer, would seem to support his contention. Learned counsel for the respondent, however, has cited before me the latest case of the Supreme Court in Manikayala Rao vs Narashnhaswami (AIR The case relied upon by the High Court is distinguishable on two grounds: firstly, it was not a case where the plaintiff, on the pleadings in the plaint could be fairly said to have admitted dispossession 25 or ouster by setting up that the alleged co sharer in possession was denying the rights of the plaintiff; and, secondly, delivery of symbolical possession there was said to have interrupted adverse possession which could, there fore, not be continuously for twelve years. In the case before us, even if a symbolic delivery of possession to a co sharer could be said to have interrupted any adverse possession, that interruption took place beyond 12 years. Hence, it was the duty of the plaintiff to have shown by cogent evidence how, by receipt of rent or an admission by the defendants or otherwise, he or his predecessorin interest could be deemed to be in actual or constructive possession as an owner or as a co sharer with the defendants over the house in dispute. We may observe that the difficulty in deciding the question whether article 142 or article 144, Limitation Act applies to a case which really depends upon an interpreta tion of the pleadings, was sought to be removed in the Limitation Act of 1963 by a more clarified position in article 64 and 65 of Limitation Act of 1963. The reasons given for this change were: "Article 142 and 144 of the existing Act have given rise to a good deal of confusion with respect to suits for possession by owners of property. Article 64 as proposed replaces article 142, but is restricted to suit based on possessory title so that an owner of property does not lose his right to the property unless the defendant in possession is able to prove adverse possession". In other words, in cases governed by the former Limitation Act, at any rate, a plaintiff admitting dispossession, in suits based on title, had to prove that he was in actual or constructive possession within twelve years. Hence, the change in law. We do not, however, propose to examine or lay down here the exact position under the amended law of limitation under the act of 1963. The result is that, in the case before us, the plaintiff had to, prove that he was he actual or constructive posses sion within twelve years. It would be enough if he estab lishes that he was in constructive possession within twelve years by receipt of rent or otherwise. There is no finding to that effect given by the High Court or by the Subordinate Court. We, therefore, allow this appeal, set aside the judg ments and orders of the High Court and of the first appel late Court. We send the case back to the first appellate Court, which is the final Court of facts, to determine, on the evidence already on record, whether the plaintiff was in actual or constructive possession within twelve years of the filing of the suit. If the plaintiff can establish that, the suit will have to be decreed. Otherwise, the suit must fail. The costs will abide the results. S.R. Appeal allowed and case remanded.

The suit property of one Kalyan Chand in the joint possession of Shital Prasad (son 1/3), Bansidar (great grandson 1/3) and Sheo Shankar Sangamlal and Kripa Shankar (1/9+1/9+1/9 grandsons) was mortgaged by Sheo Shanker, Sangamlal and Bansidhar acting on their own behalf and allegedly on behalf of Kripa Shankar (who was a minor then). Shital Prasad was not a party to the mortgage. When the whole house was sold in Court auction on 3 10 1937, in realisation of the mortgage money decreed, one Bhagwandas father of Kailash Chand (Respondent No. 1) purchased the said house and took symbolical possession on 12.9.1938. 'The residential portion of the house was in occupation of Kripa Shankar (Appellant 's husband) and Devika Rani w/o Shital Prasad who established her right to 1/3 share by a decree obtained on 22 1 1941. Another suit filed by Bhag wandas for a declaration and possession over 2/3 share for ejecting Kripa Shankar was decreed on 27 8 1945, and, again symbolical possession was obtained on 21 11 46 under O.21 r.96 C.P.C. Kripa Shankar died in 1953 leaving behind the appellants Raj Rani (wife) and Kali Charan (son). Respond ent No. 1 son of the auction purchaser Bhagwan Das filed a suit No. 475/1959 on or about 10 8 1959 for partition and possession over 2/3 share of the portion in addition 'to certain claims of rents illegally collected and the amount of tax unpaid by the appellants. The plaint allegations were: (i) The auction purchaser has been in possession over 2/3 part of the house with Devika Rani who had 1/3 share in the house; (ii) The defendants had no concern with 2/3 share in the said 'house themselves or through any other person were not in possession or in occupation of any part of the above said house at any time as owners; (iii) The plaintiff was being obstructed in looking after the house and realis ing rents and that the defendant had misled some tenants and realised the rents due to him. The appellant defendants took the plea (i) the mortgage was not valid as the amount was not borrowed for legal necessity; (ii) Even if the house "had been sold in execution of the mortgage, they have been openly denying the rights of the plaintiff and had been in adverse possession and occupation of the property for more than 12 years so that, even if the plaintiff or his prede cessors had any right, it had been extinguished by the operation of law limitation. The Trial Court decreed the suit and the first appellate court confirmed it. The second appeal filed in the High Court was also dismissed. Allowing the appeal by special leave, the Court, HELD: (1) The High Court in a second appeal and the Subordi nate courts failed to determine the crucial question of actual or even constructive possession of the plaintiff within twelve years and give a finding to that effect. [24E] (2) The plaintiff had to Drove that he was in actual or constructive possession within twelve years. It would be enough if he establishes that he was in constructive posses sion within twelve years by receipts of rent or otherwise. [25F] (3) A decision on the question whether article 142 Limita tion Act applies to a case, really depends upon an interpre tation of the pleadings. In cases governed by the former Limitation Act, at any rate, a plaintiff admitting dispos session in suits based on title, had to Drove that he was in actual or constructive possession within twelve years. [25C E] 19 (4) The allegations in the plaint amount to an allega tion that by asserting their ownership and inducing the tenants not to pay rents to the plaintiffs, the defendants had dispossessed the plaintiff. In such a case, even if a defendant in actual possession could be deemed to be ini tially a co sharer, the plaintiff would be really asserting that the co sharer had dispossessed or ousted him. Hence an ouster having been admitted in the plaint the burden would lie upon the plaintiff of proving his case that the ouster had taken place within twelve years as article 142 of the old Limitation Act applied to such a case. In the instant case, even if the symbolic delivery of possession to a co sharer could be said to have interrupted any adverse possession, that interruption took place beyond twelve years [23B C] Bindhyachal. Chand & Ors. vs Ram Gharib Chand & Ors. AIR [1934] All. referred to. Manikyala Rao vs Narasimhaswami ; , distin guished. Appeal allowed and case remanded to first Appellate court to determine whether plaintiff was in possession within the period of limitation.

Civil Appeal No. 272 of 1972. From the Judgment and Order dated 18.7.1972 of the Delhi High Court in F.A.O. No. 139 D of 1962. S.S. Ray and Rameshwar Nath for the Appellant. Anoop Singh, C.L. Itorara and H.M. Singh for the Respondent. The Judgment of the Court was delivered by TULZAPURKAR, J. This appeal by special leave is directed against the judgment and decree passed by the learned Single Judge of the Delhi High Court on 18th July, 1972 in F.A.O. No 139 D of 1962 whereby a decree in terms of the Award passed by the Trial Court was set aside. Principally the view of the Full Bench rendered on the specific question referred to it and which was followed by the 571 learned Single Judge while allowing the first appeal has been challenged by the appellant before us in this appeal. Facts, admitted and/or found by the lower courts are these: The appellant is a share broker and a member of the Delhi Stock Exchange an Exchange recognised by the Central Government under the Securities Contracts (Regulations) Act, 1956. The respondent, a non member, had dealings in shares and securities with the appellant as principal to principal between 14th July and 27th September, 1960 in respect whereof printed Contract Notes (exhibit P. 1 to P. 31) in the prescribed form were issued by the appellant and were signed by the respondent. These transactions were subject to the Rules, Regulations and Bye laws of the Exchange which covered transactions between a member and a non member. Each one of the Contracts contained an arbitration clause couched in very wile terms requiring the parties thereto to refer all their disputes of claims to arbitration as provided in the Rules, Regulations and Bye laws of the Exchange and Bye law 244(a) incorporated a "Reference to Arbitration" in respect of such disputes or claims (whether admitted or not) between a member and a non member arising out of or in relation to such transactions to two arbitrators to be appointed under the Rules, Regulations and Bye laws of the Exchange. It appears that under these transactions a sum of Rs. 5923 became due and payable by the respondent to the appellant but since the respondent raised a dispute and did not pay the claim the said dispute was referred to the arbitration of two arbitrators Mr. Prem Chand and Mr. P.S. Khambete (both members of the Exchange) after following the procedure prescribed under the Rules, Regulations and Bye laws of the Exchange, the former being the nominee of the appellant and the latter being the appointee of the Exchange on the respondent 's failure to nominate his arbitrator when called upon to do so. The arbitrators held their proceedings in which the respondent participated though he inter alia raised a contention that he was not a party to the reference and would not be bound by the Award that might be made on the basis of such unilateral reference. After considering the entire evidence oral and documentary produced before them and after hearing the parties the arbitrators made their Award on 18th April, 1961 whereby they allowed the claim of the appellant with costs against the respondent. The Award was filed in Court and after notices of filing the Award were served, the respondent filed objections to the Award on several grounds such as 572 denial of the existence of the agreement of reference, that he was not a member of the Exchange, that the Contract Notes had not been signed by him, that the arbitrators had mis conducted themselves and the proceedings, that the Award had been improperly procured etc. The learned Sub Judge Ist Class, Delhi who heard the matter negatived all the objections raised for setting aside the Award; in particular he recorded the findings that the Contract Notes bore the signatures of the respondent and as such under the arbitration clause contained in each one of them read with the relevant Bye laws there was a valid Agreement for Reference to arbitration. Consequently, he made the Award a rule of the Court and passed a decree in favour of the appellant on 7.9.1962. The respondent preferred an appeal being F.A.O. No. 139 D of 1962 to the High Court of Delhi. The learned Single Judge who heard the appeal confirmed the trial court 's findings on all the issues arising in the case except on the question of validity of the reference. Undoubtedly, he in agreement with the trial court held that the Contract Notes Exbs. P. 1 to P. 31 which contained the arbitration clause, were signed by the respondent but even so, since the respondent had not joined in nominating his arbitrator despite service of notice asking him to do so, he entertained a doubt as to whether the respondent could be said to be a party to the actual Reference to arbitration and whether on that account the Reference to the two arbitrators could be said to be unilateral and therefore, in view of the importance of the question involved, he referred the same to a larger Bench keeping the appeal on his file pending receipt of the decision of the larger Bench on the point. This reference order was made on 5th January, 1971 in consequence whereof the question came to be referred to a Full Bench. The Full Bench answered the question in favour of the respondent. It took the view that notwithstanding the fact that respondent had signed the Contract Notes and had thereby become consenting party to the arbitration agreement the actual reference to arbitration of the two arbitrators Prem Chand and P.C. Khambete required the assent of both the parties and since to such reference the respondent had not given his consent it was a unilateral reference to arbitration and as such the resultant Award would not be binding on the respondent. In taking the view that the actual reference also required fresh 573 assent of both the parties the Full Bench relied upon some observations made by this Court in its decision in Seth Thawardas Pherumal vs Union of India. The Full Bench rejected the submission made before it on behalf of the appellant that the relevant observations of this Court on which it sought to rely for taking such view should be confined to and must be regarded as having been made in the context of the specific question which actually arose for decision before this Court in that case. The Full Bench expressed its final conclusion in these words: "In cases where a contract between the parties contains what may be called an arbitration clause to refer future disputes to arbitration, the agreement is merely an agreement to submit future differences to arbitration within the meaning of section 2(a) of the . If disputes arise in the future, a reference has to be made to arbitration within the meaning of section 2(e) of the and at this stage there should be a consent of both the parties. If the consent exists it would not be necessary to proceed under Chapter III by making an application under section 20 of the and the parties or one of the parties can proceed under Chapter II of the said Act. " Presumably the Full Bench held that since there was no such consent at such later stage for the actual reference on the part of the respondent herein an application under section 20 was necessary to be taken out by the appellant and in the absence of such step having been taken the actual Reference was unilateral and consequently the Award made on such reference was not binding on the respondent. When the matter went back to the learned Single Judge he naturally following the view of the Full Bench allowed the appeal of the respondent and set aside the decree passed in terms of the Award. It is this view of the Full Bench that is under challenge in this appeal. It is obvious that two questions really arise for our determination in this appeal. First, whether in the facts and circumstances of the case there was a unilateral reference to arbitration of the 574 two arbitrators Mr. Prem Chand and Mr. P.S. Khambete or having regard to the terms and conditions of the Contract Notes which included an arbitration clause in very wide terms to which the respondent had become a party by signing the Contract Notes and the relevant Rules Regulations and Bye laws of the Exchange the respondent could be said to have accorded his consent to the actual Reference to arbitration of the two arbitrators? In other words whether a fresh assent on his part was necessary at the stage when the reference came to be made to the two arbitrators in accordance with the relevant Bye laws of the Exchange? And the second, whether the Full Bench has properly appreciated the true scope and effect of the relevant observations made by this Court in Seth Thawardas Pherumal 's case (supra)? It is true that the defines the two expressions "arbitration agreement" and "reference" separately. Section 2(a) defines an "arbitration agreement" to mean "a written agreement to submit present or future differences to arbitration, whether an arbitrator is named therein or not" while s 2(e) defines a "reference" to mean "a reference to arbitration". The latter expression obviously refers to an actual reference made jointly by the parties after disputes have arisen between them referring the` said disputes for adjudication to a named arbitrator or arbitrators, while the former expression is wider as it combines within itself two concepts, (a) a bare agreement between the parties that disputes] arising between them should be decided or resolved through arbitration and (b) an actual reference of a particular dispute or disputes for adjudication to a named arbitrator or arbitrators. This will be clear form the manner in which the expression "submission" was defined in the earlier Indian Arbitration Act, 1899 because, following the English Arbitration Act, 1889, the Indian Arbitration Act 1899 defined the expression "submission" in the same words now used to define "arbitration agreement" in the 1940 Act and in Russell on Arbitration (20th Edn.) at page 44 it has been stated that this term (arbitration agreement as defined) covers both the concepts (a) and (b) mentioned above within it. If that be so, it stands to reason that only when the arbitration agreement is of the former type, namely, a bare agreement a separate reference to arbitration with fresh assent of both the parties will be necessary and in the absence of such concensual reference resort to section 20 of the Arbitration Act will be essential but where the arbitration agreement conforms to the definition given in section 2 (a), the party desiring arbitration can straightaway approach the arbitrator or arbitrators and resort to section 20 of 575 Arbitration Act is unnecessary because consent to such actual reference to arbitration shall be deemed to be there as the second concept is included in the agreement signed by the parties, and the aspect that differences or disputes actually arose subsequently would be inconsequential because the arbitration agreement as defined in section 2(a) covers not merely present but future differences also. In other words, in such a case there will be no question of there being any unilateral reference. Such being the true position in law it is difficult to agree with the view of the Full Bench that "where a contract between the parties contains what may be called an arbitration clause to refer future disputes to arbitration the agreement is merely an agreement to submit future differences to arbitration within the meaning of section 2(a) of the Arbitration Act and that if disputes arise in future a reference has to be made to arbitration within the meaning of section 2(e) of the agreement and at this stage there should be a consent of both the parties. " In every case the question will have to be considered as to whether the arbitration agreement is a bare agreement of the type indicated earlier or an arbitration agreement as defined in section 2(a) of the Act and we proceed to examine this question in regard to the arbitration agreement in the instant case. It has not been disputed before us that the Contract Notes Exbts. P. 1 to P. 31 issued by the appellant and signed by the respondent contain printed terms and conditions on the basis of which the transactions were put through by the parties and that such terms and conditions include an arbitration clause. There is also no dispute that these dealings were subject to or governed by the Rules, Regulations and Bye laws and the usages of the Exchange. The arbitration clause printed in each one of the Contract Notes runs thus: "In the event of any claim (whether admitted or not), difference or dispute arising between you and me/us out of these transactions the matters shall be referred to arbitration in Delhi as provided in the Rules, Bye laws and Regulations of Delhi Stock Exchange Association Ltd; Delhi. This contract constitutes and shall be deemed to constitute as provided overleaf an agreement between you and me/us that all claims (whether admitted or not) 576 differences and disputes in respect of any dealings transactions and contracts of a date prior or subsequent to the date of this contract (including any question whether such dealings, transactions or contracts have been entered into or not) shall be submitted to and decided by arbitration in Delhi as provided in Rules, Bye laws and Regulations of the Delhi Stock Exchange Association Ltd; Delhi. The provisions printed overleaf form a part of the contract. " On the reverse of the Contract Notes are printed verbatim, Bye laws Nos. 247 to 249 and 273 and 274 of the Exchange contained in the Chapter of the Bye laws dealing with "arbitration other than between the members. " Bye law 247 appears under the heading "Reference to Arbitration" and clause (a) thereof is relevant which runs thus: "247 (a) All claims (whether admitted or not) differences and disputes between a member and a non member or non members (the terms "non member" and "non members" shall include a remisier, authorised clerk or employee or any other person with whom the member shares brokerage) arising out of or in relation to dealings, transactions and contracts made subject to Rules, Bye laws and Regulations of the Exchange or with reference to anything incidental thereto or in pursuance thereof or relating to their construction, fulfillment or validity or relating to the rights, obligations and liabilities of remisiers, authorised clerks, employees or any other person with whom the member shares brokerage in relation to such dealings, transactions and contracts shall be referred to and decided by arbitration as provided in the Rules, Bye laws and Regulations of the Exchange". Bye law 248 deals with "Appointment of Arbitrators" and clause (a) thereof is material which runs thus: "248(a) All claims, differences, and disputes required to be referred to arbitration under these Bye laws and Regulations shall be referred to the arbitration of two members of the Exchange one to be appointed by each party." 577 Bye law 249 deals with "Appointment of Arbitrators by the Board of Directors or President" and cl.(1) thereof which is material runs thus: "249. On payment in advance of the minimum fees of arbitrators prescribed under these Bye laws and Regulations by any party to a claim, difference or dispute the Board of Directors or the President shall appoint an arbitrator. (i) if after one party has appointed an arbitrator ready and willing to act and there is failure, neglect or refusal on the part of the other party or parties to appoint an arbitrator (ready and willing to act) within seven days after service of written notice of that appointment or within such extended time as the Board of Directors or the President may on the application of the other party or parties allow". The aforesaid arbitration clause contained in the Contract Notes read with relevant Bye laws make two or three things very clear. In the first place the arbitration clause is couched in a very wide language inasmuch as it makes arbitrable not merely the claims or disputes arising out of the transactions specified in the Contract Note but also "all claims differences and disputes in respect of any dealings, transactions and contracts of a date prior or subsequent to the date of this Contract (including any question whether such dealings, transactions or contracts have been entered into or not)" Secondly, the arbitration clause incorporates a provision that all such claims, differences and disputes "shall be submitted to and decided by arbitration" in Delhi as provided in the Rules, Regulations and Bye laws of the Exchange; this is a pointer to consensual submission in the clause. Thirdly, Bye law 247(a) which governs these transactions in terms constitutes the actual reference to arbitration and under Bye laws 248(a) and 249 (1) the reference is to two arbitrators who would be the nominees of each one of the parties to the disputes and provision is made empowering the Board of Directors or President to appoint arbitrator in case a party fails to nominate his own; in other words once a contract is made subject to Rules, Regulations and Bye laws (framed under the rule making powers) there comes into existence a statutory submission or reference to arbitration. On a plain reading of the arbitration clause contained 578 in the Contract Notes read with relevant Bye laws it is abundantly clear that the arbitration agreement herein is not a bare arbitration agreement but is clearly an arbitration agreement as defined in section 2(a) of the Arbitration Act of 1940. In other words, the assent of the parties to actual reference is already there in the agreement; in addition there is a statutory reference. Therefore the reference being consensual (and also statutory) the resultant award would be valid and binding on the parties to the transactions. That being so it is difficult to accept the Full Bench view that this was a case of unilateral reference requiring fresh assent of the respondent at the stage when the reference came to be made to two arbitrators. In our view resort to section 20 of the Arbitration Act on the part of the appellant before approaching the arbitrators for adjudication was unnecessary and the Award was and is binding on the respondent. For taking the view that it was a case of unilateral reference requiring fresh assent of the respondent at the stage when the reference came to be made to Messrs Prem Chand and Khambete and that in the absence of such fresh assent from the respondent it was necessary for the appellant to approach the Court with an application under section 20 of the Arbitration Act the Full Bench relied upon the following observations made by this Court in Thawardas Pherumal case (supra): "A reference requires the assent of 'both ' sides. If one side is not prepared to submit a given matter to arbitration when there is an agreement between them that it should be referred, then recourse must be had to the Court under section 20 of the Act and the recalcitrant party can then be compelled to submit the matter under sub section (4). In the absence of either, agreement by 'both ' sides about the terms of reference, or an order of the Court under section 20(4) compelling a reference, the arbitrator is not vested with the necessary exclusive jurisdiction. " The Full Bench has taken the view that the above observations are applicable generally to all references and are not restricted to references of specific questions of law arising in given set off acts and circumstances and lay down the wide proposition that there can be no reference to arbitration except through the Court under section 20 unless both the parties join in the actual reference. That is why 579 the Full Bench has expressed its final conclusion in the manner and language quoted earlier. With great respect, we would like to observe that the Full Bench has failed to appreciate the true scope and effect of the aforementioned observations of this Court. These observations must be read in the proper perspective and not in a truncated manner or divorced from the context of specific issue which arose for determination before the Court in that case. So considered it will be clear that these were neither intended to apply generally to all references nor to lay down the wide proposition that there can be no reference to arbitration except through the Court under section 20 unless both parties join in it. Briefly stated the facts in Thawardas Pherumal 's case (supra) were these: Seth Thawardas, a contractor, entered into a contract with the Government for supply of two and half crores of pucca bricks to be delivered in instalments according to a fixed time schedule. A clause in the contract required "all disputes arising out of or relating to the contract to be referred to arbitration" of the Superintending Engineer of the Circle for the time being Disputes arose about a number of matters between the parties at the same were duly referred to the arbitrator. One of the claims (the 5th head of the claim) preferred by the contractor was a loss of Rs. 75,900 being the value of 88 lacs of katcha bricks that were destroyed by rain. The contractor 's case in regard to this claim was that there was default on the part of the C.P.W.D. in not removing the fully baked bricks which were ready for delivery, that due to delay in removal of baked bricks unburnt katcha bricks got accumulated which could be not be fed into his kilns and in the meanwhile rains set in with the result that 88 lacs of katcha bricks were destroyed by the rains and hence he was entitled to claim the value thereof as loss. Government 's reply was two fold. First, it urged that the katcha bricks formed no part of the contract and even if it was at fault in not taking delivery of the pucca bricks in time all that it will be liable for would be for the breach of that contract but the loss that was occasioned by damage caused to the katcha bricks which formed no part of the contract was too remote. Secondly, compensation for this loss could in no event be claimed because this kind of situation was envisaged by the parties when the contract was made and it was expressly stipulated that Government would not be responsible and in that behalf reliance as placed on clause (6) of the agreement which in terms stated: "the 580 department will not entertain any claim for damage to unburnt bricks due to any cause whatsoever. " The arbitrator held that the said clause was not meant "to absolve the department from carrying out their part of Contract and so he awarded the contractor Rs, 64075 under this head. This part of the award was challenged on the ground that it disclosed an illegality and an error of law on the fact of it. This Court took the view that the arbitrator had clearly gone wrong in law, his construction of the terms of the contract being faulty and the award was liable to be set aside. Even so a contention was raised on behalf of the contractor that the Court could not interfere with or set aside the award inasmuch as the question of law had been specifically referred to the Arbitrator for his adjudication and therefore, he had exclusive jurisdiction to decide it rightly or wrongly and the court could not interfere with that decision, however, erroneous in law it might be. Therefore, the real issue that arose for determination before the Court in that case was whether the question of law arising between the parties had been specifically referred to the arbitrator or not and on the facts of the case the court expressed the view that such a specific question of law could not be expected to be referred to arbitration by reason of the arbitration clause contained in the original contract inasmuch as the question could not be known to the parties unless and until the dispute actually arose and that such a question could be specifically formulated and referred only after the dispute arose. Since the question could not be and was not contained in the original arbitration clause it was required to be referred to arbitration by both the parties after disputes arose and since this was not done the Court held that the question of law had not been specifically referred to the arbitrator and therefore, the arbitrator had no exclusive jurisdiction to decide the same and there being an error of law apparent on the face of the award the Court could interfere with the decision and set aside the award. It was in this context that the Court considered the necessity of either making such a reference by both the parties afresh or a Court 's order under section 20(4) so as to give exclusive jurisdiction to the arbitrator to decide the question of law rightly or wrongly and the aforementioned observations on which the Full Bench has relied were not meant for applying generally to all references. This would also be clear if the relevant observations are read in their entirety and in proper perspective. The relevant observations appearing at page 58 of the Report run thus: 581 "We are of the opinion that this is not the kind of specific reference on a point of law that the law of arbitration requires. In the first place, what was shown to us is no reference at all. It is only an incidental matter introduced by the Dominion Government to repel the claim made by the contractor in general terms under claim No.5. In the next place, this was the submission of the contractor alone. A reference requires the assent of 'both sides '. If one side is not prepared to submit a given matter to arbitration when there is an agreement between them that it should be referred, then recourse must be had to the Court under section 20 of the Act and the recalcitrant party can then be compelled to submit the matter under sub section (4). In the absence of either, agreement by 'both sides ' about the terms of reference, or an order of the Court under section 20(4) compelling a reference, the arbitrator is not vested with the necessary exclusive jurisdiction. Therefore, when a question of law is the point at issue, unless 'both sides ' specifically agree to refer it and agree to be bound by the arbitrator 's decision, the jurisdiction of the Court to set an arbitration right when the error is apparent on the face of the award is not ousted. The mere fact that both parties submit incidental arguments about a point of law in the course of the proceedings is not enough". On reading the aforesaid observations in proper perspective it is clear that these were made in the context of the specific issue that arose before this Court and were not and are not intended to apply generally to all references. The statement that in the absence of either, agreement by both sides about the terms of reference, or an order of the Court under s.20(4) compelling a reference, the arbitrator is not vested with 'the necessary exclusive jurisdiction ' makes it clear that the observations were confined to the references of specific questions of law. Ordinarily the Court has jurisdiction to set aside an award if an illegality or an error of law appears on the face of it and it is only when a specific question of law has been referred to the arbitrator for adjudication that his decision thereon falls within his exclusive jurisdiction and cannot be interfered with by the Court howsoever erroneous it might be. The true effect of these observations is that even in the case of an arbitration agreement which squarely falls within the definition of that expression as 582 given in s.2(a) (and which is not a bare arbitration agreement) there would be included in it a consensual actual reference by the parties of all their disputes including questions of law that may arise later but the arbitrator 's award on such questions of law would not be within his exclusive jurisdiction since specific question or questions of law cannot be said to have been referred to him as required by the law of arbitration but though the reference would be valid the award and his decisions on questions of law if erroneous on the face of it would be liable to be set aside by the Court. This is far from laying down the wide proposition that there can be no reference to arbitration except through the Court under s.20 unless both the parties join afresh in the actual reference. As we have said above the question whether fresh assent of both the parties for the actual reference is necessary or not must depend upon whether arbitration agreement is a bare agreement of the type indicated earlier or it is an arbitration agreement as defined in s.2(a) of the Act. If it is the latter then clearly the actual reference to arbitration would be consensual and not unilateral and no fresh assent of the parties would be necessary nor will resort to s.20 be necessary. Instead the party desirous of going to arbitration can resort to remedies available to him under Chapter II of the ; and in a case like the instant one he can, as the appellant did, proceed under the relevant Bye laws. Having regard to the above discussion the appeal is allowed, the judgment and decree of the learned Single Judge passed in F.A.O. 139 D of 1962 following the view of the Full Bench is set aside and the decree in terms of the Award which was passed by the learned trial Judge is restored. The respondent will pay the costs of the appeal to the appellant. S.R. Appeal Allowed.

