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Appeal No. 101 of 1959. Appeal by special leave from the judgment and order dated November 8, 1957, of the Deputy Custodian General, Evacuee Property, Now Delhi Revision Petition No. 17 R/55 of 1955. Achhru Ram and K. L. Mehta for the appellants. B.K., Khanna and, T. M. Sen, for the respondent No. 1. N.S. Bindra and A. G. Ratnaparkhi, for the respondents Nos. March 15. The Judgment of the Court was delivered by MUDHOLKAR J. The appellants who are admittedly displaced persons from West Pakistan were granted quasi permanent allotment of 24 standard acres and 15 3/4 units in the village of Raikot in Ludhiana District in 1949. Their father Sardar Nand Singh who was 42 330 found entitled to quasi permanent allotment of 40 standard acres and 5 1/4 units of land was given quasipermanent allotment in another village named Humbran in the same district. The two villages are, however, 25 miles or so distant from each other. Nand Singh, therefore, made an application for consolidation of his lands with those of the appellants in the village Raikot. During the pendency of this application he died and after his death, the, application was continued by the appellants. This application was rejected by the Assistant Custodian on July 23, 1951 on the ground that no land was available in the village Raikot. A revision petition preferred by the appellants against the order of the Assistant Custodian was dismissed by the Additional Custodian on August 20, 1952. On October 7, 1952 the appellants preferred a revision application before the Custodian General. During the pendency of the revision application the Additional Custodian for the State of Punjab cancelled the allotment of fourteen quasi permanent allottees of the village Karodian in the same district on the ground that these persons were entitled to allotment of suburban land a had been wrongly fitted in the village Karodian. Acting suo motu the Additional Custodian made an order on October 31, 1952 cancelling the order of allotment of land in the village Raikot made in favour of the appellants in the year 1949 and instead allotted to them land in Karodian in substitution of :,the lands at Raikot and of the lands allotted to their father. The land allotted was out of the land released upon the cancellation of allotment of lands in favour of the aforementioned 14 allottees. These fourteen allottees preferred an application for review of the order cancelling their allotment on the ground that this cancellation was a result of misapprehension of the actual facts and that they were not entitled to allotment of suburban lands at all. The appellants also preferred an application for review of the order cancelling their quasi permanent allotment in the village Raikot. The Additional Custodian for the State of Punjab recommended to the Custodian General the restoration 331 of the land to the 14 allottees which had been taken away from them by reason of cancellation of the allotment in their favour by the order dated October 31, 1952. The Additional Custodian admitted that these persons were not entitled to allotment of suburban land and that consequently their allotment had been wrongly made but referred the matter back to the Additional Custodian for decision. The application made by the appellants was kept pending till the decision of the application of the 14 allottees of Karodian. The Additional Custodian, however, dismissed the application on the ground that r. 14(6) of the Evacuee Property Rules which came into force on July 22, 1952, stood in the way of cancellation of the allotment in favour of the appellant. On December 17, 1954, the Deputy Custodian General, before whom these allottees had preferred an application for revision, revised the order of the Additional Custodian and restored to the 14 allottees of Karodian the land which had been originally allotted to them. and allotment of which had been cancelled earlier. As a result of this order the allotment of Karodian land made in favour of the appellants automatically stood cancelled. On January 6, 1955, the appellants moved the Deputy Custodian General for calling up their review application and for revising the order of October 31, 1952 passed by the Additional Custodian cancelling the allotment of Raikot lands which had originally been made in their favour in the year 1949. Consequent upon the cancellation of the appellants ' allotment of the Raikot land they were allotted to respondents 2 to 4. These persons were, therefore, impleaded as parties to the proceedings before the Deputy Custodian General. By the order dated November 8, 1957 the Deputy Custodian General dismissed the appellants ' application. The appellants have, therefore, come up to this Court by way of appeal with special leave. The ground on which the appellants ' application was rejected by the Deputy Custodian General was that his jurisdiction to revise the order has been 332 taken away by virtue of the provisions of , (44 of 1954) and the notification issued thereunder on March 24, 1955. In taking this view he has relied upon the decision in Bal Mukund vs The State of Punjab (1). In that case the Court has held that the powers of the Custodian General to deal with matters of this kind have been taken away by the , and that these powers now vest in another authority and that there is no provision for continuing the pro ceedings which had been commenced under the , but had not been concluded. Mr. Achhruram for the appellants challenged the correctness of this decision. There is no specific provision in this Act to the effect that after its commencement the jurisdiction of the various authorities created by the , to deal with the allotment or cancellation of allotment of evacuee property shall cease. What is urged by Mr. Khanna on behalf of the Custodian General is that this is the effect of the provisions of sections 12(2) and 19 of the Act. Section 12 of the 1954 Act empowers the Central Government to acquire evacuee property for rehabilitation of displaced persons by publishing in the official gazette a notification to the effect that it has decided to acquire such evacuee property in pursuance of this provision. It is common ground that by notification section R. 0. 697 dated March 24, 1955 the Central Government decided to acquire all evacuee property allotted to displaced persons by the Custodian under the "Conditions" contained in the notification of the Government of Punjab in the Department of Rehabilitation, No. 4892 6 dated July 8, 1949, except certain categories of property specified in the schedule. The Raikot lands were allotted to the appellants under the aforesaid notification of the Government of Punjab. It is not disputed on their behalf that they do not fall within any of the excepted categories of property, set out in the schedule. Sub section 2 of section 12 of the Act (1) I.L.R. 1957 Punj. 333 provides that on the publication of the notification under sub section 1 the right, title or interest of any evacuee in the property specified in the notification shall immediately stand extinguished and that property shall vest absolutely in the Central Government free from all encumbrances. The power of the Custodian under the , to allot any property to a person or to cancel an allotment existing in favour of a person rests on the fact that the property vests in him. But the consequence of the publication of the notification by the Central Government under section 12(1) of the with respect to any property or a class of property would be to divest the Custodian completely of his right in the property flowing from section 8 of the , and vest that property in the Central Government. He would, therefore, not be competent to deal with the property in any manner in the absence of any provision in either of these two enactments permitting him to do so. No provision was, however, pointed out to us in either of these Acts whereunder despite the Vesting of the property in the Central Government the Custodian was empowered to deal with it. Sub section 4 of section 12 of the 1954 Act provides that all evacuee property acquired under that section shall form part of the compensation pool. Under section 16(1) of this Act the Central Government is empowered to take such measures as it considers necessary or expedient for the custody, management and disposal of the compensation pool. Sub section 2 of section 16 empowers the Central Government to appoint such officers as it deems fit or to constitute such authority or corporation as it deems fit for the purpose of managing and disposing of the properties forming part of the compensation pool. Section 19 of the Act provides that notwithstanding anything contained in any contract or any other law for the time being in force but subject to the rules that may be made under the Act the managing officer or managing corporation may cancel any allotment etc., under which any evacuee property acquired under the Act is held or 334 occupied by a person whether such allotment or lease was granted before or after the commencement of the Act. This provision thus confers the power to deal with evacuee property acquired under the Act only on a managing officer appointed or managing corporation constituted under the Act and makes no mention whatsoever of the Custodian appointed under the . No doubt, under section 10 of the the Custodian is empowered to manage evacuee property and in exercise of his power he will be competent to allot such property to any person or to cancel an allotment or lease made in favour of a person. Apart from the fact that subsequent to the issue of the notification under section 12(1) of the , the property would cease to be evacuee property, the aforesaid powers of the Custodian would be in conflict with those conferred by section 19 of the 1954 Act on a managing officer or a managing corporation constituted under that Act. In other words, to that extent the provisions of section 10 of the 1950 Act and section 19 of the 1954 Act cannot stand together. As already stated the powers conferred by sub section (1) of section 19 of the 1954 Act are to prevail notwithstanding anything contained in any other law for the time being in force. Therefore, they must prevail over the provisions of B. 10 of the . It is true that there, is nothing on record to show that a managing officer was appointed with respect to the Raikot properties acquired under the notification dated March 24, 1955. But it is not necessary to ascertain that fact. The point is, who, after the coming into force of the 1954 Act could cancel an allotment. Section 10 says that only a managing officer or a managing corporation can do so. This means that no one else can do so even though some other law may have authorised another person or authority to cancel an allotment. Mr. Achhruram, however, contended that the appellants ' rights were protected by section 10 of the . Section 10 runs as follows: 335 "Special procedure for payment of compensation in certain cases. Where any immovable property has been leased or allotted to a displaced person by the Custodian under the conditions published (a)by the notification of the Government of Pun. jab in the Department of Rehabilitation No. 4892 S or 4892 S dated the 8th July, 1949, or (b)by the notification of the Government of Patiala and East Punjab States Union in the Department of Rehabilitation No. 8R or 9R, dated the 23rd July, 1949, and published in the official Gazette of that State dated the 7th August, 1949, and such property is acquired under the provisions of this Act and forms part of the compensation pool, the displaced person shall, so long as the property remains vested in the Central Government, continue in possession of such property on the same conditions on which he held the property immediately before the date of the acquisition, and the Central Government may, for the purpose of payment of compensation to such displaced person, transfer to him such property on such terms and conditions as may be prescribed. " It is followed by an explanation; but that explanation has no bearing upon the point urged by Mr. Achhruram. It is no doubt true that the Raikot lands were allotted to the appellants under the notification referred to in el. (a) of this section and, therefore, they would be entitled to the benefits conferred by this section provided they satisfied all the other requirements of this section, express or implied. It is implicit in this section that the displaced person to whom land was allotted "held" the land and was in possession of such property at the date of the notification. It is not disputed that the appellants ceased to hold and had lost possession of the Raikot lands before the publication of this notification. Even assuming that the order of the Custodian cancelling the allotment in their favour was erroneous there will be no difference in the result because what is essential is the facts of holding and possession of the land on the date of the notification. 336 Mr. Achhruram then referred to the "Conditions" on which allotments of land may be made under the notification referred to in sub section 10(a) and pointed out that under condition No. 6 the Custodian or rehabilitation authority would be competent to resume or cancel an allotment only on one of the grounds set out in that condition. He said that the cancellation of the allotment in favour of the appellants was impermissible inasmuch as it was not based upon any of the grounds set out in the 6th condition. That may or may not be so. We would repeat that the appellants had lost their possession before the publication of the notification and are thus not entitled to the protection of the section. Moreover, the Custodian, by reason of the divesting of the property, as from March 24, 1955, had become functus officio with respect to it and could not rectify any error made by him in the past in the matter of cancellation of allotment. It is true that had the appellants been in possession at the critical time they would have had the right to obtain a permanent transfer in their favour of the Raikot lands and by virtue of what happened and without any fault on their part they have been deprived 'of that right. That is indeed unfortunate but none of the authorities created by the could rectify the wrong that has been done by them to the appellant. The question whether it could be rectified by any of the authorities constituted by the or not was not canvassed before us and, therefore, there is no occasion for us to say anything about it. Mr. Achhruram contended that r. 74 of the Displaced Persons (Compensation and Rehabilitation) Rules, 1955 stood in the way of the Custodian allotting the Raikot property to the respondents during the pendency of the proceedings before the Custodian General. That rule reads as follows: "Allotments which are the subject matter of dispute. No property in a rural area in respect of which any case is pending in a Civil Court or before a Deputy Custodian, Custodian or Custodian General, shall be transferred to the allottee". 337 The aforesaid rule is in Chapter X headed "Payment of compensation under section 10 of the Act" and deals with a transfer of property to an allottee by way of final settlement of his claim to compensation and does not deal with the question of allotment on a quasi permanent basis. Moreover, this rule applies to a proceeding before an authority created by the and not to an authority created by the . There is, therefore, no substance in this argument. Finally Mr. Achhruram referred to section 17 of the 1954 Act and to r. 102 of the Rules framed thereunder and said that the powers of the managing officers appointed under the Act are confined only to properties which are entrusted to them for management and not with respect to any other property. Section 17 deals with the function; and duties of managing officers and managing corporation. Sub section (1) provides that managing officers and managing corporations will perform such functions as may be assigned to them under the Act. Sub section (2) provides that subject to the provisions of the Act and the rules made thereunder, a managing officer or a managing corporation may, among other things, take such measures as he or it considers it necessary or expedient for the purpose of securing, administering, preserving, managing or disposing of any property in the compensation pool entrusted to him or it. etc. The argument is that unless there is such "entrustment" the managing officer or managing corporation has no function to perform with respect to evacuee property. His contention appears to be that there is nothing to show that this property was "entrusted" to a managing officer. In the first place the section confers the particular powers On managing officers or managing corporations only and no one else. Therefore, even if no managing officer or managing corporation was appointed with respect to that property no one else could exercise the power of cancellation of allotment. Further, there is no ground in the special leave petition or in the statement of the 43 338 case that there is no entrustment in fact of this property or this class of properties to a managing officer or managing corporation. He cannot, therefore, be permitted to make out a new case at this stage of argument. That apart, this argument assumes that the property, despite the publication of the notification under section 12(1) of the Act continues to be evacuee property. Again, this provision is a general provision and the particular provision regarding cancellation of allotment is section 19(1) of the Act which does not refer to entrustment at all and it is this provision which must prevail over the general provision. He then contends that the provisions of section 19(1) of the Act being subject to rules made under the Act must be read along with r. 102 which deals with cancellation of allotments of leases. That rule reads thus: "Cancellation of allotments and leases A managing officer or a managing corporation may sell any property in the compensation pool entrusted to him or to it, cancel an allotment or terminate a lease, or vary the terms of any such lease or allotment if the allottee or lessee, as the case may be (a)has sublet or parted with the possession of the whole or any part of the property allotted or leased to him without the permission of a competent authority, or (b)has used or is using such property for a purpose other than that for which it was allotted or leased to him without the permission of a competent authority, or (c) has committed any act which is destructive of or permanently injurious to the property, or (d) for any other sufficient reason to be recorded in writing; Provided that no action shall be taken under this rule unless the allottee or the lessee, as the case may be, has been given a reasonable opportunity of being heard. " He points out that in the first place, the rule speaks of land 'entrusted ' to the manager and, therefore would operate only if entrustment is established. What we have said in regard to section 17 would apply 339 here also. He then says that this rule restricts the powers of a managing officer or a managing corporation in the matter of cancellation of allotment in the sense that it permits cancellation only on certain specified grounds and, therefore, it cannot be said that section 19(1) of the Act is completely in conflict with section 10 of the in so far as the question of cancellation of allotment is concerned. We cannot accept the argument because, apart from the fact that the acquired properties have ceased to be evacuee properties, el. (d) of r. 102 permits the managing officer or managing corporation to cancel allotment "for any other sufficient reason to be recorded in writing". The only effect of r. 102 is to permit cancellation 'of an allotment for reasons stated. That is all. In our opinion, therefore, this rule does not help the appellants. Mr. Khanna had raised three other points but upon the view which we have taken as to the effect of sections 12 and 19 of the Act, it is not necessary to consider them. The appeal is accordingly dismissed. We, however, make no order as to costs because had there been no delay on the part of the Custodian General in dealing with the revision application the present situation would not have arisen. Appeal dismissed.

The appellants who are displaced persons from West Pakistan, were granted quasi permanent allotment of some lands in village Raikot in 1949. On October 31, 1952, the Assistant Custodian cancelled the allotment of 14 allottees in village Karodian, and also cancelled the allotment of the Appellants in Raikot but allotted lands to them in village Karodian, and allotted the lands of Raikot to other persons. The 14 allottees of village Karodian as well as the appellants applied for review of the orders of cancellation of their allotment. The application of the 14 allottees was dismissed. They preferred a revision to the Custodian General who cancelled the appellant 's allotment (1) Cal. 926. 329 in Karodian and restored the allotment of the 14 allottees on December 17, 1954 Thereupon,, on January 6, 1955, the appellants moved the Custodian General for calling up their review application and for revising the order of October 31, 1952, cancelling their allotment in Raikot. The Custodian General refused to revise the order on the ground that his power to revise had been taken away by the . The appellants contended that the, Custodian General had the power to revise the order. Held, that after the enactment of the, , the Custodian General ceased to have the power to cancel allotments. By, the issuing of a notification under, section 12(1) of this Act, the Fight, title or interest of the evacuee in the property specified in the notification was extinguished and the property vested absolutely in the Central. Government. The right of the Custodian manage the property under the , came to an end and the management vested in a new set of officers. Even though no managing officer was appointed or a managing corporation, constituted under the new Act to manage the property no one else could 'exercise the power of cancellation of allotment. Bal Mukund vs The State of Punjab, I.L.R. 1957 Punj. 712, approved.

Appeal No. 52 of 1957. Appeal from the judgment and decree dated April 22, of 1953, of the Patna High Court in Appeal from Original Decree No. 162 of 1946. K.N. Bhattacharya and P. K. Chatterjee, for appellants. N.C. Chatterjee, A. V. Viswanatha Sastri, R. section Chatterji and D. N. Mukherjee, for respondents Nos. 2 to 6. 1961. March 22. The Judgment of the Court was delivered by SUBBA RAO, J. This appeal by certificate granted is directed against the judgment of the High Court of Judicature at Patna dated April 23, 1953, confirming that of the Subordinate Judge, Dhanbad, dated November 30, 1946. The plaintiffs and the defendant are adjoining colliery owners at Kujama. The plaintiffs ' land lies immediately to the south of the defendants ' land. On August 2, 1,894, Raja of Jharia granted mukarrari lease of the coal and coal mining rights in 300 bighas of land in village Kujama to Satya Karan Banerjee and Girish Chandra Samanta. On June 15,1900, his son, Raja Durga Prasad Singh, granted coal and coal 494 mining rights in respect of 400 bighas out of 592 bighas to one Jugal Kishore Lal. Samanta purchased the leasehold interest of Banerji, and thereafter on November 23, 1900, it appears that Samanta bad surrendered his rights under the previous lease in favour of the Raja and taken a fresh lease of the same 300 bighas on a reduced rent. On June 10, 1901, Jugal Kishore Lal granted a lease of 96 bighas out of his 400 bighas to one D. M. Mathews. On the very same day D. M. Mathews, in his turn, granted a lease to one Walji Kheta in respect of the said 96 bighas. Walji Kheta executed a kabuliat in favour of M. Mathews on October 11, 1901. Walji Kheta represented the defendants. By diverse transfers, the interest of Samanata vested in Bagdigi Kujama Collieries Limited. The plaintiffs case was that as a result of a letter written by the Inspector of Mines on August 18, 1941, the plaintiffs made an inquiry and came to know that the defendants had encroached upon their coal mines on the northern side and removed coal from the encroached portion and had rendered the remaining coal of the encroached portion unworkable. On those allegations, they asked for the following reliefs: (a)That the intermediate boundary line between the plaintiffs ' coal land and the defendants ' coal land be ascertained and fixed. (b)That the area encroached upon by the defendants be ascertained and the defendants be directed to vacate the same,. (c)That a permanent injunction be issued against the defendants restraining them from encroaching upon the plaintiffs ' coal land and cutting and removing coal therefrom. (d)That an enquiry be made and the quantity of coal cut and removed by the defendants from the plaintiffs ' coal land as also the quantity of the coal rendered unworkable be ascertained and a decree for the value thereof by way of damages be granted to the plaintiffs against the defendants. The defendants denied that they had encroached upon the plaintiff , ' coal land and stated that the suit was barred by limitation. They further pleaded that the 495 plaintiffs would not be entitled to any damages. The learned Subordinate Judge held that the defendant had encroached upon the plaintiff ' coal land, that the suit was not barred by limitations and that they would be entitled to the reliefs prayed for. On appeal, the High Court of Patna accepted all the findings of the learned Subordinate Judge and dismissed the appeal. Hence the present appeal. The first question that arises for consideration is whether the defendants had encroached Upon the plaintiffs ' coal land. The answer to this question depends upon the correct, delineation of the boundary line between the plaintiffs ' leasehold and the defendants ' leasehold. It is common case that the southern boundary of the appellants ' leasehold is conterminous with the northern boundary of the respondents ' lease hold. Learned counsel for the appellant contends that the said boundary should be fixed solely with reference to the boundaries given in the lease of 1894, whereas learned counsel for the respondents contends that no plan has been annexed to the said lease and, therefore, the boundary could more satisfactorily and definitely be fixed with reference to the plans annexed to the subsequent lease deeds executed in favour of the successors in interest of the appellant and the respondents. To appreciate the rival contentions it is necessary to consider the various lease deeds in some detail. On August 2, 1894, Raja Jaimangal Singh executed the lease deed (exhibit 1) in respect of 300 bighas in favour of the respondents ' predecessor in interest. In that lease deed the northern boundary is described to be the remaining portion of mauza Kujama and the western boundary is described as Chatkari Jorh. The foot note to the lease reads, "measuring 1101 feet in length running north and south by the side of the said Chatkari Jorh and area being 300 bighas by such measurement". No plan was annexed to this lease deed. On June 15, 1900, Jugal Kishore Lal, the predecessor in interest of the appellant, had obtained a lease (exhibit C) of 400 bighas 496 from Raja Durga Prasad Singh, the son of the previous Raja. The southern boundary of this leasehold is given as the northern boundary limit of the leasehold land of Girish Chandra Samanta and others and the western boundary is shown as the eastern boundary of Chatkari Jorh as per the map annexed. This lease deed clearly shows that the southern boundary of this plot is conterminous with the northern boundary of the leasehold land in favour of Samanta. It may also be noticed at this stage that the map annexed to this lease deed has not been filed by the appellants. It appears that Samanta purchased the interest of Banerji in the leasehold of 1894 and thereafter at the request of Samanta, on November 23, 1900, Durga Prasad Singh gave a fresh lease of the same holding to Samanta and incorporated a map in that lease, i.e., exhibit 3(b). There, the northern boundary of the leasehold is described as the leasehold of Rajkumar Jugal Kishore Lal Singh Bahadur. The plan, exhibit 3(b), annexed to this lease deed shows the boundary line between the two leaseholds. The said plan is drawn to scale and the boundary line is drawn between point A marked in the plan and point B marked therein. As the plan is a part of the lease deed, it is clear from the plan that the northern boundary of the leasehold of Samanta is the said line. On June 10, 1901, Jugal Kishore Lal, that is, the predecessor in interest of the appellant demised a plot of 96 bighas carved out from his leasehold to Mathews under a deed exhibit C(1). Mathews in turn demised under exhibit D the said land of 96 bighas to Walji Khetan representing the appellant. In both these documents the southern boundary is shown as the northern boundary of the leasehold land of Samanta. One interesting feature is that a map has been referred to in each of the documents and the said map shows that the line drawn from point A to point B is the boundary between the two leaseholds. It may be mentioned that the said boundary line is exactly the same as that found in exhibit 3(b). These documents to which the defendants ' predecessors were parties contain a clear admission that the boundary line between the two leaseholds i.e., between appellant 's and that of the respondents ' is the line between 497 A and B shown in plan exhibit 3(b). We have no doubt that if the plan annexed to exhibit C was produced by the appellant, it would have also established that the dividing line between the two leaseholds is that found in exhibit 3(b). The appellant, in our view, has suppressed the said plan and, therefore, in the circumstances, we are justified to draw an inference that, if produced, it would be against appellant 's contention. From the aforesaid documentary evidence we hold, agreeing with the courts below, that the southern boundary of the appellant 's holding, which is conterminous with the northern boundary of the respondents ' holding, is the line between points A and B shown in exhibit 3(b). The next question addressed by the courts below is how to ascertain the point A. The argument of learned counsel for the appellant is that the map translated into words indicates that the correct boundary should be a line drawn from the true meeting point of the four villages Pandebera, Jharia Khas, Lodhna and Kujama at a bearing of 82.15 ', whereas the contention of the respondents is that the line actually drawn on the lease map correctly lays down the northern boundary of the respondents ' leasehold. It is settled law that a map referred to in a lease should be treated as incorporated in the lease and as forming part of the document: see Darapali Sadagar vs Najir Ahamed (1). As in this case the map is drawn to scale and incorporated in the lease deed, it is not permissible to ignore the starting point of the boundary line and adopt instead any scientific point based on survey. The Commissioner appointed by the court tested the position of the six trijunction pillars shown in the map of lease dated November 23, 1900, and found that two of the trijunction pillars were in their correct positions. On the basis of these two trijunction pillars, the Commissioner relaid, by the process of superimposition, the northern boundary line of the leasehold property, The point A in the map so laid does not tally with the point where the aforesaid four villages actually meet. He pointed out that the correct (1)(1923) I.L.R 50 Cal 394 63 498 point where the said four villages met would be 1680 feet only from the trijunction pillar of Lodhna, Kujama and Madhuban, whereas the point A was at a distance of 1750 feet from the said trijunction pillar. But learned counsel for the appellant contends that according to exhibit 3 the western boundary should be according to the revenue plan and, therefore, point A should be fixed at a distance of 1680 feet from the trijunction pillar, as that is the distance according to the revenue plan. But a perusal of exhibit I shows that there is no reference in regard to the western boundary to revenue records. That apart, even if 1680 feet is taken as the distance between the injunction pillar and point A in 'the map, it demonstrates that the measurement given in exhibit 3 was incorrect, for, there the distance was shown only as 1101 feet. But a more serious objection to the argument is that it is not permissible for a court to reconstruct the plan with reference to revenue records when the plan is self contained and drawn to scale. To summarize: the question is whether the disputed extent is part of the respondents ' holding or that of the appellant 's holding. The map, exhibit 3(b), annexed to the lease deed executed in favour of the respondents ' predecessor in interest clearly demarcates the boundary line between the holdings of the appellant and the respondents, and according to that plan the disputed extent falls within the boundary of the respondents ' holding. The lease of the appellant 's predecessor, i.e., exhibit C, also refers to a map, but the appellant withheld it. In the sub leases created by the appellant, maps were annexed and the boundary therein is in accord with that in exhibit 3(b). Those documents contain clear admissions supporting the case of the respondents. No reliance can be placed upon the recitals in exhibit 1, as it is demonstrated that the extent given in respect of the western boundary is incorrect. On the aforesaid material both the courts have held that the disputed extent of land is part of the holding of the respondents. It is well settled that a map referred to in a lease should be treated as incorporated in the lease and as 499 forming part of the said document. In this case the maps accepted by us are drawn to scale and the boundary is clearly demarcated. The courts were, therefore, certainly right in accepting the boundaries drawn in the plan without embarking upon an attempt to correct them with reference to revenue records. The question really is one of fact and we accept the finding. The next question is whether the suit was barred by limitation. The encroachment by the appellant on the respondents ' colliery and the removal of coal therefrom are alleged to have taken place in or about the year 1932. The respondents in the plaint averred that they came to know of the said encroachment and removal of coal by the appellant after they received the letter dated August 18, 1941, from the Inspector of Mines and before that they had absolutely no knowledge or information whatsoever regarding thereto. The appellant denied the said allegation and stated that the respondents all along knew and had been aware that the portion of coal land in question belonged to and was the property of the appellant. In particular the appellant alleged that the respondents must have the knowledge of it since 1932 when there was a survey by the Department of Mines. On the said pleadings issue 3 was framed which reads, "Is the suit barred by limitation?" The learned Subordinate Judge found, on the evidence, that the proceedings in 1932 had nothing to do with the delineation of the boundary line between the two holdings. He held that article 48 of the Limitation Act applied to the suit and that the appellant had failed to prove that the respondents had knowledge of the sinking of the quarries and pits in the encroached land. On appeal the High Court accepted the finding. Though the High Court held that the burden of proof to establish knowledge on the part of the respondents beyond the prescribed time was on the appellant, it has given the finding on the assumption that the initial burden was on the respondents to prove that they had knowledge of the said encroachment only within three years thereof. There are, therefore, concurrent findings of fact on the 500 question of knowledge. But learned counsel for the appellant contended that the finding is vitiated by the burden of proof having been wrongly thrown on the appellant. This submission is not accurate, for, as we have pointed out, the High Court arrived at the finding of fact on the assumption that the initial burden of proof was on the respondents. It is common case that article 48 of the Limitation Act governs the period of limitation in respect of the present suit. It reads: ___________________________________________________________ Period Time from Description of suit. of which period limitation begins to run. ___________________________________________________________ For specific moveable When the per property lost, or son having acquired by theft, or the right to dishonest misappro the posses priation or conver Three sion of the sion, or for com years. property first pensation for wrong learns in ful taking or detain whose posses ing the same. sion itis. __________________________________________________________ The article says that a suit for recovery of specific movable property acquired by conversion or for compensation for wrongful taking or detaining of the suit property should be filed within three years from the date when the person having the right to the possession of the property first learns in whose possession it is. The question is, on whom the burden to prove the said knowledge lies? The answer will be clear if the article is read as follows: A person having the right to the possession of a property wrongfully taken from him by another can file a suit to recover the said specific moveable property or for compensation therefore within three years from the date when lie first learns in whose possession it is. Obviously where a person has a right to sue within three years from the date of his coming to know of a, certain fact, it is for him to prove that he had the knowledge of the said fact on a particular date, for 501 the said fact would be within his peculiar knowledge. That apart, section 3 of the Limitation Act makes it obligatory on a court to dismiss a suit barred by limitation, although limitation has not been set up as a defence, indicating thereby that it is the duty of a plaintiff to establish, at any rate prima facie, that the suit is within time. It is the obligation of the plaintiff to satisfy the court that his action is not barred by lapse of time: see Lalchand Marwari vs Mahanth Rampur Gir (1) and Rajah Sahib Perhlad Sein vs Maharajah Rajender Kishore Sing (2) . Looking from a different perspective, we arrive at the same result. Under the Evidence Act there is an essential distinction between the phrase "burden of proof" as a matter of law and pleading and as a matter of adducing evidence. Under section 101 of the Evidence Act, the burden in the former sense is upon the party who comes to court to get a decision on the existence of certain facts which he asserts. That burden is constant throughout the trial; but the burden to prove in the sense of adducing evidence shifts from time to time having regard to the evidence adduced by one party or the other or the presumption of fact or law raised in favour of one or the other. In the present case the burden of proof in the former sense is certainly on the respondents. But the question is whether they have adduced evidence which had the effect of shifting the onus of proof to the appellant. On behalf of the respondents, their Colliery Manager was examined as P. W. 2. He stated in his evidence that the appellant had encroached upon the South Kujamal Colliery in Seam Nos. 10, 11 and 12 and another special seam, known as 4 feet seam and that in August, 1941, be came to know about the encroachment for the first time when the Mines Department forwarded a plan of the joint workings of the two collieries of the parties. He also stated that he had no knowledge of the encroachment before. In the cross examination, two suggestions were made to him, namely, that in 1932 there was a survey of the plaintiffs ' and defendants ' coal land by the Mines Department and that Seam Nos. 11 and 12 were (1) Pat. 312. (2) (1869) 12 M.I.A. 292. 502 worked by the appellant by open quarry system. He denied that he had any knowledge of the said two facts. The evidence of this witness has been accepted by the learned Subordinate Judge, and the High Court also accepted his evidence, though in its view it was not very satisfactory. This evidence, therefore, prima facie, proves that the respondents had knowledge of the encroachment only in 1941. Let us now consider some of the decisions cited at the Bar. A division beach of the Patna High Court in Sundarji Shivji vs Secretary of State for India (1) held that "when a defendant in an action based on tort seeks to show that the suit is not maintainable by reason of the expiry of the statutory period of limitation, it is upon him to prove the necessary facts". There the suit was for conversion of property, and the learned Judges applied article 48 of the Limitation Act to the said suit. After noticing the words in the last column of the article, the learned Judges proceeded to observe thus: " The starting date of limitation in the case of conversion is the date when the person who has the right to possession first learns of the act of conversion. " Adverting to the burden of proof, the learned Judges observed: "There is nothing in the pleadings which would show precisely at what period tile plaintiff or the plaintiff 's agent, which is the same thing, became aware of the sale and its wrongfulness, that is to say, became aware of the fact of conversion. The defendant was unable to provide us with any materials to fix that date and therefore his plea of limitation fails altogether, because he is unable to show a date outside the period of three years which would entitle him to succeed. " With great respect to the learned Judges, we hold that this case had not been correctly decided. The burden of proof, as we have explained earlier is on a plaintiff who asserts a right, and it may be, having regard to the circumstances of each case, that the (1) Pat, 752, 760. 503 onus of proof may shift to the defendant. But to say that no duty is cast upon the plaintiff even to allege the date when they had knowledge of the defendant 's possession of the converted property and that the entire burden is on the defendant is contrary to the tenor of the article in the Limitation Act and also to the rules of evidence. A division bench of the Calcutta High Court in Kalyani Prasad Singh vs Borrea Coal Co. Ltd. (1) did not accept the view of the Patna High Court, but followed that of the Bombay High Court in the Bank of Bombay vs Fazulbhoy Ebrahim (2). In the context of the application of article 48 of the Limitation Act, the learned Judges of the Calcutta High Court observed thus: "The burden of proof rests upon the party who substantially asserts the affirmative of the issue. . We are of opinion that the onus is upon the plaintiff in these suits to prove that the knowledge of his father wag within three years of the suit. " In Talyarkhan vs Gangadas (3), Rangnekar, J., formulated the legal position thus: "The onus is on the plaintiff to prove that he first learnt within three years of the suit that the property which he is seeking to recover was in the possession of the defendant. In other words, he has to prove that he obtained the knowledge of the defendant 's possession of the property within three years of the suit, and that is all. If he proves this, then to succeed in the plea of limitation the defendant has to prove that the fact that the property was in his possession became known to the plaintiff more than three years prior to the suit. " We accept the said observations as representing the correct legal position on the subject. The appellant gave evidence to show that the encroachment was prior to 1932, but there is no acceptable evidence on their part to establish that the respondents came to know of the removal of coal by the appellant or their possession of the coal removed beyond three years prior to the suit. Learned counsel (1) A.I.R. 1946 Cal. 123,127 (2) (3) Bom. 848, 860. 504 took us through the correspondence that passed between the parties and the Mining Department in 1932. But it does not prove that the respondents had knowledge of the fact that the appellant had encroached upon any portion of their coal mines. Emphasis is also laid upon the fact that there was quarry system of working in the mines and a contention is advanced that quarrying is done openly and, therefore, the respondents must have had knowledge of the said fact. But the courts found from Commissioner 's maps that in the encroached portion, there were only underground workings and that the quarries were mostly outside the encroached area. The learned Subordinate Judge and the High Court refused to base any finding on mere probabilities without clear evidence to sustain them. We cannot therefore hold that the findings of the courts are vitiated by an error of law by the burden of proof having been wrongly thrown on the appellant. We accept the findings of the High Court that the respondents had knowledge of the appellant 's encroachment of their coal mines only in the year 1941 which was within three years of the date of the filing of the suit. The only other outstanding question that remains for consideration is that covered by Issue No. 7. In paragraph 11 of the plaint, the plaintiffs allege that under the Indian Mines Act and the Rules and Regulations made thereunder the plaintiffs are bound to keep a barrier of 25 feet to the south of the defendant 's working and, therefore, the coal that is still left in the encroached area is not by any means accessible to the plaintiffs and being thus wholly unworkable is entirely lost to them for ever. In the written statement the defendants did not deny the fact that the coal still left in the encroached area was lost to the plaintiffs, but only stated that it was purely a question of statutory obligation on the part of the plain. tiffs with which the Defendant had nothing to do. The learned Subordinate Judge accepted the case of the plaintiffs and held that the coal that was left in the encroached area was entirely lost to them by being rendered unworkable. The High Court accepted the finding. Learned counsel for the appellant contends that under the Rules the respondents could request the mining authorities to exempt them from the operation of rule 76 of the Indian Coal Mines Regulation, 1946, and if exemption was granted, they could remove the coal left by the appellant in the encroached area. This possibility of the respondents getting an exemption from the operation of the rule was not raised either before the learned Subordinate Judge or before the High Court. Nor can we hold in favour of the appellant on the basis of such a possibility. We, therefore, accept the concurrent finding of fact arrived at by the courts below in respect to this issue. No other point was raised. The appeal fails and is dismissed with costs. Appeal dismissed.

The appellants and the respondents were owners of adjoining collieries and the suit out of which the present appeal arose was one brought by the respondents for certain reliefs on the allegation that the appellants had encroached upon their coal mines and removed coal from the encroached portion and that they came to know of the said encroachment and removal of coal after they had received the letter dated August 18, 1941, from the Inspector of Mines. The appellant denied the encroachment and pleaded that the suit was barred by limitation inasmuch as the respondents had knowledge of the encroachment in 1932 then there was a survey by the Department of Mines. The trial judge found on evidence that the proceedings in 1932 had nothing to do with the matter, held that article 48 of the Limitation Act applied to the suit and that the appellants had failed to prove that the respondents had knowledge of the sinking of the quarries and pits in the encroached land and decreed the suit. The High Court on appeal accepted the finding of the trial court and although it placed the burden of proving knowledge on the part of the respondents beyond the prescribed time on the appellants, nevertheless proceeded on the assumption that the initial burden to prove that they had knowledge of the said encroachment within the period was on the respondents and affirmed the decree of the trial court. Held, that the burden of proof had not been misplaced. Under article 48 of the Indian Limitation Act, which prescribes a three years ' limitation from the date of the knowledge, the initial onus is obviously on the plaintiff to prove that date since it would be within his special knowledge. Moreover, under section 3 of the Act, which makes its obligatory on the court to dismiss a suit barred by limitation, even though such a plea is not set up in defence, it is for the plaintiff to establish that the suit is not so barred. Lalchand Marwari vs Mahant Rampur Gir, pat. (P.C.) 312 and Rajah Sahib Perhalad Seim vs Maharajah Rajender Kishore Singh, (1869) 12 M.I.A. 292, referred to. Under the there is an essential distinc tion between burden of proof as a matter of law and pleading and as a matter of adducing evidence and under section 101 of the 493 Act the burden in the former sense is always on the plaintiff and never shifts, but the burden in the latter sense may according to the evidence led by the parties and presumptions of law or fact raised in their favour. Sundarji Shivji vs Secretary of State for India, Pat. 752, disapproved. Kalyani Prasad Singh vs Borrea Coal Co. Ltd., A.I.R. 1946 Cal. 123, Bank of Bombay vs Fazulbhoy Ebrahim, and Talyarkhan vs Gangadas, Bom. 848,approved. Held, further, that it is well settled that a map referred to in a lease is a part of the lease. Where, therefore, the map is drawn to scale and clearly demarcates the boundary it is not permissible to ignore it and reconstruct the boundary with reference to the revenue records. Darapali Sadagar vs jajir Ahmad, Cal. 394, referred to.

Appeals Nos. 45 and 46 of 1959. Appeal by special leave from the judgment and order dated March 25, 1957, of the former Bombay High Court in Appeal No. 16 of 1957. Q. K. Daphtary, Solicitor General of India, H. J. Umrigar and D. Gupta, for the Apellant (In C. A. No. 45 of 59) and Respondent (In C. Appeal No. 46 of 59). H. N. Sanyal, Additional Solicitor General of India, section N. Andley and J. B. Dadachanji, for the respondents (in C. A. No. 45 of 59) and Appellants (In C. A. No. 46/59). 926 1960. September 27. The Judgment of the Court was delivered by DAS GUPTA J. M/s. Daulatram Rameshwarlal, a firm registered under the Indian Partnership Act (referred to later in this judgment as "sellers ") are registered dealers under section 11 of the Bombay Sales Tax Act. In their return of turnover for the period from April 1, 1954 to March 31, 1955, they claimed exemption from Sales Tax in respect of sales of cotton of the total value of Rs. 68,493 2 6 and sales of castor oil of the total value of Rs. 6,47,509 1 6 on the ground that these sales were oil FOB contracts, under which they continued to be the owners of the goods till the goods had crossed the customs barrier and thus entered the export stream, and so no tax was realisable on these sales in view of the provisions of article 286 (1)(b). The Sales Tax Officer rejected this claim for exemption and assessed them to sales tax on a taxable turnover including these sales. He also assessed them to purchase tax under section 10(b) of the Bombay Sales Tax Act on their purchase of castor oil which they later sold for the sum of Rs. 6,47,509 1 6 as mentioned above. The notice of demand for the total sales tax and the purchase tax assessed was served on the sellers on September 30, 1956. The sellers thereupon moved the Bombay High Court under article 226 of the Constitu tion for the issue of appropriate writs for quashing the order of assessment and the notice of demand and for prohibiting the Sales Tax Officer from taking any steps pursuant to the order or the notice. The learned Judge who heard the petition rejected the sellers ' contention that the goods remained their property till these crossed the customs frontier and therefore held that the sellers were not entitled to the benefit of article 286(1)(b) of the Constitution. As regards the assessment to purchase tax also he rejected the sellers ' contention that the assessment in question was illegal. In this view the learned Judge dismissed the application under article 226. Against this decision the sellers appealed. The 927 learned Judges who heard the appeal held, disagreeing with the Trial Judge, that the goods remained the sellers ' property till the goods had been brought on board the ship and so the sales were exempted from tax under article 286(1)(b) of the Constitution. They however agreed with the Trial Judger that the sellers were liable to pay purchase tax under section 10(b) of the Bombay Sales Tax Act. Accordingly they directed the Sales Tax Officer not to enforce the demand for payment of sales tax with regard to the sales of cotton for Rs. 68,493 2 6 and sale of castor oil of the total value of Rs. 6,47,509 1 6. The Sales Tax Officer has, on the strength of special leave granted by this Court, preferred the appeal which has been numbered as Civil Appeal No. 45 of 1959 against the appellate court 's order directing him not to realise the sales tax in respect of sales of cotton and castor oil. Civil Appeal No. 46 of 1959 has been preferred by the sellers against the appellate court 's judgment in so far as it upheld the assessment of purchase tax under section 10(b). The only "question for our decision in the appeal by the Sales Tax Officer is whether property in the goods passed on shipment or at some point of time before shipment. The law is now well settled that if the property in the goods passes to the buyer after they have for the purpose of export to a foreign country crossed the customs frontier the sale has taken place "in course of the export" out of the territory of India. If therefore in the present sales the property in the goods passed to the buyers on shipment, that is, after they had crossed the customs frontier the sales must be held to have taken place "in the course of export" and the exemption under article 286(1)(b) will come into operation. The sellers ' case is that these were sales on FOB contracts. Though the learned Solicitor General appearing on behalf of the Sales Tax Officer tried to convince us that these were not really FOB contract sales, it appears that the averment in Paras. 11 and 13 of the writ petition that these sales were made on FOB basis were not denied in the counter affidavit sworn by the Sales Tax Officer. It is also 928 worth noticing that in the assessment order itself the Sale Tax Officer referred to these sales as sales on FOB basis. The specimen contract produced also used the words " FOB delivered ". There can be no doubt therefore that these were sales under FOB contracts. ' The normal rule in FOB contracts is that the property is intended to pass and does pass on the shipment of the goods. In certain circumstances, e.g., if the seller takes the bill of , lading to his own order and parts with it to a third person the property in the goods, it has been held, does not pass to the buyer even on shipment. We are not concerned here with the question whether the passing of property in the goods was postponed even after shipment. The correctness of the proposition that in the absence of special agreement the property in the goods does not pass in the case of a FOB contract until the goods are actually put on board is not disputed before us. As has however been rightly stressed by the learned Solicitor General it is always open to the parties to come to a different agreement as to when the Dropert in the goods shall pass. The question whether there was such a different agreement has to be decided on a consideration of all the surrounding circumstances. He relies on three circumstances to convince us that the sellers and their buyers agreed in these sales that the property will pass to the buyer even before shipment. The first circumstance on which he relies is that the bill of lading was taken in the name of the buyer. Along with this fact we have to consider however the fact that the bill of lading was retained by the sellers, the contract being that payment will be made on the presentation of the bill of lading. It is not disputed that the term in the contract for "payment at Bombay against presentation of documents " means this. It was the sellers who received the bills of lading and it was on the presentation of these bills of lading along with the invoices that the buyer paid the price. When the bills of lading though made out as if the goods were shipped by the buyer, were actually obtained and retained by the sellers, that fact itself would ordinarily indicate an intention of 929 the parties that the property in the goods would not pass till after payment. The second circumstance to which our attention has been drawn is that the export was under the contract to be under the buyer 's export licence. This, in our opinion, shows nothing. The ordinary rule in FOB contracts is that it is the duty of the buyer to obtain the necessary export licence. That was laid down in Brandt 's case (1) and though in a later case in Hardy vs Pound (2) the Court of Appeal in England held that the judgment in Brandt 's case (1) does not cover every FOB contract and that in the special facts of the particular case before them it was for the sellers to obtain the licence and this view was approved by the House of Lords , it is in our opinion correct to state that the presumption in FOB contracts is that it is the duty of the buyers to obtain export licence, though in the circumstances of a particular case this duty may fall on the sellers. The third circumstance on which reliance is placed on behalf of the Sales Tax Officer is that the Export Control Order, 1954, which was passed in the exercise of powers conferred by Import & Export Control Act, 1947, contained a provision in its clause 5(2) in these words: " It shall be deemed to be a condition of that licence. . . that the goods for the export of which licence is granted shall be the property of the licensee at the time of the export ". It has been strenuously contended by the learned Solicitor General that it will be reasonable to think that the parties to the contract intended to comply with this condition and to agree as between themselves that the goods shall be the property of the licensee, that is, the buyer, at the time of the export. It is argued that the time of the export should be interpreted as the time when the customs frontier is crossed and that we must proceed on the basis that the buyer and the sellers intended that the goods shall be the buyer 's property at the point of time when they crossed this frontier. We see however no justification for thinking that in this clause "the time of the export " means the time (1) (2) 930 when the goods cross the customs frontier. Export has been defined in the Import & Export (Control) Act, 1947, as " taking out of India by sea, land or air ". In the Exports (Control) Order, 1954, the word must be taken to have the same meaning as in the Act. On that definition the time of the export is the time when the goods go out of the territorial limits of India. These territorial limits would include the territorial waters of India. Consequently the time of the export is when the ship with the goods goes be yond the territorial limits. At any rate, the export of the goods cannot be considered to have commenced before the ship carrying goods leaves the port. The intention of the parties that in compliance with the requirements of cl. 5(2) of the Exports (Control) Order the goods shall be the property of the licensee at the time of the export would therefore mean nothing more than that the property in the goods shall pass immediately before the ship goes beyond the territorial waters of the country, or at the earliest when the ship leaves the port. Whichever view is taken there is nothing to indicate that the intention to comply with the requirements of el. 5(2) of the Exports (Control) Order carries with it an intention that the property should pass to the buyer at the time the goods cross the customs frontier. It is true that in the United Motor '8 Case (1) and in other cases it has been held by this Court that the course of export commences to run when the goods cross the customs barrier. What the court had to consider in these cases was not however when export commences within the meaning of the Exports (Control) Order but when the course of export commences for the purpose of article 286(1)(b) of the Constitution. For the reasons which need not be detailed here it was decided that the course of export commences at the time when the goods cross the customs barrier. These decisions as regards the commencement of the course of export are of no assistance in deciding about the point of time when the export proper commences. As we have already pointed out when export has been defined in the Import & Export (1) (1953) 4 S.T.C. 133. 931 (Control) Act, 1947, as "taking out of India by land, sea, or air ", export in the Export Control Order, cannot be held to have commenced till at least the ship carrying the goods has left the port, though it may in some contexts be more correct to say that it does not commence till the ship has passed beyond the territorial waters. We have therefore come to the conclusion that there is no circumstance which would justify a conclusion that the parties came to a special agreement that though the sales were on FOB contracts property in the goods would pass to the buyer at some point of time before shipment. We think that the learned judges who heard the appeal in the Bombay High Court were right in their conclusion that the goods remained the sellers ' property till the goods had been brought and loaded on board the ship and so the sales were exempted from tax under article 286(1)(b) of the Constitution. In Civil Appeal No. 46 of 1959 the appellants ' contention is that on a correct interpretation of the provisions of section 10(b) of the Bombay Sales Tax Act no purchase tax was leviable from them. Section 10(b) provides for the levy of a purchase tax on the turnover of purchase of goods specified in column I of Schedule B, at the rates, if any, specified against such goods in column 4 of the said schedule, "where a certificate under cl. (b) of section 8 has been furnished in respect of such goods and the purchasing dealer does not show to the satisfaction of the Collector that the goods have been despatched by him or by a person to whom he has sold the goods to an address outside the State of Bombay within a period of six months from the date of purchase by the dealer furnishing such certificate ". Section 8(b) provides for the deduction from the turnover, of sale of goods to a dealer who holds an authorisation and furnishes to the selling dealer a certificate in the prescribed form declaring inter alia that the goods so sold to him are intended for being despatched by him or by registered dealers to whom he sells the goods to an address outside the State of Bombay. Admittedly such a certificate was furnished by 932 M/s. Daulatram Rameshwarlal in respect of the castor oil which they sold to others and that in respect of these sales to them their sellers were allowed deductions. It is equally undisputed that the persons to whom M/s. Daulatram Rameshwarlal sold the goods were sent to an address outside the State of Bombay within a period of six months from the date of purchase by M/s. Daulatram Rameshwarlal. These persons are however not registered dealers. The Sales Tax Officer as also the High Court of Bombay has held that the " person to whom he has sold the goods " in section 10(b) means " a registered dealer to whom he has sold the goods ". It is contended before us on behalf of the appellant dealers that the word " a person " is wide enough to include a registered dealer and an unregistered dealer. It is urged that the use of the word it a person " instead of the words " a registered dealer " is deliberate and that it was the intention of the Legislature to levy purchase tax on a person who has given such certificate under section 8(b) only if the goods were not 'despatched outside the State of Bombay within the prescribed period by anybody. It is therefore contended that " a person " in section 8(b) should be interpreted to include a registered dealer or anybody else. We are unable to agree. A close examination of sections 8 and 10 justifies the conclusion that the Legislature was anxious to secure that the declaration as regards intention of the goods being despatched outside the State of Bombay should be carried out by despatch by " a registered dealer " to whom he sells the goods. If such despatch outside the State of Bombay is by a person to whom the certifying dealer has sold the goods but who is not a registered dealer the certificate has not been complied with. It will be in our opinion unreasonable to think that though the Legislature insisted that the certificate should declare the goods purchased were intended 11 for being despatched by him or by a registered dealer to whom he sells the goods outside the State of Bombay ", the Legislature would be content to accept actual despatch outside the State of Bombay by one who is not a registered dealer as sufficient. Mr. Sanyal contended that the certificate 933 has to declare only an intention and that if ultimately the actual despatch is made by some person who is not a registered dealer, it cannot strictly be said that the declaration has not been carried out. It might very well be that if at the time a declaration of intention is made in the certificate the purchasing dealer had the intention as stated and ultimately he sells to a person who is not a registered dealer for despatch of the goods outside the State of Bombay, the purchasing dealer may not be liable for having made a false declaration ". Even though he has not made a false declaration of his intention, the fact remains that the intention declared has not been carried out. The scheme of the Legislature clearly is that where the intention as declared has not been carried out purchase tax should be levied. To hold otherwise would be to make the declaration of the intention useless. Our conclusion therefore is that the courts below have rightly interpreted the words " a person " in section 10(b) of the Bombay Sales Tax Act as a " registered dealer " and that the purchasing dealers have rightly been assessed to purchase tax under section 10(b). In the result, both the appeals are dismissed with costs. Appeals dismissed.