The appellant is a share broker and a member of the Delhi Stock Exchange an exchange recognised by the Central Government under the Securities Contract Regulations) Act, 1956. The respondent, a non member had dealings in shares and securities with the appellant as principal to principal between 14th July to 27th September, 1960, in respect whereof Contract Notes (ex. P. 1 to P. 31) in the prescribed form where issued by the appellant and were signed by the respondent. Each one of the Contracts contained an arbitration clause couched in very wide terms requiring the parties thereto to refer all their disputes or claims to arbitration as provided in the Rules, Regulations and Bye laws of the Exchange. Under these transactions a sum of Rs. 5923 became due and payable by the respondent to the appellant but since the respondent raised a dispute denying the claim, the said dispute was referred to the arbitration of two arbitrators Mr. Prem Chand and Mr. P.S. Khambete (both members of the Exchange) the former being the nominee of the appellant and the latter being the appointee of the Exchange on the respondent 's failure to nominate his arbitrator when called upon to do so. The arbitrators held their proceedings in which the respondent participated though he inter alia raised a contention that he was not a party to the reference and would not be bound by the Award that might be made on the basis of such unilateral reference. The Arbitrators made their Award on 18th April, 1961, allowing the claim of the appellant with costs against the respondent. In response to the notice of filing the Award in the Court, the respondent filed objections to the Award on several grounds such as denial of the existence of the agreement of reference, that he was not a member of the Exchange, that the Contract Notes had not been signed by him, that the arbitrators had mis conducted themselves and the proceedings, that the Award had been improperly procured etc. Negativing all the objections, the Sub Judge Delhi recorded the findings that the Contract Notes bore the signatures of the respondent and as such under the arbitration clause contained in each one of them read with the relevant Bye laws there was a valid Agreement for Reference to arbitration made the Award a rule of the Court and passed a decree in favour of the appellant on 7.9.1962. 568 In the first appeal preferred to the High Court, a learned Single Judge of the Delhi High Court entertained a doubt as to whether the respondent could be said to be a party to the actual Reference to arbitration even though each of the Contract Notes containing the arbitration clause was signed by the respondent, since the respondent had not joined in nominating his arbitrator despite service of notice asking him to do so, and whether on that account the Reference could be said to be unilateral, referred the same to a larger Bench on 5.1.1971. The Full Bench answered the question in favour of the respondent, relying on certain observations made by the Supreme Court in Seth Thawardas Pherumal vs Union of India reported in (1955) 2 SCR P. 48 and took the view that notwithstanding the fact that respondent had signed the Contract Notes and had thereby become consenting party to the arbitration agreement tho actual reference to arbitration of the two arbitrators required the assent of both the parties and since to such reference the respondent had not given his consent it was a unilateral reference to arbitration and as such the resultant Award would not be binding on the respondent. Hence the appeal by special leave. Allowing the appeal, the Court ^ HELD: 1.1 The question whether fresh assent of both the parties for the actual reference is necessary or not must depend upon whether arbitration agreement is a bare agreement or it is an arbitration agreement as defined in section 2(a) of the Act. If it is the latter, then, clearly the actual reference to arbitration would be consensual and not unilateral and no fresh assent of the parties would be necessary nor will resort to section 20 be necessary. Instead the party desirous of going to arbitration can resort to remedies available to him under Chapter II of the ; and in a case like the instant one he can, as the appellant, did, proceed under the relevant Bye laws. [582 C E] 1.2 It is true that the defines the two expressions "arbitration agreement" and "reference" separately. Section 2(a) defines an "arbitration agreement" to mean "a written agreement to submit present or future differences to arbitration, whether an arbitrator is named therein or not '` while section 2(e) defines a "reference" to mean "a reference to arbitration". The latter expression obviously refers to an actual reference made jointly by the parties after disputes have arisen between them referring the said disputes for adjudication to a named arbitrator or arbitrators, while the former expression is wider as it combines within itself two concepts, (a) a bare agreement between the parties that disputes arising between them should be decided or resolved through arbitration and (b) an actual reference of a particular dispute or disputes for adjudication to a named arbitrator or arbitrators. If that be so, it stands to reason that only when the arbitration agreement is of the former type, namely, a bare agreement a separate reference to arbitration with fresh assent of both the parties will be necessary and in the absence of such concensual reference resort to section 20 of the will be essential but where the arbitration agreement conforms to the definition given in section 2(a), the party desiring arbitration can straightaway approach the arbitrator or arbitrators and resort to section 20 of is unnecessary because 569 consent to such actual reference to arbitration shall be deemed to be there as the second concept is included in the agreement signed by the parties, and the aspect that differences or disputes actually arose subsequently would be inconsequential because the arbitration agreement as defined in section 2(a) covers not merely present but future differences also In other words, in such a case there will be no question of there being any unilateral reference. In every case the question will have to be considered as to whether the arbitration agreement is a bare agreement of the type indicated earlier or an arbitration agreement as defined in section 2(a) of the Act. [574 D A; 575 A C] 2.1 On a plain reading of the arbitration clause contained in the Contract Notes read with relevant Bye laws it is abundantly clear that the arbitration agreement herein is not a bare arbitration agreement but is clearly an arbitration agreement as defined in section 2(a) of the of 1940. In other words, the assent of the parties to actual reference is already there in the agreement; in addition there is a statutory reference. Therefore, the reference being consensual (and also statutory) the resultant award would be valid and binding on the parties to the transactions. This case was not a case of unilateral reference. Resort to section 20 of the on the part of the appellant before approaching the arbitrators for adjudication was unnecessary and the Award was and is binding on the respondent. [577 H; 578 A C] 2.2 The arbitration clause contained in the Contract Notes read with relevant Bye laws make two or three things very clear. In the first place the arbitration clause is couched in a very wide language inasmuch as it makes arbitrable not merely the claims or disputes arising out of the transactions specified in the Contract Note but also "all claims differences and disputes in respect of any dealings, transactions and contracts of a date prior or subsequent to the date of this Contract (including any question whether such dealings, transactions or contracts have been entered into or not)". Secondly the arbitration clause incorporates a provision that all such claims, differences and disputes shall be submitted to and decided by arbitration" in Delhi as provided in the Rules, Regulations and Bye laws of the Exchange; this is a pointer to consensual submission in the clause. Thirdly, Bye laws 247(a) which governs these transactions in terms constitutes the actual reference to arbitration and under Bye laws 248(a) and 249(1) the reference is to two arbitrators who would be the nominees of each one of the parties to the disputes and provision is made empowering the Board of Directors or President to appoint arbitrator in case a party fails to nominate his own; in other words once a contract is made subject to Rules, Regulations and Bye laws (framed under the rule making power) there comes into existence a statutory submission or reference to arbitration. [577 D H] 3.1 The true scope and effect of the observations of the Court in Seth Thawardas Pherumal 's case must be read in the proper perspective and not in a truncated manner or divorced from the context of specific issue which arose for determination before the Court in that case. It will be clear that these were neither intended to apply generally to all references nor to lay down the wide proposition that there can be no reference to arbitration except through the 570 Court under section 20 unless both parties join in it. The observations were made in the context of the specific issue that arose before this Court and were not and are not intended to apply generally to all references. The statement that in the absence of either, agreement by both sides about the terms of reference, or an order of the Court under section 20(4) compelling a reference the arbitrator is not vested with the necessary exclusive jurisdiction ' makes it clear that the observations were confined to the references of specific questions of law. Ordinarily the Court has jurisdiction to set aside an award if an illegality or an error of law appears on the face of it and it is only when a specific question of law has been referred to the arbitrator for adjudication that his decision thereon falls within his exclusive jurisdiction and cannot be interfered with by the Court howsoever erroneous it might be. The true effect of these observations is that even in the case of an arbitration agreement which squarely falls within the definition of that expression as given in section 2 and which is not a bare arbitration agreement there would be included in it a consensual actual reference by the parties of all their disputes including questions of law that may arise later but the arbitrator 's award on such questions of law would not be within his exclusive jurisdiction since specific question or questions of law cannot be said to have been referred to him as required by the law of arbitration but though the reference would be valid the award and his decisions on questions of law is erroneous on the face of it would be liable to be set aside by the Court. This is for from laying down the wide proposition that there can be no reference to arbitration except through the Court under section 20 unless both the parties join afresh in the actual reference. [579 A C; 581 F H; 582 A C] Seth Thawardas Pherumal vs Union of India [1955] 2 SCR P. 48 discussed and explained.

Appeal No. 1690 of 1969. Appeal by special leave from the judgment and order dated July 15, 1968 of the Delhi High Court at New Delhi in Incometax Reference No. 44 of 1964. G.C. Sharma, R. Chawla, section R. Gupta, R. P. Soni and K. B. Rohtagi for the appellant. F. section Nariman, Addl. Solicitor General of India, A. N. Kirpal, section P. Nayar and R.N. Sachthey for the respondent. The Judgment of the Court was delivered by HEGDE, J. This is an appeal by special leave. The appellant is the assesssee. In this case we are concerned with his assessment for the assessment year 1958 59. The relevant previous year ended on March 31, 1958. The assesses firm applied for renewal of its registration under section 26(A) of the Indian Income Tax Act 1922 (in short 'the Act ') before the Income Tax Officer on May 26, 1958. In that application he mentioned that the previous years ' income had been divided among the partners. The Income Tax Officer rejected that application. He did not believe the version of the assessee that the previous years ' income 77 had been divided. In appeal, the Appellate Assistant Commissioner agreed with the conclusion reached by the Income tax Officer. On a further appeal being taken to the Income tax Appellate Tribunal the Tribunal agreed with the conclusions reached by the lower authorities. Before the Tribunal yet another contention appears to have been taken. That contention was that at any rate the partners having divided the income of the previous year as evidenced by the balance sheet before the assessment Was made, the assessee firm was entitled for its registration under section 26(A). The Tribunal did not go into that question. The High Court agreed with the view taken by the Tribunal. The only question that arises for decision in this case is whether it was incumbent on the part of the assessee to have divided the profits of the previous year before it made its application for renewal of the registration certificate. For deciding this question it is necessary to refer to the relevant provisions of the Act as well as the Rules. Section 26 (A) of the Act reads. thus. "26A. Procedure in registration of firms (1) Application may be made to the Income tax Officer on behalf of any firm, constituted under an instrument of partnership specifying the individual shares of the partners, for registration for the purposes of this Act and of any other enactment for the time being in force relating to income tax or super tax. (2) The application shall be made by such person or persons, and at such times and small contain such particulars and shall be in such form, and be verified in such manner, as may be prescribed; and it shall be dealt with by the income tax Officer in such manner as may be prescribed. " Turning to the relevant Rules, they are found in Rules 2, 3 and 6. These Rules read thus: "Rule 2 Any firm constituted under an Instrument of Partnership specifying the individual shares of the partners may, under the provisions of section 26A of the Indian Income tax Act, 1922 (hereinafter in these rules referred to as the Act), register with the Incometax Officer, the particulars contained in the said Instrument on application made in this behalf. Such application shall be signed by all the partners (not being minors) personally, or in the case of a dis 78 solved firm by all persons (not being minors) who were partners in the firm immediately before dissolution and by the legal representative of any such partner who is deceased and shall, for any year of assessment UP to and including the, assessment for the year ending on the 31st day of March, 1953, be made before the 28th February, 1953, and for any year of assessment subsequent thereto, be made. (a)Where the firm is not registered under the (TX of 1932), or where the deed of partnership is not registered under the Indian (XVI of 1908), and the application for registration is being made for the first time under the Act. (i) within a period of six months of the constitution of the firm or before the end of the "previous year" of the firm whichever is earlier, if the firm was constituted in that previous year, (ii)before the end of the previous year in any other case. (b) where the firm is registered under the (TX of 1932), or where the deed of partnership is registered under the Indian (XVI of 1908), before the end of the previous year of the firm, and (c)where the application is for renewal of registration under Rule 6 for any year, before the 30th day of June of that year : Provided that the, Income tax Officer may entertain an application made after the expiry of the time limit specified in this rule, if he is satisfied that the firm was prevented by sufficient cause from making the application within the specified time . Rule 3 The application referred to in Rule 2 shall be made in the form annexed to this rule and shall be accompanied by the original Instrument of Partnership under which the firm is constituted, together with a copy thereof : provided that if the Income tax Officer is satisfied that for some sufficient reason the original Instrument cannot conveniently be produced, be may accept a copy of it certified in writing by all the partners (not being minors) or, where the application is made after dissolution of the firm, by all the persons 79 referred to in the said Rule, to be correct copy, and in such a case the application shall be accompanied by a duplicate copy. FORM I FORM OF APPLICATION FOR REGISTRATION OF A FIRM UNDER SECTION 26A OF THE INDIAN INCOME TAX ACT, 1922. TO The Income tax Officer, Dated 19 Income tax year 19 19 1. . . . 2. . . 3.We do hereby certify that the profits (or loss if any ) of the previous year were/will be (period upto the date of dissolution were/will be) divided or credited as shown in section B of the Schedule and that the information given above and in the attached Schedule is correct. (Signatures) (Address) Note : This application must be signed. . . SCHEDULE Name of Address Date of (1) (1) (2) partner admitt Interest Salaryor Share in REMARKS ance to on capital commis the bal partner or loans sion from ance of ship. (if any) firm profits (or loss) etc. 1 2 3 4 5 6 7 (A)Particulars of the firm as constituted at the date of this application. 80 (B) Particulars of the apportionment of the income, profits or gains (or loss) of the business, profession or vocation in the previous year between the partners who in that previous year were, entitled to share in such income, profits or gains (or loss). Applicable where the application is made after the end of the relevant previous year). Note: (I) If the interest, salary and/or commission . . . . . . . . column with the letter "R". (In other cases the interest, salary and/or commissionmay exceed the total profits so as to leave a balance of net loss divisible in column 6). (2)If any partner is entitled to share in profits but is not liable to bear a similar proportion of any losses this fact should be indicated by putting against his share in column 6 the letter "P". Rule 6 Any firm to whom a certificate of registration has been granted under Rule 4 may apply to the Income tax Officer to have the certificate of registration renewed for a subsequent year. Such application shall be signed personally by all the partners (not being minors) of the firm or, where the application is made after dissolution of the firm, by all persons (not being minors) who were partners in the firm immediately before dissolution and by the legal representative of any such person who is deceased, and accompanied by a certificate in the form set out below. The application shall be made before the 30th day of June of the year for which assessment is to be made provided that the Income tax Officer may entertain an application made after the expiry of the said date, if he is satisfied that the firm was prevented by sufficient cause from making the application before that date. FORM OF APPLICATION FOR THE RENEWAL OF REGISTRATION OF A FIRM LTNDER SECTION 26A OF THE INDIAN INCOME TAX ACT, 1922 TO The Income tax Officer Dated 19 Assessment for the Income tax Year 19 /19 1. . . 2. . . . 81 3.We do hereby further certify that the profits (or loss if any) of the previous year were/period up to the date of dissolution were/will be divided or credited as shown below: Particulars of the apportionment of the income, profits or gains (or loss) of the business, profession or vocation in the previous year or the period upto the date of dissolution between the partners who were entitled to share in such income, profits or gains (or. loss). Name of Address Date of (1) (1) (2) Partner admitt Interest Salary Share ance of on capital or comm in the REMARKS partner or loans ission balance ship (if any) from of profits firm. (or loss) etc. 1 2 3 4 5 6 7 Note : (1) If the interest, salary and/or. . loss divisible in column 6. (2) If any partner is entitled . . his share in column 6 the letter "P". (Signatures) (Address) Note : This application must be signed personally . of any such person who is deceased". From a reading of these provisions it is clear that in the case of an application for renewal it is incumbent on the part of the assessee to have divided the previous year 's profits. This conclusion appears to be obvious from Section 26(A) read with Rules 2, 3, 6 and the forms set out earlier. The contention ' of Mr. Sharma, the learned counsel for the assessee, that if the relevant provisions are interpreted in the manner that we have done it leads to hardship to the assessee, is not relevant in view of the plain language of the provisions. Our conclusion in this regard receives support from the decision of Madras High Court in Surajmall vs Commissioner of, L63lSuP Cl/73 82 Income tax, Madras(1), and that of the Allahabad High Court in Ganesh Lal Laxmi Narain vs Commissioner of Income tax, U.P.(2). In Khanjan Lal Sewak Ram vs Commissioner of Income tax, U.P.(3) this Court had ruled that para 3 of Rule 6 (supra) is mandatory. We see no merit in this appeal. It is dismissed with costs. V.P.S. Appeal dismissed.

The assessee firm applied for renewal of its registration under s.26A, Income Tax Act, 1922, in May 1958, stating that the income of the previous year, which ended on March 31, 1958, had been divided among the partners. The Department Tribunal and the High Court did not believe that the previous year 's income had been divided and rejected the application. Dismissing the appeal to this Court, HELD : From a reading of the section and rules 2, 3 and 6 of the In,come tax Rules and the forms prescribed, it is clear that in the case of an application for renewal, it is incumbent on the part of the assessee to have divided the previous year 's profits before the application for renewal is made. The fact that the interpretation may cause hardship to the assessee is irrelevant when the language is plain. [81 G] Surajmal vs Commissioner of Income tax, Madras, 43 I.T.R. 491 and Ganesh Lal Laxmi Narain vs Commissioner of Income Tax, U.P. , approved. Khanjan Lal Sewak Ram vs Commissioner of Income tax, U.P., , referred to.

Appeal No. 88 of 1957. Appeal from the judgment and order dated January 18, 1956, of the Rajasthan High Court (Jaipur Bench) in D.B.C. Writ Petition No. 262 of 1954. section K. Kapur and Ganpat Rai, for the appellants. N. section Bindra and D. Gupta, for the respondents. December 7. The Judgment of the Court was delivered by SARKAR, J. The appellants are traders of Jhalawar. Respondent No. 1, the Collector of Jhalawar, ,served on the appellants a notice under section 6 of the ,Rajasthan Public Demands Recovery Act, 1952, hereafter called the Act, for the recovery from them as a public demand, of Rs. 2,24,607/6/6 said to be due on account of loans taken by them from the Jhalawar State Bank. The appellants filed a petition under section 8 of the Act contending, among other things, that 964 the amount sought to be recovered from them was not a public demand. Respondent No. 1 appears to have called upon the appellants to prove that it was not a public demand. The appellants without proceeding further before respondent No. 1, filed a petition in the High Court of Rajasthan for the issue of a writ quashing the proceedings under the Public Demands Recovery Act. The High Court dismissed the petition but granted a certificate that the case was fit for an appeal to this Court. Hence the present appeal. The only question raised in this appeal is whether any loan due to the Jhalawar State Bank could be recovered as a public demand. A "public demand" within the meaning of the Act is "any money payable to the Government or to a department or an officer of Government under or in pursuance of a written instrument or agreement". The Government here means the Government of Rajasthan for the Act was passed in 1952 by the Rajasthan State Legislature. The question then is whether money due to the Jhalawar State Bank, is money payable to the Government of Rajasthan. Now, the Jhalawar State Bank was started in 1932. At that time Jhalawar was a ruling State. Sometime in or about April, 1948, the State of Jhalawar, along with nine other ruling States of Rajputana, integrated and formed the United State of Rajasthan under a covenant executed by the Rulers of these States. One of the articles of this covenant provided, "All the assets and liabilities of the covenanting States shall be the assets and liabilities of the United State." Subsequently, on March 30, 1949, the States of Bikaner, Jaipur, Jaisalmer and Jodhpur joined the United State of Rajasthan. On the promulgation of the Constitution of India, the United State of Rajasthan became a Part B State in the Indian Union. The assets of the previous ruling State of Jhalawar, which had earlier vested in the United State of Rajasthan, thereupon passed to and devolved upon the State of Rajasthan in the Indian Union. 965 The proceedings under the Act against the appellants were started by the filing of a requisition with respondent No. 1 by respondents Nos. 2 and 3, being respectively the Treasury Officer, Jhalawar, and the Recovery Officer, Jhalawar State Bank, under section 3 of the Act stating that the amount earlier mentioned was due from the appellants to the Government of Rajasthan in respect of the claims of the Jhalawar State Bank against them. This was done presumably shortly prior to June 16, 1953, on which date respondent No. 1 signed a certificate specifying the amount of the demand and certain other particulars and filed it in his own office under section 4 of the Act. A notice of the signing and filing of the certificate was served upon the appellants under section 6 of the Act. This notice and the subsequent proceedings have been referred to in the beginning of this judgment. The claim thus is in respect of moneys due to the Jhalawar State Bank. If that Bank was not the property of the Jhalawar State, then its dues cannot of course be said to have merged in the present State of Rajasthan. The appellants first contended that the Jhalawar State Bank was not the property of the State of Jhalawar. The only material to which we have been referred by the appellants in support of this contention is certain rules framed by the Ruler of Jhalawar in respect of the Bank. It was pointed out that the rules showed that the Bank was like any other commercial enterprise. We are unable to agree that for this reason it could not be an institution belonging to the State. There was nothing to prevent the Jhalawar State carrying on a commercial undertaking. If it did so, the assets of that undertaking would be those of the State and, in the circumstances earlier mentioned, must now be held to be vested in the State of Rajasthan. It was also said that the rules showed that the management of the Bank was in the hands of a board of which certain non officials were members. It was contended that this showed that the Bank was not the property of the State. It is clear, however, from the 122 966 rules that the Bank was not the property of the board. Again, the board was constituted from time to time by the Ruler and the majority of its members were officers of the State. This would show that the Ruler was in full control of the management of the Bank as a State undertaking. It is true that the rules indicate that the Bank might sue or be sued in respect of transactions made by or with it. That, however, would not indicate that the Bank had a separate identity. The rules in this connection only indicate in what name suits could be brought by or against the State 's banking business. On the other hand, it is perfectly clear that the capital of the Bank was derived solely from the funds of the Jhalawar State. No part of it was contributed by anyone else. One of the objects of the Bank was to invest the surplus funds of the State. The entire transaction of the business of the Bank was in the ultimate control of the Ruler. The Jhalawar State guaranteed the financial liabilities of the Bank. The name "Jhalawar State Bank" also indicates that the institution belonged to the State of Jhalawar. About the time of the formation of the United State of Rajasthan in 1948, the Chief Executive Officer, Jhalawar, issued a public notification in which, after referring to the article in the Covenant which provided that the assets and liabilities of the covenanting States would be the assets and liabilities of the United State, he proceeded to state that by virtue of this article, on the formation of the new State, the responsibility and guarantee of the existing transactions with the different departments of Jhalawar State or the Jhalawar State Bank, would be of the newly formed United State of Rajasthan. This would show that the assets of the Jhalawar State Bank were being treated by all concerned as assets of the former Jhalawar State, which, upon the formation of the United State of Rajasthan, had vested in the latter State. Further, no one else has at any time made any claim to the assets of the Jhalawar State Bank. It is, therefore, clear beyond all doubt, that the Jhalawar State Bank was one of the assets of Jhalawar State and is now vested in the State of Rajasthan. 967 The second point argued for the appellants is that the dues of the Jhalawar State Bank have in any case been transferred by the Government of Rajasthan to the Bank of Rajasthan Ltd. under certain Notifications to which we shall presently refer. It is said that the Bank of Rajasthan Ltd. is, as its name shows, obviously a limited company having an inde pendent existence and is not a department of the Government of Rajasthan State. It is also contended that this vesting took place before the proceedings under the Act had started. Therefore, it is said that at the commencement of those proceedings, the amount claimed from the appellants as due to the Jhalawar State Bank, was not a public demand within the meaning of the Act. This contention which is based on the Notifications, earlier mentioned, does not seem to us to be well founded. We will assume for the present purpose that the Bank of Rajasthan Ltd. is not a department of the Government of Rajasthan State. The question is whether the effect of these Notifications, which were two in number, was to vest the dues of the Jhalawar State Bank in the Bank of Rajasthan Ltd. The first Notification is dated February 15, 1951. It, stated that the Government of the State of Rajasthan had decided to transfer, among others, the Jhalawar State Bank, to the Bank of Rajasthan Ltd. It was contended that by this Notification the assets of the Jhalwar State Bank were transferred to the Bank of Rajasthan Ltd. We do not think that that was the effect of this Notification. It contained two very significant provisions which we set out below: "All debtors of the State Banks irrespective of the class, category and nature of the debt are hereby informed that within one month from the date of publication of this notice they should clear accounts with the aforesaid State Banks which will continue to function only to clear the old accounts, and thereafter their accounts with the securities pledged will automatically be transferred to the Bank of Rajasthan Ltd., who will be authorised on behalf of the State, to effect necessary recoveries and settle accounts. 968 The transfer of these debts to the Bank of Rajasthan Ltd. will not, on any account, take away the inherent right which the Rajasthan Govt. possess in these various transactions made on the guarantee of the respective convenanting States to make recoveries and settle accounts in accordance with the existing rules or laws that may hereafter be made to effect recovery of State dues or State debts. " It is clear from these provisions that the Bank of Rajasthan Ltd. was being authorised "on behalf of the State", that is, the Government of the State of Rajasthan, to recover the amounts due to the Jhalawar State Bank. The transfer of the latter Bank to the Bank of Rajasthan Ltd. was to be subject to this qualification that its dues would remain the dues of the Government of the State of Rajasthan and would only be recovered by the Bank of Rajasthan Ltd. as the agent of that Government. The last paragraph set out above emphasises this Position. It preserves the right of the Government of the State of Rajasthan to recover the amounts due to the Jhalawar State Bank in accordance with any law that might be made after the date of the Notification. The position then is that under this Notification the debts due to the Jhalawar Bank were not transferred to the Bank of Rajasthan Ltd. and remained payable to the Government of Rajasthan. The other Notification is dated April 16, 1952, and it repeats that the banks mentioned in the earlier Notification, including the Jhalawar State Bank, "will be merged in the Bank of Rajasthan Limited". It is said that the effect of this Notification was in any event to cancel the earlier Notification, in so far as the latter preserved the power of the State to collect the debts of the Jhalawar State Bank. We are wholly unable to agree. This Notifi cation only reiterates the intention of the Government of the State of Rajasthan to merge the banks named, in the Bank of Rajasthan Ltd. It says nothing specifically about the dues of these banks or as to their recoveries, with regard to which, therefore, the provisions of the previous Notification must have effect. Furthermore, there is nothing to show that the debts 969 due to the Jhalawar State Bank were by any document specifically transferred to or vested in the Bank of Rajasthan Ltd. and thereupon became its property. That being so, there is no basis for the contention that the debts due from the appellants are now due to the Bank of Rajasthan Ltd. in its own right. It would follow that such debts remained debts due to the Government of the State of Rajasthan. The third point argued was that the moneys claimed from the appellants were not payable under a written instrument or agreement. This contention is wholly unfounded. It appears that the loans were granted by the Jhalawar State Bank to the appellants on their own applications. In each application the appellants stated that they wanted a loan from the Jhalawar State Bank and promised to repay it with interest at the rate mentioned in it. By these applications the appellants also proposed to hypothecate various properties belonging to them as security for the due repayment of the loans taken. They signed the applications and the receipts, which latter also bore the signatures of the officers of the Bank in token of the sanction of the loan. In our view, the money payable by the appellants was payable under these applications and receipts and was, therefore, payable under written instruments or agreements. A point was sought to be made that in each case there were two documents, namely, the application by the appellants and the receipt for the moneys advanced signed by them, whereas a public demand as defined in the Act, required one instrument. It is enough to say in regard to this contention that the Act does not say that the moneys shall be due under a single instrument. It is well known that in a statute a singular includes the plural. In any case, the two documents constituted the written agreement between the parties and that is enough to satisfy the requirement of the Act, even if read in the way suggested by the appellants. The fourth point advanced was that the certificate under the Act was defective and therefore the proceedings were a nullity. Section 4 of the Act requires that the certificate shall be in the prescribed form. 970 One of the particulars to be stated in the form, requires that the period for which the demand was due should be specified. That period was not specified in the certificate in the present case. It seems to us however that this is no defect. In the case of loans due, there is no question of any period for which the demand is due. Obviously, the requirement as to, the specification of the period was meant to apply where the demand consisted of a claim for revenue or rent or the like, which could be due for a period. It is clear to us that the requirement as to stating the period for which the demand is due, as appears from the prescribed form, does not arise in the case of a loan due to the Government which is a public demand within the Act and in such a case no question of stating the period arises. The certificate was not, therefore, defective. The last point argued was that in so far as the Act enables moneys due to the Government in respect of its trading activities to be recovered by way of public demand, it offends article 14 of the Constitution. It is said that the Act makes a distinction between other bankers and the Government as a banker, in respect of the recovery of moneys due. It seems to us that the Government, even as a banker, can be legitimately put in a separate class. The dues of the Government of a State are the dues of the entire people of the State. This being the position, a law giving special facility for the recovery of such dues cannot, in any event, be said to offend article 14 of the Constitution. We have now discussed all the points raised in this appeal and are unable, for the reasons earlier mentioned, to find merit in any of them. In the result we come to the conclusion that the amount claimed from the appellants was a public demand within the meaning of the Act and was legally recoverable by the impugned proceedings. This appeal therefore must be dismissed with costs and we order accordingly Appeal dismissed.

The jhalawar State Bank was originally a Bank belonging to the ruling State of jhalawar and its assets, including moneys 963 due to it, became vested in the United State of Rajasthan under the covenant executed by the Ruler of Jhalawar along with other Rulers by which the United State of Rajasthan was formed. On the promulgation of the Constitution of India, the United State of Rajasthan became the State of Rajasthan in the Indian Union and all its assets, including the jhalawar State Bank and its dues, vested in the State of Rajasthan. Moneys due from the appellants in respect of advances made to them by the jhalawar State Bank at a time when it belonged to the ruling State of jhalawar, could be recovered by the State of Rajasthan after the Bank had become vested in it, as a public demand under the Rajasthan Public Demands Recovery Act, 1952. The form prescribed in the Rajasthan Public Demands Recovery Act, in which a certificate has to be drawn up and filed under section 4 of the Act for commencing proceedings for recovery of public demands under the Act in so far as it required a statement as to the period for which a public demand is due, was not applicable to a public demand like a loan due to the Government in respect of which there is no question of any period for which it is due. The Rajasthan Public Demands Recovery Act did not off end article 14 of the Constitution as giving special facility to the Government as a banker for the recovery of the bank 's dues for, the Government can legitimately be put in a separate class for this purpose.

ivil Appeal No. 2010 of 1986. From the Judgment and Order dated 15.4. 1986 of the Andhra Pradesh High Court in A.A.O. Nos. 737 of 1981 275 of 1982 and 69 of 1984. Shanker Ghosh, A.V. Rangam and T.V. Ratnam for the Appellant. Ashok Sen. A. Subba Rao, Qamaruddin, Mrs, Qamaruddin, C.S.S. Rao and S.V. Deshpande for the Respondents. The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J. This appeal by special leave is from the judgment and order of the High Court of Andhra Pradesh dated 15th April, 1986. On or about th of April. 1948 Sail Nawaz Jung, the then ruler of Mukkalla State, South Yeman in Arabia settled some of the properties with which the appeal is concerned by a Registered Tamleeknama in favour of his son Sultan Awaz and his grand son Galib Bin Awaz. In 1954, there was Wakfnama by the said Sail Nawaz Jung. On or about 23rd of August, 1963 the Military Estate Officer, Secunderabad of. Andhra Pradesh requested for the requisition of the property named as "Sail Gulshan" with a vast extent of land and palaces with roads and surrounded by a compound wail measuring 19 acres and 10 guntas situated in the heart of Hyderabad city near Sarojini Devi Hospital. The property in question was taken possession of on or about 12th of September, 1963. In this appeal we are concerned with the claim for compensation for the said acquisition by one Abdul Khader who was a flower picker. He had claimed rights as a tenant during the requisition. His claim for compensation for requisition was settled by sharing the rent in or about 1969. The appellant is one of the owners of the property in question deriving their title 1233 and right from the said Sail Nawaz Jung. On or about 3rd February, 1970 the Collector issued notice for acquisition of the property under section 7(1) of the being Act 30 of 1952 (hereinafter called the Central Act). The Gazette Notification for the acquisition was issued on 12th March, 1970. The controversy in this case relates to the question whether Abdul Khader was 'a protected tenant ' under the Andhra Pradesh (Telangana Area) Tenancy and Agricultural Lands Act, 1950 being Act No. XXI of 1950 (hereinafter called the Andhra Pradesh Act). The purpose of the said Act as the Preamble states was, inter alia, to enable the land holders to prevent the excessive sub division of agricultur al holdings and empower government to assume in certain circumstances the management of agricultural lands, to provide for the registration of Co operative Farms and to make further provision for matters incidental thereto. Section 2(r) states that the expression 'protected ' means a person who is deemed to be a protected tenant under the provisions of the said Act. Chapter IV of the Andhra Pradesh Act deals with protected tenants and section 34 of the said Act provides who is to be considered as a protected tenant and uses the expression that a person shall, subject to the provisions of sub sections (2) and (3), be deemed to be a protected tenant in respect of the land if he has fulfilled the conditions mentioned in clauses (a) and (b) of sub section (1) of Section 34 of the said Act. Sub section (2) of Section 34 of the said Act also deals with "to be deemed to be a protected tenant in respect of any land", for cer tain purposes. Section 35 of the said Act deals with deci sion on claims and stipulates by sub section (1) of Section 35 of the said Act that if any question arises whether any person, and if so what person, is deemed under Section 34 to be a protected tenant in respect of any land, the landhold er, or any person claiming to be so deemed, may, within one year from the commencement of the Act apply in the pre scribed form to the Tahsildar for the decision of the ques tion and the Tahsildar shall after enquiring into the claim or claims in the manner prescribed, declare what person is entitled to be deemed to be protected tenant or as the case may be, that no person is so entitled. Sub section (2) of Section 35 stipulates that a declaration by the Tahsildar that the person is deemed to be a protected tenant or, in the event of an appeal from the Tahsildar 's decision such declaration by the Collector on first appeal or by the Board of Revenue on second appeal, shall be conclusive that such person is a protected tenant and his rights as such shall be recorded in the Record of Right of where there is no Record of Rights in such village record as may be prescribed. Section 36 of the said Act deals with the recovery of pos session by protected tenant. Section 37 deals with persons not entitled 1234 under section 34 to be deemed in certain circumstances as protected tenants. Section 38 of the said Act deals with right of protected tenant to purchase land. Section 39 deals with right of protected tenants to exchange lands. Section 40 of the said Act makes rights of protected tenant herita ble. Sub section (2) of section 40 of the said Act indicates who are the heirs who would be entitled to hold the tenancy on the death of the protected tenant and on what terms. Sub section (3) of section 40 of the said Act provides that if a protected tenant dies without leaving any heirs all his rights shall be so extinguished. The explanation to sub section (3) of section 40 of the said Act provides who should be 'deemed to be the heirs ' of a protected tenant. Subsection (4) of section 40 stipulates that the interest of a protected tenant in the land held by him as a protected tenant shall form sixty per cent. It is necessary also to note the provisions of section 99 of the Act. It is as follows: "99. Bar of Jurisdiction: (1) Save as provid ed in this Act no Civil Court shall have jurisdiction to settle, decide or deal with any question which is by or under this Act re quired to be settled, decided or dealt with by the Tahsildar, Tribunal or Collector or by the Board of Revenue or Government. (2) No order of the Tahsildar, Tribunal or Collector or of the Board of Revenue or Government made under this Act, shall be questioned in any Civil or Criminal Court. ' Section 102 of the said Act stipulates that the Act shall not apply to certain lands and areas and provides inter alia as follows: "102. Nothing in this Act shall apply (a) to lands leased, granted, alien ated or acquired in favour of or by the Cen tral Government or the State Government, a local authority or a Cooperative Society. " It is relevant at this stage to refer to certain provi sions of the Central Act to consider the controversy in volved in this appeal. The Central Act was enacted giving power for requisitioning and acquisi 1235 tion of immovable property for Union purposes. Section 3 of the said Act gave power to requisition immovable property. Section 4 of the said Act empowers taking possession of requisitioned property. Section 5 deals with rights over requisitioned property. Section 6 deals with the power of release from the requisitioning. Section 7 authorises the Central Government where it is of the opinion that it is necessary to do so to acquire requisitioned property. Sec tion 8 deals with 'principles and method of determining compensation either for requisitioning or acquisition of the property and, inter alia, provides for appointment of an arbitrator in certain contingencies in case there was no agreement for determining compensation. Section 9 deals with the payment of compensation and provides that the amount of compensation payable under an award shall, subject to any rules made under that Act, be paid by a competent authority to the person or persons entitled thereto in such manner and within such time as may be specified in the award. Suspect ing that the entry in the Protected Tenancy Register might not be genuine, on or about 24th of October, 1970 the Tah sildar passed an order cancelling that entry. The main question centres around the right of Abdul Khader, respond ent No. 1 herein to the compensation awarded by the arbitra tor, it is therefore, necessary to refer to the relevant portion of the said order which inter alia, stated as fol lows: "By perusal of the Tenancy Register of 1958 it is evident that Sri Mohd. Abdul Khader is not a genuine protected tenant. The entries of this particular so called tenant is doubtful. I suspect that somebody has tampered the register and entered the name of Sri Mohd. Abdul Khader. Separate enquiry in this connec tion is going on in this office to know under what circumstances such entry has been made and copy also issued without knowledge of the Tahsildar. Hence I suspect the entry and order to cancel the copy of the tenancy issued in favour of Sri Modh. Abdul Khader. Sd Tahsildar. Hyderabad West Taluk. " This order of cancellation was challenged by Abdul Khadar by filing a writ petition in the High Court of Andhra Pradesh being W .P. No. 1786 of 197 1 and by judgment and order passed on 27th August, 197 1, the learned single Judge, Vaidya, J. held, inter alia, as follows: 1236 "Whether the petitioner (Abdul Khader) is a protected tenant or whether he has any prima facie interest in the suit property are mat ters entirely within the sole jurisdiction of the arbitrator who has to be appointed under Section 8 of the 'Central Act '. " In the appeal of Abdul Khader the proceedings of Revenue Divisional Officer while questioning entry of the name of Abdul Khader in the Register is a genuine one or net and while it is stated that it was entered in the Register in such suspicious way by giving Serial No. 1/A between Serial Nos. 1 and 2 of Register being Exhibit A. 106 and Exhibit A. 107, it ultimately held that Abdul Khader was a protected tenant under section 37A of the Andhra Pradesh Act. On or about 19th of April, 1972 the order was passed by the Dis trict Revenue Officer who held that Abdul Khader was not a protected tenant. He held further that Khasra Pahani which is the basic record of occupancy period after spot inspec tions does not find the name of Abdul Khader and further held that all entries except this entry in the Protected Tenancy Register prepared under section 37A of the Andhra Pradesh Act was supported by an enquiry. It was in those circumstances held by him that the entry was a spurious one. In Civil Revision Petition No. 1006 of 1972 which was filed by Abdul Khader as against others, Justice R. Ramachandra Raju of the Andhra Pradesh High Court on or about 19th August, 1974 held that Abdul Khader was not a protected tenant and directed deletion of entry made in the Final Record of tenancies as a spurious one. The learned Judge observed, inter alia, as follows: "I am told by the counsel for both the parties that the lands in question were already ac quired for military purpose under the Requisi tion and Acquisition of Immovable property Act, 1952 and that Sri M.S. Sharma, the Addi tional Chief Judge, City Civil Court, Hydera bad has already been appointed as Arbitrator under the Act for determining the compensation and the persons entitled to it. Not only that, in the writ petition filed by the present petitioner in this Court, it was held that it is not necessary to go into the question whether the petitioner is a protected tenant or whether he has any prima facie interest in the property because they are the matters entirely within the sole jurisdiction of the arbitrator who has to be appointed under Section 8 of the Act. Now, as the arbitrator has already been appointed, he will go into the matter as to whether the 1237 petitioner was a protected tenant of the lands or not and if he was the protected tenant to what share in the compensation amount he would be entitled to. Under these circumstances, the C.R.P. is dismissed with a direction that the entry made in the Final Record of Tenancies that the petitioner was the protect ed tenant, for the lands in question which is spurious as found by both the Revenue Divi sional Officer and the District Revenue Offi cer should be deleted. " The matter was brought to this Court by a special leave application and this Court in Special Leave Petition (Civil) No. 10 of 1975 on or about 30th January. 1975 held that since the question whether the petitioner in that case namely, Abdul Khader was a protected tenant had been left open by the High Court to be decided by the Arbitrator under section 8 of the Central Act, special leave petition was rejected with those observations. Thereafter there was an order appointing arbitrator on 29th of March, 1975 under section 8(1)(b) of the Central Act. Claim petition was filed by the appellant before the arbitrator ' Claim petition was also filed by Abdul Khader claiming 60 '% of compensation as a 'protected tenant '. There was an award by the arbitrator holding that as this Court had left it open to decide whether Abdul Khader was a protected tenant. Despite the objection exercising the jurisdiction of the Arbitrator to go into the question of protected tenant, the arbitrator held that Abdul Khader was a protected tenant. Aggrieved by the aforesaid award, the appellant claiming as one of the owners of the property filed a statutory appeal to the High Court. In the meantime Abdul Khader filed an application on or about 21st of Octo ber, 1984 for adducing additional evidence to mark Kaulnama dated 2nd of December, 1950 for the first time and Oubu liatnama dated 2nd December, 1950 as exhibits in deciding the protected tenancy rights. The appellant objected to that application but the High Court on 1st April, 1985 appointed Advocate Commissioner to record additional evidence. On or about 22nd of April, 1985 the appellant filed the objection reserving the right of raising the jurisdiction of the Arbitrator to go into the question whether Abdul Khader was a protected tenant in the light of the Act 21 of 1950. Three civil appeals were filed before this Court against the order of the High Court on 15th May, 1985. This Court passed the order, on 19th August, 1985. The said order is important and reads as follows: 1238 "Special leave are granted. The appeal is heard. Dr. Chitale learned counsel for the appellants submitted that the High Court should be directed to consider the issues relating to the jurisdic tion of the arbitrator appointed and function ing under the , 195 i to decide whether a person is protected tenant of an agricultural land or not in the light of Sections 99 and 102 of the Andhra Pradesh (Telangana Area) Tenancy and Agricultural Land Act, 1950. We have heard the learned counsel for the respondents on the above question. After giving our due consideration to the question we are of the view that the High Court should determine this question. The High Court shall decide the question of juris diction referred to above in light of the submissions to be made by both the parties. Shri Subba Rao, learned counsel for the respondents submits that the appellants should not be permitted to withdraw from the authorities concerned more than 40 per cent of the total compensation awarded in respect of the lands in question pending disposal of the appeal before the High Court. We agree with his submission. We direct that the appellants shall withdraw not more than 40 per cent of the compensation pending disposal of the appeal before the High Court. The remaining 60 per cent shall be disbursed in accordance with the directions to be given by the High Court after hearing all the parties concerned. " The appeals were disposed of accordingly. Other C.M.Ps. were filed for clarification of the second part of the order dated 19th August, 1985 and this Court on 29th November, 1985 in CMPs. Nos. 4692 to 4694 of 1985 clarified and ob served that there was no need for further clarification. It was observed that the High Court was at liberty to consider the claims to be made by both the parties and pass any fresh order with regard to the disbursement of the remaining 60% of the compensation. The judgment under appeal was passed on 15th of April, 1986. This appeal arises out of the said judgment. In the judgment under appeal which is directed against the award made by the arbitrator formulated the following four issues (1) what is the value of the land; (2) who are entitled to the compensation amount; (3) whether Abdul Khader is a protected tenant of Sail Gulshan of the area 19 02 guntas excluding the 1239 land of buildings, wells, etc. and (4) what share is to be apportioned to successors of Sail Nawaz Jung. It has to be borne in mind that in the award, the arbitrator after ex haustively discussing the evidence on record held that Abdul Khader was a protected tenant and as such further held that he was entitled to 60% of the compensation money payable for the acquisition of the land excluding the land of buildings, wells etc. In this appeal we are concerned with the question wheth er the High Court was right in upholding the award of the arbitrator so far as it has held in favour of Abdul Khader and his rights to get 60% of the compensation. The High Court dealt with the value of the land. We are not concerned with the challenge to this aspect in this appeal. The High Court further modified a portion of the order in view of the decision of this Court in Bhag Singh vs Union Territory of Chandigarh, ; on the question of solati um and interest on the amount awarded. The judgment also dealt with the question as to who were the successors of Nawaz Jung. We are also not concerned with this aspect of the matter inasmuch as the same is the subject matter of another appeal being Civil Appeal No. 4406 of 1986. We are concerned in this appeal with the right of Abdul Khader. The High Court discussed 18 documents out of which two are challans and other depositions. Kowlnama executed in favour of Shaik Hussain was not filed. The Kowlnama executed in favour of the son, Mohd. Abdul Khader, on December 3, 1950 was filed and was marked as Exhibit C 1. The document recited: "permitted to utilise garden fruits, flowers and mango fruits". The tenant was permitted to raise flower trees at his own expenses. The High Court took into consid eration the judgment in Suit No. 13(1) of 195 1 52 by the tenant. The High Court on consideration of these documents was of the view that these documents showed unequivocally that the tenancy was in favour of Shaik Hussain from 1935. After his death Mohd. Abdul Khader was recognised as the tenant. The land was taken possession of under a panchanama dated 12th of September, 1963. According to the High Court the documents discussed in the judgment indicated that Shaik Hussain was a tenant from 1935. After his death on July 18, 1949, his son Mohd. Abdul Khader became a tenant. In this background the Court addressed itself to the question wheth er Abdul Khader was a protected tenant or not entitled to 60% of the compensation. No document was filed to show that Abdul Khader was declared by the revenue courts as a pro tected tenant. 1240 The High Court was of the view that there was surfeit of evidence prior to the commencement of the Andhra Pradesh Act that Shaik Hussain was a tenant of the land. The question was whether on enforcement of the said Act Abdul Khader, respondent herein, was a protected tenant. The High Court thereafter discussed the facts mentioned hereinbefore about the order of the District Revenue Officer and the orders of this Court referred to hereinbefore. The High Court noticed the position that under the said Andhra Pradesh Act it was for the revenue authorities to order whether a tenant is a protected tenant under section 34, section 37 'and section 37A of the said Act. Section 37A was enacted on 12th of March, 1956. The High Court was, however, of the view that it cannot be said that it was for the revenue authorities alone to decide the issue because the arbitrator was ordered to decide the issue by the High Court on 19th August, 1974 and by this Court on 30th of January, 1975. The High Court also referred to the directions of this Court dated 19th August, 1985 mentioned hereinbefore. The High Court was of the view that the arbitrator was to decide that question and the arbitrator was not in error in deciding the issue in the manner it did. The Court reiterated that there was surfeit of evidence to declare that Abdul Khader was a tenant. If he was a tenant, the High Court observed. he was a protected tenant under section 34 read with section 37 or under sec tion 37 A of the Andhra Pradesh Act. The High Court on reciting the facts came to the conclusions, inter alia: (a) that Abdul Khader because he was a tenant between January, 1942 to January, 1948 for six years, therefore, was a pro tected tenant under sub clause (ii) of clause (1) of section 34 of the Andhra Pradesh Act; (b) that Abdul Khader held the land from October, 1943 to October, 1949, therefore, was a protected tenant of Sail Gulshan under sub clause (iii) of clause (1) of section 34 of Act 21 of 1950. In these circum stances, the High Court held that Adbul Khader was entitled to 60% of the compensation paid. Aggrieved by the aforesaid decision, the appellants being the successor of the owner of the land in question is in appeal before us. Shri Shanker Ghosh, learned counsel for the appellant, urged that under the said Andhra Pradesh Act it was mandatory under section 99 read with section 102 of the said Act in conjunction with the definition of section 2(r) of the Act for the revenue authorities to decide wheth er Abdul Khader was a protected tenant or not. There being no such finding by the revenue officer, on the other hand there being a finding mat Abdul Khader was not a protected tenant by the revenue authorities it was not open to the arbitrator to decide the question of 1241 protected tenancy. The arbitrator therefore, exceeded his jurisdiction and the High Court was in error. Shri A.K. Sen, on behalf of the respondents on the other hand contended that the compensation payable in respect of the requisitioning and acquisition must be determined under the Central Act and the arbitrator was the authority to decide that question. The question of Abdul Khader 's right to compensation had to be decided in accordance with law. He had claimed rights of a protected tenant. He had sought to establish his rights which must be found within the fourcor ners of the Andhra Pradesh Act along with other documents because under section 40(4) of the Andhra Pradesh Act the interest of a protected tenant in the land held by him as a protected tenant formed 60%. The rights of the protected tenants have been defined in the Andhra Pradesh Act and relevant provisions of that Act namely, sections 34, 37, 37A and 40 in conjunction with the definition under section 2(r) have to be taken into consideration in the background of the facts and circumstances of the case. The two orders of this Court as we have mentioned hereinbefore dated 30th of Janu ary, 1975 and 19th of August. 1985 reiterated the position that it was for the arbitrator to decide the question and he should decide the question in the light of sections 99 and 102 of the Andhra Pradesh Act as set out hereinbefore. On behalf of the appellant it was submitted that there was a complete bar for any civil court to go into the question whether Abdul Khader was a protected tenant and as such the arbitrator and the High Court had no jurisdiction to decide this question. For this reliance was placed on Section 102 of the Andhra Pradesh Act which lays down that the Act will not apply to lands leased, granted, alienated or acquired in favour of or by the Central Government or the State Govern ment etc. and on Section 99 of the Act which bars the jurisdiction of civil courts to deal with any question which is under the Andhra Pradesh Act required to be settled, to be decided or dealt with by the Tahsildar, Tribunal or Collector. According to the appellant inasmuch as whether Abdul Khader was a protected tenant had not to be settled by the Collector or the Tribunal, the arbitrator and the High Court were in error in going to that question. We are unable to accept this submission. By the scheme of the Central Act compensation was payable to persons who had interest in the land acquired. Who are the persons who have interest in the land had to be decided in accordance with the law and the evidence. Determination by the revenue authorities and non determination is not conclusive or decisive. It is clear that section 102 of the Andhra 1242 Pradesh Act mentions that after acquisition the Act was not to apply in respect of certain land. Therefore, it was submitted by the respondents that section 99 of the Andhra Pradesh Act. which made the determination by the Tahsildar to be final and debarred other courts from going into the question did not apply in case of compensation payable. In the background of the totality of circumstances as manifest in the different orders it appeared to the arbitrator and the Court that the entry which was made in favour of Abdul Khader as the protected tenant was of doubtful validity. We are of the opinion that the High Court was not in error in so holding. It was the observation of the revenue authori ties that it was spurious. That in any event what was the interest of Abdul Khader had to be determined in determining the question of payment of compensation to him and in so determining the facts and circumstances and the proceedings before the revenue authorities and entries and subsequent deletions had to be taken into consideration by the arbitra tor. The arbitrator has done so. He had jurisdiction to do so. The High Court has so held. This Court by the two orders referred to hereinbefore had also affirmed this position. In that view of the matter we are unable to accept the challenge to the award. Furthermore, under section 99 of the Andhra Pradesh Act the bar was not against the arbitrator but against a civil court. In determining the amount of compensation payable to Abdul Khader under the Central Act, his interests in the property had to be determined. In another context, the High Court of Andhra Pradesh enunciated the position that it was necessary to determine the interest of the persons claiming compensation. Reference may be made to the decision in the case of Archi Appalareddi and another vs Special Tahsildar, land Acquisition, Visakhapatnam Municipality and mother, [1979] Andhra Weekly Reporter, Vol. 1 p. 101, where the Court observed in the context of the Land Acquisition Act that a tenant was a 'person inter ested ' as defined in clause (b) of section 3 of the Land Acquisition Act. He has a right to object to the acquisition and/or the quantum of compensation. The Land Acquisition Officer or the Court, as the case may be, had to ascertain the value of a claimant 's right in the property acquired and compensate him in that behalf. We may mention that in the two orders of this Court dated 30th of January, 1975 and 19th of August, 1985 referred to here inbefore, this Court had left it open to the High Court and to the arbitrator to decide whether he is a protected tenant or not. the arbitrator has decided that question and the High Court found 1243 over wheiming evidence in support of it. In that view of the matter we must uphold that decision however unsatisfactory it might appear that a fruit plucker gets 60% of the compen sation while the owners get only If that is the law let it be. In the aforesaid view of the matter this appeal must fail and is accordingly dismissed with costs. P.S.S. Appeal dismissed.

Section 8(1)(b) of the provides for appointment of an arbitrator by the Central Government in a case where there is no agreement for determining compensation. Sub section (4) of section 40 of the Andhra Pradesh (Telanga na Area) Tenancy and Agricultural Lands Act, 1950 stipulates the interest of a protected tenant in the land at sixty per cent. The expression 'protected tenant ' is defined in section 2(r) to mean a person who is deemed to be a protected tenant under the provisions of the Act. One of the conditions to be fulfilled by such a person under section 34(1)(a), sub cls. (ii) and (iii) is that he should have held the land as tenant continuously for a period of six years immediately preceding the 1st day of January, 1948 or for a period of six years commencing not earlier than 6th October, 1943 and completed before the commencement of the Act. Section 35 makes the decision of the Revenue Authorities on the question conclu sive. Section 37 mentions other persons not entitled under section 34 to be deemed to be protected tenants. Section 37A enables persons holding lands as tenants at the commencement of the Act to be deemed to be protected tenants. Section 99 bars the jurisdiction of Civil Courts and section 102 exempts lands leased, granted, alienated or acquired in favour of or by the Central Government. Certain lands settled in favour of the appellant by his grandfather were requisitioned in 1963 by the Military Estate Officer, Secunderabad. Respondent claimed rights as a tenant of the said land. 1230 His claim was settled by sharing of the rent. The property was acquired under the Central Act subsequently in 1970. The entry in the Protected Tenancy Register prepared under section 37A of the Andhra Pradesh Act in favour of the respondent was cancelled by the Tahsildar in 1970 suspecting it not to be genuine. That order was challenged by the respondent in a writ petition before the High Court which held that whether the petitioner was a protected tenant or whether he had any prima facie interest in the suit property were matters entirely within the sole jurisdiction of the arbitrator who was to be appointed under section 8 of the Central Act. The District Revenue Officer in the proceedings before him held that entry in the Protected Tenancy Register was a spurious one as it was not supported by an inquiry. This order was upheld by the High Court in revision filed by the respondent, In its order dated 30th January, 1975 in tile special leave petition this Court left it open to the High Court and the arbitrator to decide the question whether the respondent was a protected tenant or not. The arbitrator after exhaustively discussing the evi dence on record held that the respondent was a protected tenant and as such he was entitled to sixty per cent of the compensation money payable. In the statutory appeal of the appellant before the High Court an application filed by the respondent for adducing additional evidence was allowed and a Commissioner appointed. Disposing of the appeal against the aforesaid order this Court in its order dated 19th August, 1985 reiterated its earlier view that the High Court should determine this issue. The HIgh Court took the view that the arbitrator was not in error in deciding the issue in the manner it did, that there was surfeit of evidence to conclude that the respond ent was a protected tenant under section 34 read with section 37 or under section 37A of the Andhra Pradesh Act and, therefore, he was entitled to sixty per cent of the compensation payable. In this Appeal by Special Leave, it was contended for the appellant that it was mandatory under section 99 read with section 102 of the Andhra Pradesh Act for the Revenue Authorities to decide whether a person was a protected tenant or not and the Revenue Authorities having found that he was not a protected tenant, it was not open to the arbitrator to decide the question of protected tenancy. On behalf of the respondent it 1231 was contended that the compensation payable must be deter mined under the Central Act and the arbitrator was the authority to decide that question. Dismissing the appeal, the Court, HELD: The challenge to the award is rejected. The re spondent was a 'protected tenant ' under the Andhra Pradesh (Telangana Area) Tenancy and Agricultural Lands Act, 1950. He was, therefore, entitled to get sixty per cent of the compensation amount. [l242D, H; 1243A] Under section 99 of the Andhra Pradesh Act, which makes the determination by the Tahsildar to be final, the bar of jurisdiction is not against the arbitrator appointed under section 8 of the but against a civil court. In determining the amount of compensation payable to a person under the Central Act his interest in the property had to be deter mined. [1242DE] Atchi Appalareddi and another vs Special Tahsildar Land Acquisition, Visakhapatnam Municipality and another, (1979 Andhra Weekly Reporter, Vol. 1 p. 101), referred to. By the scheme of the Central Act compensation was pay able to persons who had interest in the land acquired. Who were those persons had to be decided in accordance with law and the evidence. Determination by the revenue authorities and non determination was not conclusive or decisive. Sec tion 102 of the Andhra Pradesh Act lays down that after acquisition of the lands by the Central Government the Act was not to apply in respect of such lands. Section 99 of that Act, therefore, had no application. [124 1 G 1242B] In its two orders dated 30th January, 1975 and 19th August, 1985 this Court had left it open to the High Court and to the arbitrator to decide whether the respondent was a protected tenant or not. What was the interest of the re spondent in the land acquired had to be determined in deter mining the question of payment of compensation to him and in so determining the facts and circumstances and proceedings before the revenue authorities and entries and subsequent deletions had to be taken into consideration by the arbitra tor. The arbitrator had done so and held that the respondent was a protected tenant and as such entitled to sixty per cent of money payable for the acquisition of land. He had jurisdiction to do so. The High Court found overwhelming evidence in support of this view. It discussed 18 documents and concluded (a) 1232 that because the respondent was a tenant of the said land between January 1942 to January 1948 for six years he was a protected tenant under sub cl. (ii) of cl.(a) of sub section (1) of section 34 of the Andhra Pradesh Act, and (b) that because he held the land from October 1943 to October 1949 he was a protected tenant under sub cl. (iii) and held that he was entitled to sixty per cent of the compensation. This view has to be upheld however unsatisfactory it might appear that a fruit plucker gets sixty per cent of the compensation while the owners get only forty per cent. If that is the law let it be. ]1242G, C; 1239AB; 1242H 1243A; 1239DE; 1240EF; 1243A]