The respondents firm claimed exemption from Sales Tax under article 286(i)(b) of the Constitution in respect of sales 925 made by them of cotton and castor oil on the ground that the sales were on F.O.B. contracts under which they continued to be the owners of the goods till those crossed the custom barrier and entered the export stream. They also contested the purchase tax to which they were assessed under section 10(b) of the Bombay Sales Tax Act. The High Court upheld the contention of the respondents regarding the Sales Tax but held that they were liable to pay purchase tax. On appeal by both the parties Held, that the goods remained the seller 's property till those had been brought and loaded on board the ship and so the sales were exempted from tax under article 286(i) of the Constitution. The word " a person " in section 10(b) of the Bombay Sales Tax Act had been correctly interpreted as " a registered dealer " and the purchasing dealers had been rightly assessed to purchase tax. The normal rule in F. 0. B. contracts was that the property was intended to pass and did pass on the shipment of the goods. The presumption in F. 0. B. contracts was that it was the duty of the buyer to obtain the necessary export licence, though in the circumstances of a particular case that duty might fall on the seller. H.O. Brandt & Co. vs H. N. Morris & Co. Ltd., [1917] 2 K.B. 784 and M. W. Hardy & Co. vs A. V. Pound & Co., Ltd., (1953) 1.Q.B. 499, considered. "Export " under the Import and Export Control Act having been defined as " taking out of India by land, sea or air " it could not, under the Export Control Order, be held to have commenced till the ship carrying the goods left the port or in some cases passed the territorial waters. The State of Bombay vs The United Motors (India) Ltd., (1953) 4 S.T.C. 133, held inapplicable.

ION: Criminal Appeal 89 of 1961. Appeal by special leave from the judgment and order dated December 8, 1960, of the Allahabad High Court in Criminal Appeal No. 1782 of 60 and Referred No. 125 of 1960, section K. Kapur, for the appellant, G. C. Mathur and C. P. Lal, for the respondent. December 19. The Judgment of the Court was delivered by RAGUHBAR DAYAL, J. Ram Singh appeals, by special leave, against the order of the Allahabad High Court dismissing his appeal and confirming 204 his conviction and sentence of death, under section 302, I.P.C., by the Session Judge, Etawah. The prosecution case, in brief, is that due to enmity, the appellant caused injuries to Sheo Sahai, who was sleeping in his cattle shed in village Bhadurpur Ghar, with a sword at about mid night on the night between June 14 15, 1960. Sheo Sahai died of the injuries received. The appellant thereafter proceeded to the Canal Distributory at some distance from the village and had a bath there. Later on, he went to the Police Station, Ekdil, nine miles away and lodged a report. He delivered the sword which has been found by the Serologist to be stained with human blood. The appellant was taken in custody and as a result of the investigation was sent up for trial, The appellant denied the allegation that he had caused the death of Sheo Sahai and alleged that he was falsely accused of the offence. He also denied the other allegations for the prosecution. He alleged that one Paley Singh informed him about the murder of Sheo Sahai and asked him to go to the Police Station, Ekdil, and to inform the Station Officer orally about the murder. He did accordingly. He was detained at the Police Station till 11 a.m., the next day and was then put up in the lock up. The Sub Inspector took his thumb impression forcibly on three papers, but did not tell him the reason. The appellant adduced no evidence in support of his statement. The Courts below rightly did not accept his version. The evidence led by the prosecution consisted of the evidence relating to motive, to his extrajudicial confession to one Ujagar Singh when he was having a bath in the Canal, to his purchasing the sword and to his delivering it at the police Station after he had dictated the report. Both the Courts below rightly believed the evidence about the motive and purchase of the sword by the appellant. 205 The learned Sessions Judge believed Ujagar Singh and acted on the extra judicial confession made by the appellant to him. The High Court, however, did not rely on this extra judicial confession. It relied on certain statements made by the appellant in his report dictated at the Police Station and considered those facts together with the motive and the evidence about the purchase of the sword sufficient to confirm the appellant 's conviction and sentence. The learned counsel for the appellant has argued that the entire report dictated by the appellant was inadmissible in evidence as its contents amounted to a confession of the offence by the appellant made to a Police Officer and that the evidence relied upon by the High Court was insufficient to establish that the appellant had murdered Sheo Sahai. On the other hand, learned Counsel for the respondent urged that the High Court was wrong in rejecting the statement of Ujagar Singh about the appellant 's extra judicial confession and that the extra judicial confession together with the circumstances relied on by the High Court, fully make out the prosecution case against the appellant. He also urges that such portions of the report which did not amount to a direct admission of the appellant 's striking Sheo Sahai with a sword and thereby causing his death were admissible in evidence. We do not consider it necessary to decide whether any portion of the report dictated by the appellant at the Police Station is admissible or not in evidence, as there is good independent evidence with respect to the four matters mentioned in the report and relied on by the High Court in considering the case against the appellant. These admissions of the appellant are (i) that he purchased a cycle from the deceased; (ii) that there was a quarrel in a play of cards; (iii) that he purchased a sword; and (iv) that he deposited the sword at the Police Station. 206 Ajit Singh, P.W., 5 deposed about the purchase of the cycle and about a dispute taking place between Sheo Sahai and the appellant on account of the latter 's demanding the return of Rs. 10/ which had been paid towards the sale price as the balance of the sale price had not been paid and the deal was cancelled by Sheo Sahai in accordance with the oral contract. Ajit Singh bears no enmity with the appellant. In fact, none of the prosecution witnesses is alleged to bear enmity with the appellant. Paley Singh, P.W. 2, and Baij Nath P.W. 4, depose about the dispute during the game of cards played on June 12, 1960. Kehar Singh P.W.3. deposed about the selling of a sword to the appellant on June 13, 1960. A receipt about the sale was found on the person of the appellant when he was searched after his arrest. The appellant 's depositing the sword at the Police Station is deposed by Madho Ram P.W. 12, and by Sri Kishan Singh, Station Officer, Ekdil, (P.W. 16), in whose presence the appellant had dictated the report. It is therefore not necessary to rely on the admissions of the appellant in the report with respect to these facts deposed to by the various witnesses whose testimony has been rightly accepted. We need also consider whether the facts that the accused had a motive to harm Sheo Sahai and that he had purchased a sword a day before the incident and deposited it stained with human blood at the Police Station on the night of the murder are sufficient to establish that it must be the appellant who committed the murder of Sheo Sahai or not, as we are of opinion that the High Court erred in rejecting the statement of Ujagar Singh about the appellant 's confessing to him that he had murdered Sheo Sahai. 207 In this connection, the High Court simply said: "A perusal of the statement of Ujagar Singh would show that it is very likely that this may have happened. To us, it seems that in the middle of June when the chari and sugar cane crop would not have been very high, it seems improbable that Ujagar Singh would have been sleeping in his field or that he should have met the appellant in the manner alleged. We do not feel sure of the extra judicial confession said to have been made by the appellant to Ujagar Singh, and consequently we do not place any reliance on his statement, though it has been relied upon by the court below. " With respect to the learned Judges, these observations are not very consistent. If Ujagar Singh 's statement made it very likely that what he stated did happen, there could not have appeared any improbability in Ujagar Singh 's sleeping in his field and meeting the appellant in the manner alleged, especially when the learned Judges believed, and there was evidence about it, that the fields had chari and sugarcane crop at the time. The learned Judges have not stated those considerations, if any, in addition to the improbability of Ujagar Singh 's presence in his field on account of the crops being not very high, which made them doubt the appellant 's confessing to Ujagar Singh. It may be mentioned that Ujagar Singh was on the field, according to his statement, for protecting the crop from the depradations of neel gais. They damage the leaves of the plants and have no partiality for tall plants alone. In fact, the smaller the plants, the easier it must be to graze. The learned Sessions Judge has discussed the criticism urged before him against the acceptance of the statement of Ujagar Singh and considered 208 it, for reasons given, not to justify the rejection of Ujagar Singh 's statement. We agree with those reasons. There is no enmity between Ujagar Singh and the appellant and therefore no good reasons existed for Ujagar Singh to state falsely. Extra judicial confessions are not usually considered with favour but that does not mean that such a confession coming from a person who has no reason to state falsely and to whom it is made in circumstances which tend to support his statement, should not be believed. The murder was committed in the month of June. Both on account of the temperature and on account of the culprit 's desire to wash of blood marks on his person, the appellant 's bathing in the Canal at that hour of the night cannot be said to be improbable. It is not stated by sub Inspector Kishan Singh, nor it is alleged that the appellant had on his person or on his clothes blood stains when he presented himself at the Police Station. This tends to support Ujagar Singh 's statement that the appellant had a bath in the Canal at that hour. Of course, this consideration springs out of the supposition that the appellant did commit the murder. The fact that he had the sword which was stained with human blood, leads to such a supposition, even if the mere possession of a sword so stained be not sufficient to establish conclusively that the person who possessed it so shortly after the murder of a person with whom he had enmity, had committed the murder. The Canal runs beside Ujagar Singh 's field. Ujagar Singh was on the field for the purpose of watching it against the neel gais trespassing and grazing the crop. It is not therefore a matter of surprise that he wakes up and proceeds to the spot from where the splashing sound which, is supposed to be due to the wading of the neel gais, came. On reaching the Canal bank, he observes 209 the person bathing and naturally asks him what. led him to have a bath at that hour at night. Taken by surprise, it is not unlikely that the appellant should have made a statement that he had committed the murder of Sheo Sahai and was, thereafter, having a bath. There is no reason to think that the appellant would not make such a statement when the appellant himself proceeds to the Police Station and hands over the blood stained sword. It is no doubt unusual, as urged for the appellant, that a person who commits a murder in pursuance of an enmity arising out of minor disputes, would be feeling so justified in his conduct as to openly admit it to the first person he met and to go to the Police Station and report about it. It is always difficult to find reasons for a person 's acting in a certain manner. It may be that having blurted out the truth to Ujagar Singh, when taken by surprise, the appellant thought the best thing to be to proceed to the Police Station and report the matter there. It is true that Ujagar Singh did not rush to the village at once and convey the news of the murder of Sheo Sahai. The learned Sessions Judge has considered the criticism against such a conduct and has held that there were good reasons for Ujagar Singh 's not leaving his field whose crops he was watching against the neel gais. We agree with the view of the learned Sessions Judge and do not consider Ujagar Singh 's conduct of continuing to remain on his field during the night to be so improbable as to affect his veracity. Ujagar Singh went to the village at about 5 a.m., and them told the people of what he had been told by the appellant. This statement of his, is supported impliedly by Paley Singh, P.W. 2, who states that the Sub Inspector was not present when Ujagar Singh related to them the fact which had taken place at night and by Bishram Singh, P.W. 13, who 210 deposed that Ujagar Singh stated that Ram Singh was taking his bath at night in the Canal Distributory and had said that he had come after committing the murder of Sheo Sahai and that the appellant had then proceeded towards the police station. We are therefore of opinion that Ujagar Singh 's statement about the appellant 's confessing to him that he had murdered Sheo Sahai has been erroneously rejected by the High Court. The extra judicial confession of the appellant to Ujagar Singh finds ample support from the facts that the appellant did purchase a sword a day before, that very sword was found to be stained with human blood shortly after the murder and that sword was handed over by the appellant himself to the Police Officer at the Police Station. The evidence of the appellant 's having enmity with Sheo Sahai, the appellant 's conduct in purchasing a sword and delivering it stained with human blood to the Police and the appellant 's confession to Ujagar Singh, fully establish that the appellant did commit the murder of Sheo Sahai. We are therefore of opinion that he has been rightly convicted of the offence under section 302, I.P.C., and has been awarded the proper sentence. We therefore dismiss the appeal. Appeal dismissed.

The appellant was tried for murder. The facts established were that there were quarrels between the appellant and the deceased over the purchase of a cycle and in a play of cards that the appellant had purchased a sword a day earlier and that he had deposited the sword stained with human blood at the police station shortly after the murder. Evidence was also led of an extra judicial confession made by the appellant to one U but the High Court did not place reliance on it as it did not feel sure of it though it observed that a perusal of the statement of U showed that it was very likely that what he stated may have happened. ^ Held, that the statement of U regarding the extra judicial confession was erroneously rejected by the High Court. Extra judicial confessions were not usually considered with favour but such a confession coming from a person who had no reason to state falsely and to whom it was made in circumstances which tended to support his statement could be relied upon. The extra judicial confession in the present case was supported by the facts established, and these together fully established the guilt of the appellant.

Civil Appeal No. 50 of 1961. Appeal by special leave from the Award dated March 10, 1959, of the Industrial Tribunal. Kozhikode, in I.D. No. 89 of 1958. A. V. Viswanatha Sastri and T. V. R. Tatachari, for the appellant, Janardan Sharma, for the resondents. January 29. The Judgment of the Court was delivered by WANCHOO.J. This is an appeal by special leave in an industrial matter. The brief facts necessary for present purposes are these. The appellant in a saw mill carrying on business in Kozihkode in 824 the State of Kerala. One Sankaran was in the employ of the appellant as a crosscutter. It is said that on June 21, 1958, Sankaran came drunk to they mill and abused the Engineer, the Secretary and others and threatened them with physical violence. He was caught hold of by other workmen and taken outside. It is said that he came again a short time later at 4 30 p.m. and abused the same persons again. Thereupon the appellant served a charge sheet on Sankaran on June 24, 1958 acting out the above facts and asked him to show cause why his services should not be terminated on account of his grave indiscipline and misconduct. Sankaran gave an explanation the same day denying the allegations of fact made against him, though he admitted that he had come to the mill at the relevant time for taking his wages for that week. On June 25, 1958 Sankaran was informed that in view of his denial, a departmental inquiry would be held and he was also placed under suspension pending inquiry. The same day Sankaran protested against his suspension and requested that in any case the departmental inquiry should be expedited. As no inquiry was held till July 2, 1958, Sankaran again wrote to the appellant to hold the inquiry as early as possible. On July 8, 1958, the appellant terminated the services of Sankaran under r. 18 (a) of the Standing Orders without holding any departmental inquiry and the order was communicated to Sankaran the same day. In that order the appellant informed Sankaran that the proposed inquiry, if conducted, would lead to further friction and deterioration in the rank and file of the employees in general and also that maintenance of discipline in the undertaking would be prejudiced if he was retained in the service of the appellant, and therefore it considered that no inquiry should be held. A dispute was then raised by the union which was referred to the industrial tribunal for adjudication by the Government of Kerala in October 1958. The tribunal held that 825 something seemed to have happened on the afternoon of June 21, 1958 but there was no evidence to prove what had actually happened. It further held that the appellant had intended to take disciplinary action against the workman but subsequently departmental proceedings were dropped and action was taken under r. 18(a) of the Standing orders. The tribunal was of the view that this was a colourable exercise of the power given under r. 18(a) to the appellant and therefore its action could not be upheld as a bona fide exercise of the power conferred. The tribunal also pointed out that no attempt was made before it to defend the action taken under r. 18 (a) by proving the alleged misconduct. Two witnesses were produced before the tribunal in connection with the alleged misconduct, but the tribunal did not rely on them on the ground that the important witnesses, namely, the Engineer, the Secretary and other members of the staff whose evidence would have been of more value had not been produced and no explanation had been given why they were not produced. The tribunal therefore held that on the facts it could not come to the conclusion that Sankaran had come drunk to the mill and abused or attempted to assault either the Engineer or the Secretary or other officers. In the result the order of discharge was set aside and Sankaran was ordered to be reinstated. The appellant thereupon applied for special leave which was granted; and that is how the matter has come up before us. The main contention of the appellant is that it is entitled under r. 18 (a) of the Standing Orders to dispense with the service of any employee after complying with its terms. Rule 18 (a) is in these terms: "When the management desires to determine the services of any permanent workmen 826 receiving 12 as. or more as daily wages, otherwise than under rule 21, he shall be given 14 days notice or be paid 12 days wages. " It may be mentioned that r. 21 deals with case of misconduct and provides for dismissal or suspension for misconduct and in such a case the workman so suspended is not entitled to any wages during the period of suspension. The claim thus put forward on behalf of the appellant is that it is entitled under r. 18(a) of the Standing orders which is a term of contract between the appellant and its employees to dispense with the service of any employee at any time by just giving 14 days notice or paying 12 days wages. We are of opinion that this claim of the appellant cannot be accepted, and it is too late in the day for an employer to raise such a claim for it amounts to a claim "to hire and fire" an employee as the employer pleases and thus completely negatives security of service which has been secured to industrial employees through industrial adjudication for over a long period of time now. As far back as 1952, the Labour Appellate Tribunal had occasion to consider this matter relating to discharge by notice or in lieu thereof by payment of wages for a certain period without assigning any reason: (see Buckingham and Carnatic Co. Ltd. Etg. vs Workers of the Company. etc.) (1). It was of opinion that even in a case of this kind the requirement of bona fides is essential and if the terminataton of service is a colourable exercise of the power or as a result of victimisation or unfair labour praction the industrial tribunal would have the jurisdiction to intervene and set aside such termination. Further it held that where the termination of service is capricious, arbitrary or unnecessarily harsh on the part of the employer judged by normal standards of a reasonable man that may be cogent evidence of victimisation or unfair labour practice. These observations 827 of the Labour Appellate Tribunal were approved by this Court in The Chartered Bank, Bombay vs The Chartered Bank Employees ' Union (1). and Assam Oil Company vs Its Workmen (2). Therefore if as in this case the employer wanted to take action for misconduct and then suddenly dropped the departmental proceedings which were intended to be held and decided to discharge the employee under r. 18 (a) of the Standing orders, it was clearly a colourable exercise of the power under that rule in as much as that rule was used to get rid of an employee instead of following the course of holding an inquiry for misconduct, notice for which had been given to the employee and for which a departmental inquiry was intended to be held. The reason given by the appellant in the order terminating the services of Sankaran of July 8, 1958, namely, that the proposed inquiry, if conducted, would lead to further friction and deterioration in the rank and file of the employees in general and also that maintenance of discipline in the undertaking would be prejudiced if Sankaran were retained in service, cannot be accepted at its face value; so that the necessity for an inquiry intended to be held for misconduct actually charged might be done away with. In any case even if the inquiry was not held by the appellant and action was taken under r. 18 (a) it is now well settled, in view of the decisions cited above, that the employer could defend the action under r. 18(a) by leading evidence before the tribunal to show that there was in fact misconduct and therefore the action taken under r. 18(a) was bona fide and was not colourable exercise of the power under that rule. But the tribunal has pointed out that the employer did not attempt to do so before it. It satisfied itself by producing two witnesses but withholding the important witnesses on this question. In the circumstances, if the tribunal did not accept the evidence of the two witnesses 828 who were produced it cannot be said to have gone wrong. Learned counsel for the appellant however urges that the employer was empowered to take action under r. 18 (a) of the Standing orders and having taken action under that rule, there was nothing for it to justify before the tribunal. We have already said that this position cannot be accepted in industrial adjudication relating to termination of service of an employee and has not been accepted by industrial tribunals over a long course of years now and the view taken by industrial tribunals has been upheld by this Court in the two cases referred to above. Learned counsel for the appellant, however, relies on the decision of this Court in Parshotam Lal Dhingra vs Union of India. (1) That was however a case of a public servant and the considerations that apply to such a case are in our opinion entirely different. Stress was laid by the learned counsel on the observations at p. 862 where it was observed as follows: "It is true that the misconduct, negligence inefficiency or other disqualification may be the motive or inducing factor which influences the Government to take action under the terms of the contract of employment or the specific service rule, nevertheless, if a right exists under the contract or the rule, to terminate the service, the motive operating on the mind of the Government is, as Chagla C. J. has said in Srinivas Ganesh vs Union of India (2) (supra), wholly irrelevant. It is urged that the same principle should be applied to industrial adjudication. It is enough to say that the position of government servants stands on an entirely different footing as compared to industrial employees. Articles 310 and 311 of the Constitution apply to government servants and it is in the 829 light of those Articles read with the Rules framed under article 309 that questions relating to termination of service of government servants have to be considered. No such constitutional provisions have to be considered when one is dealing with industrial employees. Further an employer cannot now press his right purely on contract and say that under the contract he has unfettered right "to hire and fire" his employees. That right is now subject to industrial adjudication and even a power like that granted by r. 18 (a) of the Standing orders in this case, is subject to the scrutiny of industrial courts in the manner indicated above. The appellant therefore cannot rest its case merely on r. 18 (a) and say that having acted under that rule there is nothing more to be said and that the industrial court cannot inquire into the causes that led to the termination of service under r. 18 (a). The industrial court in our opinion has the right to inquire into the causes that might have led to termination of service even under a rule like 18(a) and if it is satisfied that the action taken under such a rule was a colourable exercise of power and was not bona fide or was a result of victimisation or unfair labour practice it would have jurisdiction to intervene and set aside such termination. In this case the tribunal held that the exercise of power was colourable and it cannot be said that view is incorrect. The appellant failed to satisfy the tribunal when the matter came before it for adjudication that the exercise of the power in this case was bona fide and was not colourable. It could have easily done so by producing satisfactory evidence; but it seems to have rested upon its right that no such justification was required and therefore having failed to justify its action must suffer the consequences. Learned counsel for the appellant also drew our attention to another decision of this Court in 830 The Patna Electric Supply Co. Ltd. Patna vs Bali Rai(1). That case in our opinion has no application to the facts of this case because that case dealt with an application under section 33 of the Industrial Disputes Act while the present proceedings are under section 10 of the Act and the considerations which apply under section 33 are different in many respects from those which apply to an adjudication under section 10. The appeal therefore fails and is hereby dismissed with costs. Appeal dismissed.

S, employed by the appellant as a cross cutter in the saw mill was asked to show cause why his services should not be terminated on account of grave indiscipline and misconduct and he denied the allegations of fact. He was thereafter informed about a department enquiry to be held against him and was suspended pending enquiry. Purporting to act under r. 18(a) of the Standing Orders, the appellant terminated the services of S, without holding any departmental enquiry. The industrial tribunal to which the dispute was referred held, that action taken, after dropping the proposed departmental proceedings was not bonafide and was a colourable exercise of the powerconferred under r. 18(a) of the Standing order and since no attempt was made before it to defend such action by proving the alleged misconduct, it passed an order for reinstatement of S, The appellant contended that as the termination was strictly in accordance with the terms of contract under r. 18(a) of the Standing Orders, it was entitled to dispense 823 with the service of an employee at any time by first giving 14 days notice or, paying 12 days wages. ^ Held, that the employer 's decision to discharge the employee under r. 18(a) of the Standing Orders after dropping the enquiry intended to be held for misconduct was clearly a colourable exercise of the power, and an employer could not press his right purely on contract and say that under the contract he has unfettered right "to hire and fire" his employees, right was subject to industrial adjudication and even a power like that granted by r. 18(a) of the Standing orders in this case was subject to the scrutiny of industrial courts. Even in a case of this kind the requirement of bona fides was essential and if the termination of service was a colourable exercise of power, or was a result of victimisation or unfair labour practice, the tribunal had jurisdiction to intervene and set aside such termination. Buckingham and Carnatic Co. Ltd. vs Workers of the Company, , referred to. The Chartered Bank Bombay vs The Chartered Bank Employees Union. ; and Assam Oil Company vs Its Workmen, [1960] 3 S.C.R. 457, followed. Held, further, that the principle relating to termination of Government service stands on an entirely different footing as compared to industrial employees and the same principle could not be applied to industrial adjudication. Parshotaa Lal Dhingra vs Union of India, ; , distinguished.

iminal Appeals Nos. 160 to 162 of 1960. Appeals by special leave from the judgment and order dated January 20, 1960 of the Allahabad High Court in Criminal Government Appeals Nos. 2011 to 2013 of 1958. B. C. Misra and P. K. Chakravarti, for the appellant. G. C. Mathur and C. P. Lal, for the respondent. September 27. The judgment of the Court was delivered by MUDHOLKAR, J. These three appeals arise out of three separate trials before the Additional Sessions judge, Bulandshahr, but were argued together as they arise identical questions. In all these trials, the appellant, who was a postman attached to the Bulandshahr post office was tried for offences under section 52 of the Indian Post Office Act, 1898 (VI of 1898) and in two of ' them, also for offences under sections 467 and 471 of the Indian Penal Code. Briefly stated the allegations against the appellant were that he either stole or secreted five registered letters and that he fabricated three receipts showing that the registered letters were received by the addressees. The learned Additional Sessions judge acquitted the appellant of all these offences. The State then preferred an appeal against his acquittal in these three cases to the High Court of Allahabad but restricted the appeal to the acquittal of the appellant in respect of offences under 410 section 52 of the Indian Post Office Act, 1898 (hereafter referred to as the Act). The High Court held that the appellant had secreted the five registered letters in question and on this finding set aside his acquittal and convicted him in each of the three appeals for offences under section 52 of the Act and sentenced him to undergo rigorous imprisonment for a period of one year in each case. The appellant has come up to this Court by special leave. Briefly stated the prosecution case is that when the house in which the appellant lives along with his father Diwan Singh, a retired Police Head Constable, was searched by the C.I.D. Inspector, S.N. Singh, along with Masood Murtaza, Sub Inspector of Police, Bulandshahr on May 12, 1956, in connection with a case against Messrs Greenwood Publicity, they accidentally discovered a large number of letters and postcards and also the five registered letters in question. At the time of the search the appellant who happens to be a trade union official, was not in Bulandshahr but was away on leave at Delhi in connection with a postal conference. These articles were found in an almirah, the key of which was produced by the appellant 's father. The articles were not listed at the spot but were taken to the Kotwali in a sealed packet and later on listed there. A number of other articles were also seized at that time but we are not concerned with them as they have no connection with the charges against the appellant. Briefly, the appellant 's defence in all these cases is that there are two factions in the Bulandshahr post office and that these articles were planted by the opposite party. According to him, the planting must have occurred in the Kotwali when the Sub Inspector purported to make a list of the articles seized from the house in which the appellant lives. Further, according to him, neither the house nor the almirah from which the articles are said to have been 411 seized was in his exclusive possession. He stated and that fact is not denied that the house which consists of two rooms only has been rented in his father 's name, that both of them live in those two rooms and that the almirah was in his father 's possession inasmuch as the key was produced by him. On behalf of the appellant Mr. B. C. Misra has raised the following six points: (1) That on the findings arrived at by the High Court no offence under section 52 of the Post Office Act has been made out. (2) That it has not been established that the five registered letters were in the exclusive possession of the appellant. (3) That the search was illegal inasmuch as it was in contravention of the provisions of sections 103 and 165 of the Code of Criminal Procedure. (4) That in examining the appellant the Ad ditional Session Judge did not comply with the requirements of section 342 of the Code of Criminal Procedure. (5) That the High Court has not found that there were compelling reasons for setting aside the appellant 's acquittal . (6) The sentences in the three cases having been ordered to run consecutively the total sentence is excessive. We will deal with the last four points first. So far as the alleged illegality of the search is concerned it is sufficient to say that even assuming that the search was illegal the seizure of the articles is not vitiated. It may be that where the provisions of ' sections 103 and 165, Code of Criminal Procedure, are 412 contravened the search could be resisted by the person whose premises are sought to be searched. It may also be that because of the illegality of the search the Court may be inclined to examine carefully the evidence regarding the seizure. But beyond these two consequences no further consequence ensues. The High Court has chosen to accept the evidence of the prosecution with regard to the fact of seizure and that being a question to be decided only by the Court of fact, this Court would not re examine the evidence for satisfying itself as to the correctness or otherwise of the conclusions reached by the High Court. In so far as the contravention of provisions of section 342, Code of Criminal Procedure, are concerned it is sufficient to point out that no grievance was made either before the Court of the Additional Sessions judge or before the High Court that there was such a contravention and the appellant was prejudiced and we cannot allow the point to be raised for the first time here, the reason being that whether there was prejudice is a question of fact and cannot be permitted to be agitated for the first time in an appeal under article 136 of the Constitution. As regards the fifth point, it is sufficient to say that this Court has held that an appeal from acquittal need not be treated differently from an appeal from conviction and if the High Court finds that the acquittal is not justified by the evidence on record it can set aside the acquittal without coming to the conclusion that there were compelling reasons for doing so. In so far as the sentence is concerned, bearing in mind the fact that the maximum sentence awarded under section 52 of the Act is seven years it would not be right to say that in ordering the sentences in the three cases to run consecutively the appellant is being very severely punished. In so far as section 52 of the Act is concerned the argument is that the prosecution having merely shown that the registered letters were recovered from an almirah in the house in which the appellant lives the 413 utmost that could be said is that he was in possession of letters, that is, assuming that he was in the exclusive possession of the house and the almirah. The mere fact of possession, according to learned counsel, does not suffice to show that the letters were secreted by the appellant. It is contended that for an officer of the post office to be found guilty for any of the acts specified in section 52 it has further to be shown that he was entrusted with the postal article with respect to which he is alleged to have committed any of those acts. Section 52 of the Act runs thus : "Penalty for theft, dishonest, misappropriation, secretion, destruction, or throwing away of postal articles. Whoever, being an officer of the Post Office, commits theft in respect of, or dishonestly misappropriates, or, for any purpose whatsoever, secretes, destroys or throws away, any postal article in course of transmission by post or anything contained therein, shall be punishable with imprisonment for a term which may extend to seven years, and shall also be punishable with fine. " The first act referred to in this section is theft. Surely it cannot be contended that any (entrustment ' is necessary with regard to that act. Indeed, if entrustment were proved and the article entrusted is not found to have been disposed of in the manner permissible under the Act, the offence committed would be not theft but criminal breach of trust. according to Mr. Misra, the appellant cannot be said to have secreted the letter just because it was found in the almirah which is said to have been in his exclusive possession. To secrete means, according to the dictionary "to hide". In connection with a postal article addressed to some person the fact that it is retained in his possession by an officer of the post office in an almirah and that too for an inordinately long period would be tantamount to hiding that 414 article. Of course, what act amounts to "secreting" would necessarily depend upon the facts of each case and in our opinion in a case like the present, what 'has been established by the prosecution would sustain an inference of secreting. Further, a perusal of section 55 makes it clear that where the entrustment of an article is made an ingredient of an offence, the legislature has used appropriate words to make the matter clear. If, therefore, it was the intention of ' the legislature that for an officer of the post office to be punished for secreting, destroying or throwing away a postal article in the oucrse of transmission by post, entrustment of that article to him was essential it would have used language similar to that used by it in section 55. It seems to us that bearing in mind the ' fact that an officer of the post office having in the course of his duties access to postal articles kept or lying in the post office, the legislature has deliberately enlarged the scope of section 52 so as to encompass secretion, destruction or throwing away of postal articles by an officer of the post office even though they may not have been entrusted to him or even though the are riot articles with which he is required or is competent to deal in the course of his duties. The object of the provision is to prevent postal articles 'in course of transmission by post ' from being tampered with, and so the secreting, destruction ' etc., of postal articles to which the provision is directed is to such secreting, destruction etc., as would frustrate or tend to frustrate their delivery to the addressees. Then Mr. Misra contended that it would not be correct to say that the five registered letters recovered from the almirah were in the course of transmission by post because that recovery was made 7 or 8 months after those letters had been despatched and that no complaint had ever been made regarding their nondelivery by the senders or the addressees of those letters. He further referred to the fact that at least in respect of three of the registered letters 415 acknowledgments purporting to be from the addressee were obtained and were with the post office. He admitted that the prosecution allegation was that those documents were fabricated but that case having failed before the Court of Sessions and the Government not having appealed against that part of the decision of that court it must be held that at least three of those letters were duly received by the addressees. The expression "in course of transmission by post" has been defined in section 3 (a) of the Act as follows : .lm15 " a postal article shall be deemed to be in course of transmission by post from the time of its being delivered to a Post Office to the time of its being delivered to the addressee or of its being returned to the sender or otherwise disposed of under Chapter VII. " The mere fact that there is even a delay of several months in delivering a postal article to the addressee would not mean that the article had ceased to be in course of transmission. It is common experience that delivery of postal articles is now and again delayed for a considerable length of time may be through accident or through the negligence of the postal employees. It is probably for this reason that the definition clearly lays down that until an article despatched by post is delivered or can be said to be delivered that it will be deemed to be in course of transmission. We cannot, therefore, accept the first part of this contention of Mr. Misra. As regards the other point, that is, based on the fact that there were acknowledgments in respect of three letters in the post office we may point out that the existence of these acknowledgments would no more than raise a presumption that those articles were delivered to the addressees. The addressees have been examined in this case and they have deposed that the letters in question were not received by them. Their 416 evidence has been believed by the High Court and therefore, there is an end to the matter. In the circumstances, therefore, we do not accept Mr. Misra 's contention that the act of an officer of the post office in being in possession of a postal article for an inordinate length of time has no significance and cannot justify the conclusion that he had secreted the article. The next and in our opinion the most important question to be considered is whether the prosecution has established that the five registered letters in question were recovered from the possession of the appellant. As already stated, all that the prosecution has been able to prove is this case is that these letters were found in an almirah of the house in which the appellant lives jointly with his father and of which the key was furnished by the father. Dealing with this question the High Court has observed as follows : "In the first place, the respondent alone had the opportunity and the means to secure such a large number of postal articles. (2) that at least nine of those postal articles were addressed to the respondent himself (vide exhibit Ka 9, serial No. 66), (3) that Dewan Singh, who, we are informed is a very old man, would not foist the said incriminating articles on his son and thus ruin his career for ever, and (4) that the respondent alone can be said to have had some motive for secreting and concealing the registered letters and other postal articles in question. " Before the High Court could take into consideration the circumstance that as between himself and his father the appellant had a better opportunity to 417 get at postal articles it had to find affirmatively that the almirah was in the exclusive possession of the appellant. We have not been able to discover anything in the judgment which directly bears on this question. As the key was produced by the appellant 's father and there is no evidence that it was ever with the appellant it would not be legitimate to infer that the almirah was even in the appellant 's joint, much less in his exclusive, possession. Tile circumstance that the almirah contained, apart from the registered letters in question, certain other articles belonging to the appellant cannot sustain an inference that the almirah was in the appellant 's possession exclusively or even jointly with his father. We may recall that the almirah contained a large number of articles belonging to the father and since he had the key with him it must be he who must be deemed to be in possession of the almirah and consequently of its contents including the registered letters in question. Apart from that, out of the four reasons given by it, the last, as pointed out by the High Court itself, is a speculative reason and must, therefore, be left out of consideration. The second 'reason ' is no reason at all because a very large number of articles found in the almirah admittedly belong to the father. The third reason that the rather would not foist articles to incriminate the son and thus ruin his career assumes that had the father kept the articles he could have done so only if he wanted to incri minate the son. We cannot understand why the father, if he happened to get possession of the articles from some source may not have kept them in the almirah in the same way in which he had kept the other articles belonging to him. That leaves, therefore, only the first reason. We doubt if on the basis of this reason alone the High Court could have held that though the locked almirah was not in the exclusive possession of the appellant, these articles were in his exclusive possession. If the point to be 418 established was whether the appellant had availed himself of the opportunity to procure the articles it could have been established by showing that he was in their exclusive possession. But to say that he must be deemed to be in exclusive possession of these articles and not merely in their joint possession along with his father because he had the opportunity to get at the articles and then infer that he must have utilized the opportunity and was therefore in their exclusive possession would be arguing in a circle. Moreover since entrustment of the articles has not been established, the taking away of the articles by the appellant from the post office (if that is how he came by the articles) would be theft but it has not been found that he committed any theft. Indeed, had it been so found he could have been convicted under section 52 without the Court having to consider whether he had secreted the articles. We may mention that Mr. Mathur who appears for the State does not even suggest that the articles were stolen by the appellant. Therefore, the contention that he had an opportunity to get at the articles loses all significance and can possibly have no bearing on the question as to the nature of possession attributable to the appellant. In the circumstances we must hold that the prosecution has failed to prove that these letters were in the exclusive possession of the appellant. No presumption can, therefore, be drawn against him that he had secreted them from the mere fact that they were found in the almirah which, at best, may be regarded as being in the joint possession of himself and his father. But, as already stated, even an, inference of joint possession would not be legitimate. For these reasons we allow the three appeals and set aside the conviction and sentences passed against the appellant. Appeal allowed.

The appellant, a postman, and I,is father were living in the same house. Certain undelivered postal articles were re covered from an almirah in the house, the key of which was produced by the father. The appellant was tried and convicted of an offence under section 52 Post Offices Act for secreting postal articles. The appellant contended that since it had not been proved that he had been entrusted with these articles the offence under section 52 was not made out and that lie could not be held guilty of secreting as he was not in exclusive possession of these articles. Held, that entrustment was not an essential ingredient of the offence under section 52. Where the legislature intended to make entrustment an ingredient of the offence it had used appropriate words to make it clear. It had used no such words in section 52. To secrete means to hide. In a case like the present, the retention of an undelivered postal article in an almirah for an inordinately long period would be tantamount to hiding that article. Held, further, that the appellant was not in exclusive possession of the postal articles and no inference could be drawn 409 that he had secreted them. As the key was produced by the appellant 's father it could not be inferred that the appellant was in joint possession of the almirah much less that he was in exclusive possession of it. No inference could be drawn from the fact that the almirah contained certain other articles belonging to the appellant as it also contained a large number of articles belonging to the father.

l Appeals Nos. 15 to 19 of 1962. Appeal from the Judgment and order dated October 10, 1958, of the Bombay High Court in Income tax Reference No. 22 of 1 958. H. N. Sanyal,, Additional Solicitor General of India, N. D. Karkhanis and R. N. Sachthey, for the appellant. 701 A. V. Viswanatha Sastri, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for the respondents. October, 23. The judgment of the Court was delivered by KAPUR, J. These a peals pursuant to a certificate of the High Court of Bombay raise the question of interpretation of section 24B of the Income tax Act in an Income tax Reference. The question referred was answered in the negative and against the Commissioner of Income tax who is the appellant in these appeals, the respondents being the heirs and legal representatives of one Amarchand N. Shroff deceased. The appeals relate to the assessment years 1950 51, 1951 52, 1952 53, 1953 54 and 1954 55. Shortly stated the facts of the case are these Amarchand N. Shroff, Mangaldas and Hiralal were partners in a firm of solicitors. Amarchand died on July 7, 1949. Thereafter the partnership was carried on by Mangaldas and Hiralal up to November 30, 1949, and on December 1, 1949, Ramesh son of Amarchand who had by then qualified as a solicitor joined the firm as the third partner. After the death of Amarchand the arrangement between the various partners in regard to the realisations of the old outstandings was that in respect of the work done up to the death of Amarchand the realisations were to be divided amongst Amarchand, Mangaldas and Hiralal, in respect of the work between July 8, 1949, and November 30, 1919, the realisations were to be divided between Mangaldas and Hiralal 'and in respect of work done after December 1, 1949, the realisations were to be divided amongst Mangaldas, Hiralal and Ramesh. The firm kept its accounts on cash basis. For the five assessment years 1950 51 to 1954 55 the following amounts were received : Rs. 37,847/ , As. 43,162/ , Rs. 34,899/ , Rs. 13,402/ and 702 Rs. 32,523/ by the heirs and legal representatives of Amarchand out of the outstandings. The Income tax Officer sought to tax these realisations. For the assessment years 1950 51 and 1951 52 he assessed the amounts in the hands of the heirs and legal representatives of Amarchand as a Hindu undivided family. Against that order an appeal was taken to the Appellate Assistant Commissioner and then to the Appellate Tribunal. The two members of the Tribunal agreed in holding, though for different reasons, that the amounts were not the income of the Hindu undivided family but merely represented inheritance or realisations of the assets of Amarchand. The matter was not pursued further by the Revenue but sometime later proceedings were started by the Income tax Officer under section 34 in respect of the same income in the hands of "Amarchand N. Shroff by his heirs and legal representatives". The status of that entity was taken to be that of an individual and not Hindu undivided family. The various amounts were assessed to income tax in the hands of the respondents under section 34(1) (b) read with section 24B of the Income tax Act. The assessments so made were for the assessment years 1950 51, 1951 52, 1952 53, 1953 54 and 1954 55: On appeal the Appellate Assistant Commissioner held that. the notice under section 34 could validly be served only for the assessment years 1950 51 and notices for the subsequent years were invalid. The assessments for 1951 52 to 1954 55 were therefore quashed. The Commissioner of Income tax took an appeal to the Appellate Tribunal and the Tribunal held that assessment could not be made on Amarchand and that section 24B had no application to the income received after the death of Amarchand and that it was capital receipt and not revenue receipt. The order of the Appellate Assistant Commissioner was therefore upheld, On the application of the Commissioner of 703 Income tax the following question of law was referred to the High Court : "Whether on the facts and in the circumstances of the case, the sums of Rs. 37,847/ , Rs. 43,162/ , Rs. 34,899/ , Rs. 13,402,/ and Rs. 32,523/ were assessable to income tax in the hands of the assessee "Amarchand N. Shroff by his legal heirs and representatives" in the five respective years under reference ?". The High Court answered the question in the negative. It held that apart from section 24E of the Income tax Act the amounts were not taxable and that the section had no application to the case. It was argued by counsel for the Commissioner of Income tax that on a correct interpretation of section 24B the amounts which were received by the heirs and legal representatives of Amarchand after his death should be deemed by the fiction incorporated in sub section (1) to be income received by Amarchand and liable to tax under section 24B (1) of the Income tax Act. In other words the respondents as heirs and legal representatives of the deceased Amarchand were liable to pay out of the estate of the deceased Amarchand on those amounts to the extent of the estate as the estate was liable for tax on the amounts received by the heirs and legal representatives just as the deceased Amarchand would have been had he not died. The emphasis was on words in section 24B (1) "or any tax which would have been payable by him under this Act if he had not died". Section 24B is as follows : section 24B 11,Tax of deceased person payable by represen tative (1) Where a person dies, his executor, administrator or other legal representative shall be liable to pay out of the estate of the deceased person to the extent to Which the estate 704 is capable of meeting the charge the tax assessed as payable by such person or any tax which would have been payable by him under this Act if he had not died. (2) Where a person dies before the publication of the notice referred to in sub section (1) of section 22 or before he is served with a notice under sub section (2) of section 22 or section 34, as the case may be, his executor, administrator or other legal representative shall, on the serving of the notice under sub section (2) of section 22 or under section 34, as the case may be, comply therewith and the Income tax Officer may proceed to assess the total income of the deceased person as if such executor, ad ministrator or other legal representative were the assessee. (3) Where a person dies, without having furnished a return which he has been required to furnish under the provisions of section 22, or having furnished a return which the Income tax Officer has reason to believe to be incorrect or incomplete, the Income tax Officer may make an assessment of the total income of such person and determine the tax payable by him on the basis of such assessment, and for this purpose may by the issue of the,, appropriate notice which would have had to be served upon the deceased person had he survived require any accounts, documents or other evidence which he might under the provisions of sections 22 and 23 have required from the deceased person. " Sub section (1) provides that where a person dies his heirs and legal representatives are liable to pay out 705 of the estate of the deceased the tax assessed as payable by the deceased or any tax which would have been payable under the Act by the deceased if he had not died. According to the 'submission of counsel for the Commissioner of Income tax the words of sub section (1) "or any tax which would have been payable by him under this Act if he had not died" mean that irrespective of the date of ' receipt of income receivable by a person, if the income is received by his heirs and legal representatives after his death, they are liable for payment of the tax just as the deceased would have been liable when the income was received had he been living. But this interpretation is not in accord with the language used in s.24B. All the sub sections have to be read together. Sub section (1) can be divided into two parts; (1) where the income of the deceased was assessed before his death and (2) where the income was not so assessed but it would have been liable to tax had he not died. The second part or the words above quoted when read with sub sections (2) and (3) show that they are confined to cases therein mentioned. They show that those words also have to be restricted to the income received by the deceased person before his death and to the income received after his death by his heirs and legal representatives but in the previous" year and which had not been assessed but would have been assessed as income received by him if death had not taken place. See Allen vs Trehearne(1) where the words "if he had not died" were interpreted. Sub section (2) provides that if a person dies before the publication of the public notice under s.22 (1) or before a notice is served on him under sub sections 2 of section 22 or section 34 then the Income tax Officer may proceed to compute or assess the total income of the deceased person as if the heirs and legal representatives were the assessees Sub section (3) provides that when a person dies before a return is furnished by him under the provisions of section 22 or dies after having furnished the return which the (1) (1938) 22 Tax. 15, 706 Income tax Officer finds incorrect or incomplete then the Income tax Officer can make assessment on the total income of the deceased person and certain other consequences follow but in all the cases enumerated above the language used in sub sections 1, 2 and 3 of s.24B contemplates that the heirs and legal representatives of a deceased person are liable to pay income tax out of his estate (1) where assessment had already been made and (2) where he dies before the assessment but the income was received before his death or by his heirs and legal representatives after his death which occurs during the previous year. If he dies before the publication of the notice under S.22(1) or before the service under s.22(2) or after the service but before he has furnished a return or filed an incorrect or incomplete return then the Income tax Officer should make an assessment of the total income of such deceased person and determine the tax payable thereupon. Section 24B does not authorise levy of tax on receipts by the legal representatives of a deceased person in the years of assessment succeeding the year of account being the previous year in which such person died. Income tax is exigible in reference to a person 's total income of the previous year. The question before us is whether the income which was received subsequent to the previous year in which Amarchand died is liable to be assessed to income tax under section 24B as his income in the hands of his heirs and legal representatives. In the present case the accounts were kept on cash basis. The assessee under the Act has ordinarily to be a living person and cannot be a dead person because his legal personality ceases on his death. By section 24B the Legal personality of a deceased assessee is extended for the duration of the entire previous year in the course of which he died and therefore the income received by him before his death and that received by his heirs and legal representatives after his death but in that previous 707 year becomes assessable to income tax in the relevant assessment year. The section was enacted by the Legislature to bring to tax, after his death, income received during his lifetime, and fill up the lacuna which was pointed out by the High Court in Ellis C. Reid vs Commissioner of Income tax, Bombay(1). Any income received in the year subsequent to the previous or the account year cannot be called income received by the person deceased. The provisions of section 24B do not extend to tax liability of the estate of a deceased person beyond the previous or the account year in which that person dies. In support of his contention counsel for the Commissioner of Income tax relied upon the scheme of the Act as given in Additional Income tax Officer vs E. Alfred(2). There is nothing said in that case which supports the contention raised by the Commissioner of Income tax. Reliance was next placed on certain observations in a judgment of the Bombay High Court in re. B. M. Kamdar(3). Those observations also are of no assistance to the Commissioner of Income tax, Kania, J., as he then was) there observed that the question whether a particular amount was income or not had nothing to do with the time of its receipt and the question of receipt was material. only for the purpose of determining whether on that amount tax was to be levied under the Act in the year of assessment. That was a case where a consulting engineer discontinued his practice as such from February 15, 1938, and he received a sum of money representing the outstanding 'professional fees earned by him prior to the discontinuance of his practice but realised by him during the Calendar year which was the previous year. The assessee was keeping is accounts on cash basis and he contended that as he had discontinued his profession in the previous year the source had come to an nd and the amounts received by him were not liable to income tax. It was held that the income was assessable. The assessee in that case was still alive when the income (1) (2) , 445. (3) [1946] 14 l. T.R. 10. 708 was received by him and section 24B had no application to the facts of the case. Counsel also relied on the observations of Derbyshire, C.J., in re Sreemati Usharani Shoudhurani(1). In that case the managing agent of a limited company died on May 12, 1938. At the time of his death there was a credit with the company of a sum of money on account of commission earned by him and due to him prior to the date of his death. This sum was paid after his death in the previous year 1938 39 and was sought to be taxed under section 24B of the Income tax Act. It was held that this income was taxable. Derbyshire, C.J., said at p. 205 that the assessee who was the widow had received the salary due to her husband; that the Income tax Officer was entitled to assess the total income of the deceased person as if the legal representatives were the assessees and the amount was liable to tax under section 24B (1), but in that case also the amount was received by the widow in the previous year and it was earned by the deceased during the previous year. The correct position is that apart from s.24B no assessment can be made in respect of the income of a person after his death. See Ellis C. Reid vs Commissioner of Income tax, Bombay(2). In that case, and that was a case before section 24B was enacted, a person was served with a notice under section 22(2) of the Income tax Act but no return was made within the period specified and he died. It was held that no assessment could be made under section 23(4) of the Act after his death. At p.106 it was observed : "The is to be noticed that there is through the Act no reference to the decease of a person on whom the tax has been originally charged, and it is very difficult to suppose the omission to have been unintentional It must have (1) (2) 709 been present to the mind of the legislature that whatever privileges the payment of income tax may confer, the privilege of immortality is not amongst them. Every person liable to pay tax must necessary die and, in practically every case, before the last instalment has been collected, and the legislature has not chosen to make any provisions expressly dealing with assessment of, or recovering payment from the estate of a deceased person". The individual assessee has ordinarily to be a living person and there can be no assessment on a dead person and the assessment is a charge in respect of the income of the previous year and not a charge in respect of the income of the year of assessment as measured by the income of the previous year. Wallace Brothers & Co. Ltd. v Commissioner of Income tax, Bombay City(2). By section 24B the legal representatives have, by fiction of law, become assessees as provided in that section but that fiction cannot be extended beyond the object for which it was enacted. As was observed by this Court in Bengal Immunity Co. Ltd. vs The State of Bihar(2) legal fictions are only for a definite purpose and they are limited to the purpose for which they are created and should not be extended beyond that legitimate: field. In the present case the fiction is limited to the cases provided in the three subsections of section 24B and cannot be extended further than the liability for the income received in the previous year. In the present case the amounts which are sought to be taxed and which have been held not to be liable to tax are those which were not received in the previous year and are therefore not liable to tax in the several years of assessment. It cannot be said that they were income which may be deemed by fiction to have been received by the dead person and therefore they are not liable to be taxed as income (1) , 244. (2) , 664. 710 of the deceased Amarchand and are not liable to be taxed in the hands of the heirs and legal representatives who cannot be deemed to be assessees for the purpose of assessment in regard to those years. In our view the High Court rightly answered the question in the negative and against the Commissioner of Income tax. The appeals therefore fail and are dismissed with costs. Appeals dismissed.