Civil Appeal No. 147 of 1974. Appeal by special leave from the Judgment and Order dated 16 10 1973 of the Delhi High Court in LPA No. 238/72. Dr. L. M. Singhvi and Mahinder Narain for the Appellant. Lal Narain Sinha Att. of India, B. P. Maheshwari, Suresh Sethi and section K. Bhattacharyya for Respondent No. 1. Sardar Bahadur Saharya and Vishnu Bahadur Saharya for Respondent No. 2. The Judgment of the Court was delivered by PATHAK, J. Does the failure of the Standing Committee of the Delhi Municipal Corporation to consider under sub section (3) of section 313, Delhi Municipal Corporation Act, 1957, an application for sanction to a lay out plan within the period specified in the subsection result in a "deemed" grant of the sanction? That is the principal question raised in this appeal by special leave which is directed against the judgment and order of the Delhi High Court allowing a Letters Patent Appeal and dismissing a writ petition filed by the appellant. The appellant 's father, Amin Chand, owned a large parcel of land in village Chowkhandi near Tilak Nagar, Najafgarh Road, New Delhi. The land was situated within the municipal limits of Delhi. Amin Chand decided on developing the land as a residential colony named, after his father, the "Gangaram Vatika Colony". He submitted a lay out plan for sanction under section 313 of the Delhi Municipal 1076 Corporation Act, 1957. The plan was sanctioned by the Standing Committee of the Delhi Municipal Corporation by Resolution No. 17 passed on 10th December, 1958. A revised lay out plan was approved by the Standing Committee by Resolution No. 871 dated 12th November, 1964. Meanwhile, Amin Chand died, and the appellant, his son, thought it desirable that the lay out plan should include provision for the construction of a cinema. Plots Nos. 33, 34 and 35 approved as separate units for the construction of residential houses in the lay out plan were selected as an amalgamated unit for the cinema. An application dated 20th April, 1967, accompanied by a copy of the sanctioned lay out plan indicating the proposed changes, was filed by the appellant and he prayed for "an early sanction in terms of the provisions of section 313" of the Act. The Town Planner of the Corporation informed him by letter dated 14th June, 1967 that his application did not fall within the purview of section 313 and that, moreover, the Master Plan did not envisage a cinema within a residential area, and therefore the request could not be considered. Some correspondence followed between the appellant and the Corporation and concluded with a letter of 29th September, 1969 by the Corporation informing the appellant that his proposal could not be accepted because it would contravene the Master Plan of Delhi. The Appellant filed a writ petition in the High Court of Delhi alleging that the application had not been considered by the Standing Committee, and as the period prescribed by the statute for doing so had expired the revised lay out plan must be treated as having been sanctioned. Accordingly, he prayed that the respondents be restrained from interfering with his right to raise the construction including the cinema building in accordance with the revised lay out plan. A learned Single Judge of the High Court while disposing of the writ petition directed the Corporation to treat the revised lay out plan as having been approved, but observed that the appellant would not be entitled to construct a cinema on the land unless due compliance had been effected with other provisions of the law and that it was open to the Standing Committee under sub section (5) of section 313 to prohibit the construction of the cinema. The Corporation preferred a Letters Patent Appeal, and a Division Bench of the High Court by its judgment and order dated 16th October, 1973 allowed the appeal, set aside the judgment and order of the learned Single Judge and dismissed the writ petition. Section 313 of the Corporation Act consists of the following provisions: "313. (1) Before utilising, selling or otherwise dealing with any land under section 312, the owner thereof shall send to the 1077 Commissioner a written application with a lay out plan of the land showing the following particulars, namely: (a) the plots into which the land is proposed to be divided for the erection of buildings thereon and the purpose or purposes for which such buildings are to be used; (b) the reservation or allotment of any site for any street, open space, park, recreation ground, school, market or any other public purpose; (c) the intended level, direction and width of street or streets, (d) the regular line of street or streets; (e) the arrangements to be made for levelling, paving, metalling, flagging, channelling, sewering, draining, conserving and lighting street or streets. (2) The provisions of this Act and the bye laws made thereunder as to width of the public streets and the height of buildings abutting thereon, shall apply in the case of streets referred to in sub section (1) and all the particulars referred to in that sub section shall be subject to the sanction of the Standing Committee. (3) Within sixty days after the receipt of any application under sub section (1) the Standing Committee shall either accord sanction to the lay out plan on such conditions as it may think fit or disallow it or ask for further information with respect to it. (4) Such sanction shall be refused (a) if the particulars shown in the lay out plan would conflict with any arrangements which have been made or which are in the opinion of the Standing Committee likely to be made for carrying out any general scheme of development of Delhi whether contained in the master plan or a zonal development plan prepared for Delhi or not; or (b) if the said lay out plan does not conform to the provisions of this Act and bye laws made thereunder; or (c) if any street proposed in the plan is not designed so as to connect at one end with a street which is already open. (5) No person shall utilise, sell or otherwise deal with any land or lay out or make any new street without or otherwise than in conformity with the orders of the Standing Committee 1078 and if further information is asked for, no step shall be taken to utilise, sell or otherwise deal with the land or to lay out or make the street until orders have been passed upon receipt of such information: Provided that the passing of such orders shall not be in any case delayed for more than sixty days after the Standing Committee has received the information which it considers necessary to enable it to deal with the said application. (6) The lay out plan referred to earlier in this section shall, if so required by the Standing Committee, be prepared by a licensed town planner. " The principal contention of the appellant before us is that on a true construction of section 313 it must be regarded that 'there is no restriction on his utilising, selling or otherwise dealing with the land in accordance with the lay out plan because the time prescribed by sub section (3) for the Standing Committee to take action on the application had expired ', and reliance is place on Municipal Corporation of Delhi & ors. vs Smt. Kamala Bhandari & ors.(1). It is necessary to examine for the purpose of this case what Parliament intended when enacting section 313. Among the obligations vested in the Corporation under the Act are the construction, maintenance and improvement of streets. Public streets vest in the Corporation and the Commissioner is enjoined to ensure their maintenance and repair. Sections 313 to 316 related to private streets. Section 312 provides that if the owner of any land utilises, sells, leases out or otherwise disposes of such land for the construction of buildings thereon, he must lay out and make a street or streets giving access to the plots in which the land is to be divided and connecting with an existing public or private street. Sub section (1) of section 313 obliges the owner of the land, before utilising, selling or otherwise dealing with the land under section 312 to apply to the Commissioner with a lay out plan of the land for sanction to the lay out plan. The particulars detailed in sub section (1) required in a lay out plan bear on the provisions of section 312. The lay out plan will indicate in what manner the plots are proposed to be divided and the use to which they will be applied as well as the condition and direction of the streets, which provide access to them, so that it can be determined whether the private streets proposed in the lay out plan will adequately and sufficiently serve the buildings raised on the plots. Sub section (3) requires the Standing Committee, within sixty days after receipt of the application, either to accord sanction to the lay out plan or to disallow it 1079 or ask for further information in respect of it. If further information is asked for, the ban on the owner utilising, selling or otherwise dealing with the land continues to operate until orders have been passed by the Standing Committee on receipt of the information. That is sub section Its proviso lays down that the passing of such orders shall not be in any case delayed for more than sixty days after the Standing Committee has received the information which it considers necessary. Sub sections (3) and (5) of section 313 prescribe a period within which the Standing Committee is expected to deal with the application made under sub section But neither sub section declares that if the Standing Committee does not deal with the application within the prescribed period of sixty days it will be deemed that sanction has been accorded. The statute merely requires the Standing Committee to consider the application within sixty days. It stops short of indicating what will be the result if the Standing Committee fails to do so. If it intended that the failure of the Standing Committee to deal with the matter within the prescribed period should imply a deemed sanction it would have said so. They are two distinct things, the failure of the Standing Committee to deal with the application within sixty days and that the failure should give rise to a right in the applicant to claim that sanction has been accorded. The second does not necessarily follow from the first. A right created by legal fiction is ordinarily the product of express legislation. It seems to us that when sub section (3) declares that the Standing Committee shall within sixty days of receipt of the application deal with it, and when the proviso to sub section (5) declares that the Standing Committee shall not in any case delay the passing of orders for more than sixty days the statute merely prescribes a standard of time within which it expects the Standing Committee to dispose of the matter. It is a standard which the statute considers to be ' reasonable. But non compliance does not result in a deemed sanction to the lay out plan. Besides the absence of express language creating the legal consequence claimed by the appellant, there is nothing in the context to persuade us to accept the claim. Parliament did not apparently view the matter of sanctioning a lay out plan as possessing the immediacy associated with the actual erection of a building or the execution of a work, where on the failure of the Commissioner to refuse sanction or to communicate such refusal within a specified period the applicant is entitled to commence and proceed with the building or work. There is nothing in section 313 which has the contextual character of sections 336 and 337. A perusal of sections 336 and 337 confirms that the cases covered there are controlled by a tightly woven time bound 1080 programme strongly indicating Parliament 's intent to regard the direction of a building and the execution of a work as matters of the utmost expedition and urgency. Sub section (3) of section 336 requires the Commissioner to communicate the sanction to the applicant and, where sanction is refused, to communicate the refusal with a statement of his reasons for such refusal. If the period specified in sub section (1) of section 337 has expired without the Commissioner refusing to sanction or, if refusing, without communicating the refusal, the applicant can commence and proceed with the projected building or work. If it appears to the Commissioner that the site of the proposed building or work is likely to be affected by any scheme of acquisition of land for a public purpose or by any of the other public works mentioned in the proviso to sub section (1) of section 337, he may withhold sanction of the proposed building or work, but even therefor not more than three months and the period specified in the sub section is computed as commencing from the expiry of such period. That is not all. On the sanction or deemed sanction, the applicant must under sub section (3) of section 337 commence the erection of the building or execution of the work within one year. Failure to do so will reduce him to the need for taking fresh steps for obtaining the sanction. Then, before commencing the erection of the building or execution of the work with the period specified in sub section (3), he is obliged, by virtue of sub section (4) to give notice to the Commissioner of the proposed date of such commencement; and if the commencement does not take place within seven days fresh notice is necessary. This network of provisions demonstrates the urgency attached by Parliament to the case where a building has to be erected or a work executed. It is conspicuous by its absence in section 313. We are, therefore, of opinion that if the Standing Committee does not consider the grant of sanction on the application made under sub section (1) of section 313 within the specified period, it is not open to the applicant to regard the lay out plan as having been sanctioned. We are unable to endorse the contrary view taken by the High Court in Municipal Corporation of Delhi 's case (supra) and overrule that decision. The application made by the appellant for sanction to the lay out plan must be regarded as pending before the Standing Committee and must now be disposed of without any further delay. The appellate Bench of the High Court has taken the view that the application does not lie under section 313. As we have already observed, the purpose of filing a lay out plan under sub section (1) of section 313 is related immediately to determining whether the access pro 1081 vided by the proposed private streets sufficiently and adequately serves the purpose enacted in section 312, and that is why the lay out plan must show the particulars specified in sub section (1) of section 313. Sanction to the lay out plan is also a preliminary step in the process of utilising the land for the construction of buildings thereon. It is necessary to obtain that sanction because it is a pre requisite to the grant of sanction for the erection of the building or the execution of the work. Under sub section (1) of section 336, it is open to the Commissioner to refuse sanction of a building or work, in cases falling under section 312, if the lay out plans have not been sanctioned in accordance with section 313. In our view, the appellant was right in making the application under section 313 regard to the amalgamation of the three plots for the proposed construction of a cinema building. The Standing Committee has to determine whether the lay out plan now proposed can be sanctioned. It may refuse the sanction by reason of sub section (4) of section 313 on any of the ground specified therein. That will be a matter for the Standing Committee to consider. The Appellate Bench of the High Court has held that the appellant is not entitled to invoke sub section (3) of section 313 for the grant of sanction to the revised lay out plan. The High Court was apparently of the view that section 313 is attracted only when the owner of the land has not yet utilised or otherwise dealt with the land and the application for sanction envisaged under section 313 is the first application made for the purpose. The High Court has referred to the circumstances that the owner had already commenced to act on the sanction granted to the original lay out plan. We think that the limited view taken by the High Court is not justified. It is open to the owner of land, after obtaining sanction to the original lay out plan, to apply afresh for sanction to a revised lay out plan. Circumstances may arise, after the original sanction was granted, requiring the owner to incorporate changes in the original lay out plan. In that event, when an application is made for the grant of sanction to a revised lay out plan it is, as it were, an application for the grant of a fresh sanction. There is a fresh lay out plan for which sanction is applied. It is differently constituted from the original lay out plan. Such an application will fall under section 313. It is no bar to making such an application and entertaining it that the owner has commenced to utilise the land or otherwise dealt with it. Section 312 implies that the land must be utilised in accordance with the lay out plan. If the land has been utilised to any degree by the appellant before 20th April, 1967, the utilisation must conform to the original sanctioned lay out plan. No utilisation by the appellant in the manner subsequently proposed is 1082 permissible unless and until sanction is accorded to the revised lay out plan. If such sanction is refused, it is the original sanction which will continue to operate, and the lay out plan to which such sanction was granted is the one that matters. In the circumstances, we direct the first respondent, the Municipal Corporation of Delhi, to refer the application dated 20th April, 1967 along with the lay out plan accompanying it to its Standing Committee and the Standing Committee will dispose of the application expeditiously in accordance with law. The appellant is not entitled to any further relief at this stage. In the circumstances, the parties will bear their costs.

The Delhi Municipal Corporation Act, 1957 by sub section (1) of section 313 obliges the owner of the land, before utilising, selling or otherwise dealing with the land under section 312 to apply to the Commissioner with a layout plan of the land for sanction to the lay out plan. Sub section (3) of the said section requires the Standing Committee, within sixty days after receipt of the application, either to accord sanction to the lay out plan or to disallow it or ask for further information in respect of it. If further information is asked for, the ban on the owner utilising, selling or otherwise dealing with the land continues to operate until orders have been passed by the Standing Committee on receipt of the information. The appellant 's father who owned a large parcel of land situated within the Municipal limits, decided on developing the land as a residential colony and submitted a lay out plan for sanction under section 313, which was sanctioned by the Standing Committee on 10th December, 1958. After the death of the appellant 's father, the appellant thought it desirable that the lay out plan should include provision for the construction of a cinema and he submitted an application dated 20th April, 1967 accompanied by a copy of the sanctioned lay out plan indicating the proposed changes, and prayed for an early sanction in terms of the provisions of section 313. The Town Planner of the Corporation informed by letter, dated 14th June, 1967 that as the application did not fall within the purview of section 313, and that as the Master Plan did not envisage a cinema within a residential area, the request could not be considered. Some correspondence followed and ultimately by letter, dated 29th September, 1969 the appellant was informed that his proposal could not be accepted. Feeling aggrieved, the appellant filed a Writ Petition in the High Court alleging that the application had not been considered by the Standing Committee and as the period prescribed by the statute for doing so had expired the revised lay out plan must be treated as having been sanctioned. The Single Judge of the High Court allowed the Writ Petition and directed the Corporation to treat the revised lay out plan as having been approved but observed that it was open to the Standing Committee under sub section (5) of section 313 to prohibit the construction of the cinema. The respondent Corporation preferred a Letters Patent Appeal and the Division Bench of the High Court allowed the appeal, holding that the appellant was not entitled to invoke sub section (3) of section 313. In the appeal to this Court, on the question, whether the failure of the Standing Committee of the Municipal Corporation to consider under sub section 1074 (3) of section 313 of the Act, an application for sanction to a lay out plan within the period specified in the sub section can result in a deemed grant of the sanction: ^ HELD: 1. Merely because the Standing Committee does not consider the grant of sanction on the application made under sub section (1) of section 313 within the specified period, does not entitle the applicant to regard the lay out plan as having been sanctioned. [1080F] 2. The Municipal Corporation is obliged to refer the application dated 20th April, 1967 alongwith the lay out plan accompanying it, to its Standing Committee to dispose of the application expeditiously in accordance with law. [1082B] 3. Sub sections (3) and (5) of section 313 prescribe a period within which the Standing Committee is expected to deal with the application made under sub section (1). But neither sub section declares that if the Standing Committee does not deal with the application within the prescribed period of sixty days it will be deemed that sanction has been accorded. The statute merely requires the Standing Committee to consider the application within sixty days. It stops short of indicating what will be the result if the Standing Committee fails to do so. [1070C] 4. If the Act intended that the failure of the Standing Committee to deal with the matter within the Prescribed period should imply a deemed sanction it would have said so. [1070C] 5. When sub section (3) declares that the Standing Committee shall within sixty days of receipt of the application deal with it, and when the proviso to sub section (5) declares that the Standing Committee shall not in any case delay the passing of orders for more than sixty days the statute merely prescribes a standard of time within which it expects the Standing Committee to dispose of the matter. It is a standard which the statute considers to be reasonable. But non compliance does not result in a deemed sanction to the lay out plan. [1070E F] 6. Parliament did not apparently view the matter of sanctioning a lay out plan as possessing the immediacy associated with the actual erection of a building or the execution of a work, where on the failure of the Commissioner to refuse sanction or to communicate such refusal within a specified period the applicant is entitled to commence and proceed with the building or work. [1070G] 7. There is nothing in section 313 which has the contextual character of sections 336 and 337. A perusal of sections 336 and 337 confirms that the cases covered there are controlled by a tightly woven time bound programme strongly indicating Parliament 's intent to regard the erection of a building and the execution of a work as matters of the utmost expedition and urgency. This network of provisions demonstrate the urgency attached by Parliament to the case where a building has to be erected or a work executed. [1079H 1080A, E] 8. Sanction to the lay out plan is also a preliminary step in the process of utilising the land for the construction of buildings thereon. It is necessary to obtain that sanction because it is a pre requisite to the grant of sanction for the erection of the building or the execution of the work. [1081B] 9. The appellant was right in making the application under section 313 in regard to the amalgamation of the three plots for the proposed construction 1075 of a cinema building. The Standing Committee has to determine whether the lay out plan now proposed can be sanctioned. It may refuse the sanction by reason of sub section (4) of section 313 on any of the grounds specified therein. That will be a matter for the Standing Committee to consider. [1081C D] 10. It is open to the owner of the land, after obtaining sanction to the original lay out plan to apply afresh for sanction to a revised lay out plan. Circumstances may arise, after the original sanction was granted, requiring the owner to incorporate changes in the original lay out plan. In that event, when an application is made for the grant of sanction to a revised lay out plan it is, as it were, an application for the grant of a fresh sanction. There is a fresh lay out plan for which sanction is applied. It is differently constituted from the original lay out plan. Such an application would fall under section 313. [1081F G] In the instant case the application made by the appellant for sanction to the lay out plan must be regarded as pending before the Standing Committee which must be disposed of without any further delay. [1080G] Municipal Corporation of Delhi & ors. versus Smt. Kamla Bhandari & Ors. I.L.R. (1970) 1, Delhi 66 disapproved.