Sub section (1) of section 24B of the Indian Income tax Act, 1922, provided that where a person dies his heirs and legal representatives ate liable to pay out of the estate of the deceased the tax assessed as payable by the deceased or any tax which would have been payable under the Art by the deceased if he had not died. A who, was one of the three partners in a firm of solicitors died. on July 7,1949, and thereafter the partnership was carried on by the other two partners till December 1, 1949. when R, son of A, joined the firm as the third partner. After the death of A the arrangement between the various partners in regard to the ' realisations of the old out standings was that in respect of the work done up to the death of A the realisations were to be divided between A and the other two partners. The firm 700 kept its accounts on cash basis For each of the five assessment years, 1950 1955, certain amounts were received by the heirs and legal representatives of A out of the out standings. Proceedings were started by the Income tax Officer under section 34 of the Indian Income tax Act, 1922, in respect of the aforesaid. income, and the various amounts were assessed to income tax in the hands of the respondents, the heirs and legal representatives of A, under section 34 (1) (b) read with section 24B of the Act, for the five respective assessment years, on the footing that the amounts which were received by the heirs and legal representatives of A after his death should be deemed by virtue of the words in sub section (1) of section 24B to be income received by A and liable to tax under that sub section. Held, that the words "or any tax which would have been payable by him under this Act if he had not died" under section 24B(1) of the Indian Income tax Act, 1922, are restricted to the income received by the deceased person before his death and to the income received after his death by his heirs and legal representatives in the "previous year" and which had not been assessed but would have been assessed as income received by him, if death had not taken place. The provisions of section 24B do not extend to tax liability of the estate of a deceased person beyond the previous or the account year in which that person dies. Apart from section 24B no assessment can be made in respect of the income of a person after his death. Held, that as the income was received after the expiry of the previous year in which A died it was not liable to be taxed as the income of A in the hands of his legal representatives in the several years of assessment. Allen vs Trehearne, , Ellis C Reid vs Commissioner of Income tax Bombay, and Wallace Brother & Co. Ltd. vs Commissioner of Income tax, Bombay City, [1948] 16 , referred to.

Appeals, Nos. 275 276 of 1963. Appeals by special leave from the judgment and order dated May 2, 1960 of the Kerala High Court in Income tax Referred case No. 98 of 1955(M). section T. Desai, C. V. Mahalingam, B. Parthasarathi and J. B. Dadachanji, for the appellant (in both the appeals). K. N. Rajagopal Sastri and R. N. Sachthey, for the res pondent (in both the appeals). 95 December 20, 1963. The Judgment of A. K. Sarkar and J. C. Shah, JJ. was delivered by Sarkar, J. M. Hidayatullah, J. delivered a Dissenting opinion. SARKAR J. These two appeals arise out of assessments of the appellant to income tax for the years 1948 49 and 1949 50. The question in these appeals is whether on the facts to be presently stated, the appellant was entitled to relief under section 25(4) of the Income tax Act, 1922. The appellant claimed relief under section 25(4) contending that it had transferred its business to a limited company with effect either from November 13. 1947 or February 13, 1948, by an instrument executed on February 7, 1948. The claim was rejected by the Income tax Officer and by the Appellate Assistant Commissioner and also by the Income tax Appellate Tribunal on appeal to it. The appellant then moved the Tribunal to refer a, certain question to the High Court at Madras under section 66(1) of the Act but that application was rejected. It then moved the High Court under section 66 (2) of the Act and the High Court directed the Tribunal to refer the following question for determination by it: "Whether, on the facts and in the circumstances of the case, the assessee is not entitled to relief under section 25 (4) of the Indian Income tax Act, and to what extent?" The Tribunal duly drew up a statement of case and referred the question along with it to the High Court. There were really two references as there were two cases before the Tribunal. These however were heard together by the High Court and disposed of by one judgment. The High Court held that the appellant was not entitled to any relief under section 25 (4). The present appeals are from the judgment of the High Court. The facts have to be stated at some length but before we do that we think it would be profitable to set out the statutory provisions concerned. Though we are directly concerned with sub sec. (4) of section 25, a consideration of subsec. (3) of that section will throw useful light on the matter 96 in question and so we set both these sub sections out below: section 25 (3) Where any business, profession or vocation on which tax was at any time charged under the provisions of the Indian Income tax Act, 1918, . . is discontinued, then, unless there has been a succession by virtue of which the provisions of sub section (4) have been rendered applicable no tax shall be payable in respect of the income, pro fits and gains of the period between the end of the previous year and the date of such discontinuance. . (4) Where the person who was at the commencement of the Indian Income tax (Amendment) Act, 1939 carrying on any business, profession or vocation on which tax was at any time charged under the provisions of the Indian Income tax Act, 1918, is succeeded in such capacity by another person, the change not being merely a change in the constitution of a partnership, no tax shall be payable by the first mentioned person in respect of the income, profits and gains of the period between the end of the previous year and the date of such succession Both these sub sections gave a further right to the assessee but with that right we are not concerned and shall, there fore, make no more reference to it. Now it will be seen that under sub sec. (3) the discontinuance of the business gave rise to a relief from taxation in respect of its income provided however that there had not been a succession to the business as mentioned in sub sec. (4) which, as will later be seen, has to be a succession taking place after April 1, 1939. The succession contemplated in sub sec. (4) again must have taken place before the discontinuance for if the business is discontinued it ceases to exist and cannot be succeeded to. Sub section (4) requires certain conditions to be fulfilled before a claim to relief under it can be made. As the present appeals relate only to a business carried on by a 97 firm, in discussing these conditions we will omit all refer ences to the professions, vocations and owners of businesses other than firms. We would like to remind here that a firm is a taxable unit under the Income tax Act and it is a person as that word is used in the Act. Now the first condition of the applicability of sub sec. (4) of section 25 is that the business must have been charged to tax under the Indian Income tax Act, 1918. This Act was in force between 1918 and 1922 in which year it was replaced by the present Act. So the business must have been in existence sometime between 1918 and 1922. Under the Act of 1918 tax was assessed, computed and levied on the income of the year of assessment but under the Act of 1922 the scheme of assessment of income and tax was modified. By that Act tax was assessed on the income of the previous year and the result of the innovation was that the income of the year 1921 22 was assessed twice, once under the Act of 1918 and again under the Act of 1922 and it was because of this that relief was given by sub secs. (3) and (4) of section 25. The second condition of the applicability of section 25(4) is that business must have been carried on at the commencement of the Indian Income tax Act (Amendment) Act, 1939, that is, April 1, 1939, by the person claiming the relief. The third condition is that the person carrying on the business on April 1, 1939 has to be succeeded by another person as the owner carrying on the business. Obviously, the succession indicated must have been after April 1, 1939, as we have earlier stated, for a person carrying on a business on that date can only be succeeded in that business by another person on a date later than it. The fourth condition is that the succession was not merely a change in the constitution of the firm. This condition, of course, is applicable only where, as in the present case, the business was carried on by a firm. The appellant, who is the assessee in these cases, is a firm. It contends that it had been carrying on a business on April 1, 1939 from before and on that business tax had been charged under the Act of 1918 and that it was succeeded by a company as owner of the business as a result of a transfer by an instrument executed on February 7, 1948. The appellant further contends that its constitution has changed 134 159 S.C. 7. 98 from time to time but the firm has never been dissolved so that it has been the same firm continuing and carrying on the same business from before 1918 till the transfer afore said. It is on this basis that it claimed the benefit of section 25 (4) of the Act. We now proceed to set out the facts of the case in a chronological order. It appears that a firm bearing the same name as that of the appellant, that is, Sait (or Shah) Nagjee Purshotham and Company was started in 1902 and was reconstituted by an agreement of partnership dated December 6, 1918. On the last mentioned date it carried on business in piece goods, yarn, and other articles at Calicut with branches in Madras and Bombay. It also subsequently started a business of manufacture and sale of umbrellas but the precise date of the commencement of this business does not appear from the record. Sometime about 1932 it started another business of manufacture and sale of soap. For practical purposes the firm can be treated as having been constituted by this document of December 6, 1918. The partnership agreement of December 6, 1918 was between the following six persons, Purushotham, Nagjee, Narayanjee, Krishnajee, Maneklal and Bhagwanjee. Of these persons the last named was an outsider and the rest were members of a family. The agreement provided that the withdrawal of a partner for whatever reason, would not dissolve the partnership as between the remaining partners. Krishnajee died in 1933 and Bhagwanjee retired about that time. On January 2, 1934, the remaining four partners executed an instrument varying some of the terms of the agreement of December 6, 1918. The instrument, however, provided that subject to the variations made the agreement of December 6, 1918 was to remain effective. It is not in dispute that there was no dissolution of the firm by the instrument of January 2, 1934. Thereafter on April 27, 1934 Purusbotham died and the firm was then left with three partners, namely, Nagjee, Narayanjee and Maneklal. Then we get two instruments both dated May 30, 1939, each described as an agreement of partnership. One instrument, which is marked as annexure CI, was between Nagjee, Narayanjee, Maneklal and Hemchand. The other instrument, which is marked as annexure C II was between 99 Nagjee, Narayanjee and Maneklal. It will be necessary to set out later some of the terms of these instruments, for on them a large part of the arguments advanced in this case has turned. Briefly it may be stated here that the appellant contends that these agreements did not really create new partnerships dissolving the existing one. Its case is that under annexure C I an outsider Hemchand was admitted as partner in some of the businesses of the existing partner ship, namely, the umbrella and soap businesses and by the other instrument, annexure C 11, the other existing businesses of that partnership, e.g., in yarn, piece goods, money lending etc., were, continued by the subsisting partners mentioned above. The contention of the respondent, on the other hand, is that these two instruments show that the business of the existing firm had been split up into two and transferred to two different owners, namely, two newly constituted firms with different partners, some of whom were no doubt common, and this amounted to a discontinuance of the business of the old firm. It was contended that after such discontinuance it could not be said that the same business on which tax had been charged under the Act of 1918 was being carried on on April 1, 1939 and no question, therefore, of any subsequent succession to that business to make sub sec. (4) of section 25 applicable, could arise. We next have an instrument of October 30, 1943, also "Styled an agreement of partnership, to which Narayanjee, Maneklal, Jayanand, Leeladhar and Prabhulal were parties. It refers to the two "agreements of partnership of May 30, 1939" and certain retirements of partners and admission of new partners and provides that the parties to the instrument had agreed to carry on "as one single partnership" the busi nesses carried on previously by the two partnerships referred to in the instruments of May 30, 1939. One of the ,contentions of the respondent is that even if it was not right in its view of the instruments of May 30, 1939, this instrument of October 30, 1943 clearly evidenced a dissolution of the partnership then existing and the creation of an entirely ,new partnership to which the business of the old firm was transferred. It was said that this was a succession to business within the meaning of sub sec. (4) of section 25 and, therefore, the later succession, if any, by the transfer of Febru 100 ary 7, 1948 could not provide the basis for relief under section 25 (4). Whether relief could be granted under the earlier succession, it was said, is irrelevant for such relief had never been claimed. The last instrument to which we have to refer is the agreement of February 7, 1948 between Maneklal, Jayanand, Leeladhar and Prabhulal as partners of the appellant firm and a limited company formed to take over the business. of the firm. By this instrument the parties agreed that the business of the firm would be transferred to the company with effect from November 13, 1947, the transfer to be completed on February 13, 1948 by payment of the consi deration of Rs. 4 lacs by the vendee and delivery of posses sion of the assets of the business by the vendor. It is on this instrument that the appellant, which is the firm constituted by Maneklal, Jayanand, Leeladhar and Prabhulal, claimed relief under section 25(4) in its assessment for the years 1948 49 and 1949 50. There is no doubt that as a result of the instrument of February 7, 1948 the Company succeeded to the business that was being carried on by the firm of Nagjee, Purushotham and Company as then constituted as aforesaid, as bankers, piece goods and yarn merchants and as soap and umbrella manufacturers and sellers. The question, however is, was this firm a firm which had been carrying on a business on April 1, 1939 and which business had been charged to tax under the Act of 1918? The High Court took the view that it was not and we think, that view is correct. In our opinion, the business was discontinued in 1937 and what was subsequently carried on was not the same business. We now turn to annexures C 1 and C 11 dated May 30, 1939. Taking annexure C 1 first, the material portions of this document are as follows: "This agreement of Partnershipbetween (1)Nagjee. (2) Narayanjee(3) Maneklal and (4) Hemchand(hereinafter called the partners) witnesseth asfollows: Whereas Partners 1 to 4 have been carrying on a business as partners from the beginning of Samvat 1994 (=October November 1937) in 101 the manufacture and sale of Soaps under the name of 'The Vegetable Soap Works ' Proprietor Sait Nagjee Purushotham & Co., and in the manufacture and sale of umbrellas in Calicut with branches at Madras and Bombay under the name and style of Sait Nagjee Purushotham & Co., Soap and Umbrella Merchants at Calicut and Madras and in the name of Sha Nagjee Purushotham & Co., at Bombay hereinafter called the Firm; And whereas it is thought advisable to reduce the terms of the said partnership into writing for the proper and better conduct of the business; The Partners have agreed and also hereby agree to the following: (1) The Firm shall continue to be as of old namely Sait Nagjee Purushotham & Co., Soap and Umbrella Merchants. The Firm shall continue to do business in the manufacture and sale of soaps under the name of the 'Vegetable Soap Works ' and in umbrellas under the name of 'Sait Nagjee Purushotham & Co., S oap and Umbrella Merchants as aforesaid with Head Office at Calicut and branch at Madras under the same name and branch at Bombay under the name of 'Sha Nagjee Purushotham & Co. . . ' (4) The business of the Firm shall consist mainly in the manufacture and sale of soaps and umbrellas and such allied products and such other articles as all the partners or the majority of them may agree. (8)It is always understood by the Partners herein that the Firm of Sait Nagjee Purushotham 102 & Co., Bankers, Piece goods and Yarn mer chants, Calicut, the partners whereof are the: Partners 1 to 3 herein shall advance as, heretofore all funds that are necessary for the conduct of this Partnership Such advances shall be deemed as loan by the firm of Sait Nagjee Purushotham & Co., Bankers, Piece goods and Yarn Merchants to the., Firm . . . (9) Until otherwise determined by Partners. Nos. 1, 2 and 3 in writing the Partnership, shall not borrow any amount from any one other than the Firm Sait Nagjee Purushotham & Co., Bankers, Piece goods and Yarn merchants referred to in para 8 above. . . (25) All the Partners hereby agree that Partners. 1 to 3 herein are the Partners of the Firm of Sait Nagjee Purushotham & Co., Bankers, Piece goods and Yam merchants, Calicut. " We now set out the material portions of annexure C 11. "This agreement of partnership between (1) Nagjee. (2) Narayanjee and Maneklal . hereinafter called the Partners witnesseth as follows: Whereas under the Agreement of Partnership dated the 6th day of December 1918 (1) Purushotham (2) Nagjee. (3) Narayanjee (4) Karsanjee. . (5) Bhagvanjee (6) Maneklal . have carried on a partnership trade in Piecegoods, Banking and other articles in Cali cut with branches at Madras and Bombay, and Whereas (1) Purushotham . (2) Karsanjee. and (3) Bhagvanjee . ceased to be partners either by retirement or death, and 103 Whereas the remaining partners (1) Nagjee. (2) Narayanjee. and (3) Maneklal. settled the claims in full of the partners who ceased to exist and agreed to carry on and continue and are continuing the existing partnership business under the name and style of 'Sait Nagjee Purushotham & Co. ' Bankers, Piece goods and Yarn Merchants, hereinafter called the 'Firm '; and Whereas it is thought advisable and prudent to reduce into writing the terms and conditions agreed upon orally by them the Partners agree and have agreed to the following terms and regulations stipulated hereunder. (2) The Agreement of Partnership dated the 6th day of December 1918 is hereby revoked and the affairs of the Firm shall be regulated and governed by the Regulations agreed upon orally and reduced into writing in this Deed and the terms and conditions of the revoked deed shall not in future apply to the 'Firm ' except such as have been repeated in this Deed. (20) All the partners hereby agree that they in their individual capacity are and shall be Partners also along with Hemchand Veerjee Sait in a Partnership business in Soaps and Umbrellas carried on in Calicut and Madras under the name and style of Sait Nagjee Purushotham and Co., Soap and Umbrella Merchants and in Bombay under the name and style of Shah Nagjee Purushotham & Co., the terms and conditions whereof are embodied in an Agreement of Partnership dated 30 5 1939 signed by all the Partners. 104 It is clear that these two instruments recite events which had happened in 1937. Annexure C I shows that in Octo ber/November of that year a new partnership was started to do businesses of manufacture and sale of soap and umbrella between Hemraj and the remaining partners of the preexisting firm of the same name, that is, Nagjee, Narayanjee and Manecklal. This is clear from the terms of the instrument which we have earlier set out. We think it right especially to draw attention to the terms of cls. 8, 9 and 25 of annexure C I. These indicate that there were two firms, namely, one, of which the constitution appeared from annexure C I and which carried on umbrella and soap busi nesses and the other, consisting of Nagjee, Narayanjee and Manecklal carrying on other kinds of businesses the constitution of which appeared from annexure C 11. Clauses (8) and (9) show that one firm was to lend money to the other. Such an agreement could not of course have been made unless the two firms were separate. By cl. (25) all the parties to annexure C I agreed that the firm constituted by Nagjee, Narayanjee and Maneklal was a different firm. Learned counsel relied on cl.1 of annexure C I and contended that itprovided for the continuance of the old firm, that is, thefirm constituted by the instrument of December 6, 1918 and hence no new firm had been created. We think that this contention is without foundation. There is no reference in annexure C I to the firm constituted by the instrument of December 6, 1918. The word "firm" in annexure C I refers to the partnership brought into existence by it. Clause 1 says that "The Firm shall continue to be of old". The word "old" refers to the partnership orally brought into existence in October/November 1937 to which reference is made in the first recital and to put down the terms of which in writing, annexure C I was executed. Likewise the provision in cl. 1 that "The Firm shall continue to do business" refers to the continuance of the business carried on prior to May 30, 1939 by the firm brought into existence in October/November 1937 by the oral agreement. The continuance cannot be a continuance of the firm or business of the partnership of 1918 for annexure C I makes no reference to that partnership at all. It may be 105 that the partnership of 1918 was carried on in the same name as the firm referred to in annexure C I but we are not ,aware that an identity of names establishes that the two firms are same. It seems to us beyond question that the partnership mentioned in annexure C I is different from the partnership which was brought about by the instrument of December 6, 1918 for the partners in the two firms were not the same. It has not been shown to us, neither do we think, that where different groups of persons, some of whom are common, carry on different businesses under different agreements, they can form one partnership. Further, as ,clearly appears from annexure C 11, the firm brought into existence by the 1918 instrument was dissolved and a new firm was started between Nagjee, Narayanjee and Manecklal after the retirement of Purushotham in 1934. If the 1918 firm was thus dissolved it could not, of course, be continued. So the firm created by annexure C I could not have been a ,continuation of the 1918 partnership. Therefore, the firm mentioned in annexure C I is a new firm and not the old 1918 firm reconstituted. This position is reinforced by the terms of annexure C 11. First it is called an agreement of partnership, that is, agreement creating a partnership. The recital provides that the remaining partners of the firm constituted by the instrument of 1918 agreed to carry on and continue the existing partnership business. Clause (2) states that the deed of December 6, 1918 is revoked and the affairs of the firm would be governed by the terms of annexure C 11 and the conditions of the revoked deed were not to apply. It is impossible after this to say that the partnership constituted by the instrument of December 6, 1918 was not dissolved. There is no warrant for the view for which the appellant contended, that only the terms on which the business under the document of December 6, 1918 was carried were revoked and not the head agreement to do business in partnership. The fact that an express agreement to carry on the business in partnership was made (for which see the third recital in annexure C 11) further indicates that the agreement to that effect in the instrument of December 6, 1918 was no longer subsisting. In this case the term providing for the continu 106 ance must refer to the continuance of the business and not to the continuance of the partnership agreement because that was expressly revoked. If this is not the correct view, then cl. 20 would be inexplicable. That clause states that the partners in their individual capacity would be partners with Hemchand in another business the terms of which partnership appear in another partnership agreement of the same date and which is annexure C 1. This would show that the old partnership of 1918 had given up doing some of its existing businesses and it was decided to carry them on under a new partnership agreement. This would support the view that the old partnership was dissolved for it would not have otherwise given up those businesses. The two instruments annexure C I and C 11, therefore, clearly establish that in October/November 1937 the business that was carried on by the firm of Sait Nagjee Purushotham and Co. till that date, was discontinued and its businesses were split up into two and carried on by two independent partnerships then brought into existence. When this happens it is impossible to say that the pre existing business was continued. This view finds support from section N. A. section A. Annamalai Chettiar vs Commissioner of Income tax, Madras(1) where it was held that when a business carried on in one unit is disintegrated and divided into parts, the parts are not the whole even though all the parts taken together constitute the whole. That was a case of a joint family business which on partition was split up between different members of the family. 'It was held that as a result of this splitting up there was a discontinuance of the original business at the date of the partition and on such discontinuance the family became entitled to relief under section 25(3) It is of some significance to point out that the partners constituting the appellant at the moment of the transfer in 1948 also thought that in 1937 the old firm ceased to exist and its business was carried on thereafter by two independent firms, for the document of October 30, 1943 has referred to annexures C 1 and C 11 as constituting two independent partnerships and proceeded to revoke them both and provided that the parties to the instrument "have (1) 107 agreed to carry on and continue as one single partnership business the existing partnership businesses of Sait Nagjee Purushotham and Co., Bankers, Piece goods and Yarn Mer chants, Sait Nagjee Purushotham and Co., Soap and Umbrella Merchants. " Now when the business on which tax was charged under the Act of 1918 which, it is not disputed, happened in this case was discontinued in 1937 it could not have been carried on April 1, 1939. What was then carried on must have been some other business. So one of the conditions on which relief under section 25(4) of the Act could be claimed was not satisfied and the claim would not be maintainable. Furthermore, for the reasons earlier stated, it must be held that on April 1, 1939 the business, assuming its identity to have continued in spite of the splitting up, was being carried on by two persons, namely, two firms with different partners. Now the person who transferred the business which caused the succession in 1948 on which the appellant relies for relief under section 25(4), was a single firm. This latter firm could not have been brought about by a change in the constitution of an existing firm, for there were two existing firms and they could not become one by simple changes in their constitution. Indeed the instrument of October 30, 1943 which brought the transferor firm, the appellant before us, into existence, expressly states that "The Agreements of Partnerships dated 30th May 1939. are hereby revoked". It follows that at the date the succession relied upon can, be said to have taken place, the business was being carried, on by a person different from those who carried it on on April 1, 1939. So another condition of the applicability of ' section 25(4) of the Act is not satisfied. The claim for relief under that section must fail on this ground also. If it were to be said that the partnerships were brought into existence on May 30, 1939 by annexures C I and C II instead of in October/November 1937, then also the appel lant 's claim must fail. Whenever the new partnerships were brought into existence, the result would, in our view, necessarily be that the business of the old partnership which was 108 taken over by the two new firms must be deemed to have been discontinued. On the principle stated in Annamalai ' Chettiar 's case,(1) there could not in such a case be a suc cession of the business from one to another. That being so, there can be no question of the succession to the business carried on at the commencement of the Indian Income tax (Amendment) Act, 1939, that is, April 1, 1939 and on which tax was charged under the Act of 1918 having taken place in 1948 as claimed by the appellant. What was discontinued could not be succeeded to. Even if it was held that on May 30, 1939, there was a succession to the business which we do not think is a correct view to take, that also would disentitle the appellant to relief under sub sec: (4) of section 25 in the years 1948 49 and 1949 50, for it should, in such an event, have claimed the relief in the year 1939 40. In the result we have come to the conclusion that the business which had been subjected to tax in 191.8 had been discontinued in October/November 1937 or on May 30, 1939 and it was not in existence in 1948 so as to permit a succession to it taking place under the instrument of February 7, 1948. The appeals, therefore, fail and they are accordingly dismissed with costs. HIDAYATULLAH J. I have had the advantage of reading the judgment just delivered by my learned brother Sarkar J. but I have the misfortune to disagree with him in his conclusion that these appeals must be dismissed. In my judgment, these appeals must be allowed. The facts have been set out in detail by my learned brother and I shall content myself with repeating only such facts as are necessary for the elucidation of my point of view. The appellant is a firm which in 1948 consisted of four partners namely Manecklal Purushotham, Liladhar Narayanjee, Jayanand Nagjee and Prabhulal Naranji. It was carrying on business mainly in piece goods, yarn, banking and manufacture and sale of umbrellas and soaps. 'Its head office was at Calicut but it had branches at Bombay and Madras. The history of the firm goes back to the year 1902. In that year, five members of a family by name Purushotham, Nagjee, Narayanjee, Krishnajee and Premchand along (1) 109 with one stranger Bhagwanjee started the appellant firm Sait Nagjee Purushottam & Co. Thereafter, there were changes in the constitution of the firm caused by the death or by the retirement of partners. Of the original partners, Premchand retired in 1912 and another member of the family Manecklal was taken in his place. In 1933 and 1934, two members (Krishnajee and Purushotham) died and Bhagwanjee retired. In that year, the firm consisted of Nagjee, Narayanjee and Manecklal who were members of the original family. We have on the record the partnership deed of December 6, 1918 by which the shares of the partners were adjusted after the retirement of Premchand and the admission of Manecklal and a deed of Januarv 1, 1934 after the death of Krishnajee and retirement of Bhagwanjee. In the deed of 1918, it was stated that this firm carried on business in Calicut, having branches at Madras and Bombay and though Manecklal was included as a new partner, the firm was to carry on and continue the existing partnership business under the same name and style. By the deed of 1918, the earlier partnership deed of April 4, 1902 was revoked and the affairs of the firm were to be regulated by the new deed. It was, however, provided that the withdrawal or death of a partner would not cause a dissolution of the partnership. When the deed of 1934 was entered into, the de Id of 1918 was not revoked but only amended; it was, however, provided that the principal deed of partnership to wit of 1918 would remain in force in so far as it was not inconsistent. Sometime in the year 1932 or thereabout, the firm had started the manufacture and sale of soaps under the name of "The Vegetable Soap Works" Proprietors Sait Nagjee Purushotham & Co. and perhaps the manufacture and sale of umbrellas in Calicut with branches at Madras and Bombay under the name and style, at Calicut and Madras, of "Sait Nagjee Purushotham & Co. Soap and Umbrella Merchants", and at Bombay of "Sha Nagjee Purushotham & Co.". It may be pointed out that the words "Sha" and "Sait" mean the same thing, and the names were not different. In 1937, one Hemchand a stranger to the family was admitted as a working partner. On May 30, 1939, two 110 deeds were executed. They are respectively marked C1 and C2. Cl was executed by Nagjee, Narayanjee, Manecklal and Hemchand. C2 was executed by Nagjee, Narayanjee and Manecklal. In Cl the preamble was as follows: "Whereas Partners 1 to 4 have been carrying on a business as Partners from the beginning of Samvat 1994 (Guzarathi Era) in the manufacture and sale of Soaps under the name of "The Vegetable Soap Works" Proprietors Sait Nagjee Purushotham & Co., and in the manufacture and sale of Umbrellas in Calicut with branches at Madras and Bombay under the name and style of Sait Nagjee Purushotham & Co., Soap and Umbrella Merchants at Calicut and Madras and in the name of Sha Nagjee Purushotham & Co. at Bombay hereinafter called the Firm. " The terms relevant to our purpose were: 1. The Firm shall continue to be as of old namely Sait Nagjee Purushotham & Co. Soap and Umbrella Merchants. The Firm shall continue to do business in the manufacture and sale of soaps under the name of the "Vegetable Soap Works" and in umbrellas under the name of "Sait Nagjee Purushotham & Co. Soap and Umbrella Merchants as aforesaid with I lead Office at Calicut and branch at Madras under the same name and branch at Bombay under the name of "Sha Nagjee Purushotham & Co." 2. "The business of the Firm shall be carried on by Partner No. 4 Hemchand Virjee Sait according to the directions of Partners 1 to 3 and the said Hemchand Virjee Sait is to manage work and assist the business of the firm and he shall be called hereinafter the Workinh Partner;" 14. "The working Partner Hemchand Virjee Sait may draw on the First of each month the monthly sum of Rs. 400 only from out of the Firm 's account on account of the share of his 111 profits for the current year, but if on taking the annual account it shall appear that the monthly sums drawn out by him exceed his share of profits he shall forthwith refund the excess." 15. "The Profits and Losses shall be divided and apportioned in the following proportion: Partner No. 1 shall have 3 annas 8 pies in the Rupee; Partner No. 2 shall have 3 annas 8 pies in the Rupee; Partner No. 3 shall have 3 annas 8 pies in the Rupee; and Partner No. 4 shall have 5 annas in the Rupee. On taking the accounts if it is found that the Finn has in curred a loss the aggregate of the monthly sums drawn by the Working Partner shall at once be refunded by the Working Partner to the Firm along with his share of the loss. "It is hereby agreed that the working Partner should invest a sum of Rs. 15,000 as deposit in the Firm of Sait Nagjee Purushotham & Co., Bankers, Piece goods and Yarn Merchants, Calicut and such money shall remain in deposit as long as he remains a Partner and such amount shall carry interest at such rates of interest as the Firm of Sait Nagjee Purushotham & Co., Bankers, Piecegoods and Yarn Merchants may agree from time to time. " In C2, the preamble was: " . . . Whereas the remaining partners (1) Nagjee Amersee Sait, (2) Narayanji Purushotham Sait and (3) Manecklal Purushotham Sait settled the claims in full of the partners who ceased to exist and agreed to carry on and continue and are continuing the existing partnership business under the name and style of "Sait Nagjee Purushotham & Co." Bankers, Piece goods and Yarn Merchants, hereinafter called the "FIRM" 112 The relevant terms were: "2. The Agreement of Partnership dated the 6th day of December 1918 is hereby revoked and the affairs of the Firm shall be regulated and governed by the Regulations agreed upon orally and reduced into writing in this Deed and the terms and conditions of the revoked deed shall not in future apply to the "Firm" ' except such as have been repeated in this Deed. All the partners hereby agree that they in their individual capacity are and shall be Partners also along with Hemchand Veerji Sait in a Partnership business in Soaps and Umbrellas carried on in Calicut and Madras under the name and style of Sait Nagjee Purushotham & Co., Soap and Umbrella Merchants and in Bombay under the name and style of Shah, Nagjee Purushotham & Co. the terms and conditions whereof are embodied in an Agreement of Partnership dated 30 5 1939 signed by all the Partners." ' Both deeds provided again that the partnerships would not be dissolved by the death or retirement of a partner. Nagjee died in August 1943 and Hemchand retired on October 31, 1943. On October 30, 1943, a fresh deed of partnership was executed by Narayanjee and Manecklal who were continuing as partners from 1918 and two other members of the family namely Liladhar and Prabhulal and to the benefits of partnership Jayanand Nagjee who was a minor, was admitted. The preamble was as follows: ". . And whereas partner No. 4 Hemchand Veerjee Sait: has decided to retire from the said partnership, business as from 31 10 1943. . . And whereas the remaining partners are willing and have agreed to take as new partners Leeladhar Narayanjee Sait and Prabhulal Narayanjee Sal , sons of Narayanjee Purushotham Sait as from 31 10 1943. 113 And whereas the remaining partners along with the new partners now included in the Deed of Partnership, have agreed to carry on and con tinue as one, single partnership business, the existing partnership businesses of "Sait Nagjee Purushotham & Co., Bankers, Piece goods and Yarn merchants, "Sait Nagjee Purushotham & Co. Soap and Umbrella merchants". And whereas it is thought advisable and prudent to reduce into writing the terms and conditions agreed upon orally by them the partners agree and have agreed to the following terms and conditions stipulated hereunder : The operative terms relevant to our purposes were the following: "The Agreements of Partnerships dated 30th May 1939 entered into by (1) Nagjee Amersee Sait, (2) Narayanjee Purushotham Sait (3) Maneck lal Purushotham Sait and (1) Nagjee Amersee Sait (2) Narayanji Purushotham Sait (3) Manecklal Purushotham Sait and (4) Hemchand Veerji Sait and registered as 98 and 97 in the Joint 11 Sub Registrar 's Office, Calicut respectively, are hereby revoked and the affairs of the firm shall be regulated and governed by the regulations agreed upon orally and reduced into writing in this deed of Partnership; and the terms and conditions of the revo ked Deed shall not in future apply to the Firm except such as have been repeated in this Deed. The firm name shall be "Sait Nagjee Purushotham & Co. Bankers, Piece goods, Yarn, Soap and Umbrella merchants. " 2.The partners of the firm are (1) Narayanjee Purushotham Sait, (2) Manecklal Purshotham Sait, (3) Jayanand Nagjee Sait (Minor) represented by guardian Manecklal Purushotham Sait (4) Leeladhar Narayanjee Sait and (5) Prabhulal Narayanjee Sait." 134 159 S.C. 8. 114 The rest of the terms followed the same pattern as before. In 1948, a limited liability company was formed under the name of Sait Nagjee Purushotham & Co., Ltd. and an agreement was made by which Sait Nagjee Purushotham & Co. represented by the then partners Manecklal, Liladhar, Jayanand and Prabhulal sold to the company the goodwill, assets etc. of the firm. The question in this case is whether the appellate firm was entitled to the benefits of section 25 (4) of the Income tax Act, and if so, to what extent. The answer to the question depends on (a) whether the business on which tax was paid under the provisions of the Indian Income tax Act, 1918 had discontinued at any time before 1948 or (b) whether there was a succession by another person for the person who was carrying on business on April 1, 1939. My learned brethren consider that there was a discontinuance in 1937 39 of the original business by reason of the division of the original business into two divisions and the admission of Hemchand as a partner in one of the divisions. The Department as respondent contends that there was a succession in 1939 and again in 1943, because in those years a different person succeeded to the person carrying on business on April 1, 1939. The contention of the Department has so far succeeded and I need not give the details of the decisions of the various Tribunals under the Indian Income tax Act and the High Court, because my learned brother 's judgment gives all such details. I shall therefore address myself to the questions (a) whether there was a succession in 1948 for the first time when the company succeeded the firm, to entitle the firm to the benefits of section 25 (4): (b) whether there was, prior to 1948, a discontinuance of the business on which tax was charged under the provisions of the Indian Income tax Act and (c) whether there was, prior to 1948, succession by another person to the person who had paid the tax under the provisions of the Income Tax Act, 1918 after April 1, 1939? If the answers to (b) and (c) be in the negative, (a) must be answered in the affirmative, but if the answer to either (b) or (c) be in the affirmative,(a) must be answered in the negative. It is necessary at this stage to read section 25 which deals with assessment in case of discontinued business. The first two 115 sub sections deal with cases to which sub section 3 is not applicable. The first sub section lays down how the business is to be assessed when it is discontinued in any year and sub section 2 provides that any person discontinuing business must give a notice on pain of a penalty. We are not concerned with these sub sections. Sub section (3) and sub section (4) in so far as it is relevant for our purpose, are as follows: Sub section (3) "Where any business, profession or vocation on which tax was at any time charged under the provisions of the Indian Income tax Act, 1918 (VII of 1918), is discontinued, then unless there has been a succession by virtue of which the provisions of sub section (4) have been rendered applicable no tax shall be payable in respect of the income, profits and gains of the period between the end of the previous year and the date of such discontinuance, and the assessee may further claim that the income, profits and gains of the previous year shall be deemed to have been the income, profits and gains of the said period. Where any such claim is made, an assessment shall be made on the basis of the income, profits and gains of the said period, and if an amount of tax has already been paid in respect of the income, profits and gains of the previous year exceeding the amount payable on the basis of such assessment, a refund shall be given of the difference. " Sub section (4) "Where the person who was at the commencement of the Indian Income tax(Amendment) Act, 1939 (VII of 1939), carrying on any business, profession or vocation on which tax was at any time charged under the provisions of the Indian Income tax Act, 1918, is succeeded in such capacity by another person, the change not being merely a change in the constitution of a partnership, no tax shall be payable by the 116 first mentioned person in respect of the income, profits and gains of the period between the end of the previous year and the date of such succession, and such person may further claim that the income, profits and gains of the previous year shall be deemed to have been the income, profits and gains of the said period. Where any such claim is made, an assessment shall be made on the basis of the income, profits and gains of the said period, and, if an amount of tax has already been paid in respect of the income, profits and gains of the previous year exceeding the amount payable on the basis of such assessment, a ref und shall be given of the difference: Provided. . . . Sub section (4) was inserted by the Indian Income tax (Amendment) Act, 1939 (VII of 1939), which also introduced the words underlined in sub section Sub section (4) and the amendment to sub section (3) were to come into force from April 1, 1939 by virtue of notification No. 7 of the Central Government dated March 18, 1939. Under section 3 of the Indian Income tax Act, 1918, the subject of the tax was not the income of the previous year of assessment, but the income of the assessment year. By the. Act of 1922, a change was introduced and the tax was payable on the income of the previous year in the following year which was the year of assessment. Any business which was in existence and earning profits in the year 1921 and continued in the year 1922 was required to pay tax on its profits of 1921, once under the Act of 1918 and again under the Act of 1922. In the 1922 Act, a provision was made to give relief to any business which had paid such double tax when it discontinued busi ness. When the 1939 amendment was made, relief was given by sub section (4) to a person who had paid tax under the Act of 1918 when he was succeeded in his business by another person. It will, however, be noticed that the two sub sections were mutually exclusive. If there was a succession, then, sub section (4) was applicable. Sub section (3) was only applicable when the business was discontinued. It will further be noticed that the term "succession" was not 117 to include a change in the constitution of a partnership. In this case, the claim to the benefit of sub section (4) was made by the company on the basis of a succession either on November 13, 1947 or on February 13, 1948. The Income tax Officer held that a succession had taken place in 1943 when on the retirement of Hemchand, the two separate businesses formed under exhibit Cl and C2 were amalgamated. The Appellate Assistant Commissioner agreed with this conclusion. The Tribunal also held that the business in soap and umbrella was different from the business of banking, piece goods and yarn, and the amalgamation of these two businesses in 1943 amounted to a succession by a newly constituted firm. The High Court held on reference that the firm constituted under the deed of 1918 was dissolved in 1939 and the firms constituted under the two deeds of 1939 were dissolved in 1943. The High Court, therefor,, held that succession had taken place in 1939 and again in 1943 and the claim on the basis of the transfer to the limited liability company in 1948 was too late. In coming to the conclusion that the firm constituted under the deed of 1918 was dissolved, the High Court relied upon cl. 2 of the deed exhibit C2. The two sub sections which have been quoted apply differently, because in sub section (3) the emphasis is on the discontinuance of the business which had paid tax under the 1918 Act while the emphasis in sub section (4) is on succession to a person who, on April J., 1939, was carrying on any business on which tax was at any time charged under the Act of 1918. The former regards the continuity of the business which had paid tax under the Act of 1918 and the latter the continuance of the person who, on April 1, 1939, was carrying on the business which had paid such tax. There cannot, therefore, be a case in which both the sub sections apply at the same time, because the intention is obviously to keep them separate and when sub section (4) was added, sub section (3) was amended by the addition of the words "unless there has been a succession by virtue of which the provisions of sub section (4) have been rendered applicable. " The main idea is the continuance of business unless there has been a succes sion. The question that arises is whether there was at any time a dissolution of the partnership and if so, whether; it 118 amounted to "discontinuance" of business for the application of sub section (3) or a succession by the formation of an entirely new firm for the application of sub section For this purpose, I shall first discuss what is the position of a partnership under the ordinary law of partnership and under the Income tax Act. At the outset, I must draw attention to a few fundamental facts. It was pointed out by this Court in Charandas vs Haridas(1) that those whose duty it is to apply the provisions of the Income tax Act must bear in mind that what may be the resulting position under the law of partnership and/or the Hindu Law is not necessarily the resulting position under the Income tax Act. This case is another example of the difference of approach to the same facts under the law of partnership and the Income tax law. In Dulichand vs The Commissioner of Income tax, Nagpur (2) , it was pointed out by this Court that commercial men and accountants are apt to look upon a firm in the light in which lawyers look upon a corporation, that is, as a body distinct from the members composing it, and such a separate existence has been recognised under the Scottish law. But under the English Common Law, a firm is not regarded as a separate entity from the members composing it. The Indian Partnership Act has accepted the English Common Law though mercantile usages have crept into business accountancy and the Civil Procedure Code allows a firm to sue or be sued in the firm 's name provided the names of the partners are disclosed. Under the Income tax Act, however, a firm is by section 3 made a unit or assessment, but this personality does not make the firm a person in every sense of the word. It only makes it an assessable unit. A firm is not a "person" and cannot enter into partnership with an individual, with another firm or with Hindu Undivided family. Section 26 recognises the existence of a firm as an asses sable unit and provides for taxation in the event of changes in the constitution of firms. The first sub section deals with a change in the constitution of the firm or where a firm has been newly constituted and the second sub section where there is a succession to the person (which includes a firm) (1) (2) [1956] section C. R. 154. 119 by another person. This sub section deals with all cases of succession except those dealt with under sub section (4) of section 25 already set out. Section 25 provides for discontinu ance of business. Discontinuance is thus not a mere change in the constitution of the firm nor even succession where, though the business changes hands, the business itself is carried on. It was recently pointed out by us in Shivram Poddar vs Income tax Officer, Calcutta and another(1) thus: "Under the ordinary law governing partnerships, modification in the constitution of the firm in the absence of a special agreement to the contrary amounts to dissolution of the firm and reconsitution thereof, a firm at common law being a group of individuals who have agreed to share the profits of a business carried on by all or any of them acting for all, and supersession of the agreement brings about an end of the rela tion. But the Income tax Act recognises a firm for purposes of assessment as a unit independent of the partners constituting it; it invests the firm with a personality which survives reconstitution. A firm discontinuing its business may be assessed in the manner provided by section 25 (1) in the year of account in which it discontinues its business; it may also be assessed in the year of assessment. In either case it is the assessment of the income of the firm. Where the firm is dissolved, but the business is not dis continued, there being change in the constitu tion of the firm, assessment has to be made under section 26 (1), and if there be succession to the business, assessment has to be made under section 26 (2). " Therefore when in sub section (4) the word 'person ' is used, it is intended to include not only an individual but also a firm. This is also clear from the words "not being merely a change in the constitution of a partnership." Since the In come tax Act assesses a partnership as a unit and such units (1) Civil Appeal NO. 455 of 1963 decided on Dec. 13, 1963. 120 must, in the past, have been assessed to tax under the Act of 1918, sub section (4) allows a partnership to obtain the benefits of sub section (4) when there is a succession and a partnership does not loose this benefit if there has been a mere change in the constitution of the partnership without there being a succession. The business, if it continues, obtains a similar benefit when it is discontinued. In this way all cases of discontinuance of business are treated under the 3rd sub section and all cases of succession under the fourth sub section and all cases of mere change in the constitution of the firm, are neither cases under the third nor under the fourth subsections. In this case, we have, therefore, to find out firstly what is meant by discontinuance of a business. Next, we have to find out what is comprehended within the expression "a change in the constitution of a partnership". It is only if there was a discontinuance of the business before 1948 or a succession not amounting to a mere change in the constitu tion of the partnership between 1939 and 1948 that the appellants can be denied the benefit of section 25. The expressions, that is to say, "discontinuance" and "succession not amounting to a change of the constitution of a firm" have received exposition in the past. It is hardly necessary to refer to the large number of cases in which the matter has been discussed, because the leading case on the subject of discontinuance is Commissioner of Income tax, Bombay vs P. E. Polson(1) and on the subject of succession Commissioner of Income tax, West Bengal vs A. W. Figgies & Co. and others 2 It will be sufficient to refer to these two cases. To begin with, it must be remembered that the soap business commenced in the year 1932 and did not pay tax under the Act of 1918. Though there is nothing to show when the umbrella business commenced, it is almost certain that it did not pay tax under the Act of 1918. In any event the burden was on the assessee firm to ?rove this before claiming relief. These facts are fundamental, because, if the umbrella and soap business were never assessed to tax under the Act of 1918, they are out of the picture and in respect of these businesses, the assessee firm was not at all entit (1) (2) ; 121 led to relief. Section 25 (3) and (4) do not apply where the business was not in existence before the Act of 1922 came into force. A clear authority for this proposition is to be found in the decision of the Bombay High Court in Ambalal Himatlal vs Commissioner of Income tax and Excess Profits Tax, Bombay North(1). In that case, a Hindu Un divided family was carrying on three separate businesses, namely money lending, running a ginning factory and a share business. This family disrupted in 1943 and divided the business among its members, and claimed the benefit of section 25(4) in respect of all the three businesses. It was found that only the money lending business had paid tax under the Indian Income tax Act of 1918. It was held by Chagla C.J. and Tendolkar J. that the assessee was entitled to the bene fit mentioned in section 25 (4) only in respect of the money lending business. Chief Justice Chagla observed at p. 287 thus: "But before us we have a clear and categorical finding that the three businesses of the assessee were distinct businesses and, therefore, it cannot be stated that the relief which was intended for the money lending business which was carried on by the assessee and which was subjected to tax under t he Act of 1918 should be extended to the business of running the ginning factory and the share business which were not in existence and which were not subjected to tax under the Act of 1918. The answer, therefore, to the question put to us will be that the assessee is entitled to the benefit mentioned in section 25(4) only in respect of the money lending business." No finding in the present case is necessary, because the clear fact is that the soap business was not even in contemplation, much less in existence before 1922 and the same is true of the umbrella business also. The relief could therefore be claimed only in respect of the remaining businesses namely in piece goods, yarn and banking which were started in 1902 and which admittedly continued without break till 1948. Since no claim in respect of the business of umbrellas and soaps could at all be entertained, any dealing with that part (1) 122 of the business by the assessee firm would not affect the questions in this case. Indeed, the agreement to separate the umbrella and soap business when Hemchand was admitted as a partner in 1939 was in keeping with the continuance of the original business as an entity by itself and emphasised its separate character. From the record it appears that the old and the new businesses were also separately assessed. It is only this one entity to which the provisions of section 25 must be applied and in respect of which it must be considered whether there was a discontinuance or a succession at an earlier period. I shall first examine the question of discontinuance. The Judicial Committee in Polson 's case considered what was the meaning of the word "discontinuance '. In that case, Polson who was carrying on business assigned it to a limited com pany on January 1, 1939. He had paid tax in respect of the business under the Act of 1918. In the assessment year 1939 40, he claimed that in view of the provisions of section 25 (3) of the Act of 1922, as amended in 1939, his income from the business made during the year 1938 was not taxable. It was held that he was not entitled to the benefit of section 25 (3) as the business was not discontinued. The High Court of Bombay upheld the contention of Polson, but the Privy Council reversed the decision approving the decision of the Madras High Court in Meyyappa vs Commissioner of Income tax, Madras(1). Lord Simonds pointed out that on January 1, 1939, Polson had ceased to be the owner of the business and therefore he was not carrying it on "at the commencement of" the amending Act. Since those words meant the date when the Act came into force on April 1, 1939, they could not be carried back to a date anterior to April 1, 1939 and on that date Polson ceased to be the owner of the business. As regards the words "discontinued" and "discontinuance" in section 25, Lord Simonds pointed out that they had been the subject of numerous decisions and that it had been uniformly decided that the words did not cover a mere change of ownership but referred only to complete cessation of the business. Lord Simonds further observed "Their Lordships entertain no doubt of the correctness of these decisions, which appear to be in accord with the plain (1) ; I.L.R. 123 meaning of the section and to be in line with similar deci sions upon the English Income Tax Acts. " It would therefore follow that by discontinuance in sub section (3) is meant complete cessation of the business. This cannot be said to have taken place in the present case in respect of all the businesses and a fortiori in respect of the business in piece ,goods, yarn and banking. These businesses might have been managed by persons other than those who had paid the tax under the Act of 1918 a matter to be considered under the fourth sub section but they were not discontinued for the application of sub section The Judicial Committee was not required to consider the matter from the point of view of succession, because sub section (4) did not then exist. The Privy Council case has been approved of by this Court in Figgies 's case to which I shall refer presently. From this, it follows that there was no discontinuance of the business at any time between 1921 and 1948 or even thereafter. The next question to consider is whether there has been a succession or a mere change in the constitution of the assessee firm in the years 1939 and 1948. If we were to go by the original business, excluding the newly started busi ness of manufacture of umbrella and soap, I must say at once that there has been no succession and this case falls squarely within the rule of this Court in Figgies 's case. But even if one were to include the umbrella and soap business, I am of opinion that this case does not cease to be covered by Figgies 's case. I shall examine both the aspects of the matters separately. I shall pass on immediately to the facts of Figgies 's case. In that case, a partnership was formed in 1918 between Figgies, Mathews and Notley. In 1924, Mathews retired. In 1926, one Squire was taken as partner. In 1932, Figgies retired. In 1939, one Hillman was taken as a partner. In 1943, Notley retired. In 1945, one Gilbert was taken as a partner. By that time, all the original partners had ceased to be partners and new ones had come in their place. At every change, new deeds of partnership were executed and the shares were readjusted. No doubt, the later deeds did not say that the earlier deeds were revoked but a glance at those deeds (which I have seen in the original brief of the 124 case) shows that they could not have existed side by side. In any case, there was no incorporation of the earlier docu ments by reference and they must be taken to have been superseded. In this case there is a definite statement that the earlier documents were 'revoked '. But whether the word ,revoked ' is used or not, the resulting position is the same. Some partners went out and others came in till the identity of the original partners was completely lost. The question was whether, in these circumstances, there was a succession within the meaning of sub section (4) of section 25. This court observed: "The section does not regard a mere change in the personnel of the partners as amounting to succession and disregards such a change. It follows from the provisions of the section that a mere change in the constitution of the partnership does not necessarily bring into existence a new assessable unit or a distinct assessable entity and in such a case there is no devolution of the business as a whole." This court pointed out that though under the law of Partner ship a firm has no legal existence apart from its partners and it is merely a name to describe its partners compendiously, it is equally true that under that law also there is ordinarily no dissolution of the firm by the mere incoming or outgoing of partners. This Court also pointed out that the position is a little different under the Income tax Act where a firm is charged as an assessable entity distinct from its partners who can also be assessed individually. It was for this reason that sub section (4) of section 25 expressly mentioned that a case of succession was not to be found where there was a mere change in the constitution of the firm. In other words, though a firm was to be regarded as an entity for the purpose of the Income tax Act, that entity was not to be taken to be disturbed by the coming in or going out of partners any more than that entity could be disturbed under the law of Partnership. Applying this test to the present case, it is quite clear that the identity of the entity was never lost and there was never a succession till the year 1948. It must be remember ed that this was initially a business of a family but not in the 125 sense in which a Hindu Joint Family is said to have a business. From the very start, certain members of the family alongwith a stranger (Bhagwanjee) carried on the business in piece goods etc. In 1918, and in 1934 different deeds were executed but the basic deed was that of 1918. By that time, Bhagwanjee had retired and the business was in the hands of only the members of the family. Hemehand was then taken on in 1937 and in 1939, the original business was separated from the businesses newly started after 1922. Hemchand was given a share only in the newly started businesses to which section 25 could not possibly apply. When Hemchand retired, those businesses were also taken over and merged with the original business. In other words, the original business continued till 1943 in the hands of Narayanjee and Manecklal who were partners as far back as 1918 and three younger members of the family. In 1948, Manecklal and those three other members of the family sold this business to the company. It cannot be said these changes were not covered by the expression "a change in the constitution of the firm" and were comprehended in the term 'succession '. No question of the dissolution of the firm Sait Nagjee Purushotham & Co. ever arose. It continued right through; even the newly started businesses were owned by, it and though for a time the newly started businesses and the other business were kept distinct so that the stranger Hemchand could not get the benefit of partnership in the Head Finn, it cannot be said that the old firm had either discontinued or had been succeeded to by another person. Hemchand was merely taken on as a working partner. His rights in the firm were extremely ,slender; he had to make a deposit of Rs. 15,000 with the head firm and he was to get a remuneration of Rs. 400 p.m. which was to go up or down according to the profits. In other words, he was a mere employee though described as a working partner. As was pointed out by Chagla C.J. in .,Commissioner of Income tax, Bombay City vs Kolhia Hirdagarh Co. Ltd., Bombay(1) and again in Commissioner of Income tax, Bombay City vs Sir Homi Mehta 's Executors (2), such documents must be interpreted not in a legalistic way (1) (2) 126 but on their true business aspect. Says the learned Chief ' Justice in the former case: "It is open to us not merely to look at the documents themselves, but also to consider the surrounding circumstances so as to arrive at a conclusion as, to what was the real nature of the transaction from the point of view of two businessmen who were carrying out this transaction. In all taxation matters more emphasis must be placed upon the business aspect of the transaction rather than on the purely legal and technical aspect;. " ' Judged from this standpoint, the entry of Hemchand was not a dissolution of the firm of Sait Nagjee Purushotham and Co. He was brought in merely to do the business at one of the branches and to receive remuneration for doing the work. No doubt he was described as a working partner, but this, term did not mean much. The very fact that he was not taken on in the original business also shows that the original business in respect of which alone the benefit of section 25(3) and (4) can be claimed, continued uninterrupted. The changes, in 1939 and 1943 therefore had no effect upon this claim. Reliance was placed upon a decision of the Madras High Court in S.N.A.S.A. Annamalai Chettiar vs Commissioner of Income tax, Madras(1) as to the meaning of the word "dis continuance". In that case, a Hindu Undivided family con sisting of a father and son were carrying on money lending business under different vilasams. On March 28, 1939, there was a family partition and some vilasams were allotted to the father and the rest to the son, and he was the assessee ' In the assessment year 1939 40, the son claimed that there was a discontinuance of the business within the meaning of section 25(3) of the Income tax Act, 1922 and claimed the benefit of that sub section on the ground that the business of them joint family was taxed under the Act of 1918 and he was not liable to pay tax for the period between April 13, 1938 and March 28, 1939. It was held by Satyanarayana Rao and Raghava Rao JJ. that as the joint family was split up, the (1) (1951) 20 I.T.R.38. 127 business no longer continued in existence, but was terminat ed and there was a "discontinuance" within the meaning of section 25(3) and the family was entitled to the benefit of that sub section. Satyanarayana Rao, J. held that as the unit had disintegrated into its component parts so as to annihilate the unity of the business, each part which was thus divided was not identical with the whole, even though all the parts taken together constituted the whole and that, when the unifying principle of that whole no longer existed, the parts gained their individuality and became separate and distinct. The learned Judge held that there was discontinuance. Looked at from the point of view of Hindu Law, all these results may be said to follow. But, looked at from the point of view of section 25(3), the business could be said to have ceased. The Income tax Act thinks, not in terms of joint family business, but in terms of business in a business sense, and it is the business which was taxed under the Act of 1918 which must cease to exist before the benefit of section 25(3) can be obtained. It is possible that the decision might be justified on the ground that the benefit was being claimed by one of the members of the erstwhile family and not by the whole family, though I express no opinion upon it, but even so that would be a case of succession rather than of discontinuance. The Madras case cannot, however, be made applicable to the present facts, because, as pointed out already by me, there was no cessation of business in so far as the original business of piece goods, yarn and banking was concerned. That business continued in the hands of the same person who had paid tax under the Act of 1918 though there were changes in the constitution of the partnership in the years that passed. I may refer here to a case decided by the Rangoon High Court in Commissioner of Income tax Burma vs A.L.V.R.P. Firm(1). In that case, a Hindu undivided family of Rangoon which consisted of two brothers carried on moneylender business under a single vilasam but with shops at several places including a shop at Rangoon. The shops at each of these places had separate capital and there were separate agents to manage the shops but there was a central system of accounts at one place showing the financial position of (1) ; 128 the family. In 1938 1939, the two brothers effected a partition and the Rangoon shop was thereafter conducted by the two brothers in partnership. On these facts, it was held by a Full Bench of the Rangoon High Court that there was no succession within the meaning of section 26(2) of the In come tax Act. It was pointed out that the family did not carry on separate businesses at each of the five places but had only a number of branches at these places of the same business and in order that there, might be a succession, it was necessary that the person succeeding should have succeeded his predecessor in carrying on the business as a whole. The case was under section 26(2) and slightly different considerations govern section 25 (4) which have induced the legislature to keep the two sections separate. While it is possible that there may be a succession only to the business which had paid tax under the Act of 1918 for purposes of section 25(4), as is the case here, a complete change of ownership of all the businesses is necessary for purposes of section 26(2) before it can be said that there is succession. In both sections, change does not mean that every one who owned the former business should leave it and go away. The identity of the person who owned it before and the identity of the person who owned it later must, however, be distinct. In the present case this has not happened. All the facts have, perhaps, not come on the record with that clarity with which they should have, but as pointed ,out by Chagla C.J. in Jesingbhai Ujamshi vs Commissioner of Income tax, Bombay Moffusil(1), there is nothing in law to preclude common partners constituting two entirely separate firms in respect of different businesses carried on by them for the purpose of the Indian Income tax Act. Where they do this, it is mainly a question of fact whether there has been a succession to one of such partnership or not, whether for the purpose of section 26 or for the purpose of section 25 (4). But it must be remembered that under section 25(4), a mere change in the constitution of the partnership does not count and sections 25 (4) and 26 (2) do not apply at the same time. I am not prepared to say that in this case in respect of +the original business there was anything more than a mere change in the constitution of the partnership. The business of (1) 129 umbrella and soap which never paid tax under the Act of 1918 could be dealt with by the partners as they liked without affecting the question of relief under section 25 in respect ,of the head business. In my judgment, these appeals must be allowed anD the question answered in favour of the assessee firm but only in respect of the business in piece goods, yarn and banking which alone had paid tax under the Income tax Act of 1918. I would therefore allow the appeals with costs here and in the High Court. ORDER BY COURT In accordance with the opinion of the majority the appeals are dismissed with costs.