iminal Appeal No. 56 of 1968. Appeal from the judgment and order dated February 9, 1968 of the Kerala High Court in O.P. No. 5032 of 1967 (Contempt). 699 Y. K.Krishna Menon, D. P. Singh, N. Nettar and Y. J. Francis, for the appellant. A. Y. V. Nair, for the respondent. M. R. K. Pillai, for the intervener. The Judgment of the Court was delivered by Hidayatullah, C. J. Mr. E. M. section Naniboodiripad. (former Chief Minister of Kerala) has filed this appeal against his conviction and sentence of Rs. 1000 fine or simple imprisonment for one month by the High Court of Kerala for contempt of Court.i Judgment, February 9, 1968, was by majority Mr. justice Raman Nair (now Chief Justice) and Mr. justice Krishamoorthy lyer formed the majority. Mr. Justice Mathew dissented. The case has been certified by them as fit for appeal to this Court under article 1 3 4 ( 1 ) (c) of the Constitution. The conviction is based on certain utterances of the appellant, when he was Chief Minister, at a Press Conference held by him at Trivandrum, on November 9, 1967. The report of the Press Conference was published the following day in some Indian newspapers. The proceedings were commenced in the High Court on the sworn information of an Advocate of the High Court, based mainly on the report in the lndian Express. The appellant showed cause against the notice sent to him and in an elaborate affidavit stated that the report 'was substantially correct, though it was incomplete in some respects. ' The offending parts of the Press Conference will be referred to in this judgment, but we may begin by reading it as a whole. This is what was reported : "Marx and Engels considered the judiciary as an instrument of oppression and even today when the State set up his (sic) not undergone any change it continues to be so, Mr. Nambudiripad told a news conference this morning. He further said that Judges are guided and dominated by class hatred, class interests and class prejudices and where the evidence is balanced between a well dressed pot bellied rich man and a poor ill dressed and illiterate person the judge instinctively favors the former, the Chief Minister alleged. The Chief Minister said that election of Judges would be a better arrangement, but unless the basic state set up is changed, it could not solve the problem. 700 Referring to the Constitution the Chief Minister said the oath he had taken was limited only to see that the constitutional provisions are practiced. 'I have not taken any oath ' the Chief Minister said "that every word and every clause in the Constitution is sacred". Before that he had also taken an oath, Mr. Nambudiripad said, holding aloft a copy of the Marxist party 's programme and read out extracts from it to say that the oath had always held that nothing much could be done under the limitations of the Constitution. Raising this subject of Constitution and judiciary suo motu at the fag end of his Dews conference the Chief Minister said so many reports have appeared in the press that Marxists like himself, Mr. A. K. Gopalan, and Mr. Imbichi Baba (Transport Minister) were making statements critical of the judiciary "presumably with the idea that anything spoken about the court is contempt of court". His party had always taken the view, the ' Chief Minister said that judiciary is part of the class rule of the ruling classes. And there are limits to the sanctity of the judiciary. The judiciary is weighted against . workers, peasants and other sections of the working classes and the law and the system of judiciary essentially serve the exploiting classes. Even where the judiciary is separated from the executive it is still subject to the influence and pressure of the executive. To say this is not wrong. The judiciary he argued was only an institution like the President or Parliament or the Public Service Commission. Even the President is subject to impeachment. After all, sovereignty rested not with any one of them but with the people. Even with regard to Judges confidential records are being kept why ? The judge is subject to his own idiosyncrasies and prejudices. "We hold the view that they are guided by individual idiosyncrasies, guided and dominated by class interests, class hatred, and class prejudices. In these conditions we have not pledged ourselves not to criticise the judiciary or even individual judgments. " This did not mean, he explained that they could challenge the integrity of the individual judge or cast reflections on individual judgments, the Chief Minister contended. He did not subscribe to the view that it was an aspersion on integrity when he said that judges are guided 701 and dominated by class hatred and class prejudices. "The High Court and the Supreme Court can haul me up, if they want" he said". The affidavit Which he filed later in the High Court explained his observations at the press conference, supplied some omissions and pleaded want of intention to show disrespect and justification on the ground that the offence charged could not be held to be committed, in view of guarantee of freedom of speech and expression under the Constitution. He stated that his observations at the press conference did no more than give expression to the Marxist philosophy and what. was contained in Chapter 5 of the Programme of the Communist Party of India (Marxist) adopted in November 1964. His pleas in defence were accepted by Justice Mathew who found nothing objectionable which could be termed contempt Of court. The other two learned Judges took the opposite view. Judgment was entered on the ' basis of the majority view. In explaining his press conference the appellant added that it did not offend the majesty of law, undermine 'the dignity of courts ' or obstruct the administration of justice. Nor did it have any such tendency. He claimed that it contained a fair criticism of the system of judicial administration in an effort to make it conform to the peoples ' objective of a democratic and egalitarian society based on socialism. He considered that it was not only his right but also his duty to educate public opinion. He claimed that the statement read as a whole amounted to a fair and reasonable criticism of the present judicial system in our country, hat it was not intended to be a criticism of any 'Particular judge. his judgment or his conduct, and that it could not be construed as contempt of court. He added that he had always enforced the judgments of the courts and shown respect to the judiciary and had advocated the independence of the judiciary and decried all attempt to make encroachments upon it. Criticism of the judiciary, according to him, was his right and it was being exercised by other parties in India. He denied that it was for the courts to. tell the people what the law was and asserted that the, voice of the Legislatures should be supreme. He, however, found is party at variance with the other parties in that according to he political ideology of his party the State (including all the three limbs the Legislature, the Executive and the Judiciary) was the instrument of the dominant class or classes, so long as society was divided into exploiting and exploited classes, and parliamentary democracy was an organ of class oppression. He concluded that his approach to the judiciary was : (a) the verdicts of the courts must be respected and enforced; 702 (b) no aspersions should be cast on individual judges or judgments by attributing motives to judges; (c) criticism of the judicial system or of judges going against the spirit of legislation should be permissible; and (d) education of the people that the State (including the judiciary) was an instrument of exploitation of the majority by the ruling and exploiting classes, was legitimate. These principles, he submitted, were not transgressed by him and also summed up his observations and the press conference. The law of contempt stems from the right of the courts to punish by imprisonment or fines persons guilty of words or acts which either obstruct or tend to obstruct the administration of justice. This right is exercised in India by all courts when contempt is committed in facie curaie and by the superior courts on their own behalf or on behalf of courts subordinate to them even if committed outside the courts. Formerly, it was regarded as inherent in the powers of a Court of Record and now by the Constitution of India, it is a part of the powers of the Supreme Court and the High Courts. There are many kinds of contempts. The chief forms of contempt are insult to judges, attacks upon them, comment on pending proceedings with a tendency to prejudice fair trial, obstruction to officers of courts, witnesses or the parties, abusing the process of the court, breach of duty by officers connected with the court and scandalising the judges or the courts. The last form occurs, generally speaking, when the conduct of a person tends to bring the authority and administration of the law into disrespect or disregard. In this conduct are included all acts which bring the court into disrepute or disrespect or which offend its dignity, affront its majesty or challenge its authority. Such contempt may be committed in respect of a single judge or a single court but may, in certain circumstances, be committed in respect of the whole of the judiciary or judicial system. The question is whether in the circumstances of this case the offence was committed. In arguing the case of the appellant Mr. V. K. Krishna Menon contended that the law of contempt must be read without en croaching upon the guaranteed freedom of speech and expression in article 1 9 ( I ) (a) of the Constitution, that the intention of the contemner in making his statement at the press conference should be examined in the light of his political views as he was at liberty to put them before the people and lastly the harm done to the 703 courts by his statements must be, apparent. He admitted that it might be possible to say that the speech constituted contempt of court but submitted that it would be inexpedient to do so. He stated further that the species of contempt called 'scandalising the court had fallen in desuetude and was no longer enforced in England and relied upon Mcleod vs St. Aubyn(1). He further submitted that the freedom Of speech and expression gave immu nity to the appellant as all he did was to give expression to the teachings of Marx, Engels and Lenin. Lastly, he contended that a general remark regarding courts in general did not constitute contempt of court and relied upon The Government Pleader, High Court, Bombay v, Tulsidas Subhanrao Jadhav (2 ) and the observations of Lord Denning M. R. in R. vs Metropolitan Police Commissioner(3). It is no doubt true that Lord Morris in at p. 561 observed that the contempt of court known from the days of the Star Chamber as Scandalum Justiciae Curiae or scandalising the judges, had fallen into disuse in England. But as pointed out by Lord Atkin in Andre Paul Terence Ambard vs The Attorney General of Trinidad and Tobago (4) the observations of Lord Morris were disproved within a year in The Queen vs Gray(5). Since then many convictions have taken place in which offence was held to be committed when the act constituted scandalising a judge. We may dispose of the Bombay case above cited. The con temner in that case had expressed contempt for all courts. Beaumonth C. J. (Wasoodew, J. concurring) held that it was not a case in which action should be taken. The case did not lay down that there could never be contempt of court even though the court attacked was not one but all the courts together. All it said was that action should, not be taken in such a case. if the Chief Justice intended laying down the broad proposition contended for we must overrule his dictum as an incorrect statement of law. But we think that the Chief Justice did not say anything like that. He was also influenced by the unconditional apology and therefore discharged the rule. Another case cited in 'this connection may be considered here. In Criminal Appeal No. 110 of 1960 (In Re Basuddeo Prasad, Advocate, Patna High Court) decided on May 3, 1962, the offending statement was that many lawyers without practice ' get appointed as judges of the High Courts. The remark was held by this Court not to constitute contempt of court. The remark was made after the report of the law Commission was pub (1) (3) (2) I.L.R. (4) A.I.R. 1936 P.C. 141 at 143. (5) at 40. 704 lished and this Court held that the person concerned, who was then the Secretary of the Indian Council of Public Affairs and an advocate, was entitled to comment on the choice of judges and that the remarks were within the proper limits of public criticism on a question on which there might be differences of, opinion. In our judgment that case furnishes no parallel to the case we have here. Each case must be examined on its own facts and the decision must be reached in the context of what was done or said. The appellant has contended before us that the law of con tempt should be so applied that the freedom of speech and expression are not whittled down. This is true. The spirit underlying article 19 (1) (a) must have due play but we cannot overlook the provisions of the second clause of the article. While it is intended that there should be freedom of speech and expression, it is also intended that in the. exercise of the right, contempt of court shall not be committed. The words of the second clause are "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 t he right conferred by the sub clause. . in relation to contempt of court, defamation or incitement to an offence." These provisions are to be read with articles 129 and 215 which specially confer on this Court and the High Courts the power to punish for contempt of themselves. Article 19(1) (a) guarantees complete freedom of speech and expression but it also makes an exception in respect of contempt of court. The guaranteed right on which the functioning of our democracy rests, is intended to give protection to expression of free opinions to change political and social conditions and to advance human knowledge. While the right is essential to a free society, the Constitution has itself imposed restrictions in relation to contempt of court and it cannot therefore be said that the right abolishes the law of contempt. or that attacks upon judges and courts will be condoned. Mr. V. K. Krishna Menon read to us observations from Samuel Roth vs United States of America( '), Arthur Terminiello vs City of Chicago (2), Charlotte Anita Whitney vs People of the State of California( ') and New York Times Company vs L. B. sunivan (4 ) on the high toned objective in guaranteeing freedom of speech. We agree with the observations and can only say that (2) 93 LM Ed. 1131 at 1134. (1) 1 L. Ed.2d 1489 it 1506. (3) 71 L. ed. (4) II L. ed. 705 reedom of speech and expression will always prevail except where contempt is manifest, mischievous or substantial. The question always is on which side of the line the case falls. The Observations of this Court in Kedar Nath Singh vs State of Bihar(4) in connection with sedition do not lend any assistance because the topic there discussed was different. Freedom of speech goes far but not far enough to condone a case of real contempt of court. We, shall,, therefore, see whether there was any justification for the appellant which gives him the benefit, of the guaranteed right. The appellant has maintained that his philosophy is based upon that of Marx and Engels. Indeed he claims to be descended from the last philosophe and seeks to educate the exploited peoples on the reality behind class oppression. As a Marxist Leninist he advocates the radical and revolutionary transformation of the State from the coercive instrument of exploiting classes to an instrument which the exploited majority can use against these classes. In this transformation he wishes to make the state wither away and with the, state its organs, namely, the Legislature, the Executive and the Judiciary also to change. He has justified the press conference as an exposition of his ideology and claims protection of the first clause of article 19(1) which guarantees freedom of speech and expression. The law of contempt, he says, cannot be used to deprive him of his rights. All this is general but the appellant attacked the judiciary directly as "an instrument of oppression" and the judges as "dominated by class hatred, class interests and class prejudices", "instinctively" favoring the rich against the poor, He said that as part of the ruling classes the judiciary "works against workers, peasants and other sections of the working classes" and "the law and the system of judiciary essentially serve the exploiting classes". Even these statements, he claims, are the teachings of Marx, Engels and Lenin whose follower he is. This was also the submission of his counsel to us. The appellant is only partly right. He and his counsel may be said to have distorted the approach of Marx, Engels and Lenin, and we proceed to explain how Marx believed man 's inherent rationalism and virtue and depended upon them to create a better society where there would be no injustice and oppression and everyone would be able to share the fruits of man 's labour and genius. attacked all forms of social evils. Hence his, sympathy for the neglected and the 'injured and insulted ' laboring masses. Marx was neither first nor alone in this. Before him the Judeo Christians demanded social justice, Others who preached social (1) [1962] 2 Supp. S.C.R.769 706 equality and denounced social injustice were the Utopian Socialists and the Christian Socialists. They had all pointed out inequalities of civilization based on urban industrial development. We had thus Auguste Comte 's Cours de philosophie positive, Feuerbach 's History of New Philosophy and the writings of Hegel. Marx 's contribution was to create a scientific and ethical approach to the problem of inequality. He adopted the Hegelian dialectical form to explain how the capitalist society had arisen and showed how it would meet its fall. His view was that it nursed within itself the germ of its own destruction. In his classic book Das Kapital he disclosed the clues for the transition from capitalism to socialism. His labour theory was that the capitalist did not give to labour a due share from the value of the goods produced by labour because of the iron law of wages and this left the surplus labour value thereby saved in the hands of the capitalist. In this way the capitalist became an exploiter who grew rich on the exploited labour surplus and could indulge in what he called 'capitalist luxuries '. The introduction of machinery 'further cut down labour value and increased unemployment leading to reduction of wages. In this way the means of production passed into the hands of a few. Marx saw that this led to tensions which Marx thought would ultimately destroy the capitalist system. He saw the Revolution drawing nearer which would destroy 'classes ' and the exploitation of man by man. 'Mere was in his view one obstruction to the triumph of the working classes and that was government established by the capitalists who could frame laws to enforce the differences. From this stemmed his hostility to the state, its government and its laws. The Communist Manifesto, which spoke of class struggle, particularly between the bourgeoisie and the proletarians gave a history of the domination of the ruling classes converting everyone not belonging to itself into paid wage laborers. He said that these reactonaries were gearing all production to their own benefit and power. Describing the communists in this context, the Manifesto said that they had no separate interests but represented the proletariat as a whole, irrespective of nationalities and that the class struggle was universal. The communists were to settle the lines of action and their aim was abolition of property not property of the common man but the bourgeois property of the capitalist created by surplus from wage labour and resulting in accumulation of capital in the hands of the capitalist. According to the communists, this capital became not a personal but social power and the fight visualised in the Manifesto was the termination of its class character. Wage labour would thus leave no surplus, nor would it lead to accumulation of more wage labour yielding still greater surplus but the gains of 707 production would go to enrich labour in the communist society. Freedom according to the Manifesto.never meant the abolition property in to but the abolition of the bourgeois individuality. hat was done away with was not property but the means of subjugating labour of others to one 's own use. This in short is the communist thesis of social equality as one gathers from the Manifesto. Next follow the steps for achieving the betterment of what Saint Simon described as the largest and poorest class. Engels in his Analysis of Socialism explained the different types but we are hot concerned with them here. The radicals ' appeal followed, the forces of reaction released in the 1880s by Tzar Alexander 111. The Populists of Plekhanov were routed and driven out. Then in 1890s the young intellectuals took up the cause of socialism and Marxism provided the answer where the moderation and escapism of the Populists had failed. The former was based on a scientific approach while Populism was empiric and tended to make Russia, as Bulgakov wrote, 'a peasant and crude country '. The Populists based themselves on the Peasant Communes. The rise of Vladimir Lenin at this time determined the future of Marxism and his classic "the State and Revolution" appears to be in the mind of the appellant when he made his pronouncements. We are doubtful if he has fully appreciated the literature, if he has read it. Lenin 's teachings on the State had removed the distortions of Marxism from the minds of the people. He quoted long extracts from Marx and Engels to establish his points. Lenin first took up Engel 's Origin of the Family, Private Property and the State. The State, according to Engels, was not the image and reality of Reason as Hegel had maintained before. It was the product of society, a power standing above society like the Leviathan of Hobbes. According to Lenin the State was the product and manifestation of the irreconcilability of class antagonism. The State emerged when class antagonisms could not objectively be reconciled. The distortion which had crept into Marxism was that the State was regarded as an organ for the reconciliation of the classes. Lenin reinterpreted Marx and, according to him, the State could neither arise nor maintain itself if it were possible to reconcile classes. Marx had thought of the State as an organ of class rule and an organ of oppression. The views of the Menshiviks and other Socialist revolutionaries were exactly the converse. The disputes which have arisen in our country over the inviolability of property as a fundamental right have the same foundations. One side views that the chapter on Fundamental Rights reconciles, through itself, the basic and fundamental class antagonisms and the state is no longer required to play any part. The other side would give to one of the organs of the state, namely, 708 the legislature, a continual power of readjustment through laws and amendments of the Constitution. Both views do not accord with the Communist Manifesto and hence the distrust of the Constitution by the communists disclosed, by the appellant. Lenin, however, though that the State degenerated into an, instrument for the exploitation of the oppressed classes ' 'and wielded special public powers to tax and maintain armies. Engels thought that this made the State stand above society and the officers of the State were specially protected as they had the protection of the laws. From this sprung his hostility to the State. Engels summed it up thus "The State is by no means a power forced on society, from without, Neither as little is it 'the reality of the ethical idea ', 'the image and reality of reason ' as Hegel maintains. The state is a product of society at certain stage of development; it is the admission that this society has become entangled in an insoluble contradiction with itself, that it 'is cleft into irreconcilable antagonisms which it is powerless to dispel. But in order that these antagonisms, classes with conflicting economic might not consume themselves and society in sterile struggle, a power seemingly standing above society becomes necessary for the purpose of moderating the conflict, of keeping it within the bounds of 'order '. And this power, arisen out of society, but placing itself above it, and increasingly alienating itself from it, is the state." Lenin resumed this thought further thus : "This expresses with perfect clarity the basic idea of Marxism on the question of the historical role and meaning of the state. The State is the product and the manifestation of the irreconcilability of class antagonisms. The state arises when, where and to the extent that class antagonisms objectively cannot be reconciled. And, conversely, the exis tence of the state proves that the class antagonisms are irreconcilable." Having viewed the state in this way these writers from Marx to Lenin viewed it as the instrument for the exploitation of the oppressed classes. The Paris Commune of 1871 had stated its conclusions how the state gets above society but it was blurred in a reactionary manner later by Kautsky in 1912. Lenin cleared the misconception in an exposition of Engel 's philosophy : ". .As the state arose from the need to hold class same antagonisms in check, but as it arose, at the time, in the midst of the conflict of these classes, it is, as a 709 rule, the state of the most powerful economically dominant class, which through the medium of the state. becomes also the politically dominant class and thus acquires means of holding down and exploiting the oppressed classes. . the modern representative state is an instrument of exploitation of wage labour by capital. " Engels added further "In a democratic republic wealth exercises its power indirectly, but all the more surely 'first by means of the 'direct corruption of officials ' and second, by means of 'an alliance between the Government and Stock Exchange." Lenin gave the example that "at the present time, imperia lism and the domination of the banks have 'developed ' both these methods of upholding and giving effect to the omnipotence of wealth in democratic republics of all descriptions into an unusually fine art". He concluded that "a democratic republic is the best possible political shell 'for capitalism" and that "it establishes its power so securely, so firmly, that no change whether of persons, of institutions, or of parties in the bourgeois democratic republic can shake it". Therefore, Marx, Engels and Lenin thought in terms of 'withering away of the state '. Although Lenin thought that Engel 's doctrines were an adulteration of Marxism, he was not right. Marx himself believed this. In his Poverty of Philosophy, Marx says ". . The working class, in the course of development, will substitute for the old bourgeois society an association which will exclude classes and their antagonism, and there will be no more political power properly so called, since political power is precisely the official expression of antagonism in bourgeois society. " Marx and Engels in the Manifesto had considered the true state to be 'the proletariat organised as the ruling class '. It was the Kautskyites (the Dictatorship of the Proletariat) who, misunderstanding the doctrines of Marx, taught that the proletariat needed the state. According to Marx the proletariat needed a state which must wither away leading to the dictatorship of the proletariat. In this fight for power the Communist Manifesto gave a purely abstract solution. It was substitution of the commune for the bourgeois state machinery and a fuller democracy. The Army 710 was to be replaced by armed people, the officials were to be elected and also the judges. The Commune was not to be 'a talking parliament ' but a 'working ' body '. It was to be the executive and the legislature at the same time. The principles were formulated by Engels thus "The necessity of political action by the proletariat and of its dictatorship as the transition to the abolition of classes and with them the state. . . ". The thesis on the withering away of the state was to be accompanied by a restatement of the functions of the law. Law made by the bourgeois rulers was castigated as involving class supremacy. The Hegelian doctrine of the apotheosis of Reason was replaced by the invocation of economic necessity as the only foundation for laws. The laws which preserved privileges were to go, laws which kept the power of the bourgeois above the people were to go, only laws creating equality and preserving society from internal decay and disruption to be tolerated. In all the writings there is no direct attack on the judiciary selected as the target of people 's wrath. Nor are the judges condemned personally. Engels regarded the courts as one of the means adopted by the law for effectuating itself. It was thus that he wrote "The centralised state power, with its ubiquitus organs, standing army, police, bureaucracy, clergy, and judicature organs wrought after the plan of a systematic and hierarchic division of labour originates from the days of absolute monarchy, serving nascent middle class society as mightly weapons in its struggles against feudalism". This is not a castigation of the judiciary as being dishonestly ranged against the people but only a recital of a historic fact in feudal societies. He only said that the judicial functionaries must be divested of 'sham independence ' which marked their subservience to succeeding governments, and, therefore, be elected. In one of his letters to the Spanish Federal Council of the International Workingmen 's Association, London, February 13, 1871, he talked of the power of the possessing classes the landed aristocracy and the bourgeoisie and said that they kept the working people in servitude not only by their wealth got by the exploitation of labour but also by the power of the state, by the army. the bureaucracy, and the courts. He was not charging the .judiciary with taking sides but only as an evil adjunct of the administration of class legislation. The fault was with the state 711 and the laws and not with the judiciary. Indeed in no writing, which we have seen or which has been brought to our notice,, Marx or Engels has said what the appellant quotes them as saying. We have summarized into a very small compass, many thousands of words in which these doctrines have been debated from Plekhanov to Lenin through the thoughts of Kautsky, Kerensky, Lasalle, Belinsky and others who attempted a middle line between the revisionism of Bernstein and the Bolshevik views of Lenin. We have done so because Mr. V. K. Krishna Menon sneared that many people learn about communism through Middleton Murray! It will be noticed that in all these writings there is not that mention of judges which the appellant has made. Either he does not know or has deliberately distorted the writings of Marx, Engels and Lenin for his own purpose. We do not know which will be the more charitable view to take. Marx and Engels knew that the administration of justice must change with laws and changes in society, there was thus no need to castigate the judges as such beyond saying that the judicial system is the prop of the state. The courts in India are not sui generis. They owe their existence, from, powers and jurisdictions to the Constitution and the laws. The Constitution is the supreme law and the other laws are made by Parliament. It is they that give the courts their obligatory duties, one such being the settlement of disputes in which the state (by which we mean those in authority) are ranged against citizens. Again they decide disputes in which class interests are apparent. The action of the courts when exercised against the state proves irksome to the state and equally when it is between two classes, to the class which loses. It is not easily realized that one of the main functions of courts under Constitution is to declare actions, repugnant to the Constitution or the laws (as the case may be), to, be invalid. The courts as well as all the other organs and institutions are equally bound by the Constitution, and the laws. Although the courts in such cases imply the widest powers in the other jurisdictions and also give credit where it belongs they cannot always decide either in favour of the state or any particular class. There are innumerable cases in which the decisions have gone against what may be described in the language of communism as the exploiting classes. For those who think that the laws are defective, the path of reform is open but in a democracy such as ours to weaken the judiciary is to weaken democracy itself. Where the law is silent the courts have discretion. The existence of law containing its 712 own guiding principles, reduces the discretion of courts to a minimum. The courts must do their duty according to their own, understanding of the laws and the obligations of the Constitution. They cannot take their cue from sentiments of politicians nor even indirectly give support to something which they consider to be wrong against the Constitution and the laws. The good faith of the judges is the firm bed rock on which any system of administration securely rests and attempt to shake the people 's confidence in the courts is to strike at the very root of our system of democracy. The oft quoted anger of the Executive in the United States at the time of the New Deal and the threat to the Supreme Court (which the United States had the good sense not be pursue) should really point the other way and it should be noted that today the security of the United States rests upon its dependence on Constitution for nearly 200 years and that is mainly due to the Supreme Court. The question thus in this case, is whether the appellant has said anything which brings him out of the protection of article 19 (I) (a) and exposes him to a charge of contempt of court. It is obvious that the appellant has misguided himself about the true. teachings of Marx, Engels and Lenin. He has misunderstood the attack by them On state and the laws as involving an attack on the judiciary. No doubt the courts, while upholding the laws and enforcing them, do give support to the state but they do not do so out of any impure motives. They do not range themselves on the side of the exploiting classes and indeed resist them when the law does not warrant an encroachment. To charge the judiciary as an instrument of oppression, the judge as guided and dominated by class hatred, class interests and class prejudices, in stinctively favoring the rich against the poor is to draw a very distorted and poor picture of the judiciary. It is clear that it is an attack upon judges. which is calculated to raise in the minds of the people a general dissatisfaction with, and distrust of all judicial decisions. It weakens the authority of law and law courts. Mr. V. K. Krishna Menon tried to support the action of the appellant by saying that judges are products of their environment and reflect the influences upon them of the society in which they move. He contended that these subtle influences enter into decision making and drew our attention to the writings of Prof. Laski, Justice Cordozo, Holmes and others where the subtle influences, of one 's upbringing are described. This is only to say that judges are as human as others. But judges do not consciously take a view against the conscience or their oaths. What the appellant, wishes to say is that they do. In this he has been guilty, of a great calumny. We do not find it necessary to refer to these 713 writings because in our judgment they do not afford any justification for the contempt which has patently been committed. We agree with Justice Raman Nair that some of them have the exaggerations of the confessional. Others come from persons like the appellant, who have no faith in institutions hallowed by age and respected by the people. Mr. V. K. Krishna Menon exhorted us to give consideration to the purpose for which the statement was made, the position of the appellant as the head of a State, his sacrifices, his background and his integrity. On the other hand, we cannot ignore the occasion (a press conference), the belief of the people in his word as a Chief Minister and the ready ear which many in party and outside would to him. The mischief that his words would cause need not be assessed to find him guilty. The law punishes not only acts which do in fact interfere with the courts and administration of justice but also those which have that tendency, that is to say, axe likely to produce a particular result. Judged from the angle of courts and administration of justice, there is not a semblance of doubt in our minds that the appellant was guilty on contempt of court. Whether he misunderstood the teachings to Marx and Engels or deliberately distorted them is not to much purpose. The likely effect of his words must be seen and they have clearly the effect of lowering the prestige of judges and courts in the eyes of the people. That he did not intend any such result may be a matter for consideration in the sentence to be imposed on him but cannot serve as a justification. We uphold the conviction. As regards sentence we think that it was hardly necessary to impose heavy sentence. The ends of justice in this case are amply served by exposing the appellant 's ignorance about the true teachings of Marx and Engels (behind whom he shelters) and by sentencing him to a nominal fine. We accordingly reduce the sentence of fine to Rs. 50/ . In default of payment of fine he will undergo simple imprisonment for one week. With this modification the appeal will be dismissed.

The appellant, who was the Chief Minister of Kerala at the time. , at ' a press conference held by him on November 9, 1967, made various critical remarks relating to the judiciary referring to it inter alia as "an instrument of oppression" and the Judges as "dominated by class hatred, class prejudices", "instinctively" favoring the rich against the poor. He also stated that as part of the ruling classes the, judiciary "works 'against workers, peasants and other sections of the working classes" and "the law and the system of judiciary essentially served the exploiting classes". These remarks were reported in the newspapers and thereafter in proceedings commenced ' in the High Court the appellant was called upon to show cause why he should not be committed for contempt. In an affidavit in reply the appellant stated that the reports were "substantially correct", though incomplete in some respects. He supplied some omissions and pleaded want of intention to show disrespect to the judiciary and justification on the ground that the offence charged could not be held to be committed, in view of the guarantees of freedom of speech and expression under the Constitution. He claimed that his observations did no more than give expression to the Marxist philosophy and what was contained in the programme of the Communist Party of India. By a majority judgement the appellant was convicted for contempt of court and fined Rs. 1000/ or simple imprisonment for one month. In appeal to this Court it was contended on behalf of the appellant that the law of contempt must be read without encroaching upon the guarantee of freedom of speech and expression in Article 19(1)(a) : and that the intention of the appellant in making his remarks at the press conference should be examined in the light of his political views which he was at liberty to put before the people; he sought to justify the remarks as an exposition of his ideology which he claimed was 'based on the teachings of Marx and Engels and on this ground claimed protection of The first clause of article 19(1). HELD : Upholding the appellant 's conviction The law punishes not only act which do not fact interfere with the courts and administration of justice but also those which have that tendency, that is to say, are likely to produce a particular result. , Judged from the angle of courts and administration of justice" there was no doubt that the appellant was guilty of contempt of court. Whether he misunderstood the teachings of Marx and Engels or deliberately distorted them was not to much purpose. The likely effect of his words must be seen and they clearly had the, effect of lowering the prestige of judges and courts 698 in the eyes of the people. That he did not intend any such result may be a matter for consideration in the sentence to he imposed on him but could not serve as a justification. It was obvious that the appellant had misguided himself about the true teachings of Marx, Engles and Lenin. He had misunderstood the attack by them on state and the laws as involving an attack on the judiciary. No doubt the courts, while upholding the laws and enforcing them, do give support to the state but they do not do so out of any impure motives. They do not range themselves on the side of the exploiting classes and indeed resist, them when the law doe. not warrant an encroachment. To charge the judiciary as an instrument of oppression, the judges as guided and dominated by class hatred, class interests and class prejudices, instinctively favoring the rich against the poor is to draw a very distorted and poor picture of the judiciary. It was clear that the appellant bore an attack upon judges which was calculated to raise in the minds of the people a general dissatisfaction with, and distrust of all judicial decisions. It weakened the authority of law and law courts. [712 E] While the spirit underlying Art 19)(1)(a), must have due play, the Court could not overlook the provisions of the second clause of that Article. Its provisions are to be read with articles 129 and 215 which specially confer on this Court and the High Courts the power to punish for contempt of themselves. Although article 19(1)(a) guarantees complete freedom of speech and expression, it also makes an exception in respect of contempt of court. While the right is essential to a free society, the Constitution has itself imposed restrictions in relation to contempt of court and it cannot therefore be said that the right abolishes the law of contempt or that attacks upon judges and courts will be condoned. [704, C] Samuel Roth vs United States of America, I L.Ed.2d 1489 at 1506; Arthur Terminiello vs City of Chicago. ; at 1134; Charlotte Anita Whitney vs People of the State of California, ; , New York Times Company vs L. B. Sulivan, 686; and Kedar ' Nath Singh vs State of Bihar, [1962] 2 Supp. S.C.R. 769, referred to. While it is true that Lord Morris in Mcleod vs St. Aubyn at p. 561 observed that the contempt of court known from the days of the Star Chamber as Scandalum Justiciae Curiae or scandalising the Judges, had fallen into disuse in England, as pointed out by Lord Atkin in Andre Paul Terence Ambard vs The Attorney General of Trinidad, and Tobago, A.I.R. 1936 P.C. 141 at 143, the observations of Lord Morris were disproved within a year in The Queen vs Gray. at 40. Since then many convictions had taken place in which offence was held to be committed when the act constituted scandalizing a Judge.[703 D] The Government Pleader, High Court, Bombay vs Tulsidas Subhanrao Jadhav, I.L.R. ; explained. In re : Basudeo Prasad, Cr. Appeal No. 110 of 1960 decided on May 3, 1962; distinguished.