By section 25 (4) of the Income tax Act, "Where the person who was at the commencement of the Indian Income tax (Amendment) Act, 1939. carrying on any business, profession or vocation in which tax was at any time charged under the provisions of the Indian Income tax Act, 1918, is succeeded in such capacity by another person, the change not being merely a change in the constitution of a partnership, no tax shall be payable by the first mentioned person in respect of the income, profits and gains of the period between the end of the previous year and the date of such succession." A firm bearing the same name as the appellant firm, had been carrying on business from before 1918 and had paid tax on that business under the Income tax Act, 1918. The firm did three kinds of businesses, namely, (a) in piece goods, yam as general merchants, 92 (b) in the manufacture and sale of umbrellas and (c) in the manufacture and sale of soaps. There were various changes in the constitution of the firm between 1918 and 1934. In May 1939 two, documents were executed, one by the then members of the firm, and a stranger H. being exhibit CI and the other by those members alone,. being exhibit CII. It appeared from exhibit CI that the business in the manufacture and sale of umbrellas and soaps was being carried on from October November 1937 by the parties to it as partners while exhibit CII showed that the parties to it had been carrying on the business in yarn piecegoods and as general merchants as partners from the same time as mentioned in exhibit Cl. On October 30. 1943 a document styled as an agreement of partnership was executed by five persons who were then the persons interested in the businesses carried on under the instrument of May 30, 1939. This document referred to the two, agreements of partnership of May 30, 1939 and certain subsequent retirements of partners and admissions of new partners and provided that the businesses previously carried on by the two partnerships. referred to in the instruments of May 30, 1939, would thereafter be carried on by one single partnership constituted by the parties to it. Thereafter all the businesses aforesaid were carried on by this single partnership. The firm constituted by the instrument of October 30, 1943 continued with certain changes in its constitution till February 7, 1948 when the then partners of, it entered into an agreement with a company to transfer the business of the firm to the latter, the transfer to be completed by February 13, 1948 and the transfer was in fact made. The firm constituted by the document of October 30, 1943 claimed relief under section 25(4) in assessment for the years 1948 49 and 1949 50 on the ground that it had been carrying on a business on April 1, 1939 when the Income tax (Amendment) Act, 1939 commenced; to operate on which business tax had been charged under the Act of 1918 and that it was succeeded in that business by a company in February 1948. Held: (per Sarkar and Shah JJ.). The assessee was not entitled to the relief. Cl and CII showed that the business that had been carried on by the firm existing in 1918 was discontinued in October/November 1937 and its businesses were split up into two and from then carried on by two independent partnerships brought into existence by those documents. The old firm was brought to an end by Exs. Cl and CII. When a business carried on in one unit is disintegrated and divided into parts, the parts are not the whole, though all the parts taken together constitute the whole. In such case there is a discontinuance of the original businesses. section N. A. section A. Annamalai, Chettiar vs Commissioner of Income tax, Madras, referred to. 93 The business on which tax had been charged under the Act of 1918 was not being carried on April 1, 1939 by the firm which had paid tax under that Act. The business to which the company succeeded under the agreement ,of February 7, 1948 cannot before the succession be said to have been carried on by a firm which was carrying on business on April 1, 1939, for that firm had been newly formed under the instrument of ,October 30, 1943, which expressly revoked the partnership agreements of May 30, 1939 under which two firms had been brought into brought into existence. Per, Hidayatullah J. (dissenting) (i) Sub sections (3) and (4) of section 25 ,of the Act are mutually exclusive . sub section (3) was only applicable when the business was discontinued and that in the term "succession" was not to be included a change in the constitution of the partnership. In sub section (4) the emphasis is on succession to a person who on April 1, 1939 was carrying on any business on which tax was at any time ,charged under the Act 1918. In sub section (3) the emphasis is on the discontinuance of the business which had paid tax under the Act 1918. (ii) There is difference of approach to the same facts under the law of partnership and the Income tax law. Charandas vs Haridas, (1960)39 and Dulichand vs ,Commissioner of Income tax, Nagpur, [1956] S.C.R. 154, referred to. (iii) Discontinuance of a firm is not a mere change in the constitution of the firm or even succession where, though the business changes hands, the original business which paid the tax in 1918 is carried on. Shivram Poddar vs Income tax, Officer, C. A. No. 455 of 1963 dated December 13, 1963, referred to. (iv) All cases of discontinuance of businesses are treated under sub section (3) and all cases of succession under sub section (4) and all cases of mere change in the constitution of the firm are neither cases under sub section (3) nor under sub section These sub sections do not apply to cases where the business was not in existence before the Act 1922 came into force. Ambalal Himatlal vs Commissioner of Income tax and Excess Profits Tax, Bombay North, , referred to. (v) Since the soap and umbrella businesses were not in existence and no relief could be claimed in respect of these businesses, changes in respect of them were irrelevant. (vi) by the expression "discontinued" in sub section (3) is meant complete cessation of business. In the present case it could be said that this had taken place in respect of the piece goods business; this might 94 have been managed by persons other than those who had paid the tax under the 1918 Act, but the business was not discontinued for the application of sub section Commissioner of Income tax, Bombay vs P. E. Polson, (1945)13 Commissioner of Income tax, West Bengal vs A. W. Figgies and Co. ; and Mevoppar vs Commissioner of Income tax, Madras, 1. L. R. referred to. (vii) In the present case there was no succession and it falls within the rule laid down by this Court in Figgies ' case. (viii) Though a firm was to be regarded as an entity for the purpose of the Income tax Act, that entity was not to be taken to be disturbed by the coming in or going out of partners. Applying the test to the present case it was held that the identity of the entity was never lost and there was never a succession till the year 1948. No question of the dissolution of the old firm in piece goods business ever arose. It continued right through, even other newly started businesses were owned by it. It cannot be said that the old firm had either discontinued or had been succeeded by another person. Hemchand was a mere employee though described as a partner. The entry of Hemehand did not constitute a dissolution of the old firm. Commissioner of Income tax, Bombay City vs Kolhia Hirdagarh, Co. Ltd., Bombay, (1949) 17 ; and Commissioner of Income tax, Bombay City vs Sir Homi Metters Executor, , referred to. (ix) The appellants are entitled to succeed in their claim regarding the business in piece goods yarn and banking which alone had paid tax under the 1918 Act.

Appeals Nos. 884 887 of 1962. Appeals from the judgment and decree dated May 2, 1960, of the Rajasthan High Court in Civil Second Appeal Nos. 268 of 1954, 203 of 1955, 4 of 1954 and 27 of 1954. section K. Kapur and B. R. G. K. Achar, for the appellant 'in allthe appeals). R. P. Modi and R. K. Garg, for the respondents (in C.A. No. 887/1962). March 12, 1964. The Judgment of the Court was delivered by WANCHOO, J. These four appeals arise out of four certi ficates granted by the High Court of Rajasthan and raise a common question. We therefore, propose to set out facts in one of the present appeals (No. 887), as the facts in other appeals are similar, except that the commodity involved was different and so was the amount in dispute. The suit out 'of which appeal No. 887 has arisen was filed by the respondent against the State of Rajasthan. The respondent was a resident of the former Dholpur State and the dispute which led to the suit related to a time before the merger of former Dholpur State into the Matsya Union. The case of the respondent was that in 1947 certain commodities including chuni with which appeal No. 887 is concerned could only be exported from the former Dholpur State on export permits issued by the customs department of the said State. It was also the practice in that State that when permits for export were issued, export duties had to be paid in advance, though the actual export was made later. Consequently, in June 1947 the respondent applied for and was granted a permit for export of 15,000 maunds of chuni, and in connection therewith he deposited Rs. 30,000/as export duty in advance. This permit had been granted on June 28, 1947 and remained in force upto December 2, 1947. The respondent however was not able to export the entire quantity of 15,000 maunds for which the permit was granted; he could only export 4,572 maunds and 20 seers of chuni before December 2, 1947. Thereafter he could not export further as his permit was not extended. It was alleged on behalf of the respondent that the reason why he failed to export the entire 176 quantity of the commodity before December 2, 1947 was due to market conditions and inability to get allotment of railway wagons. The respondent 's case further was that as he could not export the entire quantity of 15,000 maunds for which he had paid export duty in advance at the rate of Rs. 2/ per maund, he was entitled to refund of the proportionate export duty for the quantity of 10,427 maunds and 20 seers, which he could not export. His case further was that though he asked the State for refund of this advance duty, the State did not pay back the same to him. In the meantime, rapid constitutional changes took place after August 15, 1947. By May 15, 1949, the United State of Rajasthan was formed including the Matsya Union into which the former State of Dholpur had merged on March 17, 1948. The United State of Rajasthan eventually became the Part B State of Rajasthan on January 26, 1950 when the Constitution came into force. Eventually when the State refused to refund the amount, the suit was filed, out of which appeal No. 887 has arisen, in January 1952. The respondent claimed refund of Rs. 20,855/ along with interest and costs. The suits were resisted by the State of Rajasthan on various grounds; but we are concerned now only with one ground which alone has been urged before us, namely, that the State of Rajasthan was not bound by any liability which might have arisen against the former State of Dholpur. It was a new sovereign and was not bound by any obligation against the old sovereign of the former State of Dholpur unless it chose to recognise the obligation. As the United State of Raja sthan into which the former State of Dholpur came to be merged in 1949 never recognised the obligations of the former State of Dholpur it was not bound to refund the amount due to the respondents. In reply to this contention of the State, the respondent relied on article 295(2) of the Constitution and other provisions made during the period when mergers were taking place after August 15, 1947 and contended that in view of article 295(2) of the Constitution the State of Rajasthan was bound by the obligation of the former State of Dholpur. Before we refer to the decisions of the courts below with regard to this controversy it would be convenient to clear the ground by indicating the admitted position, which resulted in the inclusion of the former Dholpur State into the Part B State of Rajasthan, which came into existence on January 26, 1950 and which would be bound by article 295(2) of the Constitution. The former Dholpur State remained a separate entity till March 17, 1948, though it had acceded to the Dominion of India after August 15, 1947 with respect to three subjects, namely, communications, defence and external affairs. In 1948, however, the process of merger in Rajasthan began and the 177 first merger that took place was of the former States of Alwar, Bharatpur, Dholpur and Karauli, which formed the Matsya Union as from March 18, 1948 by a Covenant entered on February 28, 1948. It is not in dispute that on this merger, provision was made for the continuance of the laws in the covenanting State till such time as they were modified by the new State. Provision was also made in the Covenant that all the assets and liabilities of the covenanting States shall be the assets and liabilities of the new State of Matsya. Then came another union of certain other Rulers in Rajasthan in March 1948 by which these Rulers united under the Ruler of Udaipur to form what later came to be known as the Former State of Rajasthan. In March 1949, the United State of Rajasthan was formed by Covenant entered into by fourteen Rulers of Rajasthan, including these who had formed the Former State of Rajasthan. and this State came into existence from April 7. It may be mentioned here that when this State came into existence on April 7, 1949, it provided for the continuance of all laws till they were repealed or amended by the new State. There was also a provision in the Covenant by which the assets and liabilities of the covenanting States became the assets and liabilities of the new State. In this State of United State of Rajasthan, the State of Matsya, merged in May 1949, and thus the former State of Dholpur came to be included in the United State of Rajasthan through the Matsya Union. When this merger took place it is not in dispute that the exis ting laws were to continue till they were repealed or altered by the new State. It is also not in dispute that the assets and liabilities of the Matsya Union were taken over as the assets and liabilities of the United State of Rajasthan in which the Matsya Union merged. Finally the United State of Rajasthan in which the State of Sirohi was also merged became the Part B State of Rajasthan on January 26, 1950. At this time also article 372 of the Constitution continued the existing laws subject to their being altered or repealed by the new State. Further article 295(2) provided that the Government of each State specified in Part B of the First Schedule shall, as from the commencement of the Constitution, be the successor of the Government of the corresponding Indian State as regards all property and assets and all rights, liabilities and obligations. whether arising out of any contract or otherwise, other than those referred to in cl. This was subject to any agreement entered into in that behalf by the Government of India with the Government of the State concerned. This completes the narration of the political changes that took place till the Constitution came into force on January 26, 1950. We have already indicated that a number of defences were raised on behalf of the State of Rajasthan and these de fences were negatived by the trial court in three suits. One 178 of the suits, out of which appeal No. 886 has arisen, was ismissed by the trial Court. The State went in appeal in two of the suits to the District Judge and in one (out of which appeal No. 887 has arisen) to the High Court direct in view of the valuation. In the fourth suit, the plaintiff went in appeal to the District Judge. The appeals of the State to the District Judge were substantially dismissed while the appeal in the fourth suit by the plaintiff was substantially allowed. Then followed three second appeals to the High Court by the State. These second appeals were heard along with the first appeal in the High Court. It seems that in the High Court for the first time a point was raised that the liability of the former Dholpur State did not fasten on the State of Rajasthan as it emerged on January 26, 1950. The High Court permitted the point to be raised as it was a pure question of law. AU the appeals came before a Division Bench of the High Court. The two learned Judges composing the Division Bench disagreed on this question of the liability of the State of Rajasthan under article 295(2) in respect of the liability of the former State of Dholpur. Thereupon there was a reference to a Full Bench on the question of liability which was formulated by the learned Judges thus: "Whether the expression 'Government of the corresponding State ' used in article 295(2) of the Constitution with reference to Rajasthan properly means the Government of the United State of Rajasthan which was the only Indian State in existence at the time of the commencement of the Constitution or it also includes the Government of any of the Covenanting States which had integrated with the United State before the Constitution came into operation. " The three learned Judges who heard the reference were unanimously of the opinion that the expression "Government of the corresponding State" used in article 295(2) of the Constitution with reference to Rajasthan meant not only the Government of the United State of Rajasthan, but also the United State of Rajasthan including its component units. The matter then went back to the Division Bench. The three second appeals were dismissed by the High Court. The first appeal out of which appeal No. 887 had arisen was also dismissed except that no interest was allowed upto the date of decree and the amount was reduced to the actual excess export duty, which had been deposited in advance and it was ordered to be refunded. The only question that has been raised before us on behalf of the appellant is about the liability of the State of Rajasthan under article 295(2) of the Constitution in respect of the obligations of the former State of Dholpur, which came to be 179 included in the State of Rajasthan on account of political changes to which we have already referred. In this connection, the appellant relies on the decision of this Court in M/s. Dalmia Dadri Cement Co. Ltd. vs The Commissioner of Incometax. (1)That case dealt with the Covenant creating the State of Pepsu and particularly article VI thereof The covenant in the State of Pepsu was more or less similar in terms to the Covenant in the United State of Rajasthan. This Court reviewed certain cases relating to the acquisition of territory by cession or by conquest, and held that it made no difference whether acquisition of new territory was by an existing State by conquest or by cession or a new State came into existence by agreement out of territories belonging to some former States. In either case, it was held that there was establishment of new sove reignty over the territory in question and that was an act of State. In consequence this Court further held that the Covenant by which the new State of Pepsu came into existence was in its entirety an act of State and that article VI therein could not operate to confer any right on the company as against the new State, for the principle was well settled that clauses in treaties entered into by sovereigns of independent States whereunder sovereignty in territories passed from one to the other providing for the recognition by the new sovereign of the existing rights of the residents of those territories must be regarded as invested with the character of an act of State and no claim based thereon could be enforced in a court of law. This Court also negatived the argument which was urged in that case that part of the Covenant was an interim Constitution and head that the Covenant was in whole or in part an act of State and could not be treated as an interim Constitution. Strong reliance is placed on behalf of the appellant on that decision in support of the contention that even if there was any liability of the former State of Dholpur to; refund the amount of tax collected in advance for no export was made, that liability did not devolve on the Part B State of Rajasthan under article 295(2) of the Constitution, as there was no recognition of this liability by the new State at any time and in that respect the present case was on all fours with that decision. After laying down the above principles, this Court proceeded to consider in that decision the particular point raised before it. That point was with respect to a clause in an agreement between the Ruler of the former Jind State and the Dalmia Dadri Cement Company with respect to income tax and certain concessions given to the company in that behalf. The question that arose in that connection was whether there had been any recognition of the concessions by the new sovereign; and this Court held that there was no recognition of the concessions. In that connection reference was made to Pepsu Ordinance No. 1 of 2005, dated August 20, 1948 by section 3 of which (1) [1959] section C. R. 729. 180 all laws in all Covenanting States were repealed and the laws in force in the State of Patiala were to apply mutatis mutandis to the entire territories of the new State. This Ordinance was repealed and replaced by Ordinance XVI of Samvat 2006 which came into force on February 5, 1949 and which contained an exactly similar provision. This Court therefore held that if the agreement was treated as a special law, it must be deemed to have been repealed by section 3 of Ordinance No. 1. It further held that the repeal of all laws in the covenanting States other than Patiala and their replacement by the Patiala laws showed that the new sovereign did not recognise the rights of the subjects of the covenanting States arising from any law in force thereafter the State of Pepsu came into existence. There fore it was held in that case that the concessions in the agreement came to an end when Ordinance No. 1 was passed as they were never recognised by the new sovereign and could not be availed of by the company. It would be noticed that the decision that the new sovereign had not recognised the rights in States other than Patiala was based on the fact that Ordinance No. 1 repealed all laws in all States other than Patiala and applied the Patiala laws to the entire territory. This was the basis of the particular decision arrived at in that case (apart from the general principles laid down in connection with the cession of territory to which we have already referred), and we shall refer to it when dealing with the facts in the present case. Further though in that case it was held that article VI could not be enforced by citizens against the new sovereign as it was part of the Covenant, which was an act of State, this Court went on to point out that article VI of the Covenant would be valuable evidence from which affirmance of the rights mentioned therein could be inferred and added that such inference must relate to act or conduct of the new State after it came into existence. If there were any acts of the new State which were equivocal in character, it would have been possible to bold in the light of article VI of the Covenant that its intention was to assume the liabilities. In that case, however, this Court refused to treat article VI even as evidence because it pointed out that the first act of the new sovereign was the application of the Patiala State laws, including the Patiala Income tax Act, to the territories of Jind involving negation of the rights claimed in that case. But apart from the particular decision in that case, we have to proceed on the basis of the general proposition enunciated in that case as to the effect of the coming into existence of a new State even in the manner in which the State of Pepsu or the United State of Rajasthan came into existence after their respective Covenants, and it is to this aspect of the matter we shall now turn. We have already indicated when dealing with the history of the political changes which eventually culminated in the 181 Part B State of Rajasthan after the coming into force of the Constitution that two matters were always provided for there during all this process of merger. The first was that each time a merger took place the new State by a provision in the Covenant took over the assets and liabilities of the merging States. This provision in the Covenant could not be availed of by the subjects of the new State as, in view of the decisions in Dalmia Dadri Cement Co. 's case(1) the Covenant in whole or in part was an act of State. But according to the same decision the presence of such a clause in the Covenant throughout would be valuable evidence which would show that the new State assumed the liabilities of the merging State, if there are any acts of the new State which are equivocal in character. Now we find from the history we have already narrated above that every time there was a merger and formation of a new State, the old laws were always to continue till they were repealed, amended or altered by the new State. We are of opinion that when the new State continued all the old laws till they were altered or repealed, and there was specific provision in each Covenant that the assets and liabilities of the Covenanting States were to be the assets and liabilities of the Union the new State must have intended to respect all the rights flowing from laws so continued and assume all liabilities arising from the existence of those laws. Otherwise we see no sense or purpose in continuing the old laws till they are altered or repeated if the intention was that the obligations and liabilities flowing from the continuance of the old laws would notwithstanding the Covenant not be assumed by the new State. If the intention was otherwise, we should have found a provision similar to that in the Pepsu case by which all the old laws were repealed in the merging States except Patiala and the Patila laws were to continue in the entire territory giving rise to such rights only as the Patiala Laws recognised or conferred. But whereas in the present case the old laws were to continue till they were repealed or altered it follows in our opinion that the rights arising under the old laws in the subjects of the merging States would continue and these subjects would have the same rights against the new State as they would have under the old laws against the merging State. Thus by continuing the old laws, till they are repealed, altered or modified, the new State in effect undertook the liability which might arise against it by virtue of the continuance of the old laws, Even if there was some doubt about the new State undertaking the liabilities of the old State in view of the continuance of the old laws, we can in accordance with the decision in the Daltia Dadri Cement Co. 's case(1) look to article VI of the Covenant to come to the conclusion that on continuing the old laws, until they were altered, repealed or modified, the (1) [1959] S.C.R. 729. 182 new State intended to affirm the rights of the subjects which they had against the merging State and to assume itself the liability if any arising against the merging State. This is the basic difference between the Dalmia Dadri Cement Company case(1) and the present case, for in that case the old laws were repealed and thus repudiated in areas other than Patiala State while in the present case the old laws were continued till they were repealed or altered; and in view of that basic difference between that case and the present case we can legitimately call in aid article VI of the Covenant and similar provisions which were always made throughout this process of merger in Rajasthan and treat them as evidence from which to come to the conclusion that the new State, by continuing the old laws, without change till they were repealed or altered, recognised that it was liable in the same way as would have been the merging State if there was any liability on the merging State. But this was of course subject to any law made by the new State repealing the old laws and the liabilities arising there under or even otherwise, provided the law so made was within the competence of the new State and after the Constitution came into force it did not transgress the constitutional limitations. The result would be that the new State would be bound by the liabilities of the merging States and as similar provisions were there always throughout till we reach the Part B State of Rajasthan, it follows that there was always recognition of the rights of the subjects and that the new State assumed liabilities of the old State, throughout this process. This was of course subject to any law passed by the New State provided that law was within its competence and after the Constitution came into force did not transgress the limitations contained therein. In these circumstances we are of opinion that the new sovereign throughout this process of integration from 1948 to 1950 must be taken to have recognised the rights of the subjects and undertaken the liability, if any, of the old States. It follows therefore that the State of Rajasthan will be liable under article 295(2) of the Constitution to meet the liabilities of all old States which eventually were included in it subject always to this that if the new State passed any law repealing the old law which would affect the liability or even otherwise that law would prevail and the liability may disappear provided the new law is within the competence of the State legislature and does not transgress the constitutional limitations after the Constitution came into force. We are therefore of opinion that there was recognition of liability by the new State throughout this process and under the circumstances the suit was main tainable against the Part B State of Rajasthan in view of article 295(2) of the Constitution. In this view of the matter we consider that it is unnecessary to decide whether the particular words used in article 295(2) include not only the United State of Rajasthan as it was just before January 26, 1950 but also the 183 old States which came to be merged into it through the process to which we have already referred. Whether that is so or not, it follows in view of the history to which we have referred that there was always recognition by the new State of its liability in the manner already referred to with respect to the liabilities of the merging States, and if there is any doubt about it that doubt in our opinion is resolved by the existence of article VI or similar provision throughout the process of these political changes. In this connection we may also refer to section 3 of the Raja sthan Administration Ordinance No. 1 of 1949, which conti nued existing laws of the old States till they were altered by the competent legislature or other competent authority in the new State. Section 3 further said that the old laws will continue in force in the State concerned subject to the modification that reference therein to the Ruler or Government of that State shall be construed as a reference to the Rajpramukh or, as the case may be, to the Government of Rajasthan. These words also indicate that whatever could be enforced under the laws in force in a State against the Ruler or the Government of the merging State could be enforced against the Rajpramukh or the Government of the new State. This further bears out the conclusion that the new State recognised the rights of the subjects of the old States flowing from the old laws and was prepared to undertake the liability that may lie on it in consequence thereof. We therefore agree with the Full Bench that the liability lay upon the State of Rajasthan because there was recognition of the liability even on the principles enunciate in the Dalmia Dadri Cement Company 's case(1). In this view of the matter we need not express any view on the question whether the expression "Government of the corresponding Indian State" used in Art 295(2) would mean only the United State of Rajasthan as it was on January 26, 1950 or would also include all the former States which came to be merged in the United State of Rajasthan as it was on January 26,1950. It only remains now to, refer to another decision of this Court in Maharaja Shree Umaid Mill Limited vs Union of India (2). In that case there was an agreement between the Ruler of the former State of Jodhpur and the Maharaja Shree Umaid Mills Limited by which certain exemptions from income tax and excise duty were granted to the Mills. Two questions arose for decision there. The first was whether excise could be levied on the cloth manufactured and the second was whether income tax could be levied on the income of the Mills, in view of the agreement between the Mills and the former Ruler of Jodhpur. The first question that was raised in that case was whether the agreement was a law; and this Court held that (1) [1959] S.C.R. 729. (2) ; 184 the agreement was not a law. With that aspect of the matter we are not concerned in the present appeals. The next question that arose was whether the agreement had been recognized by the new sovereign and reliance was placed on the continuance of laws and article VI of the Covenant in that connection, and it was urged that in view of article 295 of the Constitution the exemption as provided in the agreement continued. In that case, however, there was one vital difference; even though the old laws were continued for the time being by Rajasthan Ordinance No. 1 of 1949 the new State passed the Rajasthan Excise Duties Ordinance 1949 some time after. That Ordinance clearly applied to the Mills and there was no doubt as to the State 's competence to enact it. In view of that law, the exemption in the agreement was held not to have been affirmed by the new State of Rajasthan. The facts of that case are thus different from the facts in the present case, for there was a competent law which clearly negatived the recognition of such an agreement and which clearly provided for excise duties. So far as income tax was concerned it was imposed as from April 1, 1950 after the Constitution had come into force. Here again we find a law which was competently passed by Parliament and which did not transgress any of the constitutional limitations. Such a law therefore must prevail and in the presence of such a law there can be no question of recognition by the Union of the right to exemption, if any, under the agreement with the Ruler of the former Jodhpur State. Therefore, with respect to both the claims raised in that case there was a law which clearly applied to the Mills and it was held that there was no recognition by the new sovereign. In the present case we have only the continuance of the old laws and the valuable evidence afforded by article VI of the Covenant and there is nothing to show that the right to claim refund was taken away by any law competently passed. In this view of the matter we are of opinion that the appellant can derive no assistance from the case of Maharaja Shree Umaid Mills(1). The appeals therefore fail and are hereby dismissed. Res pondent in Appeal No. 887 will get his costs from the appel lant. Appeals dismissed.

In 1947, the Dholpur State acceded to the Dominion of India. Later on, it was merged with other States and as a result of that merger, the Matsya Union was formed on March 18, 1948. One of the provisions of the merger agreement was that the existing laws in the Covenanting States were to be continued till such time as they were modified or repealed by the new State and that all the assets and liabilities of the Covenanting States were taken over by the new State. Later on, the Matsya Union was merged with the United State of Rajasthan which had come into existence from April 7, 1949. A similar provision with regard to the recognition of the liabilities of the Covenanting States by the new State was also provided. On January 26, 1950, Part B State of Rajasthan came into existence. In the four appeals the respondents secured permits from the Dholpur State for the export of certain commodities and they had to pay export duties in advance. As the respondents could not export the full quantity for which they had secured permits they asked the appellant to refund the excess export duty and when the latter refused to do so, filed suits for refund of the same with interest. The defence taken up by the appellant was that it was not bound by any liability which might have arisen against the former State of Dholpur. It was a new Sovereign and was not bound by any liability of the former State of Dholpur unless it chose to recognise the obligation but no such obligation was recognised in the present case. One suit was dismissed by the trial court and other three were decreed. The appeals of the State to the District Judge were substantially dismissed while the appeal in the first suit by the plaintiff was substantially allowed. The State filed appeals to the High Court. After referring the matter to the Full Bench, a Division Ben oh of the High Court dismissed the appeals filed by the State. The Appellant came to this Court after obtaining certificate of fitness from the High Court. The only question raised before this Court was about the liability of the State of Rajasthan under article 295(2) of the Constitution in respect of the obligations of the former State of Dholpur which came to be included in the State of Rajasthan. Dismissing the appeals, Held, that the new State by continuing the old laws without change till they were repealed or altered, recognised that it was liable in the same way as the merging State would have been in any case. Throughout the process of integration from 1948 to 1950, the new Sovereign must be taken to have recognised the rights of the subjects and undertaken the liabilities 175 of the old State. So under article 295(2) of the Constitution, the State of Rajasthan was liable to meet the liabilities of all old States which eventually were merged into it. Moreover, there was nothing to show that the right to claim the refund was taken away by any law competently passed. M/s Dalmia Dadri Cement Co. Limited vs The Commissioner of Income tax [1959], S.C.R. 729 and Maharaja Shree Umaid Mill Limited vs Union of India, A.I.R. 1953, S.C. 953 referred to.

Appeal No. 251 of 1963. Appeal by special leave from the judgment and order dated March 20, 1957, of the Patna High Court in Civil Revision No. 40 of 1956. M. C. Setalvad, and R. C. Prasad, for the appellants. The respondent did not appear. March 24, 1964. The short question which arises in this appeal is whether the term "wages" as defined by section 2(vi) of the (No. 4 of 1936) (hereinafter called 'the Act ') includes wages fixed by an award in an industrial dispute between the employer and his employees. This question has to be answered in the light of the definition prescribed by section 2(vi) before it was amended in 1958. The subsequent amendment expressly provides by section 2(vi) (a) that any remuneration payable under any award or settlement between the parties or order of a Court, would be included in the main definition under section 2(vi). The point which we have to decide in the present appeal is whether the remuneration payable under an award was not already included in the definition of wages before the said definition was amended. It is common ground that between the appellant, Sasamusa Sugar Works Ltd., and its workmen, the respondents, an award had been made by an Industrial Tribunal fixing the pay of the employees at Rs. 2/2/ per day, and in pursuance of the said award, the management of the appellant had entered into an agreement with the respondents that effect would be given to the wage structure, prescribed by the said award. This agreement was subsequently published in the Bihar Gazette as a part of the award. In spite of the award and the agreement, the appellant paid its employees only As. / 10 / per day and that led to the present claim made by the respondents under section 15 of the Act. The respondents contended before the payment of wages authority that the refusal of the appellant to pay to them wages at the rate awarded, in substance, amounted to an illegal deduction from their wages and on that basis, they asked for an order from the authority directing the appellant to pay to the respondents the said prescribed wages. The appellant raised two pleas against the respondents ' claim. It urged that section 15 of the Act was inapplicable, because the rates of wages fixed by the award did not fall within the definition of wages prescribed by section 2(vi) and it also argue,, that the claim of the respondents was barred by limitation. 421 The authority has found that section 2(vi) includes wages prescribed by the Industrial Tribunal, and so, it has rejected the appellants ' contention that the applications made by the respondents were incompetent under section 15 of the Act. In regard to the question of 'limitation, the authority did not decide the said question as a preliminary question, because it held, and, in our opinion, rightly, that it was a mixed question of fact and law, and so, it had to be tried after recording evidence. The appellant challenged the correctness of the conclusion of the authority that the applications made by the res pondents were competent under section 15 of the Act before the Patna High Court by filing a petition under article 226 of the Constitution. The High Court has affirmed the finding of the authority and held that section 15 was applicable to the case, because the wages prescribed by the award did amount to wages as defined by section 2(vi) of the Act. On that view, the writ petition filed by the appellant was dismissed. It is this order which the appellant seeks to challenge before us by its present appeal by special leave. Section 2(vi) as it stood at the relevant time, provides, inter alia, that wages means all remuneration, capable of being expressed in terms of money, which would, if the terms of the ,contract of employment, express or implied, were fulfilled, be payable. Mr. Setalvad for the appellant contends that before it is held that the wages prescribed by the award fall under section 2(vi), it must be shown that they constitute part of the terms of the contract of employment, either express or implied. The terms in question need not be express and can be implied; but they must be terms which arise out of the contract of employment, and since an award made by an Industrial Tribunal cannot be said to amount to a contract of employment, the wage structure prescribed by the award cannot fall within the definition prescribed by section 2(vi). That, in brief, is the substance of the argument raised by the appellant. We are not inclined to hold that even under the unamended definition of wages, rates of remuneration prescribed by an award could not be included. In dealing with the question of construing the unamended definition of the term "wages", it is essential to bear in mind the scope and character of the powers conferred on Industrial 'Tribunals when they deal with industrial disputes under the provisions of the Indus trial Disputes Act. It is now well settled that unlike ordinary civil courts which are bound by the terms of contract between the parties when they deal with disputes arising between them in respect of the said terms, Industrial adjudication is not bound to uphold the terms of contract between the employer and the employees. If it is shown to the satisfaction of Industrial adjudication that the terms of contract of employment, 422 for instance, need to be revised in the interests of social justice. it is at liberty to consider the matter, take into account all relevant factors and if a change or revision of the terms appears to be justified, it can, and often enough it does, radically change the terms of the contract of employment. The development of industrial law during the last decade bears testimony to the fact that on references made under section 10(1) of the Industrial Disputes Act, terms of employment have constantly been examined by industrial adjudication and wherever it appeared appropriate to make changes in them, they have been made in accordance with the well recognised principles of fair play and justice to both the parties. Therefore the basic assumption made by Mr. Setalvad in contending that section 2(vi) cannot take in the wages prescribed by the award, is not well founded. When an award is made and it prescribes a new wage structure, in law the old contractual wage structure becomes inoperative and its place is taken by the wage structure prescribed by the award. In a sense, the latter wage structure must be deemed to be a contract between the parties, because that, in substance, is the effect of industrial adjudication. The true legal position is that when industrial disputes are decided by industrial adjudication and awards are made, the said awards supplant contractual terms in respect of matters covered by them and are substituted for them. That being so, it is difficult to accede to the argument that the wages prescribed by the award cannot be treated as wages under section 2(vi) of the Act before it was amended. The amendment has merely clarified what, in our opinion, was included in the unamended definition itself. In this connection,we may incidentally refer to the decision of this Court in the South Indian Bank Ltd. vs A. R. Chacko(1), where it has been observed by this Court that the very purpose for which industrial adjudication has been given the peculiar authority and right of making new contracts between employers and workmen makes it reasonable to think that even though the period of operation of the award and the period for which it remains binding on the parties may elapse in respect of both of which special provisions have been made under sections 23 and 29 respectively the new contract would continue to govern the relations between the parties till it is replaced by another contract. This observation clearly and emphatically bring out that the terms prescribed by an award, in law, and in substance, constitute a fresh contract between the parties. This question appears to have been considered by the Bombay and the Calcutta High Courts. In Jogendra Nath (1) A.I.R. 1964 S.C. 15. 423 Chatterjee and Sons vs Chandreswar, Singh(1), the Calcutta High Court appears to have taken the view which supports Mr. Setalvad 's argument, whereas in the Modern Mills Ltd. vs V. R. Mangalvedhkar(2), and in V. B. Godse, Manager, Prabha Mills Ltd., vs R. M. Naick, Inspector, under the Payment of Wages Act(3), the Bombay High Court has interpreted section 2(vi) to include wages directed to be paid by industrial adjudication. In our opinion, the Bombay view correctly represents the true legal position in the matter. The result is, the appeal fails and is dismissed. The matter will now go back to the authority under the Act for disposal in accordance with law. There would be no order as to costs. Appeal dismissed (1) A.I.R. 1951 Cal. 29. (2) A.I.R. 1930 Bom.

In pursuance of an award made by an Industrial Tribunal fixing the pay of the employees at Rs. 2/2/ per day, the management of the appellant had entered into an agreement with its workmen, that the effect would be given to the wage structure prescribed by the said award. In spite of the award and the agreement, the appellant paid its employees only As. /10/ per day and that led to the present claim made by the respondents under section 15 of the Payment of Wages Act. They asked for an order from the payment of wages authority directing the appellant to pay the said prescribed wages. Against the respondent 's claim it was urged by the appellant that section 15 of the Act was inapplicable, because the rates of wages fixed by the award did not fall within the definition of wages prescribed by section 2(vi) of the Act. The authority rejected the appellant 's contention. The appellant then challenged the correctness of the conclusion of the authority before the High Court under article 226 of the Constitution. The High Court dismissed the writ petition and affirmed the finding of the authority. It held that section 15 was applicable to the case, because the wages prescribed by the award did amount to wages as defined by section 2(vi) of the Act. On appeal by Special Leave the appellant contended that before it is held that the wages prescribed by the award fall under section 2(vi), it must be shown that they constitute part of the terms of the contract of employment, either express of implied. Held: The argument is not well founded. When an award is made and it prescribes a new wage structure, in law the old contractual wage structure becomes inoperative and its place is taken by the wage structure prescribed by the award. In a sense, the latter wage structure must be deemed to be the contract between the parties, because that, in substance, is the effect of industrial adjudication. The true legal position is that when industrial disputes are decided by industrial adjudication and awards are made, the said awards supplant contractual terms in respect of matters covered by them and are substituted by them. That being so, it is difficult to hold that the wages prescribed by the award cannot be treated as wages under section 2(vi) of the Act before it was amended. The amendment has merely clarified what was included in the unamended definition itself. South Indian Bank Ltd. vs A. R. Chacko, A.I.R, 1964 S.C. 1522, referred to. Jogindra Nath Chatterjee and Sons, V. Chandreswar Singh, A.I.R., , inapplicable. Modern Mills Ltd. vs V. R. Mangalvedhikar, A.I.R., 1950 Bom. 342 and V. B. Godse, Manager, Prabha Mills Ltd. vs R. M. Naick , approved L/P(D)lSCI 14(a) 420

Appeal No. 513 of 1963. Appeal by special leave from the Award dated December 1961 of the Maharashtra Industrial Tribunal in Reference (I.T.) No. 48 of 1961. section V. Gupte, Additional Solicitor General, C. L. Dudhia, K. T. Sule, Atiqur Rahman and K. L. Hathi, for the appel lants. 425 M. C. Setalvad, N. V. Phadke, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for the respondent No. 1. March 24, 1964. The Judgment of the Court was delivered by DAS GUPTA, J. This appeal arises out of an industrial dispute as regards the age of retirement. The first respondent, Shaw Wallace & Co., was incorporated in January, 1946 as a Private Limited Company to take over the business of the partnership firm of the Shaw Wallace & Co., which had been ,doing business in India for about 60 years. In July. 1947 the Private Limited Company was converted into a Public Limited Company. The Head Office of the Company is at Calcutta. It has Branches in Bombay, Delhi and Via Madras. The general practice of the Company both at the Head Office and the Branch Offices appears to have been to retire its employees at the age of 55 though in certain cases the Company in its discretion permitted an employee to continue beyond that age. In September, 1959 an agreement was entered into between the Company and its employees at Calcutta under which the age of retirement was extended to 58 years subject to the employees passing a medical examination on reaching the age ,of 55. Shortly after this the Company 's employees at Bombay raised a dispute regarding their retirement age. They claimed that no workman should be retired from service before he bad completed 60 years of age. This dispute was ultimately referred to the Industrial Tribunal, Maharashtra. Before the Tribunal the Company resisted the workmen 's claim but submitted that it was agreeable to introduce for its Bombay employees provisions similar to those which had been introduced by agreement for the Calcutta employees retirement at the age of 58 subject to the employee passing a medical examination on reaching the age of 55. The Tribunal has directed that the age of retirement should be 58 but the Company may in its discretion and with the express or implied consent of the employee concerned continue an employee after he attains that age. It is against this decision that the present appeal has been filed by the workmen. As has already been noticed there is no dispute that the age of compulsory retirement should not remain at 55. The dispute is whether it should be fixed at 58 or at 60. It is interesting to refer in this connection to the information that has been collected by the Pay Commission (1957 59) as regards the pensionable ages prescribed under the Pension Insurance Schemes for employees generally or for industrial 426 employees and under social assistance or universal schemes in forty eight countries in 1954. According to this the pensionable age is 70 in two countries; 67 in another two; 65 in twenty four, 60 in seventeen, 55 in two and 50 in one. Thus out of 48 countries for which information was available it was found that in 45 countries the pensionable age was fixed at 60 or more. As the Pay Commission Report pointed out: "This is particularly remarkable, considering that the countries differ widely in demographic constitution, levels of economic development, and climatic and social condition; and it indicates a virtual unanimity of competent opinion that balancing the various factors physiological, economic and social that are relevant, the normal working life should continue up to the age of 60, and may well go on up to 65 years. It is undoubtedly more useful, however, and indeed essential for our present purpose to examine the trends in this matter in our own country and specially in the region in which the present dispute has arisen. In the delicate task of adjust ing needs of the employees to the interests of the employers and what is even more important to the general interests of the country at large, industrial adjudication has to pay special attention to the prevailing practice in the industrial region concerned. If in any particular region employees have been successful in their claim for fixing the age of retirement at 60 this very success is bound to raise in others in the region similar expectations. Refusal of similar relief to them is likely to create discontent. It is the endeavour of industrial adjudication to prevent this. That is why on questions of age of retirement and hours of work and other similar matters industrial tribunals attach much weight to what has been done in other industrial concerns in the neighbourhood in recent timeswhether by agreement or by adjudication. In support of their demand for fixing the age of retirement at 60 the workmen tried to show that in recent years at least the tendency in comparable concerns in Bombay region has been to fix the retirement age at 60. The Chart which is marked exhibit U 5 mentions 50 concerns in which the age of retirement is 60. In several of these this age had been fixed as far back as 1950 while in the rest the age was fixed in later years, that is, between 1952 and 1961. The workmen claim that these showed clearly a tendency in the Bombay region to fix the age of retirement in comparable concerns at 60. Special emphasis was naturally placed on some decisions of this Court which contained pronouncements as regards the existence of such a trend. In Imperial Chemical Industries 427 (India) Private Ltd., vs The Workmen(1) where the Tribunal had raised the age of retirement from 55 to 58 and both parties appealed, this Court pointed out that one of the documents on the record "would conclusively show that in Bombay the age of retirement is almost invariably fixed at 60 and not at 55". In an earlier decision of this Court in Dunzlop Rubber Co. Ltd., vs Workmen(2) it had been urged that the employer was an All India concern and that changing the terms and conditions of service in regard to the age of retirement in one place might unsettle the uniformity and might have serious repercussions in other branches. The Court pointed out that though this was a relevant consideration its effect had to be judged in the light of other material and relevant circumstances, and that one of the important material considerations in this connection would be that the age of retirement can be and often is determined on industry cum region basis. The Court then took into account the fact that the Tribunal had found that in all the awards in recent times in various concerns in Bombay region the trend had been to fix the age of retire ment at 60 years. It was mainly in view of this finding of the Tribunal that this Court refused to disturb the award fixing the age of retirement at 60 years. It is important to notice that the correctness of the Tribunal 's finding that in all the awards in recent times in the Bombay region the trend had been to fix the retirement age at 60 years, was not challenged before this Court In the present case an attempt appears to have been made on behalf of the respondent Company to show that it was not correct to say that the trend in Bombay region had been to fix the age of retirement at 60. Reliance was placed for this purpose on the Chart exhibit Cl. It appears that the res pondent company wrote to the Bombay Chamber of Commerce to ascertain from its member concerns as regards the age of retirement observed by them and the information received from some of them was incorporated in this Chart. The work men objected to this being received in evidence on the ground that the original letters had not been brought on the record. It is not however seriously disputed that the Chart correctly reproduces the information as regards the age of retirement given by the various concerns named there. We think therefore that the objection was rightly rejected by the Tribunal. This Chart shows the age of retirement for 75 concerns. In most of the cases the age of retirement is shown as 55 and in a few at 58. At first sight therefore it appears to afford impressive (1) ; (2) ; 428 testimony against the workmen 's case that the recent trend in Bombay has been to fix the age of retirement at 60. But on a closer examination it is clear that this document is of little assistance for finding out the recent trend. There is no indication at all as to how long ago the age of retirement in these concerns was fixed at 55 or at 58. The Statement filed by the workmen to explain this Chart shows that in two of these cases ' viz., Ingerzoll Band and Northern Assurance Co., the demand for fixing the age of retirement at 60 years is under negotiation. Exhibit U 6 also shows that in 25 of these concerns the clerical and subordinate staff were not organised into trade unions. There is thus good ground for thinking that the. reason why these concerns have kept the age of retirement at 55 or 58 are special to them and do not show any recent trend in the matter. In spite of these infirmities this document, exhibit Cl, appears to have impressed the Tribunal. The main diffi culty in accepting the Company 's case on this point, viz., the pronouncements of this Court, however, remained. So, the Tribunal considered it to be its duty to enquire whether the conclusion recorded by this Court in some of its earlier decisions as to the relevant trend in the Bombay region was accurate. Having embarked an this enquiry, the Tribunal, appears to have taken considerable pains to perform this duty and it has ultimately persuaded itself to hold that no such trend is established in fact. We ought to add in this connection, that the approach adopted by the Tribunal in dealing with this aspect of the problem is not very commendable, and that its present conclusion that what was said by itself on an earlier occasion and was confirmed by this Court in appeal, was in fact inaccurate, is on the whole unsound. If this Court had erred in making those pronouncements we would be the first to admit such mistakes and to correct the error. After careful consideration of all the materials placed on this record, we have, however, found nothing to justify any doubt about the correctness of what was said on the earlier occasion. On the contrary, the awards and agreements on the question of age of retirement about which information is furnished by the several documents on this record clearly show a consistent trend in the Bombay region to fix the retirement age of clerical and subordinate staff at 60. The very few departures from this practice which the Tribunal has mentioned are, in our opinion, wholly insufficient to indicate any slowing down of this trend. What the Tribunal has failed to notice is that instances which may justify a revision of the judicial opinion expressed on an earlier occasion about a particular trend must be strong and unambiguous and they must speak for the period both before and more particularly after the previous finding had been recorded in the matter. 429 Notice has also to be taken in this connection of the Report of the Norms Committee in which the following opinion was expressed: "After taking into consideration the views of the earlier Committees and Commissions including those of the Second Pay Commission the report of which has been released recently, we feel that the retirement age for workmen in all industries should be fixed at 60. Accordingly, the norm for retirement age is fixed at 60". This considered opinion of a Committee on which both employers and employees were represented emphasised the fact that in the Bombay region at least there is a general agree ment that the age of retirement should be fixed at 60. The Tribunal has referred to these observations, but has brushed them aside in a way for which we find no justification. On a consideration of all the facts and circumstances disclosed by the oral and documentary evidence on this record, we have come to the conclusion that the age of retirement of the appellant workmen should be fixed at 60. Accordingly, we allow the appeal with costs, and in modi fication of the award made by the Tribunal direct that the age of retirement for the workmen of the respondent be fixed at 60. Appeal allowed.

Shortly after the extension of the age of retirement from 55 to 58 subject to the employee passing a medical examination at 55 in the respondent company 's Head Office at Calcutta, their workmen at Bombay branch raised an industrial dispute claiming the extension of their age of retirement from 55 to 60. The dispute was referred to the Industrial Tribunal. The company resisted the claim but was agreeable to introduce similar provisions as introduced at Calcutta. The difficulty in accepting the company 's case was the conclusion recorded by the Supreme Court in its earlier decisions that the trend in Bombay region was to fix the age at 60. So the Tribunal considered it to be its duty to enquire whether the conclusion recorded by the Supreme Court was accurate and ultimately persuaded itself to hold that no such trend was established in fact, and directed that the age of retirement should be 58. Held: (i) After careful consideration of all the materials placed on this record, there was nothing to justify any doubt about the correctness of what was said on the earlier occasion by this Court. The approach adopted by the Tribunal in dealing with this aspect of the problem is not very commendable and its present conclusion that what was said by itself on an earlier occasion and was confirmed by this Court in appeal, was in fact inaccurate, is on the whole unsound. What the Tribunal has failed to notice is that instances which may justify a revision of the judicial opinion expressed on an earlier occasion about a particular trend must be strong and unambiguous and they must speak for the period both before and more particularly after the previous finding had been recorded in the matter. (ii) The information furnished by the several documents on this record clearly show a consistent trend in the Bombay region to fix the retirement age of clerical and subordinate staff at 60. Imperial Chemical Industries (India) Private Ltd. vs Their Workmen, ; and Dunlop Rubber Co. Ltd. vs Workmen ; , relied on.

Appeal No. 68 of 1964. Appeal from the judgment and decree dated July 27, 1959 of the Allahabad High Court in Income tax Reference No. 307 of 1957. S.V. Gupte, Solicitor General, R. Ganapathy Iyer and R.N. Sachthey, for the appellant. A.V. Viswanatha Sastri and S.P. Varma, for the respondent. The Judgment of the Court was delivered by Sikri, J. This appeal pursuant to a certificate granted by the Allahabad High Court under section 66A(2) of the Income tax Act (hereinafter referred to as the Act) is directed against the judgment of the High Court in a reference under the Act, answering the question referred to it in the negative. The question referred by the Appellate Tribunal is: "Whether on a true interpretation of clause (viii) of subsection 3 of section 4 of the indian Income tax Act the sum of Rs. 36,396/ received by the assessee as an allowance during the previous year of the assessment year 1949 50 is revenue income liable to tax under the Indian Income tax Act, 1922?" The relevant facts stated in the Statement of the case are as follows: The assessee is a Hindu undivided family headed by one Sri Trivikram Narain Singh who is a descendant of one Sri Babu Ausan Singh who was the original founder and owner of what is known as Ausanganj State in the district of Benaras. The district of Benaras was formerly a part of Oudh territory. By a Treaty between the East India Company Nawab Asfuddaula in or about the year 1775, the province of Benaras was ceded to the British Government. The British Government granted a sanad of Raj to Raja Chet Singh who in turn gave the Jagir of Parganas Seyedpore and Bhittery in perpetuity to Babu Ausan Singh. It appears that in 1796 there were some disputes between Babu Ausan Singh and the Zamindars in the district and the matter was referred by the Collector of Benaras to the Board of Revenue in Calcutta. The disputes between the Jagirdars and Zamindars ultimately ended in 1837 by a compromise between the British Government and the then Jagirdar Hat Narain Singh whereby the British Government 702 granted a pension of Rs. 36,322/8/ to Babu Hat Narain Singh anal his heirs in perpetuity. The quantum of this pension was calculated on the basis of 1/4th of the revenue of the Jagir. By this arrangement the revenue or land collections of Jagir became payable by the Zamindars direct to the Government and by the grant of the pension, Babu Hat Narain Singh and his successors no longer remained the proprietors of the Parganas or the Jagir and became entitled to merely a pension. The letter by which the amount of pension was determined at Rs. 36,322/8/ is dated 7th of July, 1837 and was from H. Elliot Esqr., the Secretary Sadar Board of Revenue N.W.P. Allahabad, to J. Thompson Esqr., Offg. Secretary to Lt. Government, N.W.P.". The pension was paid regularly from year to year by the Government to Babu Har Narain Singh and his heirs. During the previous year of the assessment year 1949 50, the assessee received a sum of Rs. 36,396/ on account of the aforesaid pension. The Income tax Officer, in spite of the objection of the assessee, held that it was a regular annual income of the assessee and did not fall within the category of agricultural income tax. He observed that "in fact this income arose from a statutory obligation of the Government to pay it, and although the Government recouped this from the person with whom the land was settled, land in the genealogical tree of Malikana appears in the second degree, its immediate and effective source is the Government 's statutory obligation to pay it, and this obligation is not land within the meaning of Income tax Act, vide C.I.T.v. Raja Bahadur Karnakhaya Harain Singh(1)". The assessee appealed to the Appellate Assistant Commissioner who held that "the alleged cash grant of varying and unspecified amount received by the appellant, in relation to land revenue of Seyedpur now Tehsil of District Ghazipur, clearly fell within the definition of agricultural income under Section 2(1) of the Incometax Act." The Income tax Officer appealed to the Income tax Appellate Tribunal. The Tribunal held that the sum of Rs. 36,396/ was chargeable to tax under the Act as the income was not agricultural income for "although the pension was determined with respect to the quantum of the rent collection the rent collections or the land could not be said to be the immediate source of the pension. The source of the pension was a liability undertaken by the Government for extinguishing the proprietary rights of the Jagirdar and when the immediate source of the income was not land or rent collections from land, it is difficult to hold that the receipt of the assessee was agricultural income within the meaning of Section 4(3)(viii) of the Income tax Act. " The High Court held that from the language of the letter of July 7, 1837, it was manifest that the right which was conferred 703 was a right to a share of one fourth in the net land revenue collections after deducting costs of Tahsil establishment. It relied on the fact that the amount which had been received by the successors of Babu Harnarain Singh varied from year to year. It observed that "the language of the letter and this conduct of the parties can only lead to the inference that, by this settlement contained in the letter of 7th July, 1837, Babu Har Narain Singh and his successors were granted in perpetuity a right to one fourth of the land revenue collections themselves and not merely a right to receive u sum of money calculated on that basis." The High Court accordingly answered the question in the negative. The learned Additional Solicitor General, on behalf of the appellant, contends that according to the true interpretation of the letter dated July 7, 1837, no right in the land revenue was granted to the assessee. He relies on the decision of this Court in State of Uttar Pradesh vs Kunwar Sri Trivikram Narain Singh(1). That case arose out of the writ petition filed by the present respondent in the High Court of Judicature at Allahabad for a writ in the nature of mandamus calling upon the State of Uttar Pradesh to forbear from interfering with his right to regular payment of the "pension, allowance or Malikana" payable in lieu of the hereditary estate of Harnarain Singh in respect of parganas "Syudpore Bhettree" and for an order for payment of the "pension, allowance or malikana" as it fell due. This Court interpreted the same letter, dated July 7, 1837, and came to the conclusion that the respondent did not acquire any interest in land or any land revenue. Shah, J., speaking for the Court, observed: "Because the annual allowance is equal to a fourth share of the net revenue of the mahals, the right of the respondent does not acquire the character of an interest in land or in land revenue. Under the arrangement, the entire land revenue was to be collected by the Government and in the collection Harnarain Singh and his descendants had no interest or obligation. As a consideration for relinquishing the right to the land and the revenue thereof, the respondent and his ancestors were given an allowance of Rs. 30,612 13 0. The allowance was in a sense related to the land revenue assessed on the land, i.e. it was fixed as a percentage of the land revenue; but the percentage was merely a measure, and indicated the source of the right in lieu of which the allowance was given. " The learned counsel for the respondent, Mr. A. Viswanatha Sastri urges that on its true interpretation the letter dated July 7, 1837, showed an arrangement for sharing collections. We are unable to agree with his contention. We respectfully adopt the reasoning and conclusion of this Court in the case of State of ; 704 Uttar Pradesh vs Kunwar Sri Trivikram Narain Singh(1) and hold that the respondent, under the arrangement, had no interest in land or in the land revenue payable in respect thereof. If this is the true interpretation of the arrangement arrived at, the question arises whether the pension or allowance is agricultural income. 'Agricultural income ' is defined in section 2 of the Act as follows: "(1) "agricultural income" means (a) any rent or revenue derived from land which is used for agricultural purposes and is either assessed to land revenue in British India or subject to a local rate assessed and collected by officers of the Crown as such: . " In Maharajkumar Gopal Saran Narain Singh vs Commissioner of Income tax, Bihar and Orissa(2), the facts were that the assessee had conveyed the greater portion of his estate. The consideration for the transfer was, inter alia, an annual payment of Rs. 2,40,000/to the assessee for life. The Privy Council held that this "annual payment was not agricultural income as it was not rent or revenue derived from land but money payable under a contract imposing a personal liability on the covenantor the discharge of which was secured by a charge on land." The Privy Council, in Commissioner of Income tax Bihar and vs Raja Bahadur Kamakhaya Narayan Singh and construed the word 'derived ' as :follows: "The word "derived" is not a term of article Its use in the definition indeed demands an enquiry into the genealogy of the product. But the enquiry should stop as soon as the effective source is discovered. In the genealogical tree of the interest land indeed appears in the second degree, but the immediate and effective source is rent, which has suffered the accident of nonpayment. And rent is not land within the meaning of the definition." This Court observed in Mrs. Bacha F. Guzdar, Bombay Commissioner of Income tax, Bombay(4) as follow: "Agricultural income as defined in the Act is intended to refer to the revenue received by direct association with the land which is used for agricultural purposes and not by indirectly extending it to cases where that revenue or part thereof changes hands either by way of distribution of dividends or otherwise." (1) ; (2) (3) 16 I.T.R.325 (4) 705 The same test was adopted by this Court in Maharajadhiraja Sir Kameshwar Singh vs Commissioner of Income tax, Bihar and Orissa(1) and the Court again looked to the source of the right in order to determine whether income was agricultural income or not. Shah, J., observed: "The appellant has no beneficial interest in the lands which are the subject matter of the trust: nor is he given under the trust a right to receive and appropriate to himself the income of the properties or a part thereof in lieu of any beneficial interest in that income. The source of the right in which a fraction of the net income of the trust is to be appropriated by the appellant as his remuneration is not in the right to receive rent or revenue of agricultural lands, but rests in the covenant in the deed to receive remuneration for management of the trust. The income of the trust appropriated by the appellant as remuneration is not received by him as rent or revenue of land; the character of the income appropriated as remuneration due is again not the same as the character in which it was received by the appellant as trustee. Both the source and character of the income are, therefore, altered when a part of the income of the trust is appropriated by the appellant as his remuneration, and that is so, notwithstanding that computation of remuneration is made as a percentage of the income, a substantial part whereof is derived from lands used for agricultural purposes. The remuneration not being received as rent or revenue of agricultural lands under a title, legal or beneficial in the property from which the income is received, it is not income exempt under section 4(3)(viii). " It follows from the decisions of the Privy Council and the judgments of this Court cited above that if it is held in this case that the source of the allowance or pension is the arrangement arrived at in 1837. then the income cannot be held to be derived from land within the meaning of the definition in section 2(1)(a) of the Act. It seems to us that in this case the source of income is clearly the arrangement arrived at in 1837 and, therefore, it is not agricultural income as defined in the Act. Mr. Sastri sought to distinguish those cases on the ground that the allowance here varied from year to year. Assuming that the allowance varied from year to year, the source of the income still remains the arrangement and not land. The next point that arises in this case is whether the allowance is taxable income at all. Mr. Sastri contends that it is capital receipt. He says that if the assessee 's predecessor had received ) 706 compensation for relinquishing his title to the lands in dispute, that would have been a capital receipt and not taxable. He further says that the allowance was in fact a payment of the compensation for relinquishing the title to those lands. He says that we must consider the quality of the income and not its periodicity. He refers to the following passage from the speech of Viscount Simon in Commissioner of Inland Revenue vs Wesleyan and General Assurance Society(1): "It may be well to repeat two propositions which are well established in the application of the law relating to Income tax. First, the name given to a transaction by the parties concerned does not necessarily decide the nature of the transaction. To call a payment a loan if it is really an annuity does not assist the taxpayer, any more than to call an item a capital payment would prevent it from being regarded as an income payment if that is its true nature. The question always is what is the real character of the payment, not what the parties call it. " He, therefore, asked us to disregard the word 'pension ' in the letter dated July 7, 1837, and determine the real character of the payment. Another passage from the speech of Viscount Simon is also relevant. Lord Simon observed: "Secondly, a transaction which, on its true construction, is of a kind that would escape tax, is not taxable on the ground that the same result could be brought about by a transaction in another form which would attract tax. As the Master of the Rolls said in the present case: 'In dealing with Income tax questions it frequently happens that there are two methods at least of achieving a particular financial result. If one of those methods is adopted tax will be payable. If the other method is adopted, tax will not be payable . The net result from the financial point of view is precisely the same in each case, but one method of achieving it attracts tax and the other method does not. There have been cases in the past where what has been called the substance of the transaction has been thought to enable the Court to construe a document in such a way as to attract tax. That particular doctrine of substance as distinct from form was, I hope, finally exploded by the decision of the House of Lords in the case of Duke of Westminster vs Commissioner of Inland Revenue(2)". It seems to us that where an owner of an estate exchanges a capital asset for a perpetual annuity, it is ordinarily taxable income in his hands. The position will be different if he exchanges (1) 30 T.C. II. (2) 707 his estate for a capital sum payable in installments. The installments when received would not be taxable income. Mr. Sastri, relying on Perrin vs Dickson(1) contends that an annuity is not always taxable as income. This is true, but in this case no material has been produced to show that the allowance was in fact a payment in instalments of the value of the disputed title of the assessee 's predecessor in 1837. In the result, we hold that the allowance is revenue income and not exempt from taxation as agricultural income. Therefore, we accept the appeal and answer the question referred in the affirmative. The appellant will have his costs here and in the High court. Appeal allowed.

The respondent was the head of a Hindu undivided family and was the descendant of a Jagirdar. Certain disputes between the Jagirdar and the Zamindars in the district had been settled in 1837 by a compromise between the British Government and the then Jagirdar, whereby, the Government granted the Jagirdar and his heirs a pension in perpetuity to be calculated on the basis of one fourth of the revenue of the Jagir. By this arrangement the collections from the Jagir became payable by the Zamindars direct to the Government and the Jagirdar and his successors no longer remained the proprietors of the Jagir and became entitled only to a pension. The Income tax Officer assessed the receipt of the pension by the respondent as part of his regular income and rejected the latter 's contention that the amount received was agricultural income within the meaning of section 4(3)(viii) of the Income tax Act, 1922. In appeal, the Assistant Commissioner accepted the respondent 's contention, but the Tribunal reversed this finding. The High Court, on a reference, decided the issue in favour of the respondent, on the grounds, inter alia, that the right conferred under the compromise of 1837 was a right to a share of one fourth in the net land revenue collections and furthermore, the amount received by the successors of the Jagirdar varied from year to year. In the appeal before the Supreme Court, it was also contended on behalf of the respondent that the amount received was in the nature of a capital receipt, being a payment to the Jagirdar and his successors of compensation for relinquishing the title to the Jagir lands. HELD: (i) Under the compromise and arrangement of 1837, the respondent had no interest in the land or in the land revenue payable in respect thereof. [704 A] State of U.P.v. Kunwar Sri Trivikram Narain Singh; , , followed. As the source of the income in this case was the arrangement of 1837, the income could not be held to be derived from land within the meaning of the definition of agricultural income in section 2(1)(a) of the Act. Even if the income varied from year to year, the source of the income was still the arrangement and not land. [705 G] Maharajkumar Gopal Saran Narain Singh, vs C.I.T. Bihar and Orissa, , C.I.T. Bihar and Orissa vs Raja Bahadur Kamkhya Narayan Singh and Ors, , Mrs. Bacha F. Guzdar vs C.I.T. Bombay , MaharaJadhiraja Sir Kameshwar Singh, vs C.I.T. Bihar and Orissa, , followed. (ii) The amount received by the respondent was not a capital receipt but revenue income and therefore taxable. 701 Where an owner of an estate exchanges a capital asset for a perpetual annuity, it is ordinarily taxable in his hands. The position would be different if he exchanged his estate for a capital sum payable in installments. Such installments when received would not be taxable as income. But in the present case there was no material to show that the amount received was an instalment of this nature. [706 H~707C] Commissioner of Inland Revenue vs Wesleyan and General Assurance Society, , and Perrin vs Dickson , referred to.

ivil Appeal No. 325 of 1965. Appeal by special leave from the Award dated September 20, 1963 of the Central Government Industrial Tribunal, Bombay in Reference CG IT 25 of 1962. section V. Gupte, Solicitor General, M. Rajagopalan and K. R. Choudhuri, for the appellants. C. B. Agarwala, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for the respondents. The Judgment of the Court was delivered by Hidayatullah J. This is an appeal by special leave against an award dated September 20, 1963 made by the Presiding Officer of the Central Government Industrial Tribunal, Bombay in a reference made by the Government of India under section 10(2) of the . The appellants are the workmen of the Bombay Port Trust, who are and have been represented in this dispute by the Bombay Port Trust Employees ' Union. The respondents to this appeal are the trustees of the Port of Bombay. The reference was made on a joint application of the parties. and the matter in dispute was stated to be : "Whether the existing system of work of the shore crew of the Prince 's and Victoria Docks under which each shift consists of 8 hours ' normal duty, 2 hours ' variable recess and 12 hours ' overtime needs any modification? The Tribunal, by the award impugned here, held that the Union was not able to establish that the existing system of work needed any modification. The Port Trust had under its control several docks. Reference in this judgment will be made to the Prince 's and Victoria Docks, the Alexandra Docks, Butcher Island and the Flotilla Crew. These represent different areas of work where different groups of workmen were employed. From the facts appearing on the record it appears that the Trustees first introduced a two shift system of work in the Alexandra Docks on June 30, 1953 and the same system was extended to the Prince 's and Victoria Docks on December 15, 1953. Previously, the shore crew at all these places worked in a single shift and were liable to be called out at 634 any hour of the day or night. When the two shift system began, each shift of 12 hours was broken up into 8 hours ' duty, 2 hours ' variable recess and 2 hours ' overtime. The hours of rest were kept variable as they depended on the tides. In 1956 the workmen, who were then represented by the Port Trust General Workers ' Union, made a demand for a fixed recess of two hours. The Trustees apprehended that this was a device to get 4 hours ' overtime and rejected the demand. The General Workers Union was informed that if the demand was pressed a three shift system would be introduced. The workmen then retraced their steps and accepted a 2 hours ' variable recess but requested that it should be as near the middle of the shift as possible. The Trustees agreed to accept the hours of rest at fixed hours in the Alexandra Docks but at the Prince 's and Victoria Docks they kept it variable agreeing to fix it as near the middle of the duty hours as possible. Under this arrangement the shore crew working at the Prince 's and Victoria Docks were informed each day what the period of rest would be on the following day. In explanation of this difference it may be pointed out that the Alexandra Docks work on a system of lock gates which enables the depth of water at the docks to be artificially regulated but the Prince 's and Victoria Docks, being tidal, work only at high tide. It was thus possible to fix rest hours at the Alexandra Docks for half the crew different from the rest hours of the other half so that a part of the crew was always available on hand. As the lock gates control the depth of water in the Alexandra Docks, fixed hours of rest could be maintained from day to day except in the monsoon months when the, storm gates had some time to be closed. During these months recess time at the Alexandra Docks was also variable and was made to coincide with the closure of the storm gates. The workmen at the Alexandra Docks seemed to have accepted a variable recess of two hours but the Port Trust gave a notice under section 9A of the on June 25, 1960 announcing the introduction of variable recess although in the months other than the monsoon months recess was actually at fixed hours. The workmen opposed the change from fixed to variable recess. Meanwhile studies were being made and it was found that the work hours at the different Docks were not equal: they were heavier at the Alexandra Docks than at the other docks. The Trustees, therefore, resolved that the shore crew at the Alexandra Docks should work for 8 hours and that there should be a variable recess of one hour and overtime of three hours should be paid. Thus the 12 hours ' shift at the Alexandra Docks was 8 hours ' of duty, 3 hours ' overtime and one hour variable recess. This system was, however, 635 not extended to the prince 's and Victoria Docks and Butcher Island. At these docks 8 hours ' duty, 2 hours ' rest at variable times and 2 hours ' overtime were prescribed. The claim of the shore crew at the Prince 's and Victoria Docks and Butcher Island for reducing the hours of rest and increasing overtime to three hours was not accepted because the amount of work in the, opinion of the Trustees did not justify the change. The Union contended that this division of 12 hours ' shift into 8 hours ' work, 2 hours ' rest and 2 hours ' overtime violated the provisions of the and that the so called period of rest was illusory since, being variable, it was some times given right at the commencement of the shift and some times at the end, depending on the tides or the exigencies of the work. The Union claimed that a 12 hours ' shift should be divided into 8 hours ' work and 4 hours ' overtime as was the case with the Flotilla Crew. This claim was opposed by the Trustees. According to them, there was no breach of the provisions of the . They contended that, regard being had to the number of actual work hours, the case of shore crew at the Prince 's and Victoria Docks and the Butcher Island could not be compared with that of the crew at the Alexandra Docks or the Flotilla Crew. The Tribunal accepted the entire case put forward on behalf of the Trustees and the Union has appealed to this Court. On behalf of the Union the learned Solicitor General has argued the case almost entirely from the legal stand point and has attempted to establish that the break up of a 12 hours ' shift into 8 hours ' duty, 2 hours ' rest and 2 hours ' overtime offends the . He, has in addition submitted that the system of variable recess does not satisfy the requirements of rest which is the basis for fixing statutorily the hours of work in relation to wages. The was enacted to enable Government to fix minimum rates of wages in certain employments. Since fixation of minimum wages must take into account the work load also, provision must not only be made for prescribing the minimum wage but to correlate it to a specified amount of work. Any extra work beyond the specified work load must be paid for at a higher or what is known as "overtime" rate. Similarly, intervals of rest must punctuate suitably the hours of work and they must also be provided for in a scheme of the work day of a workman. The makes provision for all these matters either by itself or through Rules. The Central Government has framed the Minimum Wages (Central) Rules, 1950. The Act and the 636 Rules between them provide not only for fixation of minimum wages but also for the work load in relation to which the minimum wages are to be prescribed. They provide on the one hand for minimum wages, lay down the procedure for fixing or revising them and prescribe the rules in accordance with which the wages must be paid. On the other hand, the Act and the Rules fix the number of hours of work, payment of overtime and for hours of rest in the work day of the workman. The provisions of the Act and of the Rules are applicable to some employments only and they are shown in a Schedule appended to the Act. It is admitted that the present workmen come under the Schedule. The hours of work and the payment of overtime are, therefore, governed by the provisions of the and the Minimum Wages (Central) Rules, 1950 and the controversy in this case must be appreciated and resolved in accordance with them. We shall now turn to these provisions. We are concerned with two sections and two rules. The sections are Nos. 13 and 14 and the rules Nos. 24 and 25. The whole of the matter in dispute admittedly is governed by these, four provisions. We shall begin by setting out the relevant parts of these provisions : "13. Fixing hours for a normal working day, etc. (1) In regard to any scheduled employment minimum rates of wages in respect of which have been fixed under this Act, the appropriate Government may (a) fix the number of hours of work which shall constitute a normal working day, inclusive of one or more specified intervals; (b) provide for a day of rest in every period Of seven days which shall be allowed to all employees or to any specified class of em ployees and for the payment of remuneration in respect of such days of rest; (c) provide for payment of work on a day of rest at a rate not less than the overtime rate. (2) The provisions of sub section (1) shall, in relation to the following classes of employees, apply only to such extent and subject to such conditions as may be prescribed: (a). . . . . . 637 (b). . . . . . (c) employees whose employment is essentially intermittent; (d). . . . . . (e). . . . . . (3) For the purposes of clause (c) of sub section (2), employment of an employee is essentially intermittent when it is declared to be so by the appropriate Governmen t on the ground that the daily hours of duty of the employee, or if there be no daily hours of duty as such for the employee, the hours of duty, normally include, periods of inaction during which the employee may be on duty but is not called upon to display either physical activity or sustained attention. " 14. Overtime. (1) Where an employee, whose minimum rate of wages is fixed under this Act by the hour, by the day or by such a longer wage period as may be prescribed, works on any day in excess of the number of hours constituting a normal working day, the employer shall pay him for every hour or for part of an hour so worked in excess at the overtime rate fixed under this Act or under any law of the appropriate Government for the time being in force, whichever is higher. (2) Nothing in this Act shall prejudice the operation of the provisions of section 59 of the in any case where those provisions are applicable. " Rule 24. "Number of hours of work which shall constitute a normal working day (1) The number of hours which shall constitute a normal working day shall be: (a) in the case of an adult, 9 hours, (b) in the case of a child, 41 hours. (2) The working day of an adult worker shall be so arranged that inclusive of the intervals for rest, if any, it shall not spread over more than twelve hours on any day. 638 (3) The number of hours of work in the case of an adolescent shall be the same as that of an adult or a child according as he is certified to work as an adult or a child by a competent medical practitioner approved by the Central Government. (4). . . . . . (4 A) No Child shall be employed or permitted to work for more than 4 1/2 hours on any day. (5) Nothing in this rule shall be deemed to affect the provisions of the ". Rule 25.Extra wages for overtime (1) When a worker works in an employment for more than nine hours on any day or for more than forty eight hours in any week, he shall, in respect of overtime work, be entitled to wages, (a) in the case of employment in Agriculture, at one and a half time the ordinary rate of wages; (b) in the case of any other scheduled employment, at double the ordinary rate of wages. Explanation The expression "ordinary rate of wages" means the basic wage plus such allowances including the cash equivalent of the advantages accruing through the concessional sale to the person employed of foodgrains and other articles as the person employed is for the time being entitled to but does not include a bonus. (2) A register showing overtime payment shall be kept in form IV. (3) Nothing in this rule shall be deemed to affect the provisions of the ." The controversy in the present case is a narrow one. It is whether the fixing of a two hours ' rest and two hours ' overtime involves a breach of the two sections of the Act and the two rules quoted here ? The workmen claim that under a scheme of 12hour shifts with 8 hours ' work, overtime should be at least 3 hours, if not 4, and by fixing only two hours ' overtime the Trustee are B guilty of the breach of the Act and the Rules. Unfortunately the provisions of the and the Minimum Wages 639 (Central) Rules, 1950, are not as clear as the corresponding provisions of the and they have led to long arguments before us. We shall refer to the provisions of the later because for the present we must consider the provisions of the Act and the Rules without drawing any assistance from the . Section 13 of the Act does not itself fix the hours of work or rest or overtime. That is done by the Rules. Section 13 only authorises Government to fix the number of hours which shall constitute a normal working day, inclusive of on, . or more specified intervals. The normal working day thus includes (a) hours of actual duty, and (b) one or more specified intervals. There may be one interval of rest or there may be more intervals but whatever their number, they must be specified. By interval under section 13 is obviously meant interval of rest and this is clear from Rule 24(2). There is no definition of interval either in the Act or the Rules but the provisions of section 13 (2) (c) read with section 13 (3) give us an indication of what is meant by an interval of rest. It means a break in the work during which a workman, though present on duty, is not called upon to display either physical activity or sustained attention. But it is not a period of more inaction because there is no work for him. If it is the latter, it is counted as actual work period: if the former, it is counted as a period of rest, provided the period is specified beforehand, and the workman is neither called upon to work nor expected to work. Having thus distinguished between period of work and interval of rest we may now turn to Rule 24 which prescribes the number of hours of work which is to constitute a normal working day. Sub rule (1) (a) provides that the number of hours constituting a normal working day for an adult shall be 9. As the heading of the Rule shows these are the hours of work. Sub rule (2) then lays down that the working day of an adult shall be so arranged that inclusive of intervals for rest it shall not spread over more than twelve hours on any day. The distinction between intervals of rest and hours of work is thus made clear. From this it follows that on any single day the number of hours of work must not exceed 9 and together with the hours of rest the total period of work and rest should not go beyond 12 hours. It is wrong to contend that the period of 9 hours must always include intervals of rest. It may or it may not. There is no provision in the Act and the Rules corresponding to section 55 of the Factories 640 Act to which reference will be made hereafter. In a 12 hour shift, the nine hours of work on any day can be spread over 12 hours and the extra hours will necessarily be hours of rest. The contention of the workmen is that section 13 fixes the number of hours in a normal working day and this number is inclusive of one or more specified intervals. They read Rule 24, which prescribes a normal working day of 9 hours, as including within the 9 hours one or more intervals of rest. We do not think this is a correct reading either of section 13 or of Rule 24. There is clear antinomy between hours of work and intervals of rest in sub rules (1) and (2) of Rule 24 and the phrase 'inclusive of one or more specified intervals ' governs the normal working day and not the number of hours of work. Under sub rule (2) of Rule 24 the working day of an adult can be so arranged that inclusive of intervals of rest it does not exceed 12 hours on any day. A working day may extend to 12 hours but the number of hours of work cannot exceed 9. A working day of 12 hours is thus made up of hours of work and hours of rest and the number of hours of work (which cannot exceed 9) is part of the normal working day which may also include one or more specified intervals of rest. This determines what is a normal working day and what is meant by an interval of rest. We now come to the question of overtime. If work on any day is taken which goes beyond 9 hours the provisions of section 14 apply. That action speaks of overtime. Overtime is payable for work in excess of the number of hours constituting a normal working day. From section 13 read with Rule 24 we know that the number of hours constituting a normal working day is 9. We shall now read into section 14 this number leaving out those provisions which have no bearing upon the matter. The section so read lays down : "Where an employee. . . works on any day in excess of 9 hours, the employer shall pay him for every hour or for part of an hour so worked in excess at the overtime rate. . . " Under Rule 25 (1) (b) this overtime rate is double the ordinary rate of wages. Therefore, an employer can take actual work on any day upto 9 hours in a 12 hour shift, but he must pay a double rate for any hour or part of an hour of actual work in excess of 9 hours. He need not, however, pay for any interval of rest provided it is specified beforehand. These provisions are subject to 641 one more check which we may now mention. The check is found in the latter part of Rule 25(1) which says that the maximum number of hours of work in a week shall not exceed 48 and for any work in excess of 48 hours a week overtime shall be payable. As there is a prescribed day of rest in a week we get a working week of six days with a maximum of 48 hours ' work. Average duration of actual work payable at ordinary rate of wages per day thus comes to 8 hours. Thus if an employer takes actual work for 8 hours per day on 6 days in a week he complies with all the provisions and need not pay overtime. He may go up to 9 hours on any day without paying any overtime provided he does not exceed 48 hours in the week. He can specify the intervals of rest and spread the 8 hours or 9 hours, as the case may be, together with intervals of rest over 12 hours in a twelvehour shift. These periods of rest must not be periods during which the workman is on duty and inaction is due to want of work for him, but they must be pre determined periods of inaction during which the workman is neither called upon nor expected to display physical activity or sustained attention. We have seen that an employer having a 12 hour shift can fix 48 hours of work per week of six days at 8 hours per day. He is not compelled to give overtime for the remaining four hours unless he takes work during those hours, provided he has specified those hours as intervals of rest. If he takes work during the extra 4 hours or fails to specify the hours of rest he must pay overtime. He can spread 8 hours with intervals of rest to 9, 10, 11 or 12 hours as he likes. For the hours of rest he is not required to pay overtime but he must specify those hours. Overtime under section 14 is only payable when the workman works in excess of the number of hours constituting a normal working day. That number is 9 hours for any day and work up to 9 hours on any day can be taken without paying overtime if the total number of hours in the week does not exceed 48. As in the present case the total number of hours of work in a week is 48 (8 hours per day for 6 days) overtime is payable for that hour or part of an hour beyond the 8 hours in which the workman is either made to work or the interval is not specified. The Port Trust can say that it will not take more than two hours extra work on any day and specify the remaining two hours as the intervals for rest. It is, not compelled to fix only one interval or to make the interval of one hour only. It can fix two or three or even four without in any way going against the provisions of section 13 or Rule 24. 642 At this stage it is instructive to look into the provisions of the dealing with the daily hours of work, intervals for rest and spread over of the working time. Sections 54, 55 and 56 are the relevant provisions. Omitting the portions not necessary for the purpose of comparison, these sections read "54. Daily hours. "54.Daily hours Subject to the provisions of section 51, no adult worker shall be required or allowed to work in a factory for more than nine hours in any day Provided. . . "55. Intervals for rest. (1) The periods of work of adult workers in a factory each day shall be so fixed that no period shall exceed five hours and that no worker shall work for more than five hours before he has had an interval for rest of at least half an hour. (2). . . . "56. Spread over. The periods of work of an adult worker in a factory shall be so arranged that inclusive of his intervals for rest under section 55 they shall not spread over more than ten and a half hours in any day: Provided that the Chief Inspector may, for reasons to be specified in writing, increase the spread over to twelve hours. " Almost the same provisions are to be found in some other Acts of the State Legislatures controlling shops, establishments etc. It will be noticed that the arrangement of these sections is almost the same as the cognate provisions of the . Here too, the hours of work cannot be more than 9 in a day and taken with the intervals for rest these 9 hours may be spread over 10 1/2 hours. The only difference is that a worker must not be made to work for more than 5 hours at a stretch before he has had an interval for rest of half an hour at the least. There is no provision in the which breaks up the hours of work by interposing a compulsory period of rest as is done by the latter part of section 55 of the . The reason, perhaps, is that in some employments time for work depends on some 643 extraneous factors and hours of rest cannot always be fixed to, break up those hours. It is proverbial that time and tide do not wait for any man. Workers at a tidal dock must work when the tide is in and take their rest when the tide is out. It is for this reason that a variable recess is in force at the Prince 's and Victoria Docks and due. notice of the interval is given by specifying a day in advance the hours of rest. We do not think that the Trustees are guilty of infraction of the by keeping the recess variable so long as they specify in advance the recess on any particular day. It will also be noticed that the scheme of the compels the inclusion of an hour of rest in a normal working day. This is achieved by pres cribing that the hours of work in a six day week shall not exceed 48, although on any particular day the hours of work in a day may go up to 9. In this indirect way one hour of rest is included in a normal working day because the total number of work hours in a six day week cannot go beyond 48. What has not been done by the Act or the Rules is to specify that the interval for rest shall break up the hours of work. The Trustees cannot be compelled to break up the hours of work by interposing intervals for rest, if owing to the nature of the work there is difficulty in giving the intervals for rest in that manner on any particular day. According to their resolution the recess is fixed as near the middle of the work as possible, depending on the tides. The workmen compared the case of the Prince 's and Victoria Docks with the cases of the Alexandra Docks and the Flotilla Crew. They point out that in the former there is 3 hours ' overtime and in the latter there is 4 hours of overtime in the 12 hour shifts, but at the Prince 's and Victoria Docks there is 2 hours ' overtime only. They claim equal treatment. This is not possible. The crew at the Prince 's and Victoria Docks work in a different way and their case cannot be compared with that of the Flotilla Crew or the crew at the Alexandra Docks. The Flotilla Crew has to remain on duty for full 12 hours and they work as and when they are required. Although their hours of duty are only 8 they are entitled, if present for work, for overtime up to four hours. The crew at the Alexandra Docks get a specified interval of one hour for rest and this makes up their 9 hours which is 8 hours ' work and one hour interval for rest. They are, therefore, entitled to three hours ' overtime if required to work beyond the 9 hours on any day. There is no parallel in the work of the three different crew and we are satisfied that no conclusion can be based upon the practice existing at the Alexandra Docks or in 644 respect of the Flotilla Crew. We hold, therefore, that the decision of the Central Government Industrial Tribunal is right in a circumstances of this case. The appeal must therefore fail. It will be but in the circumstances of the case we make no order about costs. Appeal dismissed.

The respondent had under its control several docks. The trustees Of the respondent introduced a two shift system of work and that resulted in the crew working in some docks getting 4 hours of overtime in some docks 3 hours of overtime and in others 2 hours of overtime only. In the last category the 12 hours shift wag divided in to 8 hours of work, 2 hours of rest and 2 hours of overtime. The 2 hours period of rest was variable depending on the tides or the exigencies of the work, though the crew were informed each day what the, period of rest would be on the following day. The appellants, who belonged to this category, complained that the breakup of the 12 hours shift into 8 hours of duty, 2 hours of rest and 2 hours of overtime offended the , and that the system of variable recess did not satisfy the requirements of rest which is the basis for fixing statutorily the hours of work in relation to wages. The Industrial Tribunal held that the appellants were not able to establish that the existing system of work needed any modification. In appeal to this Court, HELD: There was no breach of the provision of the and the case of the appellants could not be compared with that of the crew working at the other docks, because, there wag no parallel in the work of the three different sets of crew. [643 H] If an employer takes actual work for 8 hours per day on 6 days in a week he complies with the relevant provisions of the Act and the Rules, namely sections 13 and 14 of the Act and rr. 24 and 25 of the Minimum Wages (Central) Rules 1950, and need not pay overtime. He may go up to 9 hours on any day without paying any overtime provided he does not exceed 48 hours in the week. He can specify the intervals of rest and spread the 8 or 9 hours, as the case may be, together with intervals of rest over 12 hours in a twelve hour shift. These periods of rest must not be periods during which the workman is on duty and inaction is due to want of work for him, but they must be predetermined periods of inaction during which the workman is neither called upon nor expected to display physical activity or sustained attention.[641 B D] In the present cage the total number of hours of work in a week was 48 (8 hours per day for 6 days). Therefore overtime was payable beyond the period of 8 hours, for that hour or part of an hour during which the workman was either made to work or the interval of rest was not specified. The respondent can say that it will not take more that two hours extra work on any day and specify the remaining two hours as the intervals for rest; and the Trustees would not be guilty of infraction of the Act by keeping the recess variable so long as they specify 633 in advance the recess on any particular day. The Trustees could not be compelled to break up the hours of work by interposing intervals for rest. [641 G H; 643 B C, D E]