Civil Appeal Nos. 3285, 3284, 3286 & 3287 89182 From the Judgment dated 17.2.1982 of the High Court of Judicature for Rajasthan, Jaipur Bench, Jaipur in D.R Special Appeal Nos. 192/81, 191/81, 196/81, 194/81, 193/81, 195/81 respectively. Dr. Y.S. Chitale, Sobhagmal Jain and S.K Jain for the Appellants. G.L. Sanghi, R.K. Garg, Manoj Swarup, Ms. Lalita Kohli, B.D. Sharma and Aruneshwar Gupta for the Respondents. The Judgment of the Court was delivered by: 248 SABYASACHI MUKHARJI, J. These appeals by special leave arise out of the judgment of the Division Bench of the Rajasthan High Court. The appeals are by the original petitioners before the learned single judge of the Rajasthan High Court and who having succeeded before the learned single judge became respondents in the appeals filed by the University before the Division Bench. The appellants in these appeals and other connected appeals were temporary lecturers and teachers on various subjects. They were appointed temporary lecturers by the Vice Chancellor by virtue of section 20A of the University of Rajasthan Act, 1946. Section 4 of the Rajasthan Universities Teachers and Officers (Special Conditions of Service) Act, 1974 hereinafter referred to as 1974 University Act provides for regular selection by Selection Committees. Section 3 of the 1974 Act provides that no stop gap or part time arrangement can be made for more than six months. The temporary appointments of lecturers by the Vice Chancellor cannot be made for more than one academic year. Further sub section (1) of section 3 of the said Act provides that notwithstanding anything contained in the relevant law as from the commencement of the said Act, no teacher or officer in any University in Rajasthan should be appointed except on the recommendation of the Selection Committee constituted under section 4. Section 4 of the Act provided for the constitution of the Selection Committee for selection of lecturers and officers in the University, and dealt with certain other aspects and section 5 provides for the procedure to be followed by the Selection Committee. The other provisions of the said Act are not necessary to be referred to. It appears that for along time, indeed since the inception of the University, there have not been regular selections and appointments of lecturers in the University and as such the teachers ' organisations were pressing for absorption on substantive posts of temporary lecturers who were working for long years. It is not necessary to deal in detail on this position, One Shri Y.K. Tiwari filed a writ petition before the Rajasthan High Court. The case was disposed of by a learned single judge of the Rajasthan High Court on 30th August, 1978 being Civil Writ Petition No. 446 of 1978 Yogendra Kumar Tiwari vs University of Rajasthan and Others. The petitioner in that case was appointed as a lecturer in Law on temporary basis after being selected by the Selection Committee by an earlier order dated 10th of January, 1975. The said petitioner had worked upto 19th June, 1975 but he was allowed his salary upto 29th May, 1975 as his term was not extended there after. He was not allowed any salary for vacation also as he had 249 not completed six months ' service on the last day of the session. The petitioner was reappointed as a lecturer on a temporary basis by an order dated 13th September, 1975. As mentioned hereinbefore, there was long standing grievance of the temporary lecturers and therefore the Government of Rajasthan promulgated The Rajasthan Universities Teachers (Absorption of Temporary Lecturers) Ordinance, 1978 which is hereinafter referred to as the Ordinance of 1978. It was the case of the petitioner that he was eligible for screening. It was further contended that the previous Vice Chancellor before handing over charge of his office had passed an order dated 2nd July, 1977 condoning the break in service of about 25 temporary lecturers in University belonging to the various departments including the faculty of law Para or clause 3 of the said Ordinance of 1978 had an English version as well as Hindi version. In view of the fact that certain controversy is there, it is necessary to set out both these versions. Hindi version written in Roman script reads as follows: "Samast asthai pradhyapko ke sambandh me jo is roop me 25 June, 1975 ko ya usse purve niyukat kiya gaye the aur jo Rajasthan Vishvavidhyalay Adhyapak (Asthai Pradhyapko Ka Amelan) Adhyadesh, 1978 (1978 ka Adhyadesh S 5) ke prarambh ke samaya is roop me karye kar raha hein, unki apni apni asthai niyukatiyo ki tarikho ko lagoo susangat vidhi ke adhin sambandhit vishvavidhyalaya dwara vihit nuntam ahartaon ko sammilit karte hue patrta ki sharto ki unke dwara purti ke adhyadhin aur sambandhit vibhag me pradhyapko ki adhishthai riktiyon ki uplabhyata ki bhi adhyadhin rehte hue, dhara 4 ke anhin gathit anuveekshan samiti ki sifarish per unke amelan aur adhishthai niyukti per sambandhit vishvidhyalay dwara vichar kiya jayega." (underlined by us) English version of the Ordinance reads as follows : "All temporary lecturers as were appointed as such on or before the 25th day of June, 1975 and are continuing as such at the commencement of the Rajasthan Universities Teachers (Absorption of Temporary Lecturers) Ordinance, 1978 (Ordinance No. 5 of 1978) shall be considered by the University concerned for their absorption and substantive appointment on the recommendation of the Screening 250 Committee constituted under section 4 subject to their fulfilling the conditions of eligibility including minimum qualifications prescribed by the University concerned under the relevant law as applicable on the respective dates of their temporary appointments and subject also to the avail ability of substantive vacancies of lecturers in the department concerned. " (underlined by us) The learned single judge in his judgment out of which appeals were taken to the Division Bench and from which appeals arise came to the conclusion that (i) the judgment in Tiwari 's case had become final as no appeal had been preferred therefrom and (ii) clause 3 of the 1978 Ordinance means that in order to be eligible for screening for absorption a lecturer must be in the appointment of the University any time or for any period before 25.6.1975 and then again she or he must be a temporary teacher on 12.6.1978 even though in between he or she might not have been at all in service. The learned judge found that if Hindi version of clause 3 be given effect to then, to be eligible one must have been appointed before 25th June, 1975 and must have been in the employment as such at the commencement of the Ordinance In the English version of this Ordinance, the words used are "and are continuing. " This, according to the learned judge, was not the correct translation of the Hindi version and according to his reading, instead of the words used as "and are continuing as such", words such as "and are continuously in service or have been continuously in service" should have been used if continuous employment from prior to 25th June, 1975 to the 12th of June, 1978 was required. The learned judge came to the conclusion that in the Hindi version of the Ordinance, only two conditions were required to be fulfilled for absorption i.e. appointment before 25th June, 1975 and continuing as such at the time of the commencement of this Ordinance i e. 12th June, 1978. Taking that in view, the learned judge made the rule absolute and directed the respondents to appoint the petitioner to his substantive post as the screening had already been done. This decision was not appealed from and it has been contended on behalf of the appellants before us that 106 lecturers who were working temporarily have all become permanent. On 18th of April, 1978 the Ordinance was re placed by an Act namely The Rajasthan Universities Teachers (Absorption of Temporary Lecturers) Act, 1979 in which identical 251 language was used. It was contended that interpretation given in Tiwari 's case was accepted by the legislature as correct. We shall deal with this contention later. But the fact that there was no appeal preferred by the State from judgment in Tiwari 's case might be that the judgment was delivered by the learned single judge on 30th August, 1978 and the Ordinance expired on 31st August, 1978. On 18th of April, 1979 however the Ordinance was replaced by 1979 Act. So far as the present appeals before us are concerned, the following questions fall for our consideration: (1) whether, fixing of the date here namely 25.6.1975 which happens to be the date on which emergency was clamped, for considering the lecturers of the University as eligible for screening under section 3 of the Rajasthan Universities Teachers (Absorption of temporary Lecturers,) Act, 1979 makes the Act invalid on the ground of differentiation between pre emergency and post emergency appointments, in other words whether the date 25th June, 1975 when the emergency was clamped on the country had any nexus with the purpose of this Act ? (2) what is true meaning of the expression used in section 3 of the Act ? The short facts are that there were irregular appointments in the Rajasthan University as lecturers for a very long time. In other words, lecturers had been temporarily appointed and continued from year to year but there were no rules for their absorption into permanent cadre. Furthermore it is undisputed that the services of the lecturers were terminated from time to time before vacation and they were reappointed so as to deprive them of the continuity of service which would have entitled them to permanent absorption or regularisation of their services. The Rajasthan Universities ' Teachers and Officers (Special Conditions of Service) Act, 1974 hereinafter referred to as the 1974 Act had provided elaborate procedure for recruitment of teachers and officers in the universities. But no selections had been made on the basis of that Act and all appointments were made on temporary basis. In 1978 as noted before the Ordinance of 1978 was promulgated with the object to provide for the absorption of temporary 252 lecturers of long standing working in the universities of Rajasthan. According to the University only those who had been appointed before 25th June, 1975 and continued to be in service on the date of the coming into operation of the Ordinance i.e. 12th June, 1978 were eligible. As the practice of the University, it was alleged, was to break the service, one Tiwari moved the High Court and the decision of the High Court and the basis of the said decision have been set out hereinbefore The learned single judge in this case on examination of the materials came to the conclusion that the original petitioners, the appellants herein had succeeded in establishing the fact that the date of 25th June, 19 5 was arbitrarily fixed which had no nexus with the object or the purpose of the said Act. Therefore he made the rules absolute. The learned single judge came to the conclusion that under the said Ordinance and under the said Act, the date of 25th June, 1975 offended Articles 14 and 16 of the Constitution. The learned single judge had dealt in his judgment with the petition of Dr. Rukmani. He has set out the facts in detail It is not necessary to set these out in detail but briefly these are: She passed her M.A. in Hindi in 1969, she did her Ph D. in Hindi in 1973 from the University of Rajasthan. On 28th June, 1976 she was appointed tutor in Hindi on a temporary basis for a period of three months in the University of Rajasthan. She was permitted to work as tutor on account of various extensions and ultimately she became lecturer. A Selection Committee of the University selected her for lecturer. She was appointed as such with effect from 9th October. Her services were terminated with effect from 5th August, 1979 by an order of the Vice Chancellor. The screening done as per order of the High Court in Tiwari 's case resulted in absorption of about 106 lecturers who were working temporarily. Orders to this effect were issued on 17th August, 1978. Since the present appellants being the petitioners before the High Court were not appointed as lecturers on or before 25th June, 1975, they were treated as ineligible for being screened under the provisions of the Ordinance of 1978. It may be mentioned that some of them appeared in the selection subsequently and were found eligible except two of them, who have been absorbed as lecturers. The said Ordinance of 1978 as mentioned hereinbefore expired on 31st August, 1978 and a Bill was introduced and which after having undergone some amendments became the Act 253 Of 1979 and is known as Rajasthan Universities Teachers (Absorption of Temporary Lecturers) Act, 1979 (hereinafter referred to as the Act of 1979). Having received the assent of the Governor on 17th April, 1979 it was published in the Rajasthan Gazette on 18th April, 1979. The main alteration and amendment was that whereas the entire process of screening of appointment had to be finished by 31st August, 1978, the time was thereafter extended till 31st August, 1979. Dr. Rukmani and others applied in pursuance of the advertisement issued by the University. The Selection Committee held the interviews on 16th and 17th July, 1979. She was considered by the Selection Committee. The Selection Committee did not select the said petitioner and she was accordingly rejected by the Selection Committee. Dr. Rukmani had challenged the Ordinance of 1978 and the Act of 1979 on the one hand and also the Selection Committee 's decision by which she was assessed on the other and the respondents were selected under the Act of 1974. The point that was canvassed mainly on behalf of the petitioners before the learned single judge related to the validity of the Ordinance of 1978 and the Act of 1979, since both the Ordinance as well as the Act had got common feature of making a teacher eligible for consideration by the Screening Committee, only if he or she was in the service of the University on or before 25th June. 1975 and further that he or she was also in the service of the University on 12th June, 1978, the date when the Ordinance became effective by publication in the Gazette. Section 3 of the Act of 1979 reads as follows: "3. Substantive appointment of temporary lecturers. All temporary lecturers as were appointed as such on or before the 25th day of June, 1975 and were continuing as such at the commencement of the Rajasthan Universities Teachers (Absorption of Temporary Lecturers) Ordinance, 1978(Ordinance No. 5 of 1978) shall be considered by the University concerned for their absorption and substantive appointment on the recommendation of the Screening Committee constituted under section 4 or section 5, as case may be subject to their fulfilling the condition of eligibility including minimum qualifications prescribed by the University concerned under the relevant law as applicable on the 254 respective dates of their temporary appointments and subject also to the availability of substantive vacancies of lecturers in the department concerned. " Sections 5 and 6 were as follows: "5 Re Screening.(1) Notwithstanding any thing contained in section 7 or any other provision of the Rajasthan Universities Teachers (Absorption of Temporary Lecturers) Ordinance, 1978 (Ordinance No. 5 of 1978), the services of temporary lecturer, who was considered for substantive appointment by a Screening Committee but was not found suitable, shall be deemed not have terminated and he shall continue to be a temporary lecturer till he is again considered for substantive appointment under section 3 after his rescreening under sub section (2) of this section. (2) A temporary lecturer who was considered for substantive appointment by the Screening Committee referred to in section 4, but was not found suitable shall be again considered by the Screening Committee reconstituted in the same manner as is provided in that section. Appointment to be under the Act No. 18 of 1974. The lectures appointed to the substantive posts in pursuance of the provisions of the Rajasthan Universities Teachers (Absorption of Temporary Lectures) Ordinance, 1978 (Ordinance No. 5 of 1978) or of this Act shall be deemed to have been appointed under the provisions of the Rajasthan Universities Teachers and Officers (Special Conditions of Service) Act, 1974 (Act No. 18 of 1974). " Section 8 provides for the termination of the services of the temporary lecturers not substantively appointed and stated that the services of a temporary lecturer who was considered for substantive appointment under sections 3, 4 and 5 but was not substantively appointed on or before the 31st day of August, 1979 would, stand terminated on the expiry of that day. The learned single judge was of the view that the Act had application to all the temporary lecturers who were working in the various universities in Rajasthan on the relevant dates and unless 255 they were selected by the screening committee under the said Act, their services were to be terminated by 31st August, 1978. The object of the Act, according to the learned judge, was to regularise the services of those who were found suitable after screening and to fulfil the conditions of section 3 and then terminate the services of all other temporary teachers on expiry of 31st August, 1978. The main controversy raised before the learned single judge of the High Court related to the fixation of the two dates namely 25th June, 1975 and secondly the date of the commencement of the Ordinance namely 12th June. But what was pressed was about the validity of the date fixed as 25th June, 1975 as the date on or before which the teacher should have been functioning as a teacher in a particular University. Was this date arbitrary ? It is stated by the learned judge that the court enquired from the Advocate General who appeared on behalf of the State and from the learned counsel of the Rajasthan University as to what had prompted the fixing of the date as 25th June, 1975. It may be mentioned as it is well known that 25th June, 1975 was the date on which last emergency was introduced in the country. The learned Advocate General had submitted before the learned single judge that it was at the instance of the Rajasthan University and the Vice Chancellor that The date was so selected. The standing counsel, the learned judge recorded, took the stand that so far as the University was concerned, it had never suggested the above date and he had got no reason to justify the fixing of that date. The learned judge summoned the secretariat file. It was revealed that the date was fixed precisely on account of the suggestion of the Vice Chancellor of the Rajasthan University. The learned judge extracted from a portion of a letter dated 30th January, 1978 from the file of the University which reads as follows: "It is proposed that all the temporary lecturers appointed on or before 25.6. 1975 be screened by a Screening Committee appointed by the University concerned and on the recommendation of screening committee they be absorbed subject of course to the availability of the vacancies in the department and the candidate fulfilling the prescribed qualifications. 25th day of June, 1975 has been suggested 256 as crucial date taking into account the fact that we could take care of all appointments made before the national emergency which was clamped with effect from 25.6.1975. " The two drafts of the Ordinance which were sent with the letter also contained the alteration in the date which had been changed from 1st day of September, 1973 to 25th June, 1975. This was also noted by the learned single judge. It was submitted before the learned single judge that certain representations were made by the University teachers and their associations to change the date from 1973 to 1975 and to substantiate that allegation, the above file was placed before the Court. However, the recommendations contained in the file, according to the learned Single judge, nowhere contained 25th June, 1975 as the date of the Ordinance. In their representations there was a demand that the earlier Government decision to fix the date of eligibility as 1st of September, 1973 should be altered to a date so as to cover cases of all other lecturers who had been appointed later on also. It is evident, therefore, in view OF the history of appointment of temporary lecturers, that the intention was to regularise the appointments taking into consideration certain tenure of experience or office into consideration, It was initially suggested that 1973 should be taken as the date to begin with i.e. who should be on the roll of lecturers on that date in 1973 but due to representations on behalf of the associations of teachers so as to include subsequent appointees, it was changed. Why this particular date was chosen, there is no specific answer but there is a letter from the Vice Chancellor which indicated that such date should be taken, because 25th June, 1975 was the date of emergency, that date should be taken as he said ' we should take care of all appointments before the national emergency". In order to appreciate the problem of regularisation, the learned single judge noted that the University of Rajasthan had been adopting a practice of appointing temporary lecturers for a fixed period and after a gap to reappoint. It had created a controversy and several teachers were found ineligible on account of this break in service and this had led to the earlier writ petition which we have mentioned hereinbefore. The earlier writ petition (Tiwari 's) had interpreted clause (3) now section 3 of the Act to mean that continuity of service between 25.6.1975 to 12.6.1978 was not necessary and all that was required was that one must be in service on or before 25.6.1975 and then 257 again on 12 6.1978 This is a point on which we would have to express our opinion as to whether the learned single judge was correct in his interpretation. On the basis of the interpretation of section 3 of the Act as made by Tiwari 's case (supra) by which the learned single judge felt himself bound and with which the learned single judge agreed, he accordingly made the rule absolute The learned single judge was of the opinion that a clear differentiation had been made between pre emergency and post emergency appointees of teachers and there was no basis or nexus for such differentiation with the object of the Act and such differentiation amounted to discrimination and violated Articles 14 and 16 of the Constitution. The learned single <: judge also struck down the consequential part of section 6 and 7 of the Act as mentioned hereinbefore. The universities of Rajasthan preferred appeals against the judgment and order of the learned single judge. The State Government did not. The Division Bench was unable to accept the interpretation of section 3 of the Act as made by the learned single judge and was of the opinion that what was required was continuous employment from prior to 25th June, 1975 to 12th June, 1978 to be eligible for screening for absorption and the Division Bench was of the view that 25th June, 1975 was chosen such as any other date and there was no differentiation between pre emergency and post emergency appointees for absorption as lecturers. The Division Bench therefore set aside the decision of the learned single judge. Being aggrieved by the said decision, the original petitioners have preferred these appeals by special leave to this Court. As mentioned hereinbefore two points require consideration by us (i) what is the true meaning of section 3 of the Act of 1979 and (ii) whether by choice of the date of 25th June, 1975, an invidious distinction has been made between pre emergency appointees and post emergency appointees, which has no nexus with the purpose of the Act and as such the Act is violative of Articles 14 and 16 of the Constitution. As mentioned hereinbefore, the learned single judge of the Rajasthan High Court in these appeals had relied heavily on the interpretation made in Y. K Tiwari 's case (supra) of clause (3) of 1978 Ordinance. Before us also in these appeals this was reiterated. 258 It was contended that that was the only possible construction of clause (3) of 1978 Ordinance and necessarily of section 3 of 1979 Act. We shall presently deal with this contention. It was further contended that this clause (3) of 1978 Ordinance having received judicial interpretation and when the legislature enacted the 1979 Act, the legislature had before it this interpretation and when a particular form of legislative enactment had received authoritative interpretation whether by judicial decision or by a long course of practice is again adopted in framing of a later statute, it is sound rule of construction to hold that the words so adopted were intended by the legislature to bear the meaning which had been so put upon them. (See Craies on Statute Law, Seventh Edition p. 139). This argument, however, cannot in this case be accepted. As we have noted before, the fact that there was no appeal perferred from the learned single judge 's decision in Y.K Tiwari 's case is of not much significance in the facts and circumstances of this case because the Ordinance which was the subject matter of interpretation by the judgment expired within two days of the delivery of the judgment and perhaps on this ground it was not thought necessary to pursue this matter. Secondly, the new Act came very soon thereafter within a period of about six months. Therefore it could not be said that there was any long practice or of any judicial interpretation of long standing, Indeed this aforesaid rule of interpretation which we have noted hereinbefore should be used in a careful manner It was observed by Lord Scarman in the case of R vs Chard (1984 A.C. p. 295) that the theory which has been noted hereinbefore was not a canon of construction of absolute obligation but only a presumption in the circumstances to be taken in judicial interpretation. This proposition, according to Lord Scarman, is well settled. In the aforesaid view of the matter, we are of the opinion that the interpretation of clause (3) of the Ordinance of 1978 in Tiwari 's case could not in the facts and circumstances be treated to be such an authoritative pronouncement which will bind the courts in subsequent decisions in the interpretation of an Act which was passed soon thereafter, if on a proper construction of the subsequent enactment, it appears that the expression had not been correctly interpreted. We have noted the Hindi version of clause (3) as well as the English version. The English version presents no difficulty namely those who are appointed before 25.6.1975 and "are continuing" on the date when the Ordinance came into effect i.e. 12.6.1978. 259 So therefore "were continuing as such . " in the Act must mean that to be eligible for absorption these temporary lecturers should have been in continuous employment from a date prior to 25.6.1975 to the date of the commencement of the Ordinance of 1978 i.e. 12.6.1978. The object of this legislation was to provide for absorption of temporary lecturers of long standing. So therefore experience and continuous employment were necessary ingredients. The Hindi version of the Ordinance used the expression "ke pratambh ke samaya is roop me karya kar rahe hein" is capable of meaning "and are continuing" to work as such at the time of the commencement of the Ordinance. Keeping the background of the purpose of the Act in view that would be the proper construction and if that is the proper construction which is in consonance with the English version of the Ordinance and the Act as well as with the object of the Act then in our opinion the Act and the Ordinance should be construed to mean that only those would be eligible for screening who were appointed prior to 25.6.1975 and were continuing at the time of the commencement of the Ordinance i e. 12.6.1978 i.e. approximately about three years. If that is the correct reading, then we are unable to accept the criticism that those who were for a short period appointed prior to 25.6.1975 then again with interruption were working only at the time of the commencement of the Ordinance i.e. 12.6.1978 would also be eligible. In other words people with very short experience would be eligible for absorption. That cannot be the purpose of the Act. It cannot be so read reasonably. Therefore on a proper construction it means that all temporary lecturers who were appointed as such on or before 25.6.1975 and were continuing as such at the commencement of the Ordinance shall be considered by the University for screening for absorption. The expression "were continuing is significant. This is in consonance with the object of the Act to ensure continuity of experience and service as one of the factors for regularising the appointment of the temporary lecturers. For regularising the appointment of temporary lecturers, certain continuous experience is necessary. If a legislature considers a particular period of experience to be necessary, the wisdom of such a decision is not subject to judicial review. Keeping the aforesaid reasonable meaning of clause (3) of the Ordinance and section 3 of the Act in view, we are of the opinion that the criterion fixed for screening for absorption was not an irrational criterion not having any nexus with the purpose of the Act Therefore, the criticism that 260 a teacher who was working even for two or three months only before 25.6.1975 and then with long interruptions was in employment of the University at the time of the commencement of the Ordinance would be eligible but a teacher who had worked continuously from 26.6.1975 i.e. after the date fixed i.e. 25th June, 1975 for three years would be ineligible and as such that will be discrimination against long experience, cannot be accepted. Such a construction would be an unreasonable construction unwarranted by the language used in the provisions concerned. It is well settled that if a particular period of experience is fixed for screening or t`or absorption, it is within the wisdom of the legislature, and what period should be sufficient for a particular job or a particular employment is not subject to judicial review. We need not refer to a large number of decisions on this point. Another contention was urged before us that if it was held that the proper interpretation of section 3 of the Act of 1979 is that in order to be eligible for screening for absorption one should be appointed before the 25th June, 1975 and continued to be a teacher on the day of the coming into operation of the Ordinance i.e. 12.6.1978 i.e. continuously for a period of about three years then the Act cannot apply to anyone. It was submitted that in Rajasthan universities there was the practice to keep temporary teachers with breaks and nobody could continuously hold the post for a continuous period of three years indeed not more than six months. It was urged that the practice prevalent in the universities was to break the service of the temporary lecturers and not to allow them continuously to work. The proper interpretation would be that these breaks i.e. a break for a month or so during vacation should be considered as 'functional gaps ' and temporary teachers who had functional gaps but were in fact in continuous service should be treated for all practical purposes to be in continuous service. It was submitted on behalf of the universities as well as the State Government before us that the universities as well as the State Government had always taken the stand that continuous service was covered by the Act and continuous service included those temporary teachers who had 'functional gaps ' but were in fact in continuous service. Looked at from that point of view there was no question of the Act not being of any use. It was further submitted that none of the respondents who had been absorbed had that qualification If that is so, the appointments may be bad and these facts may be looked into if appropriate 261 applications are made by the appellants and others. Improper application of law in certain cases does not make the law b ad per se. Useless law similarly is not always arbitrary law. Next comes the question whether the choice of 25th June, 1975 as the date prior to which temporary teachers must have been in employment to be eligible for screening is bad as such. If 25th June, 1975 was taken in order to differentiate between pre emergency and post emergency appointees for consideration for absorption then there cannot be any doubt that such a differentiation would amount to an arbitrary discrimination. Because the fact whether one was a pre emergency appointee and another a post emergency appointee was wholly irrelevant to the object of the Act and the Ordinance i.e. absorption of temporary lecturers of long standing working in the university. Therefore to the question of absorption of temporary lecturers of long standing, imposition of emergency in the country and appointment prior or subsequent thereto is wholly irrelevant and has no nexus. Differentiation on a ground which is irrelevant amounts to discrimination. This is well settled by numerous decisions of this Court. It is not necessary to refer to these decisions. It is sufficient if we mention the decision of this Court In Re The Special Courts Bill. 1978(1) where at page 534 the learned Chief Justice inter alia laid down the following principles to judge validity under Article 14 of the Constitution: 1. The first part of article 14, which was adopted from the Irish Constitution, is a declaration of equality of the civil rights of all persons within the territories of India. It enshrines a basic principle of republicanism. The second part, which is a corollary of the first and is based on the last clause of the first section of the Fourteenth Amendment of the American Constitution, enjoins that equal protection shall be secured to all such persons in the enjoyment of their rights and liberties without discrimination of favouritism. It is a pledge of the protection of equal laws, that is, laws that operate alike on all persons under like circumstances. The State, in the exercise of its governmental power, has of necessity to make laws operating differently on (1) 262 different groups or classes of persons within its territory to attain particular ends in giving effect to its policies, and it must possess for that purpose large powers of distinguishing and classifying persons or things to be subjected to such laws. The Constitutional command to the State to afford equal protection of its laws sets a goal not attainable by the invention and application of a precise formula. There fore, classification need not be constituted by an exact or scientific exclusion or inclusion of persons or things. The Courts should not insist on delusive exactness or apply doctrinaire tests for determining the validity of classification in any given case. Classification is justified if it is not palpably arbitrary. The principle underlying the guarantee of article 14 is not that the same rules of law should be applicable to all persons within the Indian territory or that the same remedies should be made available to them irrespective of differences of circumstances. It only means that all persons similarly circumstanced shall be treated alike both in privileges conferred and liabilities imposed. Equal laws would have to be applied to all in the same situation, and there should be no discrimination between one person and another if as regards the subject matter of the legislation their position is substantially the same. By the process of classification, the State has the power of determining who should be regarded as a class for purposes of legislation and in relation to a law enacted on a particular subject. This power, no doubt, in some degree is likely to produce some inequality; but if a law deals with the liberties of a number of well defined classes, it is not open to the charge of denial or equal protection on the ground that it has no application to other persons. Classification thus means segregation classes which have a systematic relation, usually found in common properties and characteristics. It postulates a rational basis and does not mean herding together of certain persons and classes arbitrarily. 263 6. The law can make and set apart the classes according to the needs and exigencies of the society and as suggested by experience. It can recognise even degree of evil, but the classification should never be arbitrary, artificial or evasive. The classification must not be arbitrary but must be rational that is to say, it must not only be based on some qualities or characteristics which are to be found in all the persons grouped together and not in others who are let out but those qualities or characteristics must have a reasonable relation to the object of the legislation. In order to pass the test, two conditions must be fulfilled, namely, (1) that the classification must be founded on an intelligible differentia which distinguishes those that are grouped together from others and. (2) that differentia must have a rational relation to the object sought to be achieved by the Act. " In support of the contention that 25th June, 1975 was chosen because of the emergency. reliance was placed on certain communications from the Vice Chancellor which have been noticed by the learned single judge. The learned single judge came to the conclusion that was the basis i.e to differentiate between pre and post emergency appointees. The Division Bench did not accept this view. We are in agreement with the views of the Division Bench. It appears to us that the primary object of the Ordinance as well as of the Act was to provide for the absorption and regularisation of temporary lecturers of long standing in the universities in Rajasthan. What was intended was that the temporary teachers of long standing should be screened and 25th June, 1975 was taken r because it was as convenient a date as any other. While interpreting the provisions of any Act, what is necessity is the intention of the, legislature and that has to be found out from the language used, it is not the view of the Vice Chancellor or of an officer or authority who might or might not have put a note to the Bill. Was there anything to spell out the intention of the legislature in fixing a particular date? It Is well settled that speeches of the Members of the House could at best be indicative of the subjective intention or the speaker but would not reflect the inarticulate mental processes 264 lying behind the majority of those who voted which carried the bill to become an Act. The objective must be seen. The objective was to fix some tenure to make temporary teachers eligible for screening for absorption. In this connection reference may be made to the observations of this Court in Gopalan vs State of Madras. (1) The same view was also reiterated in the case of (2) State of Travancore Cochin vs Bombay Company Limited and State of West Bengal vs Union of India.(3) It appears to us that according to the statement of objects and reasons of the Ordinance and bearing in mind the preamble of the Act, the main object was to make a specific provision for the selection of teachers and officers in the universities which had not been done for a long time. Temporary appointments against vacant posts had been made by the universities and such posts had been continuing in some cases for ten years. The preamble to the Act of 1979 is a key to unfold the intention of the legislature to make this law. It lays down that the Act was to provide for the absorption of temporary lecturers of long standing working in the universities of Rajasthan. The objects and reasons of the Ordinance of 1978 read as follows: "An Ordinance to provide for the absorption of temporary lecturers of long standing working in the Universities in Rajasthan. In the Rajasthan Universities Teachers and Officers (Special Conditions of Service) Act, 1974 (Rajasthan Act No. 18 of 1974) specific provisions have been made for the selection of teachers and officers in the Universities. But for one reason or the other, regular selection committees in the Universities should not meet to hold regular selections before and after the commencement of the Act. Therefore, temporary appointments against such vacant posts were made by the Universities. Such appointments have been continuing in some cases for the last ten years with a view to solve this long standing problem, (1) ; (2) ; (3) [1964] 1 S.C.R. 371. 265 it was considered necessary to regularise the appointments through specially constituted Screening Committees Since, the academic session was about to commence and since the Rajasthan Legislative Assembly was not in session and the Governor was satisfied that circumstances existed which rendered it necessary for him to take immediate action, he made and promulgated the Rajasthan University Teachers (Absorption of Temporary Lecturers) Ordinance, 1978 on 8th day of June, 1978. " If the intention of the legislature in fixing 25th June, 1975 in the impugned section of the Act was to make differentiation on the basis of pre emergency and post emergency temporary lecturers then there was no difficulty in agreeing with the view taken by the learned single judge of the Rajasthan High Court and accepting the submissions advanced on behalf of the appellants before us. However, as noted before, the division Bench of the High Court could not spell out such an intention from any of the provisions of the Ordinance as well as the Act. We respectfully agree. The Court can only search for the objective intent of the legislature primarily in the words used in the enactment aided by such historical material as reports of the statutory committees, preamble etc. It was laid down in the case of Stale of West Bengal vs Union of India (supra) that a statute, as passed by the Parliament, is the expression of the collective intention of the legislature as a whole. It may be borne in mind that in this case there was no particular point of view in mind of the University. We have noted the objects and reasons of the Ordinance. The problem, for the solution of which this Ordinance was passed and this Act was enacted, was to regularise the appointments through specially constituted Screening Committees for temporary teachers of long standing. There is a further fact which is important that initially it was proposed to cover the cases of temporary lecturers appointed on or before June, 1973 but representation was made by the temporary lecturers that would deprive many subsequent appointees and therefore the benefit was extended to those temporary teachers who were appointed on or before 25 6 1975. It appears that the intention was that those who had continued from a date prior to 1975 upto June 1978 should get the benefit. Such benefit had to be fixed giving a particular period and from, the mere 266 fact that 25th June, 1975 was fixed which also happens to be the date on which emergency was clamped on the country, it cannot be said that emergency was the nexus. A certain tenure of service for the purpose of absorption was the object to be achieved and this has a rational nexus with the object. The prescription of the date from which the period should begin and the date on which it should end were merely incidental to the purpose. Any date perhaps could have served the purpose which took into consideration long tenure. What was intended by the use of the expression 'appointed on or before 25 6 1975 ' and must have continued until 12 6 1978 being the date of coming into force of the Ordinance indicated that there should have been near about three years experience for being eligible for absorption. The date was a handy date. Handy in the sense it came quickly in the minds of some people. At least there is no evidence that there was any attempt to separate pre emergency appointees and no decision was taken by any appropriate authority and no such evidence is there to make a distinction between pre emergency and post emergency appointees. Being in the employment at the time of coming into operation of the Ordinance was the pre condition that is 12th June, 1978. Naturally, some day anterior to that date had to be indicated to ensure long tenure of experience and 25th June, 1975 was chosen because it was as good a date as any other. It may be borne in mind that wisdom or lack of wisdom in the action of the Government or legislature is not justiciable by court. See in this connection the observations of the U.S. Supreme Court in the case of Metropolis Theater Company vs City of Chicago and Ernest J. Magerstadt.1 To find fault with a law is not to demonstrate its invalidity. There the learned judge Mr. Justice Mckenna observed as follows: "It may seem unjust and oppressive, yet be free from judicial interference. The problems of government are practical ones and may justify, if they do not require, rough recommendations, illogical, it may be, and unscientific. But even such criticism should not be hastily expressed. What is best is not always discernible, the wisdom of any choice may be disputed or condemned. Mere errors of Government (1) 57 Lawyers ' Edition 730. 267 are not subject to our judicial review. It is only its palpably arbitrary exercises which can be declared void. " This passage has been quoted with approval by Chief Justice Chandrachud in Prag Ice & Oil Mills & We must bear in mind that mere errors of Government are not subject to judicial review. What is best is not always discernible. It may be that 25th June, 1975 has some odour to some people. It may be that it revised many attitudes but this is wholly irrelevant. Any other date might have been chosen. A particular period was taken to make a person eligible for being screened for absorption and regularisation and if the beginnings date happens to coincide with particular date about which some people have some memories, the law would not become bad. It seems that would be taking too sensitive a view of human expressions. Great deal of reliance was placed on a five judges ' Bench decision of this Court in the case of D.S. Nakara and Others vs Union of India.(1) There it was found that the Central Government servants on retirement from service were entitled to receive pension under the Central Civil Services (Pension Rules, 1972. Under the earlier pension scheme the pension was related to the average emoluments during 36 months just preceding retirement. On 25th May, 1979, the Government of India, Ministry of Finance issued Office Memorandum whereby the formula for computation of pension was liberalised but made it applicable to government servants who were in service on or after that specified date. By another Memorandum of the Ministry of Defence dated 28th September, 1979, the liberalised pension formula introduced for the government servants governed by the 1972 Rules was extended to the Armed Forces personnel subject to limitations set out in the memorandum with a condition that the new rules of pension would be effective from 1st April, 1979 and might be applicable to all service officers who become/became non effective or on after that date. The liberalised scheme introduced a slab system for computation of pension, raised pension ceiling and provided for average emoluments with reference to last ten months ' service. Consequently, the pensioners who retired prior to the specified date had to earn pension on the average emolu (1) ; at 333. (2) ; 2 S.C.R. 165. 268 ments of 36 months ' salary just preceding the date of retirement. Thus they suffered triple jeopardy viz. lower average emoluments absence of slab system and lower ceiling, and being so aggrieved they filed the writ petitions in this Court contending that the memoranda were in violation of Article 14. Petitioners I and 2 were retired pensioners of the Central Government who had retired prior to the specified date and petitioner 3 was a society registered under the Societies Registration Act, 186(), formed to ventilate the legitimate public problems and consistent with its objective it was espousing the cause of the petitioners all over the country. This Court held that pension was neither a bounty nor a matter of grace depending upon the sweet will of the employer, nor an ex gratia payment. It was a payment for the past service rendered. The most practical raison d 'etre for pension is the enability to provide for one self due to old age It created a vested right and was governed by the statutory rules such as the Central Civil Services (Pension) Rules which were enacted in exercise of power conferred by Articles 309 and 148(5) of the Constitution. The expression 'pensioner ' was generally understood in contradistinction to the one in service. In that case Article 14 was wholly violated inasmuch as the pension rules being statutory in character, the amended rules, since the specified date, accord differential and discriminatory treatment to equals in the matter of commutation of pension. Pensioners being all. equal, no date could be chosen to separate one group getting more benefit than other. If a particular benefit is to be given to all then making a classification between them is discriminatory. Pension was the right of all retired persons. A particular date was chosen by the Government and that date had no nexus with the purpose of the Act i.e. give relief to them. There are some cases where choice of date has not been questioned. For instance Union of India & Anr. vs M/s. Parameswaran Match Works Ltd, (1) wherein by notification dated 21st July, 1967, benefit to a concessional rate of duty was made available if a manufacturers of matches made a declaration that the total clearance of matches from a factory would not exceed 75 million during a financial year. There the date chosen was 21st July, 1967. It was contended before this Court by the Union of India that the (1) ; , 269 concessional rate of duty was intended for small bona fide units who were in the field when the notification dated 4th September, 1967 was issued. The concessional rate of duty was not intended to benefit the large units which had split up into smaller units to earn the concession. There this Court observed at a page 579 as follows: "The choice of a date as a basis for classification cannot always be dubbed as arbitrary even if no particular reason is forthcoming for the choice unless it is shown to be capricious or whimsical in the circumstances. When it is seen that a line or a point there must be and there is no mathematical or logical way of fixing it precisely, the decision of the legislature or its delegate must be accepted unless we can say that it is very wide of the reasonable mark. " But as we have mentioned hereinbefore; Nakara 's case (supra) dealt with the problem of benefit to all pensioners. The choice of the date of 1st April, 1979 had no nexus with the purpose and object of the Act. The facts in the instant case are, however, different. For the regularisation of teachers, experience was the object to be found out. Certain period of experience was necessary for the basis for making the regularisation. The period of experience would be how much and the date of experience should begin from what time are within the legislative wisdom and there is nothing in this case to indicate that the starting point i.e., to be in service on or before 25.6.1975 was an arbitrary choice. Reliance in this connection may also be placed on the case of State of Mysore & Anr. vs S.V. Narayanappa.(1) For the purpose Of the instant case it is not necessary to set out in detail all the facts of that case. The facts of that decision have a ring of familiarity with the facts of the present case. There also choosing a particular date did not make the Act bad for the purpose of regularisation of the appointments in the Mysore Government. Various submissions and some other decisions were placed before us in aid of rival submissions. In the view we have taken as indicated hereinbefore, it is not necessary to refer to these. (1) [1967] 1 S.C.R. 128. 270 For the reasons aforesaid, we are of the opinion that the learned judges of the Division Bench of the Rajasthan High Court were right. The appeals therefore fail and are dismissed. There will be no order as to costs in the facts and circumstances of the case. We are told that except two, all other appellants have already been absorbed. It has also to be borne in mind that in considering whether lecturers are eligible or not those who are functioning since prior to 25.6.1975 until 12.6.1978, functional gaps as we have indicated hereinbefore should be ignored and if possible some arrangements be made where after appropriate screening or selection as the case may be, those who have been functioning as temporary teachers for long period might be absorbed including the appellants, subject to the rules of the University.