Appeals Nos. 1008 and 1009 of 1965. Appeals by special leave from the orders dated April 1, 1965 of the Central Government Labour Court, Jullundur, in cases Nos. 409 of 1963 respectively. C. K. Daphtary, Attorney General, section V. Gupte, Solicitor General, Niren De, Addl. Solicitor General, K. B. Mehta, V. Sagar, H. L. Anand and B. C. Das Gupta, for the appellants. M. K. Ramamurthi, for the respondents. The Judgment of the Court was delivered by Wanchoo, J. These two appeals by special leave raise a common question as to the interpretation of paragraph 5.356 of the National Industrial Tribunal (Bank Disputes) Award of June 1962 (popularly known as the Desai award) and will be dealt with together. It is unnecessary to set out the facts of the two appeals at this stage. It is sufficient to say that the respondents made applications under section 33 C(2) of the Industrial Disputes Act, No. 14 of 1947, praying for determination and computation of the benefit to which they were entitled under the Desai award as they were not satisfied with the fixation of their pay by the appellant bank under para 5.356. The Desai award dealt with the method of adjustment in the scales of pay fixed by it from para 5.329 onwards. It divided the employees of the banks with which it was concerned in two groups. The first group consisted of workmen who were drawing basic pay on January 1, 1962 according to scales of pay provided by the ALL India Industrial Tribunal (Bank Disputes) Award, 1953 (popularly known as the Sastry award) as modified by the Labour Appellate Tribunal Decision (Bank Disputes). The second group 900 consisted of workmen who on January 1, 1962 were employed in banks which were not governed by the provisions of the Sastry award as modified and were not thus drawing basic pay on the footing of scales of pay provided by that award. In the first case the Desai award provided that the workmen would be fitted in the new scales of pay from January 1, 1962 on stage to stage adjustment basis, i.e., workmen who were drawing basic pay at a particular stage in the time scale of the Sastry award as modified would draw basic pay at the same stage in the new scale applicable to them under the Desai award. Examples of how this would be done were given in para. 5.348 of the Desai award. As to the second group, the Desai award provided that these employees would first be fitted in the appropriate scales provided in the Sastry award as modified as on January 1, 1962 and thereafter they would be fitted in the new scales of pay provided by the Desai award as laid down in para. 5.348. Paragraph 5.356 then went on to provide how these workmen would be fitted in the Sastry award. Here again the workmen were divided into two groups, namely, those who entered service before January 1, 1959 and those who entered service on or after January 1, 1959. In the present appeals we are concerned with workmen who entered service before January 1, 1959, and the fitment of these workmen was dealt with in para. 5.356 of the Desai award, and it is this paragraph which calls for interpretation in the present appeals. We may at this stage mention that a similar question of fit ment was considered by the Sastry award in para. 292 and certain provisions were made thereunder. This paragraph was considered by the Labour Appellate Tribunal in appeal from the Sastry award and certain modifications were made thereunder by paras 164 and 166 of the Labour Appellate Tribunal decision in appeal. Paragraph 292 as modified by the Labour Appellate Tribunal decision came up for interpretation before this Court in State Bank of India vs Prakash Chand Mehra. (1) As the words of para 292 of the Sastry award as modified by the Labour Appellate Decision are almost the same as the words of para. 5.356 of the Desai award, we may set out the two paragraphs in parallel columns for comparison: Sastry award as modified by the Labour Appellate decision For workmen who enterd service of the bank before 31st January, 1950 1. The workman 's basic pay as on 31st January 1960 shall not be reduced in any case. (1) Desai award For workmen who entered service of the bank before 1st January 1959 (i) The workman 's basic pay as on January 1, 1959 shall not be reduced in any case. Subject to rule (1) the adjusted basic pay in the new scale shall not exceed what point to point adjustment would give him or the maximum in the new scale. 3.In the matter of adjustment all efficiency bars, whether in the previously existing or in the scales fixed by us should be ignored. 4.Subject to rules (1) to (3) a workman 's basic pay in the new scales shall be fixed in the following manner (a) A workman shall first be fitted into the scale of pay fixed by our award (herein called the new scale) by placing him at the stage in the new scale equal to, or next above his basic pay as on 31st January 1950 in the pre Sen scale then in force (herein called the existing scale). (b) To the basic pay into which he is fitted under cl. (a) the annual increments in the new scale as from that stage onwards should be added at the rate of one increment for every completed three years of service in the same cadre as on 31st January 1950, up to a limit of 12 years ' service; hereafter one increment for every four years of service up to another 8 years service, and after that one increment for every five years of service. (c) Such increments shall not however exceed four in number. [NOTE : Omitted by the Labour Appellate Tribunal in view of change in cl. (b).] 4 A. After adjustments are made in accordance with clauses (a), (b) and (c) supra two further increments in the new scale will be added thereto for service for the two years 1951 and 1952. In addition the workman will be entitled to draw his normal increment for 1953on 1st April 1963. Thereafter each succeeding year 's annual increment shall take effect as and from 1st April of that year. 901 (ii) Subject to rule (i), the adjusted basic pay in the scale provided in the Sastry award as modified shall not exceed what point to point adjustment would give him or the maximum in the scale provided by the Sastry award as modified. (iii) In the matter of adjustment, all efficiency bars, whether in the previously existing scales or in the scales provided by the Sastry award as modified should be ignored. (iv)Subject to rules (i) to (iii) a workman 's basic pay in the scale provided by the Sastry award as modified shall be fixed in the following manner (a)A workman shall first be fitted into the scale of pay of Sastry award as modified by placing him at the stage in the Sastry award scale as modified equal to, or next above his basic pay as on 1st January, 1959 in the scale then in force in the bank concerned (hereinafter called the Bank 's scale). (b)To the basic pay into which he is fitted under clause (a) annual increment or increment& in scale provided by the Sastry award as modified as from that stage onwards should be added at the rate of one increment for every completed three years of his service in the same cadre as on 1st January 1959. (c) Such increments shall not however exceed four in number. (d) After adjustments are made in, accordance with clauses (a),(b) and (c) supra, two further annual increments. in the scale provided by the Sastry award as modified will be added thereto for service for the two years of 1960 and 1961. 902 We are not concerned with clauses (5) and (6) of para 292 of the Sastry award or with clauses (v) and (vi) of para 5.356 of the Desai award for purposes of the dispute between the parties and have not therefore set them out. It will be seen from the above comparison of the provisions in the two awards that the substantial provisions of the Desai award are exactly the same as the provisions of the Sastry award as modified except (i) for changes necessitated by the fact that the Desai award was being given in 1962 and (ii) the provision in the Sastry award corresponding to sub cl. (d) of cl. (iv) of para 5.356 of the Desai award was separated by the Labour Appellate Tribunal Decision from cl. (4) and made clause (4 A). "We have already referred to the fact that para. 292 of the Sastry award as modified came up for consideration before this Court in the case of Prakash Chand Mehra( ') and this Court interpreted clauses (1) to (4 A) of the Sastry Award as modified thus :"We have therefore first to fix the basic pay in accordance with rule 4(a), and then allow annual increments in accordance with rule 4 (b). But this is subject to rules 1 and 2 above. We are unable to accept the contention raised on behalf of the respondent that the words "subject to" have not the effect of making what would otherwise follow from the application of rules 4(a) and 4(b) subject to "both the lim its" laid down in rule 2. Giving as we must natural meaning to the words used in rules 2 and 4, we are of opinion that in no case can the basic pay be fixed at a higher figure than what the point to point adjustment would give to the workman or the maximum in the new scale. " The dispute between the bank and the workmen in the present ,case was this. The bank claimed that under cl. (ii) of the Desai award, the adjusted basic pay in the new scale was not to exceed what point to point adjustment would give an employee on January 1, 1962. The bank further claimed that this being the maximum permissible under cl. (ii) and cl. (iv) being subject to cl. (ii) the method of fitment provided in cl. (iv) could not give to an employee more than the maximum arrived at under cl. Thus the bank 's case was that once the maximum arrived at by point to point adjustment as on January 1, 1962, was reached under cl. (ii), no further increments even under sub cl. (1) 903 (d) of cl. (iv) could be allowed. The, workmen on the other hand claimed that they were entitled to what was provided by sub cls. (a), (b) and (c) of cl. (iv) and the two increments under sub cl. (d) and that it did not matter whether what was thus arrived at exceeded the maximum provided under cl. The labour court has partially accepted the workmen 's contention and fixed the pay of the two workmen concerned accordingly. The bank contests the correctness of this view. We are of opinion that neither the stand taken by the bank nor the stand taken by the workmen is correct, and that the relevant clauses in para. 5.356 of the Desai award must be interpreted in the same manner as the relevant provisions in the Sastry award as modified were interpreted in Prakash Chand Mehra 's case(1). In this connection it is brought to our notice that in para. 5.356 of the Desai award it was stated that the award was giving directions similar to those provided under the Sastry award as modified subject to certain changes which were considered necessary having regard to the lapse of time after coming into force of the provisions of the Sastry award as modified. It is urged on behalf of the appellant that the Desai award made certain changes and therefore need not be interpreted in the same way as was done in Prakash Chand Mehra 's case(1). We see no force in this submission. It is true that the Desai award said that certain changes were being made; but these changes were considered necessary having regard to the lapse of time. However, the main intention of the Desai award was also to give directions similar to those provided in the Sastry award as modified. It is true that there are some verbal changes in the Desai award; but these verbal changes are only due to lapse of time and do not affect the substance of what was provided by the Sastry award as modified. We do not agree with the case of the appellant bank that in cl. (ii) the adjusted basic pay is to be as on January 1, 1962. We are of opinion that the adjusted basic pay in cl. (ii) has to be taken as on January 1, 1959. This follows from the fact that the workman 's basic pay as on January 1, 1959 cannot be reduced and therefore when cl. (ii) speaks of adjusted basic pay it must refer to the same date as in cl. Further cl. (iv) which provides for actual calculations starts with the words "subject to rules (i) to (iii)" and therefore the actual calculations made under cl. (iv) must be subject to clauses (i) and (ii). This means in (1) L8Sup. CI/66 11 904 effect that the actual fixation. under sub cls. (a), (b) and (c) of cl. (iv) will be subject to cl. (i) and cl. Under sub cl. (a) of cl. (iv) a workman will be placed in the Sastry award as modified by placing him at the stage in the Sastry award scale equal to or next above his basic pay as on January 1, 1959, in the scale then in force in the bank concerned. But in view of cl. (i) this cannot be less than the actual basic pay of the workman as on January 1, 1959. Where under cl. (i) the actual basic pay as on January 1, 1959, is more than what point to point adjustment will give under cl. (ii), it cannot be reduced for cl. (ii) is subject to cl. After this has been done the workman would be entitled to increments as provided in sub cl. (b) read with sub cl. (c) of cl. (iv), but this will be subject to cls. (i) and (ii) and the adjusted basic pay arrived at by giving the increments under sub cls. (b) and (c) cannot exceed the adjusted basic pay as arrived at by point to point adjustment in the Sastry award as modified or the maximum of that scale or the actual basic pay as on 1st January 1959, as the case may be. Thus sub cl. (a) is subject to cl. (i) and the basic pay to be fixed on January 1, 1959, has to be fixed by reading sub cls. (a) of cl. (iv) and cl. (i) together. Then increments under sub cl. (b) read with sub cl. (c) of cl. (iv) have to be added, but this is again subject to the provisions of cls. (i) and (ii). After this has been worked out, then comes sub cl. (d) of cl. (iv), and the main dispute in the present case is about this subclause. The appellant bank 's contention is that two further annual increments allowed under sub cl. (d) cannot be permitted in view of cl. (ii) as interpreted by the appellant. But as we, have held that in cl. (ii) the adjusted basic pay has to be fixed as on January 1, 1959, sub cl. (d) of cl. (iv) will take effect and give two annual increments for 1960 and 1961 which are beyond the date which we have accepted as the right date for purposes of cl. It is however urged on behalf of the appellant that sub cl. (d) is also subject to cls. (i) to (iii) and therefore these increments if they go beyond what cl. (ii) provides cannot be given. This argument has arisen because the Desai award did not separate sub cl. (d) as was done by the Labour Appellate Tribunal in its modification of the Sastry award. But as stated by the Labour Appellate Tribunal when dealing with the Sastry award, it was inherent in the Sastry award that increments for 1951 and 1952 should be provided after the basic pay was worked out as on January 31, 1950. The same applies to the Desai award. Once it is held and that we hold that basic pay under cl. (ii) has to be worked out as on January 1, 1959, the two increments provided by sub cl. (d) of cl. (iv) which are beyond that date must 905 be given over and above what has been worked out under sub cls. (a), (b) and (c) of el. (iv) of the Desai award. The fact that by oversight sub cl. (d) of el. (iv) was not made a separate clause would make no difference for sub cl. (d) provides for a period after the date up to which el. (ii) works. Therefore, two increments under sub cl. (d) have to be given after adjustments have been made under sub cls. (a), (b) and (c) of el. (iv) in accordance with what we have interpreted these sub clauses as well as cls. (i) and (ii) to mean. In effect the two increments provided in sub el. (d) must always be given. But it may happen that increments provided in sub cl. (b) read with sub cl. (c) may in some cases be not available where the actual pay as on January 1, 1959 which will not be reduced under el. (i) happened to coincide with or was more than the adjusted basic pay under el. This interpretation is in accord with what was decided by this Court in Prakash Chand Mehra 's case(1), and that decision in our opinion would govern the interpretation of para. 5.356 of the Desai award also, which as we have indicated, is in substance the same as para. 292 of the Sastry award as modified by the Labour Appellate decision. We now turn to the actual fixation of pay in each case. We shall first take the case of Ram Parkash (i.e. C.A. 1008). I le joined service on April 11, 1949. His basic pay as on January 1,1959 was Rs. 106. His place of posting was Phagwara in area ITT. Point to point adjustment as on January 1, 1959, would give him Rs. 106 in the Sastry award scale as modified. This is equal to his actual salary as on January 1, 1959. Therefore under sub cl. (a) of el. (iv) his salary has to be fixed as on January 1, 1959 at Rs. 106. He would not be entitled to any increments under sub cls. (b) and (c), because his actual salary coincided with the adjusted basic pay in the Sastry award scale as modified as on January 1, 1959. He would however be entitled to two increments under sub cl. (d) for the years 1960 and 1961 and his salary therefore as on January 1, 1962 under the Sastry award would come to Rs. 119. As Rs. 119 is the eleventh stage in the Sastry scale, Ram Parkash would be entitled to the eleventh stage in the Desai scale, which would be Rs. 170. The bank actually fixed him at Rs. 176 on its own interpretation of the award. In the circumstances, Ram Parkash was not entitled to any relief from the labour court. Tek Chand Sharma respondent in C.A. 1009 was appointed on November 15, 1950. His salary as on January 1, 1959 was Rs. 100 and his place of posting was Nakodar in area IV of the (1) 906 Sastry award. His salary according to point to point adjustment would come to Rs. 85. But under cl. (i) his salary cannot be fixed below Rs. 100, which he was actually getting. Under subcl. (a) of cl. (iv) his salary will be fixed at Rs. 100. He would not be entitled to any increments under sub cls. (b) and (c) of cl. (iv) because he was getting more than what would be his adjusted basic pay under cl. Therefore, for purposes of sub cl. (a) of cl. (iv) he would be fixed at Rs. 100 as on January 1, 1959, and would be entitled to increments under sub cl. (d) which will bring his salary to Rs. 112 as on January 1, 1962. This is the thirteenth stage in the Sastry scale. Nakodar is now in area III in the Desai award. The thirteenth stage in the Desai award scale is Rs. 182 for that area. So his salary as on January 1, 1962 would be fixed at Rs. 182. In addition he is entitled to two increments on account of being a graduate and one increment on account of his having passed the Indian Institute of Bankers ' examination. His actual salary in the Desai scale on January 1, 1962 will be Rs. 182 plus Rs. 33, i.e., Rs. 215. The bank fitted him on Rs. 193. The award of the labour court therefore in the case of Tek Chand Sharma is correct. We therefore allow C.A. 1008 and set aside the order of the labour court and dismiss the application of Ram Parkash. We make no order as to costs in the circumstances. C.A. 1009 is hereby dismissed. We make no order as to costs in the circumstances. C.A. 1008 allowed. C.A. 1009 dismissed.

The respondent employees made applications under section 33C(2) of the Industrial Disputes Act for determination and computation of the benefit to which they were entitled under the National Industrial Tribunal (Bank Disputes) Award (Desai Award) as they were not satisfied with the fixation of their pay by the appellant bank under para 5.356 of the Desai Award. The Bank claimed that under clause (ii) of para 5.356 of the Desai Award, the adjusted basic pay in,the new scale was not to exceed what point to point adjustment would give an employee on January 1, 1962 and that this being the maximum permissible under cl. (ii), cl. (iv) could not give an employee more than the maximum arrived at under cl. (ii). The employees on the other hand claimed that they were entitled to what was provided by sub cls. (a), (b) and (c) of cl. (iv) and the two increments under sub cl. (d) and that it did not matter whether what was thus arrived at exceeded the maximum provided under cl. The Labour Court partially accepted the employees ' contention and fixed their pay accordingly. In appeal. HELD:The decision of this Court in Prakash Chand Mehra 's case would govern the interpretation of para 5.356 of the Desai Award also, which is in substance the same as para 292 of the Sastry Award as modified by the Labour Appellate decision. The adjusted basic pay in cl. (ii) has to be taken as on January 1, 1959. This follows from the fact that the workman basic pay as on January 1, 1959 cannot be reduced and therefore when cl. (ii) speaks of adjusted basic pay it must refer to the same date as in cl. Further cl (iv) which provides for actual calculations starts with words "subject to rules (i) to (iii)" and therefore the actual calculations made under cl. (iv) must be subject to cls. (i) and (ii). This means in effect that the actual fixation under sub cls. (a), (b) and (c) of cl. (iv) will be subject to cl. (i) and cl. Under sub cl. (a) of cl. (iv) a workman will be placed in the Sastry Award as modified by placing him at the stage in the Sastry Award scale equal to or next above his basic pay as on January 1, 1959 in the scale then in force in the bank concerned. But in view of cl. (i) this cannot be less than the actual basic pay of the workman as on January 1, 1959. Where under cl. (i) the actual basic pay as on January 1, 1959 is more than what point to point adjustment will give under cl. (ii), it cannot be reduced for cl. (ii) is subject to cl. After this has been done the workman would be entitled to increments as provided in sub cl. (b) read with sub cl. (c) of cl. (iv), but this will be subject to cl. (i) and (ii) and the adjusted basic pay arrived at by giving the increments under sub cls. (b) and (c) cannot exceed the adjusted basic pay as arrived at by point to point adjustment in the Sastry Award as modified or the maximum of that scale or the 899 actual basic pay as on 1st January 1959, as the case may be. Thus sub cl. (a) is subject to cl. (i) and the basic pay to be fixed on January 1, 1959 hag to be fixed by reading sub cl. (a) of cl. (iv) and cl. (i) together. Then increments under sub cl. (b) read with sub cl. (c) of cl. (iv) have to be added, but this is again subject to the provisions of cls. (i) and (ii). [903 E; 903 G 904 E] Once it is held that basic pay under cl. (ii) has to be worked out as on January 1, 1959 the two increments provided by sub cl. (d) of cl. (iv) which are beyond that date must be given over and above what has been worked out under sub cls. (a), (b) and (c) of cl. (iv) of the Desai Award. The fact that by oversight sub cl. (d) of cl. (iv) was not made a separate clause would make no difference for sub cl. (d) provides for a period after the date up to which cl. (i) works. [904 H 905 B] State Bank of India Prakash Chand Mehra, [1961] 11 L.L.J. 383, relied on.

Appeal No. 801 of 1963. Appeal by special leave from the judgment and decree dated September 2, 1959 of the Madras High Court in Second Appeal No. 774 of 1957. T. V. R. Tatachari, for the appellants. P. Raghaviah and R. Ganapathy Iyer, for the respondents. The Judgment of the Court was delivered by Gajendragadkar, C.J. The present appeal has been brought to this Court by special leave and it arises from a suit filed by the appellants against four respondents. The properties involved in the suit consist of agricultural lands situated in Eragudi village, Musiri taluk, Tiruchirappalli district. According to the appellants, the said lands had been granted in Inam to the ancestor of one Ambalathadum Pachai Kandai Udayavar by the Carnatic Rulers before the advent of the British power in India. The original grantdeeds are not available; but at the time of the settlement of the Inams in the sixties of the last century, Inam title deeds were issued in favour of the family of Pachai Kandai Udayavar. The appellants averred that the properties covered by the grant bad been granted in Inam to the original grantee burdened with the obligation of performing certain services in a Matam. The said properties were alienated from time to time, and as a result of the last alienation, the appellants became entitled to them. The appellants in the present litigation claimed a declaration about their title to the properties in suit and a permanent injunction restraining respondents 1 to 3, who claimed to be the trustees of an alleged Pachai Kandai Udayavar Temple at Eragudi, from interfering with their possession of the same. Respondent No. 4 is the Deputy Commissioner, Hindu Religious and Charitable Endowments, L9Sup. CI/66 9 122 Tiruchirappalli, and he has been impleaded because he has purported to appoint respondents 1 to 3 as trustees of the said alleged Temple on the 7th March, 1951. This suit (No. 103 of 1954) was instituted on the 13th September, 1954, under section 87 of the, Madras Hindu Religious and Charitable Endowments Act (No. XIX of 1951) (hereinafter called 'the Act '), in the Court of the District Munsif at Turaiyur. Respondents 1 to 3 who have been appointed as trustees of the said temple by respondent No. 4, obtained a certificate from him that the properties in question belonged to the Temple; and on the basis of the said certificate, they had filed an application before the Magistrate having jurisdiction in the area under section 87 of the Act for possession. Notice of this application was served on the appellants and they pleaded their own title to the properties. The Magistrate, however, over ruled the claim made by the appellants and directed them to deliver possession of the properties to respondents 1 to 3. Before this order could be executed and possession delivered to respondents 1 to 3, the appellants instituted the present suit. Respondents 1 to 3 resisted this suit and contended that the properties in suit had not been granted to the predecessor of Pachai Kandai Udayavar as alleged by the appellants. Their case was that the said properties had been granted to the Pachai Kandai Udayavar Temple and formed part of its properties. As trustees appointed by respondent No. 4, they claimed that they were entitled to the possession of the properties. On these pleadings, four substantive issues were framed by the learned trial Judge; they were : whether the grant of the Inam was a personal Inam; whether the grant of the Inam was a religious endowment; whether plaintiffs have title to the suit properties; and whether plaintiffs have acquired title by prescription ? On the first two issues, oral and documentary evidence was adduced by the parties. The learned trial Judge examined the whole evidence and came to the conclusion that the grant of the Inam was a personal Inam, and that it was not a grant in favour of the religious endowment within the meaning of the Act. That is how the first two issues were answered in favour of the appellants. In consequence, the learned trial Judge also held that the appellants had proved their title to the suit properties. The alternative plea made by the appellants that they had acquired title to the properties by prescription, was also upheld by the trial Judge. In the result, the appellants ' suit was decreed on the 14th February, 1955. 123 Respondents 1 to 3 preferred an appeal (No. 129 of 1955) in the Court of the Subordinate Judge at Tiruchirappalli, challenging the correctness of the said decree. The lower appellate Court considered three main points; they were : whether the grant was in favour of Ambalathadum Pachai Kandai Udayavar; whether there is a temple; and whether the plaintiffs had prescribed their title to the suit properties by adverse possession. The lower appellate Court made a finding against respondents 1 to 3 on point No. 2. It held that the evidence adduced by the respondents did not prove the existence of any temple in favour of which the original grant had been alleged to have been made according to them. On that view, it thought it unnecessary to consider the first point. In regard to the third point based on the appellants ' claim that they had acquired title by adverse possession, the lower appellate Court found that "it was evident that from the very beginning, Pachai Kandai Udayavar and his family had been claiming beneficial interest in the property and they were not holding the same as managers of the trust. The alienations must, therefore, be regarded only as repudiation of the trust. " In the result, the lower appellate Court 's finding was that the appellants had established their claim of prescriptive title. The appeal preferred by respondents 1 to 3, therefore, failed and was dismissed with costs on March 29, 1957. This decision was challenged by respondents 2 & 3 before the Madras High Court in Second Appeal (No. 774 of 1957). Subrahmanyam, J., who heard this appeal, held that the original grant had been made in favour of the Temple. There was evidence to show that the properties originally granted had been resumed by the Collector; but the learned Judge took the view that the said resumption was only of the melwaram or assessment, and that since the lands had been granted in Inam to the deity and its matam, their title to the lands remained unaffected by the resumption proceedings. In other words, he negatived the appellants ' claim that the original grant was in favour of their predecessors intitle, though burdened with an obligation to render service to the matam. The learned Judge reversed the finding of the lower appellate Court that the existence of the Temple had not been proved. Having thus held that the properties belonged to the Temple, the learned Judge proceeded to consider the question of limitation by reference to the several alienations with which the present litigation is concerned. In dealing with the question of limitation, the learned Judge took the view that the present suit would be governed 124 by Article 134 B of the Indian Limitation Act. This article has been introduced in the said Act by Amending Act 1 of 1929 and came into force on 1 1 1929. It was conceded before the lower appellate Court that the new article was not retrospective in operation and that if the title of the alienees in regard to 'dharmadlayam properties had been acquired by adverse possession prior to 1 1 1929, it would not be affected by the provisions of article 134 B. Thus considered, the alienations in regard to items 1, 2, part of item 3, items 7 & 8, and a portion of the well in item 5 sold under Ext. A 2 in 1914 were held to be outside the mischief of article 134B. The possession of the vendees in regard to the properties covered by the said sale deed was held to have conferred title on them. Similarly, item 4 and a part of item 6 which had been sold in auction in execution of a decree in 1927 (vide Exts. A 7 and A 8), were also held to be outside the scope of article 134 B, because the said article does not cover auction sales. That left the alienations covered by Exts. A 3, A 6 and A 12 to be considered. These three alienations were effected on the 7th October, 1917, 2nd July, 1926, and 2nd July, 1926 respectively. The High Court held that the properties covered by these sale deeds fell within the purview of article 134 B, and the appellants ' title in respect thereof was open to challenge. In the result, the appellants ' claim in regard to the properties covered by these three sale deeds was rejected, whereas their claim in regard to the other ,prop erties. was upheld. In consequence the appeal preferred by respondents 2 & 3 was partly allowed and the decree passed by the lower appellate court in regard to Exts. A 3, A 6 and A 12 was set aside. This judgment was pronounced on the 2nd September, 1959. It is against this decision that the appellants have come to this Court by special leave. Mr. Tatachari for the appellants has raised before us an interesting question of law. He contends that article 134 B would not apply to the present case, because the alienations evidenced by Exts. A 3, A 6 and A 12 show that the alienors purported to transfer the properties not as Poojaris or managers of a temple, but in their individual character as owners of the said properties. The documents recite that the properties belonged to the alienors as their separate secular properties, though burdened with an obligation to render service to the Matam; and that shows that the transfer was effected not by the Poojaris of the temple, but by persons who claimed that the properties belonged to them. Such a case falls outside the purview of article 134 B and must be governed by article 144 of the First Schedule to the Limitation Act. 125 Mr. Tatachari also argues that in applying article 144, we must assume that the possession of the alienees was adverse to the temple from the respective dates of the alienations when they were put in possession of the properties covered by the transactions in question. In support of this argument, Mr. Tatachari has relied on the statement of the law made by Mr. Justice Mukherjea in his lectures on. the Hindu Law of Religious and Charitable Trust.(1) Says Mr. Justice Mukherjea, "if the transfer (of debutter property) is not of ' particular items of property, but of the entire endowment with all its properties, the possession of the transferee is unlawful from the very beginning. The decisions in Gnanasambanda Pandara Sannadhi vs Velu Pandanam & Another(2) and Damodar Das vs A dhikari Lakham Das(3) are illustrations of this type of cases. " He also added that transfer would similarly be void 'and limitation would run from the date of the transfer, if the manager transfers the property as his own prop" and not as the property of the deity. The same statement has been made by the learned author in two other places in the course of his lectures. The argument is that in cases falling under article 134 B, the transfer made by the manager of a Hindu endowment is challenged by his successor on the ground that it was beyond the authority of the manager; and such a challenge necessarily postulates that the transfer was effected by the manager as manager purporting to deal with the property as belonging to the religious endowment. Where, however, the transfer is made by the manager not as manager, but as an individual, and he deals with the property not on the basis that it belongs to the religious endowment, but on the basis that it belongs to himself, considerations which would govern the application of limitation are substantially different; and in such a case, the transfer being void ab initio, the possession of the transferee is adverse from the date of the transfer. That is how Mr. Tatachari has attempted to avoid the application of article 134 B in the present case. There can be no doubt that if the assumption made by Mr. Tatachari is well founded, the appellants title to the three transactions in question would have to be upheld. It is well known that the law of limitation in regard to suits instituted to set aside unauthorised alienation of endowed property by a Shebait or a Mahant or a manager of a Hindu religious endowment was very uncertain prior to the decision of the Privy Council (1) Mr. Justice B. K. Mukherjea on 'Hindu Law of Religious and Charitable Trust ' II Edn. (1962) p. 282. (2) L.R. 27 I.A. 69. (3) L.R. 37 I.A. 147. 126 in Vidya Varuthi Thirtha vs Balusami Ayyar & Others.(1) That is why subsequent to the said decision, any discussion about the question of limitation relating to such suits necessarily begins with a reference to the principles laid down by the Privy Council in Vidya Varuthi 's case. In that case, the Privy Council held that the endowments of a Hindu math are not "conveyed in trust", nor is the head of the math a "trustee" with regard to them, save as to specific property proved to have been vested in him for a specific object. The question which the Privy Council had to consider in that case was whether article 134 applied to a suit in which the validity of a permanent lease of part of the math property granted by the head of a math was challenged. Article 134 covers suits brought with a view to recover possession of immovable property conveyed or bequeathed in trust or mortgaged and afterwards transferred by the trustee or mortgagee for a valuable consideration. These words used in column 1 of article 134 necessarily raise the question as to whether the head of a math is a trustee within their meaning; and Mr. Justice Ameer Ali, who spoke for the Privy Council, answered that question in the negative. In con sequence, the argument that article 134 applied, was repelled, and it was held that article 144 would govern such a case. In fact, it is substantially because of this decision that Articles 134 A, 134 B and 134 C and Articles 48A and 48B came to be inserted in the First Schedule to the Limitation Act by Amending Act 1 of 1929. At the same time, section 10 of the Limitation Act was amended by addition of an explanatory clause which provided, inter alia, that for the purposes of section 10, any property comprised in a Hindu religious or charitable endowment shall be deemed to be property vested in trust for a specific purpose, and the manager of any such property shall be deemed to be the trustee thereof. As we have already noticed, these newly added provisions in the Limitation Act came into force on the 1st January, 1929. Reverting then to the question as to whether a transfer effected by the manager of a temple in regard to properties belonging to the temple falls outside the purview of article 134 B if it is shown to have been made on the basis that the transferor treated the properties as his own, it does appear that the two earlier Privy Council decisions in Gnanasambanda 's(2) and Damodar Das 's(3) cases lend some support to the contention. In Gnanasambanda 's case, it was held by the Privy Council that where hereditary trustees of a re ligious endowment sold their hereditary right of management (1) L.R. 48 I.A. 3 2. (2) L.R. 27 I.A. 69. (3) L.R. 37 I.A. 147. 127 and transferred the endowed property, the sales were null and void, in the absence of a custom allowing them; and that the possession taken by the purchaser was adverse to the vendors and those claiming under them. In appreciating the effect of this decision, it is necessary to bear in mind that the plea of limitation with which the Privy Council was concerned in that case was based on article 124 of the Limitation Act. Article 124 relates to suits filed for possession of a hereditary office, and the limitation prescribed for such suits starts when the defendant takes possession of the office adversely to the plaintiff. It is clear that in that case, what had been sold was the hereditary office, as well as the properties belonging to the endowment; and so, it was plain that limitation began as soon as the purchaser took possession of the office under article 124. It is true that immovable properties belonging to the temple had also been sold; but the Privy Council expressly ruled that there was no distinction between the office and the property of the endowment. The one is attached to the other; but if there is, article 144 of the same Schedule is applicable to the property; and that bars the suit after 12 years ' adverse possession. It may be permissible to state that this latter observation was made in 1899 long before the Privy Council enunciated the true legal position in regard to the status of the managers of Hindu religious endowments in Vidya Varuthi 's case(1). Similarly in Damodar Das 's case(2), while dealing with the validity of an 'ikrarnama ' of a debuttar property executed by the manager of the property, the Privy Council observed that from the date of the ikranama, the possession of the transferee was adverse to the right of the idol and that led to the conclusion that the suit instituted against the transferee was barred by limitation. There is no discussion about the status and character of the Chela who made the transfer nor about the right of the succeeding Chela to challenge the validity of the transfer effected by his predecessor which was subsequently recognised by the Privy Council in Vidya Varuthi 's case(1). These two judgments have, no doubt been incidentally referred to by the Privy Council in Mahant Ram Charan Das vs Naurangi Lal and Others(3), and in Mahadeo Prasad Singh and Others vs Karia Bharti(4) though the decision in the said two cases proceeded in the light of the legal position enunciated by the Privy Council in Vidya Varuthi 's case(4). (1) L.R. 48 I.A. 302. (2) L.R. 37 I.A. 147. (3) L.R. 60 I.A. 124. (4) L.R. 62 I.A. 47. 128 It would thus be seen that the observations made by Mr. Justice Mukhejea on which Mr. Tatachari relies, really purport to extend the principle which has apparently been mentioned by the Privy Council in Gnanasambanda 's case(1). It does appear that Mr. Justice Mukhejea had expressed this view as a Judge of the Calcutta High Court in the case of Hemanta Kumari Basu vs Sree Ishwar Sridhar Jiu, (2) and had relied on the two Privy Council 's decisions in Gnanasambanda 's(1) and Damodar Das 's cases In the case of Hemanta Kumari Basa(2), the attention of Mukherjea J. was drawn to the fact that in an earlier decision of the Calcutta High Court in Ronald Duncan Cromartic and Francis Arthur Shephard Sutherland, vs Sri Iswar Radha Damodar few and Others, (4) D. N. Mitter, J., had made observations which were inconsistent with the view which Mukhejea, J. was disposed to take; but the learned Judge commented on the said observations by saying that they were open to criticism. Thus, on the question raised by Mr. Tatachari before us, there does appear to be some divergence of opinion in the Calcutta High Court itself No other decision has been cited before us which has accepted the proposition that if any part of the property belonging to a Hindu religious endowment is transferred by its manager, the transfer is void and the possession of the transferee becomes adverse to the endowment from the very beginning. In fact, as we have already indicated, in the case of Gnanasambanda(1) what had been transferred unauthorisedly, was the religious office itself and all the properties appertaining thereto. It is open to doubt whether the said decision could lead to the inference that if a part of the property is transferred by the manager of a religious endowment on the basis that it belongs to him and not to the religious endowment, the transfer is void ab initio, with the result that the possession of the transferee is adverse to the religious endowment from the very beginning, and the succeeding manager 's right to challenge the said transfer would be lost if his predecessor who made the transfer lives for more than 12 years after effecting the transfer. In the words of Sir John Edge, who spoke for the Privy Council in Nainapillai Marakayar and of hers vs Ramanathan Chettiar and Others(5), " in the case of a Shebait a grant by him (1) L.R. 27 I.A. 69. (2) I.L.R. (3) L.R. 37 I.A. 147. (4) (5) L.R. 51 I.A. 83 at p. 97. 129 in violation of his duty of an interest in endowed lands which he has no authority as Shebait to make may possibly under some circumstances be good as against himself by way of estoppel, but is not binding upon his successors. " It is not easy to see why the successor 's right to Challenge an unauthorised alienation made by his predecessor should be affected adversely if the alienation is made by his predecessor on the basis that the property belonged to him and not to the religious endowment. However, we do not think it necessary to decide this point in the present case, because, in our opinion, the plain words of article 134 B do not permit such a plea to be raised. Column 1 of article 134 B provides for suits brought, inter alia, by the manager of a Hindu religious or charitable endowment to recover possession of immovable property comprised in the endowment which has been transferred by a previous manager for a valuable consideration. The period prescribed for such suits is 12 years, and the time from which the period begins to run is the death, resignation or removal of the transferor. Confining ourselves to the first column of article 134 B at this stage, the question which we have to decide is : does this article permit any distinction to be made between transfers effected by a previous manager on the basis that the property transferred belongs to the religious endowment, and those made by him on the basis that the said property is his own private property ? If the property is transferred by the manager on the basis that it belongs to the endowment, article 134 B clearly applies; but does it make any difference to the application of article 134 B if the transfer is made on the other basis that the property belongs not to the endowment, but to the manager himself ? In either case, the successor who challenges the alienation, will have to prove that the property in fact belongs to the religious endowment. Once that is proved, is it necessary for him also to show that the transfer was made, on the basis that the property belonged to the religious endowment ? In our opinion, such a limitation cannot be read in the words used by the said article. Article 134 B applies to all cases where it is shown that the immovable property was comprised in the endowment and that it has been transferred by a previous manager for a valuable consideration. The successor has to prove three facts : (1) that the property belongs to the religious endowment; (2) that it was transferred by a previous manager; and (3) that the transfer was for a valuable consideration. The character of the representations made by the previous manager in regard to his relation with the property which is the subject matter of transfer, is irrelevant for the purpose of article 134 B. 130 All transfers made would fall within article 134 B if the three essential facts are proved by the successor of the transferor manager of the Hindu religious endowment. Therefore, we do not think that Mr. Tatachari is justified in contending that the transfers with which we are concerned in the present appeal fall outside the purview of article 134 B inasmuch as they are effected by the alienors, on the representations that the properties transferred belonged to them as their separate properties. On the findings recorded by the High Court, it is clear that the properties belonged to the temple; that they have been transferred by persons who must be deemed to be the previous managers of the temple; and that they have been transferred for valuable consideration. The present suit has been brought against respondents 1 to 3 who are appointed trustees of the temple by respondent No. 4; and so, all the ingredients prescribed by the first column of article 134 B are satisfied. That is why we must reject the ingenious argument urged before us by Mr. Tatachari that article 134 B does not apply to the present case. We may, in this connection, refer to the decision of the Privy Council in Mahant Sudarsan Das vs Mahant Ram Kirpal Das, and Others. (1) In that case, the question which arose for the decision of the Privy Council was whether article 134 B applied to a case where debuttar property had been sold in an execution sale, and the Privy Council held that it did not. "To apply article 134 B to an execution sale", observed Lord Radcliffe, "involves a reading of that article which would construe the words "transferred by a previous manager for a valuable consideration" as covering an execution sale under court process, and the word "transferor" as extending to the judgment debtor whose land is sold. It is not only that the words themselves do not properly bear that meaning. Apart from that, what is in all essentials the same question was considered on several occasions by courts in India before article 134A and 134B had been added to article 134. That Article contains the analogous phrase "transferred by the trustee or mortgagee for a valuable consideration", and there was a uniform current of decision to the effect that these words were incapable of applying to an execution sale. " What was said by the Privy Council about the impropriety of including an execution sale within the meaning of article 134B can, with equal justification, be said about introducing words of limitation in the said article which alone can exclude transfers made by the previous manager of the Hindu religious endowment on the basis that the property transferred belonged to (1) L.R. 77 I.A. 42 at pp. 49 50. 131 him. Therefore, we must deal with the present appeal on the basis that article 134 B applies to the facts of the present case. Mr. Tatachari then contends that even on the application of article 134 B, the decision of the High Court is erroneous, because on the facts proved in this case, the High Court should have drawn the legal inference that the transferor had been removed more than 12 years before the suit was filed. He contends that the question as to whether on facts proved in the present case, an inference can be drawn that the previous manager or trustee had been removed, is a mixed question of fact and law, and the High Court was in error in reversing the decisions of the courts below by holding that the title of the temple had not been lost by adverse possession before the suit was filed. For deciding this question, it is necessary to refer to some material facts. The transferor is Pachaikandaswamiar. The appellants ' case before the trial Court was that Pachaikandaswamiar had resigned his position about 27 years ago, and that even if article 134 B applied, limitation should be held to have commenced from the date when the alienor either resigned his office or was removed from it. In dealing with this aspect of the matter, the learned trial Judge has examined the oral evidence led on behalf of the parties. He assumed that Pachaikandaswamiar and his son were alive at the date of the suit. Even so, he found that they had left the village and had taken no part whatever in the management of the worship of the temple. In fact, almost all the properties belonging to the temple had in course of time, been a alienated and the alienors were no longer interested either in the temple or in staying in the village itself. Raju lyer, who was examined as a witness by the appellants, stated that he and Amirthalinga lyer had been performing the worship of the temple for the past 27 years, and he added that the alienor and his son had left the village more than 25 years ago, and but for very casual visits to the village, they had never taken any interest in the temple or in the management of its affairs. In fact, Ranga Raju Raddiar, whom the respondents examined, admitted in reply to the questions put by the Court that since 25 years or so neither Pachaikandaswamiar nor Chinnaswami lyer had performed any pooja in the temple. He substantially corroborated the statement of Raju lyer that Raju lyer and Amirthalinga lyer` had been performing the worship of the temple. Another witness, Chandrasekara lyer by name, whom the respondents examined, also admitted that Pachaikanda had sold away all his properties and had left the village. Besides, when respondents 1 to 3 were appointed as trustees of the temple, a notice was issued by the 132 office of Assistant Commissioner for Hindu Religious Endowments, Tiruchirappalli, on the 19th June, 1948, in which it was specifically averred that there were no legally constituted trustees for Sri Pachaikantha Udayavar Temple, Eragudi, and it was mismanaged; and so, it was proposed to appoint legally constituted trustees for the said temple. This notice was served on witness Raju lyer and Amrithalinga lyer, Chinnasamy Iyer, and Rangaraja Reddiar, who were performing the worship and acting as de facto managers of the temple. It is remarkable that this notice describes Amirthalinga Iyer and Chinnasamy lyer as de facto trustees of the temple. It is on these facts that the learned trial Judge held that the alienor must be deemed to have resigned his office or left it. The lower appellate Court does not appear to have considered or made any specific or clear finding on this aspect of the matter. It, however, held that the transferor and his family had been claiming beneficial interest in the properties all along and that they were not holding the same as managers of the trust. That is why he confirmed the finding of the trial Judge on the question of adverse possession, though on a somewhat different ground. The High Court has relied on the fact that the alienor is still alive, and so, it thought that the plea of adverse possession could not be sustained. Unfortunately, the question as to whether the facts proved in this case did not show that the alienor had been removed from office by other persons who were in management of the temple de facto, has not been discussed by the High Court. In our opinion, all the facts which have been brought on the record in relation to this aspect of the matter, clearly show not only that the alienor disposed of all the property and left the village ' but also that for the last 25 years or so, the management has been taken over by other persons who are acting as de facto managers of the temple. This evidence appears to us to show that the alienors had been removed from management of the temple, and other persons have taken up the position as de facto managers, and this position has lasted for more than 25 years. If that be so, there is no escape from the conclusion that more than 12 years have elapsed since the date of the removal of the previous manager who transferred the properties in question; and so, if a suit were brought by respondents 1 to 3 on the date when they were appointed trustees by respondent No. 4, it would be barred under article 134 B. On that view of the matter, we must hold that the trial Judge and 133 the lower appellate Court were right in decreeing the appellants ' suit in its entirety. We must accordingly set aside the decree passed by the High Court in regard to the transfers covered by Exts. A 3, A 6 and A 12, and restore that of the lower appellate Court. In the circumstances of this case, we direct that parties should bear their own costs. Appeal allowed.

The lands in dispute had been granted in inam to a temple. By about 1929 the then manager of the temple disposed of all those properties under various sale deeds, resigned his position and left the village. He was therefore removed from the management of the temple and other persons had taken up the position as de facto managers from 1929. As a result of successive alienations of the properties, the appellants became entitled to them. In 1951, the respondents were appointed trustees of The temple and under the Madras Hindu Religious and Charitable Endowments Act, 1951, they applied, to the Magistrate, for possession of the properties and the Magistrate ordered delivery of possession. Before the order could be executed the appellants filed the suit in 1954, for a declaration of their title to the properties and for an injunction restraining the respondents from interfering with their possession. The trial Court and the lower appellate Court decreed the suit. In second appeal, the High Court held that the suit was governed by article 134 B of the Limitation Act,, 1908, which was introduced into the Act on 1st January 1929; and that the appellants ' claim in regard to the properties covered by the sale deeds of 1917 and 1926. should be rejected, because, the alienees had not acquired title by adverse possession by 1st January, 1929, and is the alienor was still alive, the plea of adverse possession could not be sustained under that article. In appeal to this Court it was contended that article 134 B would not apply to the present case but that article 144 would apply, because, the transfers were effected by the alienor on the 'representations that the properties belonged to him as his separate property; and that even if the article applied, the decision of the High Court was erroneous, because the transferor had been removed from management more than 12 years before the suit was filed. HELD : Though article 134 B applied to the facts of the case, since the appellants had acquired title to the properties by prescription, the decree passed by the High Court, in so far as it was against the appellants, should be set aside. Column 1 of the article provides for suits brought,, inter alia, by the Tanager of a Hindu religion; or charitable endowment to recover possession of immovable property comprised in the endowment, which has been transferred by a previous manager for valuable consideration. The period Prescribed for such suits is 12 years, and the time from which the period begins to run is the death, resignation or removal of the transferor. The findings recorded by the High Court in the present case show that all the ingredients prescribed by the first column of the Article namely 121 (i)that the property belonged to the endowment, (ii) that it was transferred by a previous manager; and (iii) that the transfer was for valuable Consideration, were satisfied. The character of the representations made by the previous manager in regard to his relation with the property which is the subject matter of transfer, is irrelevant for the purpose of the Article. But if a suit had been brought by the respondents on the date when they were appointed trustees, it would have been barred under the Article, because more than 12 years had elapsed since the date of the removal of the previous manager who had transferred the properties; and therefore, the trial Court and the lower appellate Court were right in decreeing the, appellants ' suit in its entirety. [129 C D, H; 132 H] Mahant Sudarsan Das vs Mahant Ram Kirpal Das & Ors. L. R. 77 I.A. 42, applied.

Appeal No. 381 of 1966. Appeal by special leave from the judgment and order dated October 7, 1965 of the Punjab High Court (Circuit Bench) at Delhi in Civil Writ No. 1626 C of 1965. M. C. Setalvad, R. K. Garg and section C. Agarwala, for the appellants. C. K. Daphtary, Attorney General, B. R. L. Iyengar, R. K. P. Shankardass and R. H. Dhebar, for respondents Nos. 1 and 3 to 7. section Mohan Kumaramangalam, C. Ramakrishna and A. V. V. Nair, for respondent No. 2. The dissenting Opinion Of SARKAR, C.J. and MUDHOLKAR. , J. was delivered by MUDHOLKAR, J HIDAYATULLAH. BACHAWAT and SHELAT JJ. delivered separate judgments allowing the Appeal. Mudholkar, J. On May 19, 1965 Mr. D. section Dang, Secretary of the Company Law Board issued an order on behalf of the Company Law Board made under section 237 (b) of the appointing 4 persons as Inspectors for investigating the affairs of the Barium Chemicals Ltd., appellant No. I before us, since its incorporation in the year 1961 and to report to the Company Law Board inter alia "all the irregularities and contravention in respect of the provisions of the or of any other law for the time being in force and the person or persons responsible for such irregularities and contravention. " The order was made by the Chairman of the Board, Mr. R. C. Dutt on behalf of the Board by virtue of the powers conferred on him by certain rules to which we shall refer later. On June 4, 1965 the Company preferred a writ petition under article 226 of the Constitution in the Punjab High Court for the issue of a writ of mandamus or other appropriate writ, direction or order quashing the order of the Board dated May 19, 1965. The Managing Director, Mr. Balasubramanian joined in the petition as petitioner No. 2. The writ petition is directed against 7 respondents, the first of which is the 318 Company Law Board. The second respondent is Mr. T. T. Krishnamachari, who was at that time Minister for Finance in the Government of India. The Inspectors: appointed are respondents 3 to 6 and Mr. Dang is the 7th respondent. Apart from the relief of quashing the order of May 19, 1965 the appellants sought the ' issue of a writ restraining the Company Law Board and the Inspectors from giving effect to the order dated May 19, 1965 and also sought some other incidental reliefs. The order of the Board was challenged on 5 grounds which are briefly as follows: (1) that the order was made mala fide; (2) that in making the order the Board had acted on material extraneous to the matters mentioned in section 237(b) of the ; (3) that the order having in fact been made at the instance of the shareholders is invalid and on a true construction of section 237 this could not be done; (4) that the order was invalid because it was made by the Chairman of the Board and not by the Board; and (5) that the provisions of section 237(b) are void as offending articles 14 and 19(1) (g) of the Constitution. The allegations of mala fides were denied on behalf of the respondents. They disputed the validity of all the other grounds raised by the petitioners. The High Court rejected the contentions urged before it on behalf of the appellants and dismissed the writ petition. The appellants thereafter sought to obtain a certificate of fitness for appeal to this Court; but the High Court refused to grant such a certificate. They have now come up to this Court by special leave. In order to appreciate the arguments addressed before us a brief statement of the relevant facts would be necessary. The Company was registered in the year 1961 and had an authorised capital of Rs. 1 crore divided into 1,00,000 shares of Rs. 100 each. Its primary object was to carry on business of manufacturing all types of barium compounds. Appellant No. 2 was appointed Managing Director of the Company from December 5, 1961 and his appointment and remuneration were approved by the Central Government on July 30, 1962. The erection of the plant was undertaken by M/s. L. A. Mitchell Ltd., of Manchester in pursuance of a collaboration agreement between it and the company entered in October, 1961 and approved by the Central Government in November of that year. Thereafter a permit for importing the requisite machinery was granted to the Company. The issued capital of the Company was Rs. 50, 00,000 and the public was invited to subscribe for shares in the Company. It is said that the issue was oversubscribed by March 12, 1962. 319 It would see that soon after the collaboration agreement was entered into M/s. L. A. Mitchell Ltd., was taken over by a financial group (M/s. Pearwn, & Co. Ltd.), to which a. person named Lord Poole belonged. It would appear that as the work of setting up of the plant was being delayed the Company sent a notice to M/s Mitchell Ltd. , on April 2, 1965 in which the Company stated that if the plant was not completely installed and got into running order by June 1, 1965 the Company will have to make alternative arrangements and that it would hold M/s. L. A. Mitchell Ltd., liable to pay damages to the Company for the loss suffered by it. As a result of the notice Lord Poole visited India in April/May, 1965. In his opinion the design of the plant was defective. Certain negotiations took place between the Company and Lord Poole in the course of which an undertaking was given by Lord Poole on at behalf of the collaborators that the work would be completed with necessary alterations and modifications in accordance with the report of M/s. Humphrey & Co., and that the collaborators would spend an additional amount upto pound 250,000 as may be required for the purpose. It is said that the plaint was producing at that time only 25 per cent of its installed capacity but that according to the assurance given by Lord Poole it would yield full production by April, 1966. According to the appellants, before entering into a collaboration agreement with M/s. L. A. Mitchell Ltd., the appellant No. 2 Balasubramanian was negotiating with a German firm named Kali Chemie A. G. of Hanover for obtaining their collaboration. It is said that the firm of M/s. T. T. Krishnamachari & Sons were and still are the sole agents in India for some of the products of Kali Chemie. The firm of T. T. Krishnamachari & Sons approached appellant No. 2 for the grant of sole selling, agency of the products of the plant to be established in collaboration with Kali Chemie. Appellant No. 2 did not agree to this with the result that the company 's negotiations with Kali Chemie broke down. The appellants also say that T. T. Krishnamachari & Sonswere later a so granted a licence to set up a plant for manufacturing barium chemicals but that on appellant No. 2 bringing certainfacts: to the notice of Mr. Nehru the licence in favour of T. T. Krishnamachari & Sons was revoked. The relevance of these facts is in connection with the plea of mala fides. On this part of the case the appellant 's contention is that the Chairman of the Company Law Board Mr. R. C. Dutt made the order for investigation into the affairs of appellant No. 1 at the instance of Mr. T. T. Krishnamachari, the then Finance Minister and also because of his bias against appellant No. 2. The suggestion is that as the licence of M/s. T. T. Krishnamachari & Sons was revoked and as they were not even given sole selling agency for the sale of the products of barium chemicals Mr. T. T. Krishnaniachari wanted action to be taken under this provision either for penalising appellant No. 1 or putting pressure on it. 320 A lengthy argument was addressed before us by Mr. Setalvad bearing on the question of mala fides in the course of which he referred us to certain documents. He also wanted us to bear in mind the sequence in which certain events occurred and said that these would indicate that the former Finance Minister must have been instrumental in having an order under section 237(b) made by the Chairman of the Board. We were, however, not impressed by this argument. Our learned brother Shelat has dealt with this aspect of the matter fully in his judgment and as we agree with him it is not necessary to say much on the point. We would, however, like to refer to and deal with one aspect of the argument bearing on the question of mala fides. Mr. Setalvad points out that the Company Law Board had decided in December 1964 to take action against appellant No. I under section 237(b) and had actually obtained approval of Mr. T. T. Krishnamachari to the proposed action. Therefore, according to him the real order is of Mr. Krishnamachari even though the order is expressed in the name of the Board. We find no substance in the argument. The decision to take action was already taken by the Chairman and there is nothing to indicate that in arriving at that decision he was influenced by the Finance Minister. If the decision arrived at by the Chairman was an independent one it cannot be said to have been rendered mala fide because it was later approved by Mr. Krishnamachari whose sons undoubtedly constitute the partnership firm of M/s. T. T. Krishnamachari & Sons. It is also suggested by Mr. Setalvad that the action approved of in December, 1964 was delayed till May, 1965 because in the interval some negotiations with Kali Chemie had been started and had they ended fruitfully M/s. T.T. Krishnamachari & Sons would have got the sole selling agency of the products of barium chemicals. Now it does seem from ,certain material brought to our notice that negotiations with Kali Chemie were revived by appellant No. 2 because of the difficulties which were being experienced in the working of the collaboration agreement with M/s. L. A. Mitchell Ltd. No material, however, is placed before us from which it could be reasonably inferred that had the negotiations with Kali Chemie fructified M/s. T. T. Krishnamachari & Sons would have secured the sole monopoly for sale of the products of barium chemicals. One more point was urged in connection with this aspect of the argument and it is that the appellants were not given an opportunity to cross examine Mr. T. T. Krishnamachari and Mr. Dutt. In our opinion, in a proceedingunder article 226 of the Constitution the normal rule is, as pointedout by this Court in The State of Bombay vs Purshottam Jog Naik to decide disputed questions on the basis of affidavits and that it is within the discretion of the High Court whether to allow a person who has sworn an affidavit before it as indeed Mr. Krishnamachari and Mr. Dutt have to be cross examined or not to permit it. In exercise of. its discretion the High Court has re 321 fused permission to cross examine them. In such a case it would not be appropriate for this Court while hearing an appeal by special leave to interfere lightly with the exercise of that discretion. Mr. Setalvad said that as the appellants had made out a prima facie case of mala fides in their affidavits, and as these allegations had been denied by the respondents, the High Court was in error in refusing permission to the appellants to cross examine the persons who swore the affidavits on the side of the respondents. We are not aware of the rule on which Mr. Setalvad bases himself. There is nothing to show that the High Court thought that a prima facie case of mala fides had been made out. Even in such a case a court might well hold that it has been demolished by the affidavits in answer. The court has to find the facts and if it finds that it can do so without cross examination it is not compelled to permit cross examination. We have no reason to think that the High Court could not have ascertained the facts on the affidavits themselves. Coming to the second point, it would be desirable to repro duce section 237 which reads thus: "Without prejudice to its powers under section 235 the Central Government (a) shall appoint one or more competent persons as inspectors to investigate the affairs of a company and to report thereon in such manner as the Central Government may direct, if (i) the company, by special resolution, or (ii) the Court, by order, declares that the affairs of the company ought to be investigated by an inspector appointed by the Central Government; and (b) may do so if, in the opinion of the Central Government, there are circumstances suggesting (i) that the business of the company is being conducted with intent to defraud its creditors, members or any other persons, or otherwise for a fraudulent or unlawful purpose, or in a manner oppressive of any of its members, or that the company was formed for any fraudulent or unlawful purpose; or (ii) that persons concerned in the formation of the company or the management of its affairs have in connection therewith been guilty of fraud, misfeasance or other misconduct towards the company or towards any of its members; or (iii) that the members of the company have not been given all the information with respect to its 322 affairs. which they might reasonably expect, including information relating to the calculation of the commission payable to a managing or other director, the managing agent, the secretaries and treasurers, or the manager of the company. " In view of the fact that the Central Government, by virtue of the powers conferred by sections 10 E and 637 delegated its powers under section 237 to them Company Law Board we shall read section 237 as if in place of the words "Central Government" there are the words "Company Law Board" or for brevity 'Board '. According to Mr. Setalvad, cl. (b) of section 237 requires two things: (1) the opinion of the Board and (2) the existence of circumstances suggesting one or more of the matters. specified in sub cls. (i) to (iii). He contends that though the opinion of the Board is subjective the existence of circumstances set out in the sub cls. (i) to (iii) is a condition precedent to the formation of the opinion. Therefore, according to him, the Court is entitled to ascertain whether in fact any of those circumstances exists. The Attorney General disputes this construction and contends that the clause is incapable of a dichotomy and that the subjective process embraces the formation of an opinion that circumstances suggestive of any of the matters comprised in sub cls. (i) to (iii) exist. Once it is conceded that the formation of an opinion by the Board is intended to be subjective and if the provision is constitutional which in our view it is the question would arise: what is that about which the Board is entitled to form an opinion? The opinion must necessarily concern the existence or non existence of facts suggesting the things mentioned in the several sub clauses of cl. An examination of the section would show that cl. (b) thereof confers, a discretion upon the Board to appoint an Inspector to investigate the affairs of a company. The words "in the opinion of" govern the words "there are circumstances suggesting" and not the words "may do so". The words 'circumstances ' and 'suggesting ' cannot be dissociated without making it impossible for the Board to form an 'opinion ' at all. The formation of an opinion must, therefore, be as to whether there are circumstances suggesting the existence of one or more of the matters in sub cls. (D to (iii) and not about any thing else. The opinion must of course not have been arrived at mala fide. To say that the opinion to be formed must be as to the necessity of making an investigation would be making a clear departure from the language in which section 237(b) is couched. It is only after the, formation of, certain opinion by the Board that the stage for exercising the discretion conferred by the provision is reached. The discretion conferred to order an investigation is administrative and not judicial since 323 its exercise one way or the other does not affect the rights of a company nor does it lead to any serious consequences as, for instance, hampering the business of the company. As has been pointed out by this Court in Raja Narayanalal Bansilal vs Maneck Phiroz Mistry & Anr.(1) the investigation undertaken under this provision is for ascertaining facts and is thus merely exploratory. The scope for judicial review of the action of the Board must, therefore, be strictly limited. Now, if it can be shown that the 'Board had in fact not formed an opinion its order could be successfully challenged. This is what was said by the Federal Court in Emperor vs Shibnath Banerjee(2) and approved later by the Privy Council. Quite obviously there is a difference between not forming an opinion at all and forming an opinion upon grounds, which, if a court could go into that question at all, could be regarded as inapt or insufficient or irrelevant. It is not disputed that a court can,not go into the question of the aptness or sufficiency of the grounds ,upon which the subjective satisfaction of an authority is based. But, Mr. Setalvad says, since the grounds have in fact been disclosed in the affidavit of Mr. Dutt upon which his subjective satisfaction was based it is open to the court to consider whether those grounds are relevant or are irrelevant because they are extraneous to the question as to the existence or otherwise of any of the matters referred to in sub cls. (i) to (iii). Let us now examine the affidavit of Mr. Dutt. Since this affidavit is in answer to the allegations made in the writ petition the two ;should be considered together. In paragraphs 1 to 19 of the writ petition certain facts and figures concerning the formation, registration etc. of the company, the activities of the company and other related matters have been set out. These were admitted by Mr. Dutt in paragraph 14 of the counter affidavit. Paragraph 20 onwards of the writ petition deals with the action taken by the Board and the various grounds on which according to the appellants the action of the Board is open to challenge. The first 4 paragraphs of the counter affidavit deal with certain formal matters. In paragraph 5 Mr. Dutt has set out that the petition is liable to be dismissed summarily being grounded on facts which are, false, speculative and lacking in material particulars. Thereafter he has set out what, according to him, are the true facts. In paragraphs 6 to 8 he has dealt with the legal aspects of the case. The 8th paragraph is the most important amongst them. Here Mr. Dutt has stated that it was not competent to the Court to go into the question of adequacy or otherwise of the material on the basis of which orders under section 237(b) are passed by the Board. Then he stated: 'However, if in spite of what has been stated and contrary to the submissions above, this Han 'ble Court still holds that it is necessary for the Court to examine the relevant material in (1)[1961] I S.C.R. 417. (2)[1944] F.C.R. 1. 324 order to do justice, then the Board would have no objection to producing the same for the Court 's perusal provided it is not shown to the petitioners. " It may be mentioned that the Court did not call for this material at all nor did the appellants seek its production. In paragraph 9 Mr. Dutt has categorically stated that the order of May 19, 1965 was passed after careful and independent examination of the material by the Chairman and that it was issued in proper exercise of the powers conferred upon it. He has specifically denied that it was issued at the instance of the second respondent. In paragraph 10 Mr. Dutt has taken the plea that the petition was liable to be dismissed as it had not been made bona fide but for extraneous reasons and to create prejudice with a view to thwart statutory investigation. Then he has set out the circumstances upon which his contention is based. In paragraph 13 he has stated that without prejudice to his submissions in the earlier paragraphs he would reply to allegations contained in the various paragraphs of the writ petition. Then follows paragraph 14 upon which Mr. Setalvad has founded an argument that the grounds disclosed therein being extraneous the order is invalid. In this paragraph Mr. Dutt has admitted some of the facts stated in paragraphs 1 to 19. He has also said that the Board was aware of the fact that the company had entered into collaboration with M/s. L. A. Mitchell Ltd. He has then added:. . but it has no information of any of the other matters and/or negotiations with M/s. L. A. Mitchell Ltd., Manchester. However, from the Memoranda received by the Board referred to in paragraph 5 and other examination it appeared inter alia that: (i) that there had been delay, bungling and faulty planning of this project, resulting in double expenditure. for which the 'collaborators had put the responsibility upon the Managing Director, Petitioner No. 2: (ii) Since its flotation the company has been continuously showing losses and nearly 1/3rd of its share capital has been wiped off; (iii)that the shares of the company which to start with were at a premium were being quoted on the Stock Exchange at half their face value; and (iv)some eminent persons who had initially accepted seats on the Board of Directors of the company had subsequently severed their connections with it due to differences with Petitioner No. 2 on account of the manner in which the affairs of the company were being conducted. " In paragraph 5 it may be recalled Mr. Dutt has set out the grounds on which the writ petition deserved to be summarily 325 rejected. It will thus be clear that what are characterised by Mr. Setalvad as the grounds upon which the order of the Board is based are nothing more than certain conclusions drawn by the Boar& from some of the material which it had before it. Moreover the expression "inter alia" used by Mr. Dutt would show that the conclusions set out by him specifically are not the only ones which could be drawn from the material referred to by, him in paragraph 5 of his affidavit. Turning to paragraph 16 of the affidavit we find that Mr. Dutt has clearly reiterated that there was ample material before the Board on which it could and did form the opinion that there were circumstances suggesting that as stated in the order of May, 19, 1965, the business of the company was being conducted with intent to defraud creditors, members and other persons and further that the persons concerned in the management of the affairs of the company had in connection therewith been guilty of fraud, misfeasance and other misconduct towards the company and its members. This paragraph is in answer to paragraph 21 of the writ petition. It is in that paragraph alone that the appellants had specifically raised the contention that the recital in the order as to the existence of material is not correct and that in point of fact there was no material before the Board to form the said opinion. In this state of pleadings it would not be right to construe the affidavit of Mr. Dutt to mean that the only conclusions emerging from the material before the Board are those that are set out in paragraph 14 of his affidavit. Apart from this we do not think that the conclusions set out in paragraph 14 are extraneous to the matters indicated in the order of May 19, 1965. What is said therein is that there are circumstances suggesting that the business of the appellants is being conducted with intent to defraud its creditors, members and others, and that. the persons concerned with the management of the affairs of the company have been guilty of fraud, misfeasance and other misconduct towards the company and its members. it has to be borne in mind that what the Board is to be satisfied about is whether the circumstances suggest any of these things and not whether they establish any of these things. Now, the first of its conclusion is to the effect that the materials show that there was delay , bungling, faulty planning of the project and that this resulted in double expenditure for which the collaborators had put the responsibility upon the Managing Director, that is, appellant No. 2. Would it be farfetched to say that these circumstances could reasonably suggest to the Board that these happenings were not just pieces of careless conduct but were deliberate acts or omissions of appellant No. 2 done with the ulterior motive of earning profit for himself ? Similarly could not the fact that the company was continuously showing losses since its flotation and that 1/ 3rd of its 326 share : capital had ,been wiped out could have been suggestive of fraud to the Board. In 'this connection, we think it right to point out that the spirit of the section must be kept in mind in determining its interpretation. The section was enacted to prevent the Management of a company from acting in a manner prejudicial to the interests of the shareholders for whom it was difficult,to get together and take steps for the protection of their interests jointly. It was this difculty of the shareholders which is a reality which had led to the enactment of the section. There is no doubt that few share holders have the means or ability to act against the Management. It would furthermore be difficult for the shareholders to find out the facts leading to the poor financial condition of a company. The Government thought it right to take power to step in where there was reason to suspect that the Management may not have been acting in the interests of the shareholders who would not be able to take the steps against a powerful body like the Managementand to take steps for protection of such interests. As we have said, the section gives the exploratory power only. Its object is to find out the facts. , a suspicion having been entertained that all was not well with the company. The powers are exercised for ascertaining facts and, therefore, before they are finally known, all that is necessary for the exercise of the powers is the opinion ,of the Board that there are circumstances which suggest to it that fraud and other kinds of mismanagement mentioned in sub cls. (i) to (iii) of cl. (b) of the section may have been committed. If the facts do reasonably suggest any of these things to the Board, the power can be exercised,though another. individual might think that : the ;facts suggest otherwise It cannot be said that from a huge loss incurred by a company and the working of the company in a disorganised and un businegslike way, the only conclusion possible is that it was due to lack of capability. It is reasonably ,conceivable that the result had been produced by fraud and other varieties of dishonesty or misfeasance. The order does not amount to a finding of fraud. It is to find out what kind of wrong ,action has led to,the company 's ill fate that the powers under the sectional given. The enquiry may reveal that.the renovation or other similar kind of malfeasance. It would be destroying the beneficial effective use of the powers given by the section to say that the Board must first show that a fraud can clearly be said to have.been committed. It is enough that the facts show that it can be reasonably thought that the company 's unfortunate position might have been caused by fraud and other species of dishonest action. In our opinion, therefore, the argument of Mr. Setalvad about the circumstances being extraneous cannot be accepted. Coming to the third point of Mr. Setalvad pointed out that four ex Directors of the Company who had resigned submitted a 327 memorandum to Mr. T. T. Krishnamachari while he was holding the office of Finance Minister in which grave allegations were made concerning the affairs of the Company and the management of the Company by the second appellant. The investigation, according to Mr. Setalvad. was the outcome of this memorandum and that by ordering it the Board has in effect enabled the ex Directors who continue to be shareholders to circumvent the provisions of sections 235 and 236 of the . Section 235 deals with "Investigation of affairs of company on application by members or report by Registrar". Clause (a) of this section provides that in the case of a company having a share capital the investigation can be ordered either on the application of not less than 200 members or of members holding not less than one tenth of the total voting power therein. We are not concerned with cls. (b) and (c). Apparently the four ex Directors were not holding 10% of the voting power of the Company. At any rate the case was argued on this footing. Section 236 provides that such application has to be supported by such evidence as the Board (reading 'Board ' for 'Central Government ') may require. It also empowers the Board to require the applicants to furnish security for such amount, not exceeding one thousand rupees as it may think fit, for the payment of the costs of the investigation. The contention is that though the Board acted upon the memorandum submitted by four ex Directors it did not even require them to comply with the provisions of section 236. The contention is that the order of the Board appointing Inspectors is invalid. In other words the argument amounts to this that the provisions of section 237(b) have been utilised by the Board as a cloak for taking action under the provisions of section 235. In other words this is an argument that the order was made mala fide. It is true that a memorandum was presented to Mr. Krishna machari by four ex Directors containing grave allegations against the two appellants. But it was not solely on the basis of this memorandum that action was taken by the Board. It is clear from the counter affidavit of Mr. Dutt and particularly from paragraph 5 thereof that the Board had before it not only two sets of memoranda dated May 30, 1964 and July 9, 1964 respectively from four ex Directors of the Company alleging serious irregularities and illegalities in the conduct of the affairs of the Company but also other materials. The Board points out that over a long period beginning from September 1961 the Department had been receiving various complaints in regard to the conduct of the affairs of the Company. One complaint had also been received by the Special Police Establishment and forwarded by it to the Department in November, 1963. The matter was enquired into by the Regional Director of the Board at Madras and he, in his report, sent to the Board in September 1964 suggested an urgent and comprehensive investigation into the affairs of the Company. In his /S5SCI 23 328 affidavit the Chairman of the Board Mr. Dutt has stated further in paragraph 5(b) as follows: "The material on the file was further examined in the light of the Regional Director 's recommendation by the two Under Secretaries of the Board (Sarvashri M. K. Banerjee C. section section and K. C. Chand, I. R. section at the head. quarters of the Board in New Delhi and both of them endorsed the recommendation of the Regional Director to order an investigation. The matter was then considered by the Secretary of the Company Law Board in charge of investigation (Shri D. section Dang, I.A.S.) and he also expressed his agreement that there was need for a deeper probe into the affairs of the company. " Then again in paragraph 5(c) he has stated as follows: "Accordingly, the matter was put up to me at the end of November 1964 and after consideration of all the material on record, I formed the opinion that there were circumstances suggesting the need for action under section 237(b) of the ". It is abundantly clear from all this that the investigation cannot be said to have been ordered either at the instance of the four ex Directors or on the sole basis of the memoranda submitted by them. There is, therefore, no contravention of the provisions of SS. 235 and 236 of the Act. As a corollary to this it would follow that the order was not made mala fide or is otherwise invalid. As already stated the appellant had challenged the provisions of section 237(b) on the ground that they are violative of the fundamental rights under articles 14 and 19(1)(g) of the Constitution. Our brother Shelat has dealt with this attack on the provisions fully and we agree generally with what he has said while dealing with the contentions. We would, however, like to add that the com pany being an artificial legal person cannot, as held by this Court in The State Trading Corporation of India Ltd., vs Commercial Tax Officer Visakhapatnam & Ors.(1),claim the benefit of the provisions of article 19(1)(g) though appellant No. 2 Balasubramanian can do so. We agree with our learned brother that the action proposed under section 237(b) being merely, exploratory in character the fundamental right of Balasubramanian to carry on business is not affected thereby. Since that is so, the question whether the pro visions of the aforesaid section are a reasonable restriction on the exercise of the right under article 19(1)(g) does not arise for consideration. In the circumstances, therefore, we do not think that there is anything more that we need say. The last question is whether it was not competent to Mr. Dutt alone to take the decision that an investigation be ordered against the company. In taking the decision Mr. Dutt acted under a rule 1964] 4 S.C.R. 99. 329 of procedure prescribed in the order dated February 6, 1964. The validity of this rule is challenged, by Mr. Setalvad on the ground that this amounts to sub delegation of a delegated power and is ultra vires the Act. Clause (a) of sub section (1) of section 637 read with section 10(E)(1) empower the Central Government to delegate its powers under section 237 to the Company Law Board. By notification dated February 1, 1964 the Central Government has delegated, amongst other powers and functions, those conferred upon it by section 237 upon the Company Law Board. By another notification of the same date the Central Government has made and published rules made by it in exercise of its powers under section 642(1) read with section 10E(5) rule 3 of which reads thus: "Distribution of business; The Chairman may, with the previous approval of the Central Government, by order in writing, distribute the business of the Board, among himself and the other member or members, and specify the cases or classes of cases which shall be considered jointly by the Board. " By order dated February 6, 1964 the Chairman of the Company Law Board specified the cases and classes of cases to be considered jointly by the Board and distributed the remaining business between himself and other members of the Board. Amongst the matters allocated to the Chairman is the appointment of an Inspector under section 237 to investigate the affairs of a company. This, Mr. Setalvad says" could not be done in the absence of an express provision in the Act. In this connection he has referred us to sub section 4A of section 10E which was subsequently added but not made retrospective by an amendment of the Act which confers an express power on the Central Government to enable the Chairman to distribute the powers and functions of the Board. According to the learned Attorney General this provision was enacted only to make what was implicit in section 10E(5) read with section 642(1) clear and that the distribution of the work of the Board being merely a matter of procedure the order of the Chairman allocating the power under section 237(b) to himself did not amount to sub delegation of the power of the Board. Bearing in mind the fact that the power conferred by section 237(b) is merely administrative it is difficult to appreciate how the allocation of business of the Board relating to the exercise of such power can be anything other than a matter of procedure. Strictly speaking the Chairman to whom the business of the Board is allocated does not become a delegate of the Board at all. He acts in the name of the Board and is no more than its agent But even if he is looked upon as a delegate of the Board and, therefore, a sub delegate vis a vis the Central Government he would be as much subject to the control of the Central Government as the Board itself. For sub section (6) of section 10E provides that the Board shall, in S5SCI 23(a) 330 the exercise of the powers delegated to it, be subject to the control of the Central Government and the order distributing the business was made with the permission of the Central Government. Bearing in mind that the maxim delegatus non potest delegare sets out what is merely a rule of construction, sub delegation can be sustained if permitted by an express provision or by necessary impli cation. Where, as here, what is sub delegated is an administrative power and control over its exercise is retained by the nominee of Parliament, that is, here the Central Government, the power to make a delegation may be inferred. We are, therefore, of the view that the order made by the Chairman on behalf of the Board is not invalid. To sum up, then, our conclusions may be stated thus: The discretion conferred on the Central Government by section 237(b) to order an investigation and delegated by it to the Company Law Board is administrative, that it could be validly exercised by the Chairman of the Board by an order made in pursuance of a rule enacted by the Central Government under section 642(1) read with section 10E(5), that the exercise of the power does not violate any fundamental right of the company, that the opinion to be formed under section 237(b) is subjective and that if the grounds are disclosed by the Board the Court can examine them for considering whether they are relevant. In the case before us they appear to be relevant in the context of the matter mentioned in sub cls. (i) to (iii) of section 237(b). Though the order could successfully be challenged if it were made mala fide, it has not been shown to have been so made. The attack on the order thus fails and the appeal is dismissed with costs. Hidayatullah, J. We are concerned in this appeal with the legality of an order of the Chairman, Company Law Board, May 19, 1965, (purporting to be under section 237(b) of the ) declaring that the affairs of the Barium Chemicals Ltd. be investigated. As a consequence Inspectors have been appointed and searches have been made. The Company and its Managing Director filed a petition under article 226 of the Constitution in the High Court of Punjab seeking to quash the order and on failure there, have filed this appeal by special leave of this Court. The action of the Chairman was and is challenged on diverse grounds but those which were presented before us were few and clear cut. The action is challenged as without jurisdiction because not the Board but the Chairman alone acted, as mala fide because no honest opinion was formed on the matters which under the section give rise to the power but on irrelevant and extraneous material, and further because the order was passed under the influence and malice of a Minister of Cabinet who was interested in another Company belonging to his sons and sought this means to oust a rival. The facts have been stated already in some detail by my brother Shelat and I need not take time in restating them. My 331 order proposed by him but as I view the matter a little differently on some of the aspects of the case, I wish to record my reasons briefly. Under the , a power of superintendence over the affairs of Companies is retained by the Central Government in much the same way as the Board of Trade in England exercise over Companies in that country. This power is of two kinds (a) calling for information or explanation from the Company and (b) ordering an investigation into the affairs of the Company by appointment of Inspectors for inspection, investigation and report. The power is not only varied but is capable of being exercised variously. The power to call for information is conferred on the Regisrar in two different ways. Firstly, jurisdiction is conferred on the Registrar by section 234 to call for information or explanation in relation to any document submitted to him, which information or explanation must be furnished on pain of penalties. If the information or explanation is not furnished or is unsatisfactory the Registrar can report to the Central Government for action. Secondly, if a contributory, creditor 'or other person interested places materials before the Registrar (a) that the business of the Company is being carried on in fraud of its creditors or of persons dealing with the Company or (b) otherwise for a fraudulent or unlawful purpose, the Registrar can, after hearing the Company, call upon it to furnish any information or explanation. A further power is conferred after December 28, 1960, on the Registrar, who may, after being authorised by a Presidency Magistrate or a Magistrate First Class, enter any place, search and seize any document relating to the Company, its managing agents, or Secretaries and treasurers or managing director or manager, if be has reason to believe that it may be destroyed or tampered with. Sections 235 251 provide for investigation of the affairs of a company and for sundry matters related to such investigations. They follow the scheme of sections 164 175 of the English Act of 1948. Section 235 enables the Central Government to appoint inspectors for investigation and report generally if the Registrar reports under section 234 and also if a stated number of shareholders or shareholders possessing a stated voting power apply. When ' members apply they must support their application by evidence and give security for costs of investigation. In the present case no action under any of the sections noted so far was taken but it was taken under section 237. This section is in two parts. The first part which is (a) compels the Central Government to appoint inspectors to investigate and report if the company by a special resolution or the court by order declares that the affairs be investigated. The second part which is (b) gives a discretionary power, As this dis 332 cretionary power was in fact exercised this is a convenient place to read part (b) of section 237. It reads: "237. Without prejudice to its powers under section 235, the Central Government (a) (b) may do so (i.e. appoint one or more competent persons as inspectors to investigate etc.) if, in the opinion of the Central Government, there are circumstances suggesting (i) that the business of the company is being conducted with intent to defraud its creditors, members or any other persons, or otherwise for a fraudulent or unlawful purpose, or in a manner oppressive of any of its members, or that the company was formed for any fraudulent or unlawful purpose; (ii) that persons concerned in the formation of the company or the management of its affairs have in connection therewith been guilty of fraud, misfeasance or other misconduct towards the company or towards any of its members; or (iii) that the members of the company have not been given all the information with respect to its affairs which they might reasonably expect, including information relating to the calculation of the commission payable to a managing or other director, the managing agent, the secretaries and treasurers, or the manager, of the company. By section 237(b) the power is conferred on the Central Government but under the Companies (Amendment) Act, 1963 a Board of Company Law,, Administration consisting of a Chairman and a member has been set up. This Board is constituted under section 10E which has been introduced in the parent Act. The section may be read here: "10E. Constitution of Board of Company Law Administration. (1) As soon as may be after the commencement of the Companies (Amendment) Act, 1963, the Central Government shall, by notification in the Official Gazette, constitute a Board to be called the Board of Company Law Admin istration to exercise and discharge such powers and functions conferred on the Central Government by or under this Act or any other law as may be delegated to it by that Government. 333 (2) The Company Law Board shall consist of such number of members, not exceeding five, as the Central Government deems fit, to be appointed by that Government by notification in the Official Gazette. (3) One of the members shall be appointed by the Central Government to be the chairman of the Company Law Board. (4) No act done by the Company Law Board shall be called in question on the ground only of any defect in the constitution of, or the existence of any vacancy in, the Company Law Board. (5) The procedure of the Company Law Board shall be such as may be prescribed. (6) In the exercise of its powers and discharge of its functions, the Company Law Board shall be subject to the control of the Central Government. The Board was constituted on February 1, 1964 by a notification and by a notification of even, date in exercise of the powers conferred by cl. (a) of sub section (1) of section 637 read with sub section (1) of section 10E of the , the Central Government delegated its powers and functions to the Board under section 237(b) among others. Simultaneously acting in exercise of the powers conferred by sub section (1) of section 642 read with sub section (5) of section 10E the Central Government made the Company Law Board (Procedure) Rules, 1964 and one such rule dealt with distribution of business to the following effect: "3. Distribution of business The Chairman may, with the previous approval of the Central Government, by order in writing, distribute the business of the Board among himself and the other member or members, and specify the cases or classes of cases which shall be considered jointly by the Board. " The Chairman by an order dated February 6, 1964 specified the cases or classes of cases which are to be considered jointly by the Board and distributed the remaining business of the Board between the Chairman and the member each acting individually. The power under section 237 was placed among the powers exercisable by the Chairman singly. That is how action was taken in the name of the Board but by the Chairman and is the subject of challenge for the reason that a power delegated to the Board as a whole cannot be delegated to an individual member in the absence of a provision such as sub section (4A) added recently to section 10E enabling the solidarity of the Board to be broken. Sub section (4A) of section 10E, which has been added by an amending Act of 1965, after the events in this case, reads: "10E. (4A). The Board. with the previous approval of the Central Government, may, by order in writing, 334 authorise the chairman or any of its other members or its principal officer (whether known as secretary or by any other name) to exercise and discharge, subject to such conditions and limitations, if any, as may be specified in the order, such of its powers and functions as it may think fit; and every order made or act done in the exercise of such powers or discharge of such functions shall be deemed to be the order or act, as the case may be, of the Board. " This sub section enables the work of the Board to be distributed among members while sub section (5) merely enables the procedure of the Board to be regulated. These are two very different things. One provides for distribution of work in such a way that each constituent part of the Board properly authorised, becomes the Board. The other provides for the procedure of the Board. What is the Board, is not a question which admits of solution by procedural rules but by the enactment of a substantive provision allowing for a different delegation. Such an enactment has been framed in relation to the Tribunal constituted under section 10B and has now been framed under section 10E also. The new sub section involves a delegation of the powers of the Central Government to a member of the Board which the Act previously allowed to be made to the Board only. The statute, as it was formerly, gave no authority to delegate it differently or to another person or persons. When it spoke of procedure in sub section (5) it spoke of the procedure of the Board as constituted. The lacuna in the Act must have been felt, otherwise there was no need to enact sub section (4A). The argument of the learned Attorney General that sub section (4A) was ?lot needed at all, does not appeal to me. It is quite clear that its absence would give rise to the argument accepted by me, which argument is unanswerable in the absence of a provision such as the new sub section. My brother Shelat has dealt with this aspect of the case fully and I cannot add anything useful to what he has said. I agree with him entirely on this point. I shall now consider the question of mala fides. This arises in two different ways. There is first mala fides attributed to the chairman because he is said to have acted under the behest of a Minister of Cabinet interested in another rival Company. It is not necessary to go into it. The Chairman obtained the opinion of quite a few of his assistants (perhaps more than was altogether necessary) and this fact is stated to establish his fairness to and honest dealing with the Company. There is nothing to show that this was done on purpose to cover up a conspiracy to do harm to the Company. On the other hand I cannot overlook the fact that the rival Company itself had obtained a licence to manufacture Barium Chemicals which it allowed to lapse. This shows that rivalry between two manufacturing concerns was not the prime 335 motive. No doubt the rival Company had tried to obtain the sole selling rights of, and even a share in, this Company. This might have weighed with me but for the fact that the Company itself had done nothing even before action was taken, to establish itself. The whole project had hung fire and capital was eaten into a rapid rate because there were technical defects in the setting up of the plant and machinery. There was not much hope of profits as a sole selling agent or even as a partner. In these circumstances, I cannot go by the allegations made against the Chairman of the Board personally or those made against the Minister, and I find no evidence to hold that dishonesty on the part of the one or malice on the part of the other lies at the root of this action. This brings me to the third and the last question, namely, whether mala fides or the ultra vires nature of the action has been established in this case to merit interference at our hands. In view of my decision on the question of delegation it is hardly necessary to decide this question but since contradictory opinions have been expressed on it by my brethren Mudholkar and Shelat. I must give my views on this matter. The question naturally divides itself into two parts. The first is whether there was any personal bias, oblique motive or ulterior purpose in the act of the chairman. The second is what are the powers of the Board in this behalf and whether they have been exercised contrary to the requirements of the Act. The first ground has already been dealt with in part when I considered the malice and influence of the Minister. It may be said at once, that apart from that allegation, nothing has been said attributing to the Chairman any personal bias, grudge, oblique motive or ulterior purpose. Even in the arguments it was not suggested that the Chairman acted from improper motives. Therefore, all that I have to consider is whether the action of the Chairman can be challenged as done either contrary to the provisions empowering him or beyond those provisions. In dealing with this problem the first point to notice is that the power is discretionary and its exercise depends upon the honest formation of an opinion that an investigation is necessary. The words "in the opinion of the Central Government" indicate that the opinion must be formed by the Central Government and it is of course implicit that the opinion must be an honest opinion. The next requirement is that "there are circumstances suggesting etc. " These words indicate that before the Central Government forms its opinion it must have before it circumstances suggesting certain inferences. These inferences are of many kinds and it will be useful to make a mention of them here in a tabular form: (a) that the business is being conducted with intent to defraud (i) creditors of the company, or (ii) members, 336 or (iii) any other person; (b) that the business is being conducted (i) for a fraudulent purpose or (ii) for an unlawful purpose; (c) that persons who formed the company or manage its affairs have been guilty of (i) fraud or (ii) misfeasance or other misconduct to wards the company or towards any of its members. (d) That information has been withheld from the members about its affairs which might reasonably be expected including calculation of commission payable to (i) managing or other director, (ii) managing agent, (iii) the secretaries and treasurers, (iv) the managers. These grounds limit the jurisdiction of the Central Govern ment. No jurisdiction, outside the section which empowers the initiation of investigation, can be exercised. An action, not based on circumstances suggesting an inference of the enumerated kind will not be valid. In other words, the enumeration of the inferences which may be drawn from the circumstances, postulates the absence of a general discretion to go on a fishing expedition to find evidence. No doubt the formation of opinion is subjective but the existence of circumstances relevant to the inference as the sine qua non for action must be demonstrable. If the action is questioned on the ground that no circumstance leading to an inference of the kind contemplated by the section exists, the action might be exposed to interference unless the existence of the circumstances is made out. As my brother Shelat has put it trenchantly: "It is not reasonable to say that the clause permitted the government to say that it has formed the opinion on circumstances which it thinks exist. . . . Since the existence of "circumstances" is a condition fundamental to the making of an opinion, the existence of the circumstances. if questioned, has to be proved at least prima facie. It is not sufficient to assert that the circumstances exist and give no clue to what they are because the circumstances must be such as to lead to conclusions of certain definiteness. The conclusions must relate to an intent to defraud, a fraudulent or unlawful purpose, fraud or misconduct or the withholding of information of a particular kind. We have to see whether the Chairman in his affidavit has shown the existence of circumstances leading to such tentative 337 conclusions. If he has, his action cannot be questioned because the in reference is to be drawn subjectively and even if this Court would not have drawn a similar inference that fact would be irrelevant. But if the circumstances pointed out are such that no inference of the kind stated in section 237(b) can at all be drawn the action would be ultra vires the Act and void. Now the Chairman in his affidavit referred to two memoranda dated May 30, 1964 and July 4, 1964 presented by certain ex directors and also stated that from September 1961 complaints were being received in regard to the conduct of the affairs of the Company, and one such complaint was received from Special Police Establishment in November 1963. The nature of the complaints was not disclosed but in reference to the memoranda it was stated that "irregularities" and "illegalities" in the conduct of the affairs of the Company was alleged therein. It was also stated that the memoranda "were supported by documentary evidence and details of the impugned transactions and the signatories offered to produce witnesses with knowledge of these transactions". This was followed by an enquiry by the Regional Director of the Board at Madras (Shri R. section Ramamurthi, I.A.S.) who made a report in September 1964. The report was next considered by two Under Secretaries arid by the Secretary of the Company Law board who all agreed "that there was need for a deeper probe into the affairs of the Company". The matter was then placed before the Chairman who formed the opinion that there were circum stances suggesting the need for action under section 237(b). None of the reports was produced. Nor was there any indication in the affidavit what their drift was. There was considerable delay in taking up the matter and this was explained as occasioned by the language riots, and other more pressing occupation. It appears that in the High Court an offer was made to place the reports etc. in the hands of the Court provided they were not shown to the other side, but no such offer was made in this Court. The High Court did not look into the documents. Had the matter rested there it would have been a question whether this Court should interfere with a subjective opinion, when the affidavit showed that there were materials for consideration. It would then have been a question whether this Court could or should go behind the affidavit. I leave that question to be decided in another case where it arises. In this case it is not necessary to decide it because the affidavit goes on to state: ". . . However from the Memoranda received by the Board referred to in paragraph 5 and other examination it appeared inter alia that: (i) there had been delay, bungling and faulty planning of this project, resulting in double expenditure, for which the collaborators had put the responsibility upon the Managing Director, Petitioner No. 2, 338 (ii) Since its floatation the company has been continuously showing losses and nearly 1/3rd of its share capital has been wiped off; (iii) that the shares of the company which to start with were at a premium were being quoted on the Stock Exchange at half their fa ce value; and (iv) some eminent persons who had initially accepted seats on the Board of directors of the company had subsequently severed their connections with it due to differences with Petitioner No. 2 on account of the manner in which the affairs of the company were being conducted. " Paragraph 14 of the affidavit). It may be mentioned that in paragraph 16 of the affidavit the Chairman also stated: "With reference to paragraph 21 of the petition, I have already stated above that there was ample material before the Board on which it could and did form the opinion that there were circumstances suggesting that the business of the company was being conducted with intent to defraud its creditors, members and other persons and further that the persons concerned in the management of the affairs of the company had in connection therewith been guilty of fraud, misfeasance and other misconduct towards the company and its members. " The question thus arises what has the Chairman placed before the Court to indicate that his action was within the four corners of his own powers? Here it must be noticed that members are ordinarily expected to take recourse to the Registrar because there they have to be in a certain number or command a certain proportion of the voting power. They are also required to give evidence and the Company gets an opportunity to explain its actions. If section 237(b) is used by members, as an alternative to section 236, the evidence must unerringly point to the grounds on which alone action can be founded. In my opinion there is nothing to show that the, reports which were being received from September 1961, or the report of the Special Police Establishment indicated fraud. illegality or action or actions with intent to defraud, as contemplated by the section. The affidavit merely says that these reports indicated the need for a deeper probe. This is not sufficient. The material must suggest certain inferences and not the need for "a deeper probe". The former is a definite conclusion the latter a mere fishing expedition. A straight forward affidavit that there were circumstances suggesting any of these inferences was at least necessary. There is no such affidavit and the reason is that the Chairman completely misunderstood his own powers. This is indicated by the enumeration of the four circumstances, I have extracted from his affidavit and I proceed to analyse them. 339 The first circumstance is "delay, bungling and faulty plan ning" resulting in "double expenditure" for which the collaborators had put the responsibility on the second appellant. None of these shows an intent to defraud by which phrase is meant something to induce another to act to his disadvantage. The circumstances mentioned show mismanagement and inefficiency which is not the same thing as fraud or misconduct. The second and the third circumstance merely establish that there was loss in making this project work and that a part of capital had been lost. This was admitted by the appellants who pointed out that after considerable negotiations they induced Lord Poole, the President of the collaborating firm, to invest a further sum of pound 25,000. This shows that the appellants were in a position to dictate to the collaborating company which they would not have been able to do if they were guilty of fraudulent conduct. The last circumstance does not also bear upon the subject of fraud and acts done with intend to defraud. that some directors have resigned does not establish fraud or misconduct. There may be other reasons for the resignation. In the other part of the affidavit the Chairman has merely repeated section 237(b) but has not stated how he came to the conclusion and on what material. In other words, he has not disclosed anything from which it can be said that the inference which he has drawn that the Company was being conducted with intent to defraud its creditors, members and other persons or persons concerned in the management of the affairs of the Company were guilty of fraud, misfeasance and misconduct towards the company and its members was based on circumstances present before him. In fact, paragraph 16 is no more than a mechanical repetition of the words of the section. Coming now to the affidavit of Mr. Dang I find that he merely repeats what was stated in the affidavit of the Chairman. He also said that he had seen the papers and agreed with his two Under Secretaries and the Regional Director that a "deeper probe" was necessary ' There is no hint even in this affidavit that the circumstances were such as to suggest fraud, intent to defraud or misconduct, this is to say, circumstances under which investigation can be ordered. The other affidavits also run the same way and it is not, therefore, necessary to refer to them. We are concerned really with the affidavits of the Chairman and Mr. Dang in relation to the exercise of the power conferred by section 237(b). Neither proves the existence of circumstances under which the power could be exercised. In my opinion, therefore, the action has not been proved to be justified. No doubt, the section confers a discretion but it sets its own limits upon the discretion by stating clearly what must be looked for in the shape of evidence before the drastic act of investigation into the affairs of a company can be taken. The affidavits which were filed in answer to the petition do not disclose 340 even the prima facie existence of these circumstances. On the other hand, they emphasise only that there was mismanagement and losses which necessitated a "deeper probe". In other words, the act of the Chairman was in the nature of, a fishing expedition and not after satisfaction that the affairs of the Company were being carried on even prima facie with the intent to defraud or that the persons incharge were guilty of fraud or other misconduct. As to the constitutionality of section 237(b) I agree with my brethren Bachawat and Shelat and have nothing to add. 1, therefore. agree with my brother Shelat that the appeal must be allowed. There will be no order about costs. Bachawat, J. The order dated May 19, 1965 was passed by the Chairman of the Company Law Board Mr. Setalvad submitted that only the Board could pass an order under section 237, the Central Government could delegate its function under section 237 to the Board but it had no power to authorise the Chairman to sub delegate this function to himself and consequently, the Company Law Board (Procedure) Rules, 1964 made by the Central Government on February 1, 1964 and the Chairman 's order of distribution of business dated February 6, 1964 delegating the function of the Board under section 237 to the Chairman are ultra vires the and the impugned order is invalid. The learned Attorney General disputed these submissions. As a general rule, whatever a person has power to do himself, he may do by means of an agent. This broad rule is limited by the operation of the principle that a delegated authority cannot be redelegate, delegates non protest delegate. The naming of I delegate to, do an act involving a discretion indicates that the delegate was selected because of his peculiar skill and the confidence reposed in him, and there is a presumption that he is required to do the act himself and cannot redelegate his authority. As a general rule, "if the, statute directs that certain acts shall be done in a specified manner or by certain persons, their performance in any other manner than that specified or by any other person than one of those name is impliedly prohibited. " See Crawford on statutory Construction, 1940 Edn., article 195, p. 335: Normally, a discretion entrusted by Parliament to an administrative organ must be exercised by. that organ itself. If a statute entrusts an administrative function involving the exercise of a discretion to a Board consisting of two or more persons it is to be presumed that each member of the Board should exercise his individual judgment on the matter and all, the members of the Board should act together and arrive at a joint decision. Prima facie, the Board must act as a whole and cannot delegate its function to one of its members. The learned Attorney General submitted that a distribution of business among the members of the Company Law Board is not a delegation of its authority, and the maxim has no application in 341 such a case. I cannot accept this submission. In Cook vs Ward(1), the Court held that where a drainage board constituted by an Act of Parliament was authorised by it to delegate its powers to a committee, the powers so delegated to the committee must be exercised by them acting in concert and it was not competent to them to apportion those powers amongst themselves and one of them acting, alone, pursuant to such apportionment, could not justify his acts under the statute. Lord Coleridge, C. J. said at p. 262: "It was not competent to them to delegate powers, which required the united action of the three, to be exercised according to the unaided judgment of one of them." Again, in Vine vs National Dock Labour Board(1), the House of Lords, held that a local board set up, under the scheme embodied in the schedule to the Dock Workers (Regulation of Employment) Order, 1947 had no power to assign its disciplinary function under cls. 15(4) and 16(2) of the scheme to a committee and the purported dismissal of a worker by the committee was a nullity. In my opinion, the distribution of the business of the Board among its members is a delegation of its authority. But the maxim "delegatus non potest delegare" must not be pushed too far. The maxim does not embody a rule of law. It indicates a rule of construction of a statute or other instrument conferring an authority. Prima facie, a discretion conferred by a statute, on any authority is intended to be exercised by that authority, and. by no other. But the intention may be negatived by any contrary indications in the language, scope or object of the statute. The construction that would best achieve the purpose and object of the statute should be adopted. Under sections 10E(1) and 637(1)(a), the Central Government has power to constitute a Company, Law Board and to delegate its functions to the Board. The Board can consist of such number of persons not exceeding five as the Government thinks fit. One of the members of the Board has to be appointed a Chairman and this necessarily implies that the Board shall consist of at least two members. As a matter of fact, the Government constituted a Board consisting of two members and appointed one of them as Chairman. To this Board the Government delegated its function under section 237. Section 637 shows that the function under section 237 can be delegated to the Board and to no other authority. The function under section 237(b) involves the exercise of a discretion. Prima facie, all the members of the Board acting together were required to discharge this function and they could not delegate their duty to the Chairman. However, under sections 10E(5) and 642(1), the Central Government may frame rules regulating the procedure of the Board and generally to carry out the purposes of the Act. In the context of section 10E, I am inclined to construe this rule making power liberally The Central Government has power to constitute the Company Law Board, to delegate its functions to the Board and to control (1) (2) 342 the Board in the exercise of its delegated functions. In this background, by conferring on the Central Government the additional power of framing rules regulating the procedure of the Board and generally to carry out the purposes of section 10E, the Parliament must have intended that the internal Organisation of the Board and the mode and manner of transacting its business should be regulated entirely by rules framed by the Government. The Government had, therefore, power to frame the Company Law Board (Procedure) Rules, 1964 authorising the Chairman to distribute the business of the Board. In the exercise of the power conferred by this rule, the Chairman assigned the business under section 237 to himself. The Chairman alone could, therefore, pass the impugned order. Act No. 31 of 1965 has now inserted sub section (4A) in section 10E authorising the Board to delegate its powers and functions to its Chairman or other members or principal officer. The power under sub section (4A) may be exercised by the Board independently of any rules framed by the Central Government. We find, however, that the Central Government had under sections 10E(5) and 642(1) ample power to frame rules authorising the Chairman to distribute the business of the Board. The wide ambit of this rule making power is not cut down by the subsequent insertion of sub section (4A) in section 10E. Sections 235, 237(a) and 237(b) enable the Central Govern ment to make an order appointing an inspector to investigate the affairs of a company in different sets of circumstances, and the contention that section 237(b) is discriminatory and is violative of article 14 must fail. I also think that section 237(b) is not violative of articles 19(1)(f) and 19(1)(g) of the Constitution. The company is not a citizen and has no fundamental right under article 19. Appellant No. 2 who is the managing director of the company is not a citizen, but even assuming that section 237(b) imposes restrictions on his right of property or his right to carry on his occupation as managing director, those restrictions are reasonable and are imposed in the interests of the general public. On the question of mala fides, I am inclined to think that the Chairman passed the order dated May 19, 1965 independently of and without any pressure from the Minister. I am all the more persuaded to come to this conclusion having regard to the fact that in paragraph 14 of his affidavit the Chairman has disclosed the circumstances which he took into account in passing the order. In paragraphs 5, 8 and 16 of his affidavit, the Chairman stated that he had various materials on the basis of which he passed the order. But, on reading this affidavit as a whole and the affidavit of Mr. Dang, I am satisfied that in paragraph 14 of his affidavit the Chairman has set out all the material circumstances which bad emerged on an examination of the various materials before him. Briefly put, those circumstances are delay, bungling and faulty planning by the management resulting in double expenditure, huge losses, sharp fall in the price of the Company 's shares and the resignation of some of the directors on account of differences in opinion with 343 the managing director. I think that these circumstances, without more, cannot reasonably suggest that the business of the company was being conducted to defraud the creditors, members and other persons or that the management was guilty of fraud towards the company and its members. No reasonable person who had given proper consideration to these circumstances could have formed the opinion that they suggested any fraud as mentioned in the order dated May 19, 1965. Had the Chairman applied his mind to the relevant facts, he could not have formed this opinion. I am, there fore, inclined to think that he formed the opinion without applying his mind to the facts. An opinion so formed by him is in excess of his powers and cannot support an order under section 237(b). The appeal is allowed, and the impugned order is set aside. I concur in the order which Shelat, J. proposes to pass. Shelat J. The appellant company is a public limited company registered on July 28, 1961 having its registered office at Ramavaram in Andhra Pradesh and the second appellant was at all material times and is still its managing director. On August 25, 1959 and September 23, 1960 appellant No. 2 obtained two licences for the manufacture of 2500 and 1900 tonnes of barium chemicals per year in the name of Transworld Traders of which lie was the proprietor. He then started negotiations with Kali Cliemle of Hannover, West Germany to collaborate with him in setting up a plant. While he was so negotiating, M/s., ,T. T. Krishnamachari & Co., who were the sole selling agents of the said German Company, approached the 2nd appellant for the sole selling agency of barium products of the plant proposed to be put up by the 2nd appellant. The 2nd appellant did not agree. On December 5, 1960 M/s. T. T. K. & Co., applied for a licence for manufacture of barium chemicals. On December 23, 1960 the 2nd appellant wrote a letter to the Minister of Commerce and Industry objecting to the grant of a licence to M/s. T. T. K. & Co. Both were considered by the Licensing Committee. The Committee rejected the application of M/s. T. T. K. & Co., but advised them to apply again after six months. On a representation by M / section T. T. K. &.Co., the Committee reconsidered the matter and recommended the grant of licence to M/s. T. T. K. Chemicals Private Limited. The second appellant once more protested, this time to the Prime Minister but that was rejected. On July 28, 1961. an agreement between the appellant company and L.A. Mitchell Ltd., of Manchester was signed where under the latter agreed to put up the plant on the appellant company agreeing to pay them pound 184,500. On November 27, 1961, the Government granted a licence to the company for the import of machinery. , In the mean time, respondent No. 2 was appointed a, Minister without portfolio and rejoined the Cabinet which lie had left ' earlier owing to certain circumstances which are not relevant for the present. From January, 1962 to March, 1963, he continued as a L/S5SCI 24 344 Minister without portfolio but from March, 1963 to September, 1963, he became the Minister for Defence and Economic Co ordination and thereafter the Finance Minister. On August 30, 1962, the licence granted to M / section T. T. K. Chemicals Ltd. was revoked as the company had decided to surrender it. It would seem that the appellant company was not faring as well as was hoped and though it had been incorporated as early as July, 1961 production had not commenced. There arose also disputes among its directors. On May 30, 1964 and July 9, 1964 four of its directors submitted two memoranda alleging irregularities and even illegalities in the conduct of the company 's affairs to the Company Law Board. According to the second appellant, the four directors were disgruntled directors, hostile to him and the Company. The company was not able to start work in full capacity not because of any irregularities but because of the faulty planning and designing by the collaborators. The company realised this fact only in June, 1964 when it received a survey report after the breakdown of the plant during that month from M/s. Humphreys and Glascow (Overseas) Ltd., Bombay. In September, 1964, a meeting was affanged in London between the company 's representatives and the representatives of L.A. Mitchell Ltd., of which Lord Poole was the Chairman. It was agreed that L. A. Mitchell Ltd., should depute M/s. Humphreys and Glascow Ltd., London,to go through the designs etc., and to make a report showing the causes of the repeated failures of the plant and suggesting remedies there for. Lord Poole also agreed that the factory would be commissioned without any further delay and that L.A. Mitchell Ltd., would carry out the necessary repairs at their cost. While these negotiations were going on, representatives of M/s. Kali Chemie of Hannover arrived in India to negotiate a collaboration agreement with the company. On April 4, 1965, a meeting of the company 's directors was held in New Delhi which was attended by one Kriegstein, a representative of Kali Chemie and also by the General Manager of M/s. T. T. K. & Co. Certain proposals were discussed and it was decided that the company should give notice to L. A. Mitchell Ltd. canceling the agreement with them. Accordingly, by a notice dated April 2. 1965 the agreement with the said L. A. Mitchell Ltd., was cancelled. On May 7, 1965 representatives of the appellant company and of Kali Chemie met at Stuttgart when proposals for an agreement were discussed. One of these proposals was that the company should be reorganised and its share capital should be distributed in the following proportions: 49 per cent to the appellant company, 26 per cent to Kali Chemie and 25 per cent to M/s. T. T. K. & Co. It was also proposed that Kali Chemie should take over the responsibility on the production side, the appellant company would be responsible for the management and M/s. T.T.K. & Co. should take over sales promotion. Before however these negotiations could take concrete shape, Lord Poole came over to India. A meet ing was held on May 10, 1965 between him and the directors of the 345 appellant company. Lord Poole agreed that the British company would put in pound 250,000 in addition to the amount already invested by it and that production would commence from June, 1965. On May It 1965 another meeting took place when it was decided that without prejudice to what was stated in the notice of April 4, 1965, the appellant company should withdraw para 9 thereof whereby the agreement between them was terminated. By May 11, 1965, the position therefore was that the collaboration agreement between the company and L. A. Mitchell Ltd. was agreed to be continued and consequently the negotiations with the German company and M/s. T. T. K. & Co., were not to proceed further. On May 19 1965 the first respondent passed the impugned order which inter alia stated: "In the opinion of the Company Law Board there are circumstances suggesting that the business of M/s Barium Chemicals Ltd is being conducted with intent to defraud its creditors, members and other persons; and further that the persons concerned in the management of the affairs of the company have in connection therewith been guilty of fraud, misfeasance and other misconduct towards the company and its members.