The Rajasthan Universities Teachers and Officers (Special Conditions of Service) Act, 1974 provided for an elaborate procedure for recruitment of teachers and officers in the universities but no selection had been made on the basis of that Act and all appointments were made on a temporary basis. Section 3 of the Act provided that no stop gap or part time arrangement can be made for more than six months. The temporary appointments of lecturers by the Vice Chancellor could not be made for more than one academic year. It further provided that notwithstanding anything contained in any other law, no teacher or officer in any University in Rajasthan should be appointed except on the recommendation of the Selection Committee constituted under section 4. For a long time since the inception of the University, there had been no regular selections and appointments of lecturers in the University and the teachers ' organisations were pressing for absorption on substantive posts, of temporary lecturers who were working for long years. The Government of Rajasthan therefore promulgated the Rajasthan Universities Teachers (Absorption of Temporary Lecturers) Ordinance, 1978. Clause 3 of the said Ordinance had an English version as well as a Hindi version. Hindi version in Roman script read as follows: "Samast asthai pradhyapko ke sambandh me jo is roop me 25 June, 1975 ko ya usse purve niyukat kiye gaye the aur jo Rajasthan Vishvavidhyalay Adhyapak (Asthai Pradhyapki Ka Amelan) 244 Adhyadesh, 1978 (1978 ka Adhyadesh section 5) ke prarambh ke samaya is roop me karya kar rahe hein, unki apni, apni. . The English version of the Ordinance reads as follows: "All temporary lecturers as were appointed as such on or before the 25th day of June, 1975 and are continuing as such at the commencement of the Rajasthan Universities Teachers (Absorption of Temporary Lecturers Ordinance, 1978 Ordinance No. 5 of 1978). " On 18th April, 1978 the Ordinance was replaced by an Act namely the Rajasthan Universities Teachers (Absorption of Temporary Lecturers) Act, 1979 in which identical language was used. The appellants in the appeals who were temporary lecturers and teachers, were appointed temporarily by the Vice Chancellor by virtue of section 20A of the Universities of Rajasthan Act, 1946. It was the contention of the appellants in their writ petitions that lecturers had been temporarily appointed and continued from time to time but there were no rules for their absorption into permanent cadre. The services of the lecturers were terminated from time to time before vacation and they were reappointed so as to deprive them of the continuity of service which would have entitled them to Permanent absorption or regularisation of their service. The Single Judge allowed the writ petitions holding that (1) the judgment in Yogendra Kumar Tiwari vs University of Rajasthan and Others had become final as no appeals bad been preferred therefrom, and (2) clause 3 of the 1978 Ordinance means that in order to be eligible for screening for absorption a lecturer must be in the appointment of the University any time or for any period before 25 6 1975 and must be a temporary teacher on 12 6 1978 even though in between he or she might not have been at all in service. The Single Judge followed the interpretation of Section 3 as made in Tiwari 's case and, was of the opinion that a clear differentiation had been made between pre emergency and post emergency appointees of teachers and there was no basis or nexus for such differentiation with the object of the Act and such differentiation amounted to discrimination and violated Articles 14 and 16 of the Constitution. The Single Judge struck down the consequential part of Sections 6 and 7 of the Act. The Universities of Rajasthan preferred appeals against the aforesaid judgment. The State Government did not. The Division Bench was of the opinion that what was required was continuous employment from prior to 25th June, 1975 to 12th June, 1978 to be eligible for screening for absorption and that 25th June, 1975 was chosen such as any other date and there was no differentiation between pre emergency and post emergency appointees for absorption as lecturers. The Division Bench set aside the decision of the Single Judge. 245 In the Appeals to this Court on the question: (i) what is the true meaning of Section 3 of the Act of 1979, and (ii) whether by choice of the date of 25th June, 1975, an invidious distinction has been made between pre emergency and post emergency appointees, which has no nexus with the purpose of the Act, and as such that Act is violative of Articles 14 and 16 of the Constitution. Dismissing the Appeals, ^ HELD: 1. The object of the Rajasthan Universities Teachers (Absorption of Temporary Lecturers) Ordinance, 1978 which was replaced by the Rajasthan Universities Teachers (Absorption of Temporary Lecturers) Act 1979 was to provide for absorption of temporary lecturers of long standing. So therefore experience and continuous employment were necessary ingredients. The Hindi version of the Ordinance used the expression " Ke prarambh ke samaya is roop me karya kar rahe hein" is capable of meaning "and are continuing" to work as such at the time of the commencement of the Ordinance Keeping the background of the purpose of the Act in view that would be the proper construction and if that is the proper construction which is in consonance with the English version of the Ordinance and the Act as well as with the object of the Act, then the Act and the Ordinance should be construed to mean that only those would be eligible for screening who were appointed prior to 25.6.1975 and were continuing at the time of the commencement of the Ordinance i.e. 12.6.1978 i.e. approximately about three years. [259B D] 2. The English version of clause (3) presents no difficulty. Those who are appointed before 25.6.1975 and "are continuing" on the date when the Ordinance came into effect i.e. 12.6.1978. So therefore "were continuing as such. " in the Act must mean that to be eligible for absorption these temporary lecturers should have been in continuous employment from a date prior to 25.6.1975 to the date of the commencement of the Ordinance of 1978 i.e. 12.6.1978. [258H; 259A] 3. The interpretation of clause (3) of the Ordinance of 1978 in Tiwari 's case could not in the facts and circumstances be treated to be such an authoritative pronouncement which will bind the courts in subsequent decisions in the interpretation of an Act which was passed soon thereafter, if on a proper construction of the subsequent enactment, it appears that the expression had not been correctly interpreted. [258G H] The criterion fixed for screening for absorption was not an irrational criteria a criterion not having any nexus with the purpose of the Act. Therefore, the criticism that a teacher who was working even for two or three months only before 25.6.1975 and then with long interruptions was in employment of the University at the time of the commencement of the Ordinance would be eligible but a teacher who had worked continuously from 26.6.1975 i.e. after the date fixed i.e. 25th June, 1975 for three years would be in eligible and as such that will be discrimination against long experience, cannot be accepted. Such a construction would be an unreasonable construction unwarranted by the language used in the provisions concerned. [260A C] 246 5(i) If a particular period of experience is fixed for screening or for absorption, it is within the wisdom of the legislature, and what period should be sufficient for a particular job or a particular employment is not subject to judicial review. [260C] (ii) Improper application of law in certain cases does not make the law had per se. Useless law similarly is not always arbitrary law. [261A] (iii) Wisdom or lack of wisdom in the action of the Government or legislature is not justifiable by court. To find fault with a law is not to demonstrate its invalidity. Mere errors of Government are not subject to judicial review. What is best is not always discernible. Metropolis Theater Company vs City of Chicago and Ernest J. Magerstadt, 57 Lawyers ' Edition 730., Prag Ice & Oil Mills & Anr. V. Union of India, ; at 333. , D.S. Nakara and Others vs Union of India [1983] 2 SCR 305=[1983] 2 SCR 165 referred to. If 25th June, 1975 was taken in order to differentiate between pre emergency and post emergency appointees for consideration for absorption then there cannot be any doubt that such a differentiation would amount to are arbitrary discrimination. Because the fact whether one was pre emergency appointee and another a post emergency was wholly irrelevant to the object of the Act and the Ordinance i.e absorption of temporary lecturers of long standing working in the university. Therefore to the question of absorption of temporary lecturers of long standing imposition of emergency in the country and appointment prior or subsequent thereto is wholly irrelevant and has no nexus. Differentiation on a ground which is irrelevant amounts to discrimination. [261B D] In Re The Special Courts Bill 1978, Gopalan vs State of Madras ; , State of Travencore Cochin vs Bombay Company Limited, [1052] 1112. , State of West Bengal vs Union of India, [1964] l SCR 371, referred to. According to the Statement of Objects and Reasons of the Ordinance and bearing in mind the preamble of the Act, the main object was to make a specific provision for the selection of teachers and officers in the universities which had not been done for a long time. Temporary appointments against vacant posts had been made by the universities and such posts had been continuing in some cases for ten years. The preamble to the Act of 1979 is a key to unfold the intention of the legislature to make this law. It lays down that the Act was to provide for the absorption of temporary lecturers of long standing working in the universities of Rajasthan. [264C D] 8.A certain tenure of service for the purpose of absorption was the object to be achieved and this has a rational nexus with the object. The prescription of the date from which the period should begin and the date on which it should end were merely incidental to the purpose. Any date perhaps could 247 have served the purpose which took into consideration long tenure. What was intended by the use of the expression 'appointed on or before 25.6.1975 ' and must have continued until 12.6.1978 being the date of coming into force of the Ordinance indicated that there should have been near about three years experience for being eligible for absorption. The date was a handy date. Handy in the sense it came quickly in the minds of some people. At least there is no evidence that there was any attempt to separate or penalise pre emergency appointee and no decision was taken by any appropriate authority and no such evidence is there to make a distinction between pre emergency and post emergency appointees. Being in the employment at the time of coming into operation of the Ordinance was the pre condition i.e. 12th June, 1978. Naturally some day anterior to that date had to be indicated to ensure long tenure of experience and 25th June, 1975 was chosen because it was as good a date as any other. [266B D] 9. It may be that 25th June, 1975 has some odour to some people. It may be that it revised many attitudes but this is wholly irrelevant. Any other date might have been chosen. A particular period was taken to make a person eligible for being screened for absorption and regularisation and if the beginning date happens to coincide with a particular date about which some people have some memories, the law would not become bad. That would be taking too sensitive a view of human expressions. [267B C] 10. For the regularisation of teachers, experience was the object to be found out. Certain period of experience was necessary for the basis for making the regularisation. The period of experience would be how much and the date of experience should begin from what time are within the legislative wisdom and there is nothing in this case to indicate that the starting point i.e. to be in service on or before 25.6.1975 was an arbitrary choice, [269D E] State of Mysore & Anr. vs S.V. Narayanappa, [1967] 1 SCR 128, referred to.

Civil Appeal No. 431 of 1957. Appeal by special leave from the judgment and order dated the September 8, 1955, of /the Calcutta High Court in Income tax Reference No. 77 of 1951. C. K. Daphtary, Solicitor General of India, R. Ganapathy Iye r and D. Gupta, for the appellant. N. C. Chatterjee, B. Sen Gupta and D. N. Mukherjee, for the respondent. May 15. The Judgment of the Court was delivered by DAS C.J. This appeal by special leave is directed against the order of the High Court of Calcutta passed or September 8, 1955, on a reference made by the Income Tax Appellate Tribunal under section 66(1) of the Indian Income tax Act whereby the High Court answered the first question referred to it in the negative and the second question in favour of the respondent assessee. The facts leading up to the present appeal are briefly as hereinafter narrated. The respondent was at all material times a Hindu undivided family of which one B. K. Rohatgi was the eldest male member and as such its karta. It appears that in 1930 the said B. K. Rohatgi became interested in a concern called the India Electric Works carried on by Milkhi Ram and other persons none of whom was a member of the assessee family. Evidently it was decided that a Company would be floated, inter alia, for the purpose of acquiring and taking over the said India Electric Works as a going concern. The said B. K. Rohatgi was one of the promoters of that Company. Pursuant to an agreement with the vendors of the business of India Electric Works the said B. K. Rohatgi, as such promoter as aforesaid and on behalf of the said Company then to be formed, took over the said business as a going concern on and from March 1, 1930, and carried on the same since then until December 19, 1930, when the contemplated 323 Company was eventually incorporated under the Indian Companies Act as a private company with limited liability under the name of India Electric Works Ltd. (hereinafter called " the said Company "). Article 132 of the Articles of Association of the said Company provided that the first Managing Director would be the said B. K. Rohatgi or " his assigns or successors in business whether under his name or any other style or firm " and that the said B. K. Rohatgi would continue to be the Managing Director until he would resign or be found guilty of any act of fraud or dishonesty or be removed in the manner thereinafter provided. Article 133 laid down the circumstances in which and the conditions on which the Managing Director might be removed. Article 135 provided for the remuneration of the Managing Director which was fixed at Rs. 6,000 per annum or a commission of 15 per cent. on the net profits of the Company to be computed in the manner therein mentioned. The powers of the Managing Director were enumerated in article 136 under twenty sub heads. Article 138 provided that the Company should " forthwith enter into an agreement under the seal with Mr. Benoy Krishna Rohatgi in terms of the draft which has been approved on behalf of the Company. " For some reason or other, not apparent on the record, it was not till January 31, 1934, that an agreement was actually entered into between the said Company and the said B. K. Rohatgi. The terms and conditions contained in the agreement and the powers and authorities conferred thereby on B. K. Rohatgi were in substance the same as those mentioned in the Articles of Association referred to above. Of the total 950 ordinary shares of Rs. 500 each issued and subscribed, 326 shares stood in the name of the said B. K. Rohatgi, 356 shares in the name of his brother R. K. Rohatgi and 10 shares in the name of one Laxminarain said to be an employee of the assessee family. There is no dispute that prior to the accounting year relevant to the assessment year 1943 44 the Managing Director 's remuneration received by the said B. K. Rohatgi was credited in the books of the 324 Hindu undivided family just as the dividends on the shares held in the names of his brother and of himself had been done. In para. 6 of the Statement of the Case it is stated: "It was not denied by the Assessee that India Electric Works Limited was floated mainly with the funds provided by the Assessee and Mr. Rohatgi made no contribution in this respect. Further, all along its career India Electric Works Limited was financed from time to time by the Assessee Hindu Undivided Family. It was further found that it was for the first time in the year of assessment that the Assessee claimed that the remuneration belonged to Mr. Rohatgi personally. Up to 1942 43 assessment all along both Mr. Rohatgi and the Hindu Undivided Family Assessee in their accounts treated the whole of the remuneration paid to Mr. Rohatgi as the income of the Hindu Undivided Family. " In the accounting year relevant to the assessment. year 1943 44 the Managing Director 's remuneration received by B. K. Rohatgi amounted to Rs. 61,282 and during the 1943 44 assessment proceedings it was claimed that the whole of it was the personal earnings of the said B. K. Rohatgi and should not be added to the income of the Hindu undivided family which is the respondent before us. The Income tax Officer rejected this claim. On appeal to the Appellate Assistant Commissioner, the latter concurred with the view of the Income tax Officer. The assessee went up on further appeal to the Income tax Appellate Tribunal. The Tribunal struck a middle course. It held that Rs. 61,282 was made up of two kinds of remuneration, namely, (1) remuneration for services rendered by the assessee family in the floatation and financing of the said Company and (2) remuneration for the personal services of the said B. K. Rohatgi. The Tribunal, therefore, apportioned the amount received between the two categories of remuneration and allocated Rs. 30,000 computed at the rate of Rs. 2,500 per month to the personal services of the said B. K. Rohatgi and the 325 rest to the remuneration due to the services of the assessee family. On the application of the respondent assessee the Tribunal made a reference under section 66(1) of the Indian Income tax Act and the questions referred were as follows : " (1) Whether on the facts and in the circumstances of this case, the Income tax Appellate Tribunal was justified in apportioning the sum of Rs. 61,282 into two parts assessing one in the hands of the Assessee Hindu undivided family and the other in the hands of Mr. B. K. Rohatgi? (2) If the answer to the above question be in the negative, whether the assessment of the said sum of Rs. 61,282 should be on Mr. Rohatgi personally or on the Assessee Hindu undivided family?" When the reference came up before the High Court for hearing, the learned judges felt that the statement of case submitted by the Tribunal was inadequate and that it, would not be possible for the Court to answer the questions unless certain other facts were clearly stated. The High Court accordingly directed the Tribunal to submit a further statement of case and to include therein answers to the following questions: " (a) With whose funds were the shares, on the strength of which Mr. Rohatgi has been and is the Managing Director, purchased and to whom do they really belong ? (b) Who has been in enjoyment of the dividend paid on those shares ? (c) In what capacity was Mr. Rohatgi originally appointed to and was holding, at the relevant time, the office of the Managing Director of the India Electric Works Ltd., namely, whether in his personal and individual capacity or otherwise? (d) Besides the qualifying shares, are there any further shares of the Company standing in the name of Mr. Rohatgi and if there, are such shares, with whose funds were such shares acquired and to whom do they really belong ? 326 A further statement of case was accordingly submitted by the Tribunal. The Tribunal concluded its findings and expressed its opinion on the questions specifically as follows: Questions (a), (b) and (d). All the shares in the India Electric Works Limited standing In the name of Mr. B. K. Rohatgi (326 shares) and Mr. R. K. Rohatgi (356 shares) were acquired with funds belonging to the assessee family and they belong to the family and the family has been in enjoyment of the dividends paid on those shares. Besides the 10 qualifying shares there are 316 more shares in the Company standing in the name of Mr. B.K. Rohatgi and those shares also belong to the assessee family. Question (c) The answer is a matter of inference from the facts above stated. The Tribunal 's conclusion was that Mr. B. K. Rohatgi was originally appointed to and was at the relevant time holding the office of the Managing Director of the India Electric Works Limited in his capacity as a member and karta of the assessee family. " Learned counsel appearing before the High Court did not make any attempt to support the Tribunal in its choice of the middle path but conceded that the income was either the income of the family or the personal income of the said B. K. Rohatgi and that there could be no justification for ascribing a portion of it to the remuneration of the said B. K. Rohatgi as an officer of the Company and ascribing the other portion to a return made by the Company to the family for benefits received. The High Court accordingly answered the first question in the negative. As regards the second question, the High Court thought that the case was covered by the decision in the case of Commissioner of Income tax, Madras vs S.N.N. Sankaralinga Iyar (1) and expressed the opinion that the assessment of the said sum of Rs. 61,282 should be on, Mr. Rohatgi personally. Feeling aggrieved by the aforesaid answer, the Commissioner of Income tax applied for and obtained from this Court special leave to appeal to this Court (1) 327 against the order of the High Court. The learned Solicitor General appearing before us in support of this appeal has not challenged the correctness of the answer given by the High Court to the first question and; therefore, we are now concerned only with the correctness of the. answer given by the High Court to the second question. It is now well settled that a Hindu undivided family cannot as such enter into a contract of partnership with another person or persons. The karta of the Hindu undivided family, however, may and frequently does enter into partnership with outsiders on behalf and for the benefit of his joint family. But when he does so, the other members of the family do not, vis a vis the outsiders, become partners in the firm. They cannot interfere in the management of the firm or claim any account of the partnership business or exercise any of the rights of a partner. So far as the outsiders are concerned, it is the karta who alone is and is in law recognised as, the partner. Whether in entering into a partnership with outsiders, the karta acted in his individual capacity and for his own benefit or he did so as representing his joint family and for its benefit is a question of fact. If 'for the purpose of contribution of his, share of the capital in the firm the karta brought in monies out of the till of the Hindu undivided family, then he must be regarded as having entered into the partnership for the benefit of the Hindu undivided family and as between him and the other members of his family he would be accountable for all profits received by him as his share out of the partnership profits and such profits would be assessable as income in the hands of the Hindu undivided family. Reference may be made to the cases of Kaniram Hazarimull vs Commissioner of Income tax, West Bengal( ') and Dhanwatay V. D. vs Commissioner of Income tax, Madhya Pradesh and Bhopal (2) in support of this view. The same principle has been applied to the case of a karta appointed as a Treasurer of a Bank and the remuneration received by him for services rendered as such Treasurer has been treated (1) (2) , 328 as the income of the Hindu undivided family of which he was the karta and was assessed in its hands. The same principle has been extended to the remuneration received by a karta as the managing agent of a Company with limited liability. (See In re Haridas Purshottam (1)). Stone, C.J, with whom Chagla, J., agreed, held that as the managing agency was derived from or acquired with the assistance of the joint family property, that is, the mills in which the assessee as karta was beneficially interested, the income from the managing agency received by the assessee must be treated as the income of the family of which he was the karta. Reference is, however, made to certain decisions in support of the contrary view; but those decisions appear to turn on the facts found to be established in those particular cases. Thus, in Murugappa Chetty vs Commissioner of Income tax, Madras (2) it had not been established either that the managing agency agreement had, in fact, been obtained by the karta for and on behalf of ' the Hindu undivided family or that the income was earned by utilising the joint family property or utilising it to its detriment. The case of R. Hanumanthappa vs Commissioner of Income tax, Madras( ') simply follows Murugappa Chetty 's case( ') and does not carry the matter any further. As will be seen hereafter, to the facts established in the case now before us these two decisions can have no application. It is then stated that the position of a Managing Director stands on a footing different from that of a partner or a managing agent and, therefore, the principles applicable to the income derived by a karta as a partner or managing agent cannot apply to the remuneration received by the karta as the Managing Director of a Company. In the first place it is said that under the Indian Companies Act, a Hindu undivided family cannot by reason of the definition given in section 2 (9 A) be, appointed a managing agent of a Company. In the next place, the office of a managing director, it is urged, involves a personal element and the appointment of a (1) (2) (3)[1952] 22 329 managing director must necessarily be of a particular person for his personal skill and other qualities and therefore, the remuneration received by him must be his personal earnings. Neither of these two considerations appears to us to be tenable. Vis a vis the Company the managing director is undoubtedly the individual person who is appointed as such. The Company is not concerned with the managing direc tor 's Hindu undivided family or the members thereof, just as the outside partners know only the karta in his individual capacity as their partner and are not concerned with his Hindu undivided family or its members. The question whether the amount received by the karta by way of managing director 's remuneration in the one case or as his share of profits in the partnership business in the other case is his personal income or is the income of his Hindu undivided family cannot arise as between the Company and the karta as the managing director or between the outside partners and the karta as a partner. Neither the Company nor the outside partners, as the case may be, is or are interested in such a question. Such question can arise only as between the karta and the members of his family and the answer to the question will depend on whether the remuneration or profit was earned with the help of joint family assets. The case of Sardar Bahaditr Indra Singh vs Commissioner of Income tax, Bihar and Orissa (1) is clearly distinguishable in that it was expressly provided in the Articles of Association of the Company in that case that the remuneration of the managing director would be his personal income. In Commissioner of Income tax, Bihar and Orissa vs Darsanram (2) the finding of fact was that the joint family property had not been spent in earning the managing director 's remuneration which was, therefore, held to be the personal earnings of the karta who had been appointed as the managing director. The case of Commissioner of Income tax, Madras vs section N. N. Sankaralinga Iyer (3) does not help the respondent because of the facts found in that case. (1) (2) (3) 42 330 In that case it was found that the remuneration of the managing director was earned by him in consideration of the services which he rendered to the bank and no part of the family funds had been spent or utilised for acquiring that remuneration except that the necessary shares to acquire the qualification of a managing director were purchased out of the joint family funds. It was said that there was no detriment to the family property in any manner or to any extent, as admittedly the shares earned dividends which were included in the income of the family. Satyanarayana Rao, J., took the view that on the facts of that case it was impossible to infer that the appointment itself was on behalf and for the benefit of the family; or, in other words, that he became the managing director as representing the undivided family. Viswanatha Sastri, J., in a separate but concurring judgment expressed the view that the mere fact that the assessee had a particular quantity of shares as a manager of a joint family did not ipso facto enable him to function as the managing director. His personal qualifications were mainly responsible, in addition to the holding of shares, for his selection and appointment as the managing director of the bank. The remuneration, according to the learned Judge, was really quid pro quo for the work which he did under the contract of service with the bank. The managing directorship, he held, was in fact a contract of service and it is not as if the family represented by the manager was the managing director. It was the individual that was appointed and that was functioning as the managing director. With great respect to the learned judges, it appears to us that they overlooked the principles laid down by the Judicial Committee in Gokul Chand vs Hukam Chand Nath Mal (1) where it was pointed out that there could be no valid distinction between the direct use of the joint family fund and the use which qualified the member to make the gains on his own efforts. The member of the joint family entered into the Indian Civil Service no doubt by reason of his intelligence and other attainments. He certainly entered into a personal agreement with the (1) [1921] L.R. 48 I.A. 162. 331 Secretary of State in Council and he received his salary for rendering his personal service. But all that was made possible by the use of the joint family funds which enabled to him to acquire the necessary qualification and that fact made his earnings part of the joint family properties. That apart, those decisions do not clearly govern the case now before us. What are the facts here ? Here was the Hindu undivided family of which B. K. Rohatgi was the karta. It became interested in the concern then carried on by Milkhi Ram and others under the name of India Electric Works. The karta was one of the promoters of the Company which he floated with a view to take over the India Electric Works as a going concern. In anticipation of the incorporation of that Company the karta of the family took over the concern, carried it on and supplied the finance at all stages out of the joint family funds and the finding is that he never contributed anything out of his separate property, if he had any ' The Articles of Association of the Company provided for the appointment as managing director of the very person who, as the karta of the family, had promoted the Company. The acquistion of the business, the floatation of the Company and appointment of the managing director appear to us to be inseparably linked together. The joint family assets were used for acquiring the concern and for financing it and in lieu of all that detriment to the joint family properties the joint family got not only the shares standing in the names of two members of the family but also, as part and parcel of the same scheme, the managing directorship of the company when incorporated. It is also significant that right up to the accounting year relevant to the assessment year 1943 44 the income was treated as the income of the Hindu undivided family. It is true that there is no question of res judicata but the fact that the remuneration was credited to the family is certainly a fact to be taken into consideration. It appears to us that the case is governed by the principles laid down in Haridas Purshottam 's case (1). The recitals in the agreement also clearly point to the fact of B.K. Rohatgi (1) 332 having been appointed managing director because of his being a promoter of the company and having actually taken over the concern of India Electric Works from Milkhi Ram and others. The finding in this case is that the promotion of the Company and the taking over of the concern and the financing of it were all done with the help of the joint family funds and the said B. K. Rohatgi did not contribute anything out of his personal funds if any. Ill the circumstances, we are clearly of opinion that the managing directors remuneration received by B.K. Rohatgi was, as between him and the Hindu undivided family, the income of the latter and should be assessed in its hands. We, therefore, set aside the answer given by the High Court to the second question and answer the same by saying that the assessment of the whole of the sum of Rs. 61,282 should be on the assessee Hindu undivided family. The result is that this appeal is allowed with costs here and in the Court below.

R was the karta of the Hindu undivided family which became interested in a business concern which was then being carried on by others. With a view to taking over the said business as a going concern, a company was floated with R as one of the promoters. Pursuant to an agreement with the vendors. of the business and in anticipation of the incorporation of the company, R on behalf of the company, took over the concern, carried it on and supplied the finance at all stages out of the joint family funds. On December 19, 1930 the contemplated company was incorporated under the Indian Companies Act as 321 ' a private company with limited liability, in which of the total 950 ordinary shares, R had 326 shares and his brother 356 shares. The Articles of Association of the company provided for the appointment of R as the first managing director of the company. Prior to the accounting year relevant to the assessment year I943 44 the amount received by R as managing director 's remuneration was credited in the books of the Hindu undivided family just as the dividends on the shares held in the names of R and his brother had been done. For the assessment year I943 44 it was claimed that the amount which R received as the managing director 's remuneration in the relevant accounting year was his personal earnings and that it should not be added to the income of the Hindu undivided family, but the Income tax Officer rejected this claim. It was contended for the assessee that under the Indian Companies Act a Hindu undivided family cannot, by reason of the definition given in section 2(9 A) be appointed a managing agent of company and that the office of managing director involves a personal element and the appointment of a managing director must necessarily be of a particular person for his personal skill and other qualities and therefore the remuneration received by him must be his personal earnings. Held, that though vis a vis the company the managing director was undoubtedly the individual person who was appointed as such and the company was not concerned with the managing director 's Hindu undivided family or the members thereof, the question whether the amount received by the karta by way of managing director 's remuneration was his personal income or was the income of the Hindu undivided family arises as between the karta and the members of his family and would depend on whether it was earned with the help of joint family assets. In the present case, on the facts found that the promotion of the company, the taking over of the concern and the financing of it were all done with the help of the joint family funds and that R did not contribute anything out of his personal funds, held that the managing director 's remuneration received by R was, as between him and the Hindu undivided family, the income of the latter and should be assessed in its hands. Kaniram Hazarimal vs Commissioner of Income tax, West Bengal, ; V. D. Dhanwatay vs Commissioner of Income tax, Madhya Pradesh and Bhopal, In re Haridas Purshottam, and Gokul Chand vs Humam Chand Nath Mal, (192I) 48 I.A. 162, relied on. Commissioner of Income tax, Madras vs section N. N. Sankaralinga IYer,l ; Murugappa Chetty vs Commissioner of Income tax, Madras, ; Sardar Bahadur Indra Singh vs Commissioner of Incomc tax, Bihar and Orissa, 41 322 and Commissioner of Income tax, Bihar and Orissa vs Darsaram, , distinguished.

l Appeal No. 9 of 1962. Appeal by special leave from the judgment and order dated August 29, 1961, of the, Railway Rates Tribunal, Madras in Complaint No. 1 of 1960. Veda Vyasa and 1. N. Shroff, for the appellant. Niren De., P. C. Chatterjee and section N. Mukherjee, for the respondents. April 23. The Judgment of the Court was delivered by DAs GUPTA, J. This appeal by special leave arises out of a complaint made by the appellant, the Upper Doab Sugar Mills Ltd., Shamli, to the Railway Rates Tribunal. The complaint as originally made was against the station to station rates on sugarcane on the Shahdara (Delhi) Saharanpur Light Railway imposed by the. respondent, the Railway Company. by their rates Circular No. 8 of 1953 with effect from October 1, 1953. The complaint was that these rates had been and were unreasonable. The Railway Company in their answer to the complaint pointed out that the rates imposed by the rate Circular No. 8 of 1953 had long before the date of the complaint ceased to be in force and that subsequent to the decision of this Court in S.S. Light Railway Co. Ltd. vs Upper Doab Sugar Mills Ltd. (1) a new rate had come into operation from February 10, 1960, under Local Rate Advice No. 2A of 1960. After this the complaint prayed for amendment of his complaint by adding a complaint against this new Advice rate. The prayer was allowed. The complaint as it stands after the amendment made on February 3, 1961, is both against the rates imposed under Local Rates Advice (1) 336 No. 8 of 1953 and also the rates under the now Advice No. 2A of 1960 and is that these rates and charges are all unreasonable. The prayers are: (I ) for a declaration that the rates charged under the Local Rates Advice No. 8 of 1953 and the surcharges were unreasonable from 1 10 1953 to 10 2.1960; (2) a declaration that the rates charged from 10 2 1960 under rate Advice No. 2A of 1960 are also unreasonable; (3) a direction of refund of the excess collected or which may be collected after the date of the amendment of the complaint on the basis of rate Advice No. 2A of 1960 over the reasonable rates that may be fixed by the Tribunal and (4) the fixation of the rates as mentioned in the complaint as reasonable rates from various stations to Shamli. The main contentions of the Railway Company with which we are concerned in the present appeal are: (1) that the Tribunal had no jurisdiction to entertain the complaint as regards the reasonableness of rates prior to the institution of the complaint (2) that the Tribunal had no jurisdiction to grant any refund. These questions are raised in Issues Nos. 6 and 9A and are in these words "6. Has the Tribunal jurisdiction to entertain or try the present complaint regarding reasonableness or otherwise of rates and/or charges prior to the institution of this complaint, or, at any rate, prior to 27 7 1958. 9A. Has this Tribunal jurisdiction to grant a refund. " The Tribunal rightly took up the consideration of these issues first. It held that it had no jurisdiction to entertain or try the complaint as regards the reasonableness or otherwise of rates and charges made prior to the institution of the complaint on 337 May 6, 1960. It also held that it had no jurisdiction to grant any refund. In coming to these conclusions, the Tribunal followed the decision of the Madras High Court in Southern Railways vs The Railway Rates Tribunal (1). It is contended before us in appeal that the Tribunal 's decisions on these questions were wrong. It will be helpful to consider briefly the background in which the Railway Rates Tribunal came into existence. Till the establishment of these Tribunals the actions of the Government of India with regard to the regulations of rates and charges that may be charged by Railway Companies were largely influenced by the policy of laissez faire. The only provision as regards such a regulation was to be found for many years only in the contracts between the Government of India and the Railway Companies. One of the earliest contracts with the Madras Railway Company, dated December 22, 1852, had a provision that the Company could charge only such fares and tolls as might have been approved by the East India Company and that no increase in approved fares etc., could be brought into effect without the previous sanction of the East India Company. In the contracts of most of the companies ' there used to be a provision in the following terms: "The Secretary of State shall from time to time authorise maximum and minimum rates within which the Company shall be entitled to charge the public for services rendered by way of, or in connection with, the conveyance of passengers and goods on the undertaking, and shall prescribe the several classes and descriptions of passengers and goods to which rates shall be respectively (1) A.I.R. 1955 (Madras) 476. 338 applicable." (Srinivasan 's Railway Freight Rates) The maxima were fixed by the Local Governments for the railways within their provinces in 1869 while the Government of India prescribed the maxima for good grains and coal, and fares for the lowest class of passengers only. Statutory provisions for fixation of maxima and minima for rates and charges were first made the year 1939 by the Act 33 of 1939 which introduced section 42 (b) in these words: "The Federal Railway Authority may be general or special order fix maximum and minimum rates for the whole or any part of a railway, other than a minor railway, and prescribe the conditions in which such rates will apply. (2)Any complaint that a railway administra tion is contravening any order issued by the Federal Railway Authority in accordance with the provisions of this section shall be deter mind by that Authority. " Before this however, as a result of the inves tigations made by the Acworth Committee, a Railway Rates Advisory Committee had been established. This Committee was empowered to investigate and make recommendations on: 1. Complaints of "undue preference" section 42(2) of the Indian Railways Act. Complaints that rates are unresonable in themselves. Complaints or disputes in respect of terminals section 46 of the Indian Railways Act. 339 4. The reasonableness or otherwise of any conditions as to packing of articles, specially liable to damage in transit or liable to cause damage to other merchandise; 5. Complaints in respect of conditions as to packing attached to a rate; and 6. Complaints that railways do not fulfll their obligations to provide reasonable facilities under section 42 (3) of the Indian Railways Act. " It is to be noticed that this Committee could only make recommendations and could not make any effective order itself. The Railway Rates Tribunal come into existence as a result of the amendment of the Railways Act of 1890 in 1948 (Act No. 65 of 1948). Section 34 of the Act as amended, provides that there shall be a Tribunal called the Rates Tribunal for the purpose of discharging functions specified in the Chapter. These functions were specified in sections 41 ' and 42, while section 39 empowered the Tribunal to pass interim and final orders. including orders for payment of costs for the purpose of exercising the jurisdiction conferred. The first sub section of section 41 set out a number of matters of which complaints might be made against a railway administration or jointly against two or more railway administrations.and states that such complaints "shall be heard and decided by the Tribunal". The second sub section of section 41 provided that in the case of a complaint under cl. (d) of sub s 1, that is, where the complaint is that a railway administration or rail. way administrations is or are unreasonably refusing to quote a now station to station rate, the Tribunal may fix a now station to station rate. The first sub section of section 42 gave the Tribunal the exclusive 340 power to reclassify any commodity in a higher class but added that such power shall not be exercised except on the application of the Central Government. The third sub section of section 42 provided that the Tribunal as well as the Central Government would have power to re classify any commodity in lower class. In December, 1949, the Indian Railways Act was further amended by the Act No. 56 of 1949. Some changes were then made in section 41 which it is unnecessary to set out. There was amendment again in December, 1957, by Act No. 53 of 1957 by which amongst other changes, a. 41 was changed. As a result of these changes cl. 1 of a. 41 reads thus : "41(1) Any complaint that a railway administ ration (a) is contravening the provisions of section 28, or (b) it charging for the carriage of any com modity between two stations a rate which is unreasonable, or (c) is levying and other charge which is unreasonable shall hear and decide any such complaint in accordance with the provisions of this Chapter. " The second sub section(which was not changed by the 1957 Act) deals with the question of burden of proof in connection with complaints. under el. (a) of the first sub section and also says that in deciding whether a lower charge to any trader or class of traders does amount to undue preference or not the Tribunal will take into consideration whether such lower charge is necessary in 'the interest of the public. The third sub section ruins thus : "In the case of a complaint under el. (b) or cl. (c) of sub section 1 the Tribunal may fix such rate or charge as it considers reasonable: Provided that the rate 341 to be fixed under cl. (b) of sub section I shall be within the limits of the maximum and minimum rates fixed by the Central Government under sub s.1 of section 29." Section 41A which was added by the amending Act of 1957 gives the Tribunal a power to vary or revoke an order made by it on being satisfied on an application made by the Railway Administration that since the order was made there has been a material change in the circumstances on which it was based, but such application cannot be made till the expiry of one year from the date of the order. The old section 42 was substituted by a new section in these words : "The Central Government alone shall have the power to classify or reclassify any commodity, (b) to increase or reduce the level of class rates and other charges. " It will be noticed that this amendment took away the power which the Tribunal formerly had in the matter of classification of commodities. The amendment of section 41 however gave the Tribunal jurisdiction to entertain and consider complaints in respect of standard terminal charges which had been excluded in the old section 41. At the same time it took away the Tribunal 's jurisdiction to entertain any complaint that a Railway Administration has unreasonably placed a commodity in a higher class or that it was unreasonably refusing to quote a new station to station rate which it had under the old cls. (d) and (e). Our first task is now to construe the words of cl. (b) and (e) of the first sub section of section 42. The question is what did the legislature mean by the words "is charging" in clause (b) and "is levying" in cl. (c) ? The use of the present progressive tense is to denote something which is taking place at present. What has already taken place cannot be described by saying that "it is taking place. " Just as one cannot say of a man who has ceased to 342 exist, that he is existing; so also, one cannot say of a charge which has already been made that "it is being made. " of the charge which has already been made a person aggrieved can complain that "the Railway Administration has charged me at this rate." ' It will not be correct to say that 'the Railway Administration is charging me at this rate. " This, it is true, proceeds on the assumption that the words "charging a rate" was used by the legislature in its ordinary meaning of "demanding a price. " This, it is contended on behalf of the appellant, is not however the only sense in which the words "charging a rate" of its senses, it is was demanded in the past". in cl. (c) the words used are can be used; and one "Collecting a price that It is pointed out that "levying a charge" and ",levying" can certainly mean "collecting. " It will be legitimate, argues the learned Counsel, to think that the word #charging" in cl. (b) and the word "levying" in el. (c) were used by the legislature in the same sense. According to him, both these words should be construed widely so as to include ,,collecting a price. " The words "charging" in cl. (b) and " 'levying" in cl. (c) were used in the one and the same sense. We find it impossible to agree however that they were used to include "collecting". It appears to be clear that if the intention of the legislature was to give the Tribunal jurisdiction over complaints in connection with charges already made the legislature would have used the words "has charged and is charging" and would not merely say " 'is charging" Special jurisdiction of such a nature would be given clearly and the very fact that the words ,has charged" have not been used is sufficient ground for thinking that it was not the legislatures intention to give the Tribunal jurisdiction over complaints in 343 connection with charges made in the past. In our opinion, the words ,,is charging" in cl. (b) and ,,is levying" in cl. (c) must be construed to mean ,is demanding a price at the present time for services to be rendered. " The conclusion of the Railway Rates Tribunal that it had no jurisdiction to entertain or try the complaints as regards the reasonab leness or otherwise of rates and charges made prior to the institution of the complaint is therefore correct. When the Tribunal had no jurisdiction to consider the reasonableness or otherwise of any charges made prior to the institution. of the complaint, it follows necessarily that it could have no occasion to order any refund. For, the question of refund could arise only after a decision that the charges made were more than what was reasonable. It is clear however that even in respect of those charges and rates for which the Tribunal had jurisdiction to entertain a complaint the Tribunal had no power to order any refund. It is necessary to consider this question as the prayer for refund as made in the complaint was not only for charges already made but for charges that might be made in future under the rate Advice No. 2A of 1960. On behalf of the appellant it has been urged that it would be inequitable for the Tribunal not to make an order of refund in respect of charges made after the date of the complaint, if it comes to the conclusion that those charges were more than what was reasonable. The question of equity does not however arise. The Tribunal can have no more jurisdiction that what it is given by the Act whichbrings it into existences ; and if on a properconstruction of the words of the statute we findthat the Tribunal was not given any such jurisdiction we cannot clothe it with that jurisdiction on any consideration of convenience or equity or justice. 344 What the Tribunal has to do after a complaint is made is mentioned in section 41 (1) itself. It is said there that the Tribunal shall hear and decide the complaint. The complaint being that something is unreasonable all that the Tribunal has to decide is whether that thing is unreasonable or not. A finding that it is unreasonable does not involve any consideration or decision of what would flow from the finding. In other words, in making the complaint the complainant can ask only for a declaration that the rate or charge is unreasonable and it is only this declaratory relief which the Tribunal has been authorised to give. There is no provision that the Tribunal can also give a consequential relief. The only other thing which the Tribunal is authorised to do in connection with the complaint is to fix "such rate or charge as it consider reasonable". In the absence of anything to indicate to the contrary it is reasonable to think that this fixation can only be prospective, that is, the Tribunal in making this order fixing the reasonable rate or charge will mention a future date for this to come .into operation. Even if it was assumed for the sake of argument that the Tribunal can fix these rates from the date of the complaint that would not give the Tribunal any power to order refund. Mr. Veda Vyasa has argued that the power to order refund flows from section 39 of the Act. Section 39 is in these words : "For the purpose of exercising the jurisdiction conferred on it by this Chapter, the Tribunal may pass such interim and final orders as the circumstances may require, including orders for the payment, subject to the provisions of this Chapter, of costs; and it shall be the duty of the Central Government or the State Government, as the case may be, on whom any obligation is imposed by any such order to carry it out. " Is it neceserly 345 for the Tribunal to make the order for refund at least in respect of the charges made after the date of the complaint in excess of what is held to be reasonlable "for the purpose of exercising the jurisdiction conferred on it?" The utmost that could be said is that the relief for making an order of refund has a connection with the order holding the rates already charged after the date of the institution of the complaint to be unreasonable. It is impossible to say however that such )an order is necessary for the purpose of exercising the jurisdiction conferred that jurisdiction in connection with complaints, being under a. 41, only to arrive at a decision whether a certain rate was reasonable or not and if it was unreasonable to fix a reasonable rate. An order for refund can by no stretch of imagination be considered to be " 'necessary for the purpose of exercising the jurisdiction". Section 39 is therefore of no assistance to the appellant 's contention. It was next urged that unless the Tribunal is held to have power to make an order of refund, s.46 (B) will be meaningless. Section 46 (B) provides that the Tribunal may transmit any order made by a civil court having local jurisdiction and such civil court shall execute the order as if it were a decree. It is obvious that an order for payment of coati; which may be made by the Tribunal could under a. 46 (B) be transmitted to a civil court and executed by a civil court as if it were a decree. Even if the Tribunal can pass no other order, which may require execution, a. 46 (B ) will serve its purpose in connection with the orders for costs. Nor is it necessary for us to speculate as to what other orders made by the Tribunal could require execution by the civil courts. For., such considerations cannot in any way throw any light on the nature of the orders that can be made under a. 39. It is hardly necessary to mention that a. 39 does not 346 confer any jurisdiction; but only provides for means for exercise by that Tribunal the jurisdiction which it has otherwise got under other sections. It is interesting to remember in this connection the words used by the British Parliament in section 196 (3) of the Government of India Act, 1935. The first sub section of section 196 provided for the constitution of the Railway Tribunal and then the third sub section proceeded to say : "It shall be the duty of the Railway Tribunal to exercise such jurisdiction as is conferred on it by this Act, and for that purpose the Tribunal may make such orders, including interim orders, orders varying or discharging a direction or order of the Authority,, orders for the payment of compensation or damages and of costs and orders for the production of docu ments and the attendance of witnesses, as the circumstances of the case may require, and it shall be the duty of the Authority and of every federated state and of every other person or Authority affect ed thereby to give effect to any such order". These important words ,,orders for the payment of compensation or damages" have been omitted from the present section 39. Mr. Veda Vyasa strenuously contended that unless the Tribunals be held to have jurisdiction to order refund, the 'appellant and others in his position would be deprived of their right to obtain relief against unreasonable charges already paid in view of the provisions of section 26 of the Act. Section 26 (which is in the same words as the old 41) run thus : "Except as provided in this Act no suit shall be instituted or proceeding taken for anything done or any omission made by a Railway Administration in violation or contravention of any provisions of this Chapter" (Ch. V). The argument in that section 26 stands in the way of bringing any suit of the civil courts on a claim for refund of charges 347 made in excess of reasonable charges. This proceeds on the misconception that such a suit would be , 'for anything done or any omission made by a Railway Administration in violation or contravention of Ch. V of the Act". There is no provision in Ch. V however saying that unreasonable charges shall not be made by a Railway Administration. If therefore any Railway Administration has received payment of unreasonable charges or rates that is not "anything done in violation or contravention of any provisions of Chapter V". If under the law, apart from the Railways Act, a consignor is entitled to obtain relief against unreasonable charges which he has paid, in the past, section 26 will not stand in his way. What his rights in law are in respect of such past charges: and whether any claim for repayment of charges made in excess of reasonable charges can succeed in law in civil courts on the theory that as a common carrier the Railway is not entitled to charge anything more than reasonable rates and charges, need not be examined here. As a suit on ,such a claim world not be on anything done or any omission made by the Railway Administration in violation or in contravention of any provisions of Ch. V, the provisions of section 26 are quite irrelevant for the decision of the question whether the Tribunal has any jurisdiction to make an order for refund. Our conclusion therefore is that neither expressly nor by necessary implication has the Railway Rates Tribunal been given any jurisdiction to make any order for refund. The decisions of the Railway Rates Tribunal, in the present case, on both the issues are therefore correct. The appeal is accordingly dismissed with costs.

A complaint was made by the appellant to the Railway Rates Tribunal against station, to station rates as being unreasonable on sugarcane imposed by the respondent Railway Co. by their rates circular No. 8 of 1953 with effect from October 1, 1953. The Railway company in their answer pointed out that the rates imposed by the rates circular 8 of 1953 had long before the date of the complainant ceased to be in force and a new rate had come into operation from February 10, 1960. Thereafter the complainant was allowed to amend the complaint. The prayers were for a declaration that the rates charged were unreasonable, that a direction of refund of the excess collected or which may be collected after the date of the amendment of the complaint over the reasonable rates that may be fixed by the Tribunal and, lastly, for fixation of the rates. The main contentions of the respondent were that the Tribunal had no jurisdiction to entertain the complaint as regards the reasonableness of rates prior to the institution of the complaint and that the Tribunal had no jurisdiction to grant refund. The Indian Railways Act underwent several amendments and by the amendment in December 1957, section 41 was changed. As a result of the change cl. I of section 41 read thus: "Any com plaint that a railway administration (a) is contravening the provisions of section 28, or (b) is charging for the carriage of any commodity between two stations a rate which is unreasonable or is levying any other charge which is unreasonable shall hear and decide any such complaint in accordance with the provisions of this Chapter. " 334 The Tribunal held that it had no jurisdiction to entertain or try the complaint as regards the rates and charges to prior to the institution of the complaint and it had no jurisdiction to grant any refund. The appellants came up in appeal to the Supreme Court. Held, that the words "is charging" in clause (b) and "is levying" in clause (c) of section 41 (1) of the Act must be construed to mean "is demanding a price at the present time for services to be rendered". The Railway Rates Tribunal had no jurisdiction to entertain or try the complaint as regards the reasonableness or otherwise of rates and charges made prior to the institution of the complaint. When the Tribunal had no jurisdiction to consider the reasonableness, or otherwise of any charges made prior to the institution of the complaint, it follows necessarily that it could have no occasion to order any refund. For the question of refund could arise only after a decision that the charges made were more than what was reasonable. Held, further, that neither expressly nor by necessary implication has the Railway Rates Tribunal been given any jurisdiction to make any order for refund. , Southern Railway vs The Railway Rates Tribunal, A.I.R. 1955 (Madras) 676, referred to. After a complaint is made the Tribunal shall hear and decide the complaint. The complaint being that something is unreasonable all that the Tribunal has to decide is whether that thing is unreasonable or not. A finding that it is unreasonable does not involve any consideration or decision of what would flow from the finding. In otherwords, in making the complaint the complainant can ask only for a declaration that the rate or charge is unreasonable andit is only this declaratory relief which the Tribunal has been authorised to give. There is no provision that the Tribunal can also give a consequential relief. The only other thing which the Tribunal is authorised to do in connection with the complaint is to fix "such rate or charge as it considers reasonable. " In the absence of any thing to indicate to the contrary it is reasonable to think that this fixation can only be prospective, that is, the Tribunal in making this order fixing the reasonable rate or, charge will mention a future date for this to come incoporation. 335