The Company Law Board was constituted under Section 10E of the , and the Central Government delegated some of its powers under the Act, including those under Section 237, to the Board. The Government also framed rules under Section 642(1) read with Section 10E(5) called the Company Law Board (Procedure) Rules 1964, Rule 3 of which empowered the Chairman of the Board to distribute the business of the Board among himself and other member or members and to specify the cases or classes of cases which were to be considered jointly by the Board. On February 6, 1954, under the power vested in him by Rule 3 the Chairman passed an order specifying the cases that had to be considered jointly by himself and the only other member of the Board and distributing the remaining business between himself and the member. Under this order the business of ordering investigations under Sections 235 and 237 was allotted to himself to be performed by him singly. On May 19, 1965 an order was issued on behalf of the Company Law Board under Section 237(b) of the . appointing four inspectors to investigate the affairs of the appellant company, on the ground that the Board was of the opinion that there were circumstances suggesting that the business of the appellant company was being conducted with intent to defraud its creditors, members or any other persons and that the persons concerned in the management of the affairs of the company had in connection therewith been guilty of fraud, misfeasence and other misconduct towards the company and its members. Soon afterwards the appellants filed a petition under article 226 of the Constitution for the issue of a writ quashing the order of the Board on the grounds, inter alia, that the order had been issued mala fide that there was no material on which such an order could have been made, etc. One of the affidavits filed in reply to the petition was by the ,Chairman of the Company Law Board, in which it was contended, inter alia, that there was material on the basis of which the impugned order was issued and he had himself examined this material and formed the necessary opinion within the meaning of sec. 237(b) before the issue of the order; and that it was not competent for the court to go into the question of the adequacy or otherwise of such material. In the course of replying to some of the allegations in the petition it was stated in paragraph 14 of the affidavit, however, that from memoranda received from some ex directors of the company and other examination it appeared, inter alia, that there had been delay, bungling and faulty planning of the company 's main project ,resulting in double expenditure; that the company had incurred huge losses; there had been a sharp fall in the price of the company 's SCI 22 312 shares; and some eminent persons had resigned from the Board of Directors of the company because of differences with the Managing Director on account of the manner in which the affairs of the company were being conducted. The appellant 's petition was dismissed by the High Court. In the appeal to this Court it was contended on behalf of the appellants: (1) That the order was made made fide on account of the competing interests of a firm in which the Minister in charge of the department was interested and also because of his personal hostility against the second petitioner who was the managing director of the company; that the High Court had erred in deciding the petition on the footing that the first respondent Board was an independent authority and that it was its Chairman who on his own had formed the requisite opinion and passed the order and therefore the motive or the evil eye of the Minister was irrelevant; the High Court also erred in failing to appreciate that even though the impugned order was by the Chairman, as under section 10E(6) it had to receive and in fact received the Minister 's agreement, if the Minister 's mala fides were established, that would vitiate the order; furthermore, in the circumstances of the case. the High Court ought to have allowed the appellants an opportunity to establish their case of mala fide by the cross examination of the Minister and the Chairman, both of whom had filed affidavits. (2) That clause (b) of Section 237 required two things: (i) the requisite opinion of the Central Government, in the present case, of the Board, and (ii) the existence of circumstances suggesting that the company 's business was being conducted as laid down in sub clause (i) or that the persons mentioned in sub clause (ii) were guilty of fraud, misfeasance or misconduct towards the company or any of its members; though the opinion to be formed is subjective, the existence of circumstances set out in cl. (b) is a condition precedent to the formation of such opinion and therefore even if the impugned order were to contain a recital of the existence of those circumstances, the court can go behind that recital and determine whether they did in fact exist, that even taking the circumstances said to have been found by the respondent Board, they were extraneous to see. 237(b) and could not constitute a basis for the impugned order. (3) That the impugned order was in fact made on the basis of allegations contained in memoranda submitted by four ex directors of the company who continued to be shareholders; and by ordering an investigation under section 237(b) the respondent Board had in effect enabled these shareholders to circumvent the provisions of section 235 and section 236. On this ground also the impugned order was therefore made mala fide or was otherwise invalid. (4) That the impugned order was in any case bad as it was passed by the Chairman of the Respondent Board alone acting under rules under which such a power was conferred in contravention of the provisions of Section 10E. The power under section 237 was delegated by the Central Government to the Board as a whole and could not in turn be sub delegated to the Chairman alone in the absence of a provision such as sub sec. (4A) added to sec. 10E after the impugned order was issued, and which now enabled the solidarity of the Board to be broken. Such sub delegation could not be done in accordance with rules made under section 10E(5) which merely enabled the procedure of the Board to be regulated. 313 (5) That the impugned order was bad because Section 237(b) itself was bad as offending against articles 14 and 19 of the Constitution. HELD: (By Hidayatullah. Bachawat and Shelat, JJ., Sarkar C.J. and Mudholkar J. dissenting): The impugned order must be set aside. (1) (By the Court): The respondents had failed to show that the impugned order was passed mala fide. L330 E; 335 B C; F G]. (Per Sarkar C.J. and Mudholkar J.3: The decision to order the investigation was taken by the Chairman of the respondent Board and there was nothing to indicate that in arriving at that decision he was influenced by the Minister. If the decision arrived at by the Chairman was an independent one, it could not be said to have been rendered mala fide because it was later approved by the Minister. [320 D]. In a proceeding under article 226 of the Constitution, the normal rule is, as pointed out by this Court in The State of Bombay vs Purshottam Jog Naik ; , to decide disputed questions on the basis of affidavits and that it is within the discretion of the High Court whether to allow a person who has sworn an affidavit before it to be cross examined or not. The High Court having refused permission for the cross examination, it would not be appropriate for this Court, while hearing an appeal. by special leave, to interfere lightly with the exercise of its discretion. [320 G H; 321 A]. (Per Shelat J.): The allegations of mala fides in the petition were not grounded on any knowledge but only on "reasons to believe". Even for their reasons to believe, the appellants had not disclosed any information on which they were founded. No particulars of the main allegations were given. Although in a case of this kind it would be difficult for a petitioner to have personal knowledge in regard to an averment of mala fides, where such knowledge is wanting, he must disclose his source of information so that the other side gets a fair chance to verify it and make an effective answer. In the absence of tangible materials, the only answer which the respondents could array against the allegations as to mala fides would be one of general denial. [352 D H]. In a petition under article 226, there is undoubtedly ample power in the High Court to order attendance of a deponent in court for being cross examined. Where it is not possible for the court to arrive at a definite conclusion on account of there being affidavits on either side containing allegations and counter allegations, it would not only be desirable but in the interest of justice the duty also of the court to summon a deponent for cross examination in order to arrive at the truth. However, the High Court was rightly of the view that in the present case even if the two deponents were to be called for cross examination, they could in the absence of particulars of allegations of mala fides and the other circumstances of the case, only repeat their denials in the affidavits of the allegations in the petition and therefore such cross examination would not take the court any further than the affidavits. [353 D H]. (2) (Per Hidayatullah, Bachawat and Shelat JJ. Sarkar, C. J. and Mudholkar J. dissenting,):The circumstances disclosed in paragraph 14 of the affidavit must be regarded as the only materials on the basis of which the respondent Board formed the opinion before ordering an investigation under Section 237(b). These circumstances could not reasonably suggest that the business of the company was being conducted to defraud the creditors, members or other L/S5SCI 22(a) 314 persons or that the management was guilty of fraud towards the company and its members; they were therefore, extraneous to the matters mentioned in section 237(b) and the impugned order was ultra vires the Section. [339 A D, G H; 340 A; 342 G H; 343 AC; 365 D E; 367 A C]. (Per Hidayatullah J.): The power under Section 237(b) in a discretionary power and the first requirement for its exercise is the 'honest formation of an opinion that an investigation is necessary. ,The next requirement is that "there are circumstances suggesting" the inferences stout in the Section. An action, not based on circumstances suggesting an inference of the enumerated kind will not be valid. No doubt the formation of opinion is subjective but the existence of circumstances relevant to the inference as the sine qua non for action must be demonstrable. If their existence is questioned, it has to be proved at least prima facie. It is not sufficient to assert, that the circumstances exist and give no clue to what they are, because the circumstances must be such as to lead to conclusions of certain definiteness. The conclusions must relate to an intent to defraud, a :fraudulent or unlawful purpose, fraud or misconduct or the withholding of information of a particular kind. [335 F H; 336 G H] An examination of the affidavit filed by the Chairman of the respondent Board showed that the material examined by the Chairman merely indicated the need for a deeper probe. This was not sufficient. The material must suggest certain inferences and not the need for "a deeper probe". The former is a definite conclusion the 'latter a mere fishing expedition. [338 E H]. (Per Shelat J.): Althouugh the formation of opinion by cen tral Government is a purely subjective process and such an opinion cannot be challenged in a court on the ground of propriety, reasonableness or sufficiency, the Authority concerned is nevertheless required to arrive at such an opinion from circumstances suggesting what is set out in sub clauses (i), (ii) or (iii) of section 237 (b). The expres sion "circumstances suggesting" cannot support the construction that even the existence of circumstances is a matter of subjective opinion. It is hard to contemplate that the legislature could have left to the subjective process both the formation of opinion and also the existence of circumstances on which it is to be founded. It is also not reasonable to say that the clause permitted the Authority to say that it has formed the opinion on 'circumstances which in its opinion exist and which in its opinion suggest an intent to defraud or a fraudulent or unlawful purpose. If it is shown that the circumstances do not exist or that they are such that it is impossible for any one to form an opinion therefrom suggestive of the matters enumerated in section 237 (b) the opinion is challengeable on the ground 'of non application of mind or perversity or on the ground that it was formed on collateral grounds and was beyond the scope of the statute. [362 H; 363 A G]. (Per Sarkar C.J., and Mudholkar J. dissenting): An examina tion of section 237 would show that cl. (b) thereof confers a discretion upon the 'Board to appoint an Inspector to investigate the affairs of a company. The words "in the opinion of" govern the word "there are circumstances suggesting" and not the words "may do so". The words 'circumstances ' and 'suggesting ' cannot be dissociated without making it impossible for the Board to form an 'opinion ' at all. The formation of an opinion must, 'therefore, be as to whether there are circumstances suggesting the existence of one or more of 'the matters in sub cls. (i) to (iii) and not about anything else. The opinion must of course not have been arrived at mala fide. To say that the, opinion to be formed must be as to the necessity 315 of making an investigation would be making a clear departure from the language in which section 237(b) is couched. It is only after the formation of certain opinion by the Board that the stage for exercising the discretion conferred by the provision is reached. The discretion conferred to order an investigation is administrative and not judicial since its exercise one way or the other does not affect the rights of a company nor does it lead to any serious consequences as, for instance, hampering the business of the company. As has been pointed out by this Court in Raja Narayanalal Bansilal vs Maneck Phiroz Mistry and Anr. , the investigation undertaken under this provision is for ascertaining facts and is thus merely exploratory. The scope for judicial review of the action of the Board must, therefore be strictly limited. If it can be shown that the Board had in fact not formed an opinion its order could be successfully challenged. There is a difference between not forming an opinion at all and forming an opinion upon grounds, which, if a court could go into that question at all, could be regarded as inapt or insufficient or irrelevant. The circumstances set out in paragraph 14 of the affidavit of the Chairman of the respondent Board were nothing more than certain conclusions drawn by the Board from some of the material which it had before it. Moreover, the expression "inter alia" used by the Chairman would show that the conclusions set out by him specifically were not the only ones which could be drawn from the material before the Board. It would not therefore be right to construe the affidavit to mean that the only conclusions emerging from the material before the Board were those set out in paragraph 14. [352 A E]. (3) (Per Sarkar C. J. and Mudholkar J.): As it could not be said that the investigation had been ordered either at the instance of 4 ex directors of the company or on the sole basis of the memoranda submitted by them, there was no contravention of the provisions of Sections 235 and 236 of the Act. [328 C, E]. (4) (Per Sarkar C. J., Mudholkar and Bachawat JJ. , Hidayatullah and Shelat JJ., dissenting): Rule 3 of the Company Law Board (Procedure) Rules, 1964, and the order dated April 6, 1964 made pursuant thereto distributing the business of the Board, were both valid. The impugned order was not therefore invalid because it was made by the Chairman alone and not by the Board. [330 C. D; 342 B C]. (Per Sarkar C.J. and Mudholkar J.): Bearing in mind the fact that the power conferred by Section 237(b) is merely administrative, the allocation of the business of the Board relating to the exercise of such power must be regarded as a matter of procedure. Strictly speaking the Chairman to whom the business of the Board is allocated does not become a delegate of the Board at all. He acts in the name of the Board and is no more than its agent. But even if he is looked upon as a delegate of the Board and, therefore, sub delegate vis avis the Central Government, he would be as much subject to the control of the Central Government as the Board itself, for sub section (6) of section 10E provides that the Board shall, in the exercise of the powers delegated to it, be subject to the control of the Central Government and the order distributing the business was made with permission of the Central Government. Bearing in mind that the maxim delegates non protest delegable sets out what is merely a rule of construction, subdelegation can be sustained if permitted by an express provision or by necessary implication. Where, as here, what is sub delegated is an administrative power and control over its exercise is retained by the nominee of Parliament, that is, here the Central Government, the power to make a delegation may be inferred, [329 F H; 330 A C]. 316 (Per Bachwat J.): The function under section 237(b) involves the exercise of a discretion. Prima facie all the members of the Board acting together were required to discharge this function and they could not delegate their duty to the Chairman. However, under sections 10E(5) and 642(1), the Central Government may frame rules regulating the procedure of the Board and generally to carry out the purpose of the Act. In the context of section 10E, the rule making power should be construed liberally. The Central Government has power to constitute the Company Law Board, to delegate its function to the Board and to control the Board in the exercise of its delegated functions. In this background, by conferring on the Central Government the additional power of framing rules regulating the procedure of the Board and generally to carry out the purposes of section 10E Parliament must have intended that the internal Organisation of the Board and the mode and manner of transacting its business should be regulated entirely by rules framed by the Government. The Government had, therefore, power to frame the Company Law Board (Procedure) Rules. 1964 authorising the Chairman to distribute the business of the Board. In the exercise of the power conferred by this rule, the Chairman assioned the business under section 237 to himself. The Chairman alone could, therefore, pass the impugned order. [341 F H; 342 A C]. (Per Hidayatullah J.): The new sub section 4A of Section 10E, which was not there when the impugned order was made. enables the work of the Board to be distributed among members, while sub section (5) merely enables the procedure of the Board to be regulated. These are two very different things. One provides for distribution of work in such a way that each constituent part of the Board, properly autho rised. becomes the Board. The other provides for the procedure of the Board. What is the Board is not a question which admits of solution by procedural rules but by the enactment of a substantive provision allowing for a different delegation. Such an enactment has been framed in relation to the Tribunal constituted under section 10B and has now been framed under section 10E also. The new sub section involves a delegation of the powers of the Central Government to a member of the Board which the Act previously allowed to be made to the Board only. The statute, as it was formerly, gave no authority to delegate if differently or to another person or persons. When it spoke of procedure in sub section (5) it spoke of the procedure of the Board As constitlited. The lacuna in the Act must have felt; otherwise there was no need to enact sub section (4A), [334 B E]. (Per Shelat T.): The statute having permitted the delegation of powers to the Board only as the statutory Authority the powers so delegated have to be exercised by the Board and not by its components. To authorise its Chairman to hand over those functions and powers to the. Board only as the statutory Authority, the powers so by the Act. The effect of r. 3 and the order of distribution of work made in pursuance thereof was not laying down a procedure but au thorising and, making a sub delegation in favour of the members. The only procedure which the Government could prescribe was the procedure in relation to Board the manner in which it should discharge and exercise the functions and Powers delegated to it, but it could not make a provision which under the cloak of procedure authorised sub delegation. [369 F H; 370 A, B]. (5) (By the Court): The provisions of Section 237(b) were not violative of Articles 14 and 19 of the Constitution. [328 F G; 342 D F; 371 H]. Sections 234, 235, 236 and 237(b) gave power to different authorities i.e. the Registrar and the Government, provided powers which 317 are different in extent and nature, exercisable in sets of circumstances and in a manner different from one another. Therefore, there is no question of discriminatory power having been vested in the Government under these Sections to pick and choose between (one company and the other. [370 G, H]. When investigation is ordered, there would be inconvenience in the carrying on of the business of the company. It might also perhaps shake the credit of a company. But an investigation directed under section 237(b) is essentially of an exploratory character and it is not as if any restriction is placed on the right of the concerned company to carry on its business and no restrictions are imposed on those who carry on the company 's affairs. Even if it is regarded as a restriction, it is not possible to say that it is not protected as a reasonable restriction under Clause 6 of article 19(1). [371 B D]. Case law referred to.

il Appeal Nos. 931 and 1149 of 1965. Appeals from the judgment and decree dated July 31, 1964 of the Calcutta High Court in Appeal from Original Decree No. 613 of 1962. N. C. Chatterjee, Janaradan Sharma, K. B. Rohtagi and section Balakrishnan, for the appellant (in C.A. No. 931 of 1965) and the respondent (in C. A. No. 1149 of 1965). D.N. Mukherjee, for the respondent (in C.A. No. 931 of 1965) and the appellant (in C.A. No. 1149 of 1965). The Judgment of the Court was delivered by Sarkar, C.J. These appeals arise out of an election to a seat in the West Bengal Legislative Assembly from the Khargram Murshidabad constitutency reserved for members of the Scheduled Castes. The contestants at this election were Abhoy Pada Saha and Sudhir Kumar Mondal. Sudhir is admittedly a member of a Scheduled Caste. Abhoy Pada described himself in the nomination paper as "a member of the Sunri caste which is a Scheduled Caste". Sudhir objected to this nomination contending that Abhoy Pada did not belong to any Scheduled Caste. The objection was rejected by the Returning Officer. At the election which 388 ensued, Abhoy Pada secured 16,730 votes and Sudhir, 15,523 and the former was consequently declared elected. Sudhir then filed a petition challenging the validity of Abhoy Pada 's election on various grounds. At the hearing of the petition by the Election Tribunal, however, he challenged the election only on the ground that Abhoy Pada was a member of the Saha caste and not a member of a Scheduled Caste. The Election Tribunal rejected this contention and dismissed the petition. Sudhir then appealed to the High Court at Calcutta which reversed the decision of the Tribunal and declared the election of Abhoy Pada invalid and set it aside on the ground that he did not belong to a Scheduled Caste. In his petition Sudhir had further claimed that he should be declared elected in the place of the appellant if the latter 's election was found to be invalid. This prayer, however, was rejected by the High Court. These two appeals are from the judgment of the High Court. Appeal No. 931 of 1965 is by Abhoy Pada. He challenges the validity of the order of the High Court setting aside his election. Appeal No. 1149 of 1965 is by Sudhir and he challenges the validity of the order of the High Court rejecting his prayer to be declared elected. We shall first deal with Appeal No. 931 of 1965 filed by Abhoy Pada and shall hereafter refer to him as the appellant and Sudhir as the respondent. article 332 of the Constitution provides that seats shall be reserved for the Scheduled Castes in the Legislative Assembly of every State. article 341 gives power to the President to specify by public notification the castes or parts of or groups within castes which shall for the purpose of the Constitution be deemed to be Scheduled Castes. The President, on August 10, 1950, passed the Constitution (Scheduled Castes) Order, 1950 under article 341 setting out in its schedule the various castes which were declared Sche duled Castes. This Order was amended from time to time by statutes passed by Parliament and it is agreed that at the relevant time Item 40 of Part 13 of the schedule to the Order which set out which were Scheduled Castes in West Bengal stood as follows: "Sunri excluding Saha". Item 40 and some other items of the schedule were made applicable to the State of West Bengal except the Purulia District and the territories transferred from Purnea District of Bihar and it is with this item that we are concerned. The question is, whether the appellant was a member of the Scheduled Caste specified in this item. In the election petition, the respondent had stated that the appellant, was a member of the Saha caste and not a member of any Schedule Caste. It was said that this showed that the respondent 's case was that the appellant belonged to an independent caste which had nothing to do with Sunri caste and that it was, therefore, not c open to him at the trial to contend, as he appears to have done. 389 that the appellant was a Sunri by caste but was excluded from the Scheduled Caste group because he belonged to a smaller caste group of Sunirs known as Sahas. We are unable to take this strict view of the pleading. The petition may, in our opinion, be reasonably read as stating that the appellant was a member of the Saha caste, a smaller caste group within the bigger caste group of Sunirs and was for that reason not a member of the Scheduled Caste specified in item 40. We also observe that this reading of the petition which was accepted by the Election Tribunal, did not cause any surprise to the appellant at the trial or result in any injustice. The High Court also read the petition in the same way. In our view, it was open to the respondent to show that the appellant belonged to the Saha caste group within the Sunri caste group and did not, therefore, belong to the Schedule Caste specified in item 40 as he claimed. The Tribunal rejected the respondent 's case that the Sunri caste was divided into certain groups of which the Sahas formed one. It came to the conclusion that the Sahas originally belonged to the Sunri caste but for a long time past they had formed themselves into a different caste which had no connection with the Sunris. It is not very clear whether the Tribunal thought that the Sahas were originally a smaller caste group within the Sunri caste group or were only distinguished from the other Sunris by their surname. We are, however, inclined to think that the Tribunal thought that the Sahas were originally a smaller caste group within the Sunri caste because it rejected a contention advanced by the respondent that item 40 excluded from Sunirs those who bore the surname Saha observing that the names given in the schedule to the Order all referred to castes, subcaliber or groups. It found that the evidence clearly established that the appellant belonged to the Sunri caste a fact which appears to have been admitted by the respondent and, therefore, did not belong to the independent caste which according to the Tribunal, the Sahas have formed for a long time past. In that view of the matter, the Tribunal held the appellant to be a Sunri and a person belonging to the Schedule Caste specified in item 40 and, therefore, dismissed the election petition. It took the view that item 40 had excluded Sahas from Sunirs by way of abundant caution, so that the Sahas who had originally belonged to the Sunri caste but had long 'ago severed all connections with it and developed into a distinct and independent caste, might not claim, by virtue of their origin, to belong to the Sunri caste stated in the item. In the High Court P. N. Mookerjee, J. observed that the Tribunal had gone wrong in considering the Sahas as an independent caste. He said that the expression "excluding" denoted that the Sahas contemplated would, but for this word, have come within the Sunri caste. He held that the Sahas formed "a group within the Sunri caste be it a sub caste strictly so called or other 390 wise". He also held that the evidence did not establish that the Sahas formed a sub caste strictly so called within the Sunri caste of a caste wholly independent of the Sunri caste. His conclusion was that the expression "excluding Saba" referred to those Sunris who bore the surname Saha irrespective of whether they belonged to a sub caste strictly so called, of Sunris or not. The learned Judge, therefore, held that as the appellant bore the surname Saha, he did not belong to the Scheduled Caste specified in item 40 though he was a Sunri. The other learned Judge, Basu, J. held that the words "parts or groups within castes" in article 341 were wide enough to refer to any determinate part of a caste distinguished by a surname or otherwise and it was not necessary that such part must necessarily form a sub caste. He also held that the evidence broadly supported "the conclusion that the respondent 's family belongs to the Saba sub caste or group within the Sunri caste". The learned Judge however, appears to have set aside the decision of the Tribunal and directed the election of the appellant to be set aside on the ground that the appellant bore the surname Saha and was thereby excluded from the Scheduled Caste specified in item 40 for he said "these Saha families, within the fold of Sunri caste, distinguished themselves by their surname, whatever might be their other characteristics" and have come to form a class apart from the rest of the Sunris. Now, the point in issue is, whether the appellant satisfied the description "Sunri excluding Saha" in item 40 of the President 's Order. To decide that point, the description has first to be properly interpreted and understood. As we have said, the Tribunal thought that the Sahas formed a distinct caste wholly outside the Sunri caste and they had been specifically excluded in item 40 for greater safety o prevent them from claiming to be Sunris by reason of their origin. The learned Judges of the High Court thought that the effect of the item was to exclude from the Sunri caste those who belonged to that caste but bore the surname Saha. We are unable to agree with either of these interpretations. There is no doubt that Sunri is a caste. Nobody disputes that. That also follows from the fact that the Constitution (Scheduled Castes) Order, 1950 was promulgated to indicate those castes who are to be considered as Scheduled Castes for the purpose of the Constitution. "Sunri" in item 40, therefore. refers to a caste. If Sunri is a caste, the word 'Saha ' in the expression "excluding Saha" in the item must, without more. also refer to a caste group within the Sunri caste. It is legitimate to think that when a statute says that a thing is to be excluded from another, both things are of the same kind; if one is a caste. the other must be a caste. It follows that when the item excluded Sahas from Sunris, since Sunri is a caste group, Saha must equally be another caste group. The Tribunal appears to have taken the same view. Now a thing can be 391 excluded from another only if it was otherwise within it. Therefore, the correct interpretation of the item is that it indicates men of the Sunri caste but not those within that caste who formed the smaller caste group of Sahas. This is where the Tribunal went wrong. The Tribunal came to its conclusion that "Saha" in the item referred to a caste distinct from the Sunri caste because the evidence before it did not show that there was within the Sunri caste, a smaller caste group called Sahas. The error of the Tribunal lay in interpreting the Order in the light of the evidence before it. There was no justification for doing that. After all, the evidence led in a case may be imperfect. Suppose the evidence in another case led to the conclusion, as it might conceivably do, that there was a smaller caste group within the Sunri caste, called Sahas. In that case, if the reasoning applied by the Tribunal is right, it has to be held that the expression "excluding Saha" meant excluding a smaller caste group called Sahas. A method of interpreting a statutory provision which might lead to such uncertainty cannot be correct. If the correct interpretation of item 40 was, as we think it was, that Sahas were a caste group within the Sunri caste, no question of Sahas being a distinct class independent of Sunris ,could arise. The finding that Sahas were a wholly independent caste was altogether irrelevant to the point in issue. Evidence cannot alter the natural interpretation of the words in the Order. For the same reason, we are unable to agree with the interpretation of the High Court that the Sahas excluded were those Sunris who bore the surname Saha. We think the learned Judges of the High Court also interpreted item 40 in the light of the evidence in the case. If the intention was to exclude from Sunris those members of that caste who bore the surname Saha, the item would have said so; it would then have read "Sunri excluding those who bore the surname Saha". In the absence of such words "Saha" must, in the context, be understood as referring to a smaller caste group within the bigger caste group of Sunris. Surname is irrelevant as a test for applying item 40 unless it is shown that it indicated a smaller caste group of Sunris. It is nobody 's case that there is evidence to show that. It is of interest to remind in the connection that the Order provides that the Sunris in the Purulia District and those parts of the Purnea District which had been transferred to West Bengal were not to be considered as belonging to a Scheduled Caste. That would show that where the exclusion is by a test other than a caste group, the Order expressly says so. It is natural to think that if the excluded Sahas were those Sunris who bore the surname Saha, the Order would have made that clear. In our opinion, the learned Judges of the High Court were in error in interpreting the item on the evidence in the case as they appear to have done. L/S5SCI 27 392 If we are right in our interpretation of item 40, then the only question that has to be decided in this case is, whether the respondent has established that the appellant belonged to a smaller caste group called Sahas within the Sunri caste. This question presents no difficulty. The respondent called witnesses to establish that the appellant belonged to the smaller caste group of Sahas. These witnesses were disbelieved by the Tribunal which described them as unreliable. P.N. Mookerjee, J. said, "it has not been proved that the respondent (appellant here) belonged to any separate Saha caste or to any Saha Sunri sub caste of the Sunri caste". Though Basu, J. said that the appellant belonged to the Saha group of Sunris, it would appear that 'he was thinking of that group as consisting of those Sunris who bore the surname Saha. All the courts in West 'Bengal, therefore, came to the conclusion that it had not been prov ed in this case that the appellant belonged to the smaller caste group of Sahas. We have no reason to take a different view of the evidence. The result then is, that the appellant is a Sunri by caste and has not been proved to belong to the smaller caste group of Sahas. He must be held to belong to the Scheduled Caste specified in item 40. That being so, the election petition must fail. Accordingly, we allow Appeal No. 931 of 1965 and set aside the judgment of the High Court and restore that of the Election Tribunal dismissing the petition. The appellant will get the costs throughout. In the view that we have taken in Appeal No. 931 of 1965, the other appeal must necessarily be dismissed and we, therefore, dismiss it with costs. One set of hearing fees only. Appeal No. 931 of 1965 allowed. Appeal No. 1149 of 1965 dismissed.

When item 40 of Part 13 of the Schedule to the Constitution (Scheduled Castes) Order, 1950, declared "Sunris excluding Sahas" as a Schduled Caste, it indicates that men of Sunri caste but not those within that caste who formed the smaller caste group of Sahas, are members of a Scheduled Caste. It does not indicate that Sahas are a caste distinct from the Sunri caste, nor was it intended to exclude from Sunris those members of that caste who bore the surname Saha. [391 A, D]. Therefore, when the respondent challenged the election to the West Bengal Legislative Assembly, of the appellant who described himself as a member of the Sunri caste, on the ground that he was a member of the Saha caste group but failed to prove the allegation, it must be held that the appellant was a Sunri by caste and belonged to the Scheduled caste specified in the item, even though he bore the surname Saha. [392 D].

Appeal No. 696 of 1966. Appeal by special leave from the judgment and order dated September 13, 1963 of the Madras High Court in Writ Appeal No. IO of 1962. P. Ram Reddy and A. V. Rangam, for the appellant. R. Ganapathy Iyer, for the respondent. The Judgment of the Court was delivered by Ramaswami, J. The question of law involved in this appeal is whether the purchaser of business carried on by a dealer as defined in the Madras General Sales Tax Act, 1939 (Madras Act No. IX of 1939), hereinafter called the 'Act ', can be made liable for arrears of sales tax due from the dealer in respect of transactions of sale which took place before the, transfer of the business under Rule 21 A of the Rules framed in exercise of the powers conferred on the State Government by section 19 of the Act. The respondent purchased, by a registered instrument dated October 5, 1956, the business carried on by one Purushottam Raju under the name All India Trading Company. Purushottam Raju was the sole proprietor of the business and had been assessed to sales tax in respect of his turnover for the years 1948 49 and 1949 50. The assessee paid some amounts towards sales tax thus determined, but there remained some arrears of sales tax i.e., Rs. 3836 4 0 for 1948 49 and Rs. 1218 1 9 for 1949 50. The Sales tax authorities attempted to recover the arrears of tax from the respondent as the purchaser of the business. The respondent 6 63 denied liability to pay sales tax but his contention was over ruled by the Deputy Commercial Tax Officer. The respondent appealed to the Commercial Tax Officer as well as to the Board of Revenue, but the appeals were dismissed. The respondent thereafter moved the Madras High Court under article 226 of the Constitution for the issue of a writ in the nature of certiorari to quash the orders of the Commercial Tax Officer and the Board of Revenue. Ganapatia Pillai, J. who heard the petition dismissed it. The respondent took the matter in appeal under the Letters Patent. The Division Bench consisting of section Ramachandra Iyer, C.J. and Ramakrishnan, J. reversed the judgment of the Single Judge, holding that Rule 21 A of the Sales Tax Rules was illegal and ultra vires and the respondent was not liable to pay the sales tax due from his predecessor in title, Purushottam Raju. This appeal is brought, by special leave, from the judgment of the Division Bench of the Madras High Court dated September 13, 1963 in Writ Appeal No. 10 of 1962. Rule 21 A was framed by the State Government under the rule making power granted to it under section 19(1) and (2) of the Act. Rule 21 A reads as follows : "When the ownership of the business of a dealer liable to pay the tax under the Act is entirely transferred, any tax payable in respect of such business and remaining unpaid at the time of the transfer shall be recoverable from the transferor or the transferee as if they were the dealers liable to pay such tax, provided that the recovery from the transferee of the arrears of taxes due prior to the date of the transfer shall be only to the extent of the value of the business he obtained by transfer. The trans feree shall also be liable to pay tax under the Act on the sales of goods effected by him with effect from the date of such transfer and shall within thirty days of the transfer apply for registration or licence, as the case may be, unless he already holds a certificate of registration or licence, as the case may be. " Section 19 ( 1 ) and 1 9 (2) (c) are to the following effect "19. (1) The State Government may make rules to carry out the purposes of this Act. (2) In particular and without prejudice to the generality of the foregoing power, such rules may provide for (c) the assessment to tax under this Act of businesses which are discontinued or the ownership of which has changed;" 664 The first question to be considered in this appeal is whether Rule 21 A is intra vires of the power of the State Government under sections 19(1) and (2) of the Act. Section 3(1) of the Act is the charging section. It imposes a liability to pay sales tax on every dealer for each year, and the tax is to be calculated on his total turnover for that year. Section 2(b) of the Act defines a "dealer" as "a person who carries on the business of buying, selling . goods". The word "turnover" is defined in section 2(i) of the Act to mean "the aggregate amount for which goods are either bought or sold by a dealer, whether for cash or for deferred payment or other valuable consideration. ". It is manifest that a person who purchases a business as a 'dealer ' can be assessed to sales tax only in respect of his turnover and under the scheme of the charging provision of the Act the purchaser of the business has nothing to do with the sales effected by the seller of the business. The turnover in respect of such sales remains therefore the turnover of the transferor and not of the transferee. By the amending Act of 1959 (Act 1 of 1959) an express provision was inserted by which the transferee of the business was made liable for the arrears of sales tax due from the transferor. But there is no such provision in the Act for the period with which we are concerned in the present case. The question is whether the State Government has authority under its rule making power under section 19 of the Act to create a legal fiction by which the transferee of the business is constituted as the dealer liable to pay the tax in respect of the turnover of the transferor. On behalf of the appellants Mr. Ram Reddy suggested that the State Government has power under section 19(1) and 19(2) (c) of the Act to frame the impugned rule. We are unable to accept this argument as correct. Section 19(1) of the Act empowers the State Government to make rules to carry out the purposes of the Act, but the section cannot be utilised to enlarge the scope of section 10 regarding recovery and payment of tax from some other person other than a "dealer" under the Act. We also consider that the State Government has no authority under section 19(2)(c) of the Act to enact the rule. Section 19(2)(c) deals with the assessment to tax of businesses which are discontinued or the ownership of which has changed. It is true that the word "assessment" in the scheme of sales tax and income tax legislation is a term of varying import. The word is used sometimes to mean the computation of income, sometimes the determination of the amount of tax payable, and sometimes the whole procedure laid down in the Income tax Act for imposing liability on the tax payer. As the Judicial Committee, however, said in Badridas Daga vs C.I.T (1), the words 'assess ' and 'assessment ' refer primarily to the computation of the amount. of income. In Chatturam vs C.I.T. Bihar(1), the Federal Court pointed out, relying upon the decision of the House of Lords in (1) , 21 1. (2) , 665 Whitney vs Commissioners of Inland Revenue("), that the liability to tax does not depend upon assessment. The liability is definitely created by sections 3 and 4 of the Income tax Act which are the charging sections and the assessment order under section 23 only quantifies the liability which has already been definitely and finally created by the charging sections and the provision in regard to assessment relates only to the machinery of taxation. In our opinion, the principle of these decisions applies to the interpretation of the Act in the present case. We consider that, in the context and background of other sections of the Act, the word 'assessment ' used in section 19(2)(c) does not include the power of recovering tax assessed from a person other than the assessee. It follows therefore that Rule 21 A is beyond the rule making power of the State Government either under section 19(1) or section 19(2)(c) of the Act. It was then submitted by Mr. Ram Reddy that Rule 21 A may be supported by the language of section 10(1) of the Act which states "10. Payment and recovery of tax. (1) The tax assessed under this Act shall be paid in such manner and in such instalments, if any, and within such time, as may be specified in the notice of assessment, not being less than fifteen days from the date of service of the notice. If default is made in paying according to the notice of assessment, the whole of the amount outstanding on the date of default shall become immediately due and shall be a charge on the properties of the person or persons liable to pay the tax under this Act. " It was contended that under this section the whole of the amount outstanding on the date of default is charged on the property of the person liable to pay the tax. In the present case, the business which was transferred to the respondent was hence charged with the payment of sales tax and it was open to sales tax authorities to proceed against the assets of the business for realising the amount of sales tax due. In our opinion, there is no justification for this argument. Section 10 of the Act as it stood before the Madras General Sales tax (3rd amendment) Act, 1956 (Act No. XV of 1956) read as follows "The tax assessed under this Act shall be paid in such manner and in such instalments, if any, and within such time, as may be specified in the notice of assessment, not being less than fifteen days from the date of service of the notice. In default of such payment, the whole of the amount then remaining due may be recovered as if it were an arrear of land revenue. " This section was amended by section 8 of the Madras General Sales tax (3rd amendment) Act, 1956 which reads as follows (1) 666 "Substitution of new section for section 10 in Madras Act IX of 1939. For section 10 of the principal Act, the following section shall be substituted, namely "10. Payment and recovery of tax. (1) The tax assessed under this Act shall be paid in such manner and in such instalments, if any, and within such time, as may be specified in the notice of assessment, not being less than fifteen days from the date of service of the notice. If default is made in paying according to the notice of assessment, the whole of the amount outstanding on the date of default shall become immediately due and shall be a charge on the properties of the person or persons liable to pay the tax under this Act. . . The 3rd Amendment Act, 1956 received the assent of the President on October 1, 1956 but it was published in the Madras Gazette on October 8. 1956. Section 5 of the Madras General Clauses Act (Madras Act No. 1 of 1891) provides as follows "5. (1) Where any Act to which this Chapter applies is not expressed to come into operation, on a particular day, then, it shall come into operation on the day on which the assent thereto of the Governor, the Gover nor General or the President, as the case may require, is first published in the Official Gazette. " In the present case, the Act is not expressed to come into operation on any particular date, but as it was published in the Madras Gazette on October 8, 1956, the Act came into operation on that date and not before. In the present case, the registered instrument by which the business was transferred to the respondent is dated October 5, 1956 and the amending Act has therefore no application. We accordingly reject the argument of the appellants on this aspect of the case and hold that Rule 21 A is ultra vires of the rule making power of the State Government under the, Act. It was next argued on behalf of the appellants that upon a true construction of the registered instrument dated October 5, 1956 the respondent undertook to pay not only Sch. I liabilities but also other liabilities like sales tax imposed in regard to the business. It was, however, disputed by Mr. Ganapathy Iyer on behalf of the respondent that there was any undertaking on the part of the respondent to discharge the liabilities in regard to arrears of sales tax. But even on the assumption that the respondent undertook to pay the arrears of sales tax due by the transferor, it does not follow 66 7 that there is a liability created inter se between the State Government on the one hand and the transferee on the other hand. To put it differently, it is not open to the State Government to rely on the instrument inter vivos between the transferor and the transferee and to contend that there is any contractual obligation between the transferee and the State Government who is not a party to the instrument. We accordingly reject the argument of the appellants on this aspect of the case also. For these reasons we hold that the judgment of the Division Bench of the High Court dated September 13, 1963 is correct and this appeal must be dismissed with costs. R.K.P.S. Appeal dismissed.

By a registered instrument dated October 5, 1956, the respondent purchased the business carried on by a dealer as defined in the Madras General Sales Tax Act IX of 1939. The dealer had been assessed to sales tax in respect of his turnover for the years 1948 49 and 1949 50 and had paid a part of the sales tax determined as due from him with the balance amount remaining in arrears. The sales tax authorities attempted to recover the arrears from the respondent as the purchaser of the business and although he denied liability, his contention was overruled by the Deputy Commercial Tax Officer. His appeal to the Board of Revenue was also dismissed and he thereafter filed a Writ Petition under article 226 of the Constitution, challenging the orders of the C.T.O. and the Board. A Single Bench of the High Court dismissed the appeal but a Division Bench allowed a Letters Patent Appeal holding that Rule 21 A of the Sales Tax Rules under which the arrears were sought to be recovered from the respondent, was illegal and ultra vires the Act. In the appeal to the Supreme Court it was contended, Inter alia, on behalf of the department (i) that Rule 21 A was valid having been made in exercise of the rule making power granted to the State Government under sections 19(1) and 19(2) (c) of the Act whereby it could make rules for the assessment to tax under the Act of businesses which were discontinued or the ownership of which had changed; (ii) that further more under section 10, the whole of the amount outstanding on the date of the default was charged on the property of the person liable to pay the tax; therefore, in the present case, the business which was transferred to the respondent was charged with the payment of sales tax and it was open to the sales tax authorities to proceed against the assets of the business for realising the amount of sales tax due; and (iii) that upon a true construction of the registered instrument dated October 5, 1956, the respondent undertook to pay all liabilities like sales tax imposed in regard to the business. HELD: dismissing the appeal: (i) Rule 21 A was beyond the rule making power of the State Government either under section 19(1) or section 19(2)(c) and was therefore ultra vires the Act. [666 E F] Although by the amending Act 1 of 1959, an express provision was inserted by which the transferee of the business was made liable for the arrears of sales tax due from the transferor, there was no Such provision in the Act during the period covered by the present case. [664 D] it is manifest that the person who purchases a business as a 'dealer ' can be assessed to sales tax onlY in respect of his turnover and under the scheme of the charging provision of the Act, the purchaser of the busi 662 ness has nothing to do with the sales effected by the seller of the business, The turnover in respect of such sales remains. therefore, the turnover of the transferor and not of the transferee. [664 C] Although section 19(2)(c) deals with the assessment to tax of businesses which are discontinued or the ownership of which has changed, in the context and background of other sections of the Act, the word "assessment" used in para 19(2)(c) does not include the. power of recovering tax assessed from a person other than the assessee. [664 F G; 665 B C] Badridas Daga vs C.I.T., , 211; Chatturam vs C.I.7. Bihar. ; and Whitney vs Commissioners of Inland Revenue, , relied on. (ii) section 10 of the Act as amended and sought to be relied upon had not come into force until October 8, 1956; in the present case the registered instrument by which the business was transferred to the respondent was dated October 5, 1956 and the amended section therefore had no Application. [666 F] (iii) It was not open to the State Government to rely on the instrument inter vivos between the transferor and the transferee and to contend that there was any contractual obligation between the transferee and the State Government who was not a party to the instrument. [667 BC]

Appeal No. 1375 of 1966. Appeal from the judgment and order dated October 22, 1965 of the Bombay High Court Nagpur Bench in Special Civil Application No. 355 of 1964. M. N. Phadke and Naunit Lal, for the appellant. B. R. Agarwala and section B. Nerkar, for respondent No. 1. A. K. Sen, A. section Bobde, G. L. Sanghi, and O. C. Mathur, for respondent No. 2. M. section K. Sastri, R. N. Sachthey, section P. Nayar for R. H. Dhebar, for respondent No. 3. The appellant had in this petition prayed for the issue of a writ quashing the resolution dated April 6, 1964, passed by the Standing Committee, Zila Parishad, Nagpur, and for a writ of mandamus directing the Standing Committee not to interfere with the right of the appellant to impose and collect the octroi duty pursuant to its resolution dated February 25, 1963. In order to appreciate the points raised before us it is necessary to give the relevant facts and statutory provisions. The Village Panchayat of Kanhan Pipri, hereinafter referred to as the Panchayat, was originally constituted under the C.P. & Berar Panchayat Act, 1946 (C.P. & Berar Act No. 1 of 1947). On June 1, 1959, the Bombay Village Panchayat Act, 1958 (Bombay Act III of 1959) hereinafter referred to as the Act came into effect in Vidharba region, and by virtue of this Act the appellant was deemed to be a Panchayat under the Act. On July 14, 1961, the Panchayat passed resolution No. 2 with a view to levy octroi duty. The resolution, after reciting the need 215 for levying octroi duty and the relevant statutory provisions, concludes: ". . it passes the resolution to levy minimum octroi tax on the goods coming within its local limits as per the Schedule No. 1 of the Rules." On November 17, 1962, resolution No. 5 was passed which reads as follows: "5. The meeting considered the question of imposition of octroi duty. It has been unanimously resolved that by virtue of Grampanchayat Resolution No. 2, dated 14 7 61, that octroi duty shall be imposed on the goods coming into its local limits, the committee accepts the same. The matter of levying octroi duty shall be undertaken in accordance with the Panchayat Act and its rules. There fore matter of Octroi Rules, calling for objections for the tax and taking of decisions thereon after the consideration, number of the octroi posts and place etc. should be got decided by the appropriate authority. This matter may be taken into hand very urgently. It is so decided, by the majority. " On January 26, 1963, a public notice was issued under r. 3(b) of the Maharashtra Village Panchayats Taxes and Fees Rules, 1960 hereinafter referred to as the Fees Rules. On February 19, 1963, M/s Brooke Bond of India (Pr.) Ltd. hereinafter referred to as the Company respondent before us, preferred objections against the proposed levy of octroi. On February 25, 1963, resolution No.3 was passed. After setting out the previous resolutions and the publication of the notice by beat of drum, and the various objections received, it concludes: "Having considered all these above objections and suggestions and having given a satisfactory explanation for the same, this Committee unanimously resolves that as per the above resolution octroi should be levied on all the goods coming into the limits of the Panchayat,as per schedule I item 1,and levy the minimum octroi as per the rules in Schedule I item 2. This levy should come into fo rce from 1 4 1963 and its final publication be done on 1 3 1963 as per rules and by public notice and by announcement by beat of drums (through loudspeakers.)" On March 17, 1963, resolution No. 3 was passed fixing octroi limits and number of octroi nakas and their places. On March 18, 1963, the Panchayat wrote to the Collector, Nagpur, seeking his approval to the octroi limits, number of octroi nakas and their places. It appears that the Panchayat started collecting octroi from April 1, 1963. On May 29, 1963, the Company filed an appeal 216 under section 124(5) of the Act before the Panchayat Samiti, Parseoni. The Panchayat Samiti, however, rejected the appeal by its resolution dated September 4, 1963. This decision was communicated to the Company by letter dated September 19, 1963, stating that the appeal "has been rejected by the Samiti as per its resolution dated 4th September, 1963, because the same was not filed within limitation as per the provisions of Bombay Village Panchayat Act and Rule 5 of Taxes and Fees Rules of 1960. " The Company thereupon filed an appeal before the Standing Committee, Zila Parishad, Nagpur hereinafter, referred to as the Standing Committee on October 22, 1963. While the appeal was pending, the Tehsildar Ramtek on January 14, 1964, approved the octroi limits and the number and location of octroi nakas within the limits of the jurisdiction of the Panchayat under r. 21 of the Fees Rules. On April 6, 1964, the Standing Committee allowed the appeal of the Company on two grounds; first, that it was necessary for the Panchayat to have the octroi limits fixed with the approval of the Collector before levying octroi under r. 21; and secondly, that the Company was not importing tea within the limits of the Panchayat for consumption, use or sale. Thereupon, the Panchayat, as already stated, filed an application under article 226 of the Constitution before the High Court. The High Court held that the Panchayat Samiti could not dismiss the appeal of the Company as being barred by limitation because r. 5 of the Fees Rules was ultra vires the powers of the rule making authority. The High Court further held that the octroi duty was not validly levied by the Panchayat as it had failed to fix the octroi limits in accordance with law. The High Court did not deal with the question whether the company 's tea was imported into the limits of the Panchayat for consumption, use or sale because it felt that sufficient facts had not been found by the Standing Committee. The High Court felt that it would not be proper to determine facts for itself. The learned counsel for the appellant contends before us (1) that r. 5 of the Fees Rules was intraviress (2) that the Standing Committee had no jurisdiction to decide the appeal on merits as the appeal to the Panchayat Samiti was barred by limitation; (3) that the octroi duty has been levied in accordance with law; (4) that, at any rate, the levy was good after the octroi limits were fixed on January 14, 1964; (5) that the approval of the octroi limits on January 14, 1964, relates back to April 1, 1963; and (6) that the tea was imported into the Panchayat limits for consumption, use or sale. Before we deal with these points it is necessary to set out the relevant statutory provisions. Section 3(13) of the Bombay Village Panchayat Act, 1958 (Bombay Act III of 1959) defines "octroi" or "octroi duty" to mean "a tax on the 'entry of goods into a village 217 for consumption, use or sale therein". Section 124(1) empowers Panchayats to levy all or any of the taxes and fees mentioned therein, and reads as follows: "124(1). It shall be competent to a panchayat to levy all or any of the following taxes and, fees at such rates as may be decided by it (but subject to the minimum and maximum rates which may be fixed by the State Government) and in such manner and subject to such exemptions as may be prescribed, namely: . . . . . . . . . (ii) octroi. . . " Section 124(5) provides for appeals in these terms: "Any person aggrieved by the assessment, levy or imposition of any tax or fee may appeal to the Panchayat Samiti. A further appeal against the order of the Panchayat Samiti shall lie to the Standing Committee, whose decision shall be final." Section 176(1) enables the State Government to make rules for carrying into effect the purposes of the Act. Section 176(2)(xxvi) provides: "176(2) In particular but without prejudice to the generality of the foregoing provision, the State Government may make rules (xxvi)under section 124 laying down the maximum and the minimum rates and the manner in which and the exemption subject to which taxes and fees specified in the section shall be leviable;. . ." In exercise of the powers under s.176 of the Act, the State Government made the rules called the Maharashtra Village Panchayat Taxes and Fees Rules, 1960. Part I of the Fees Rules is headed "General", and apart from definitions it consists of three rules, which read as follows: "3. Procedure for levying tax or fee. Every panchayat before deciding to levy a tax or fee shall observe the following procedure, namely: (a) The Panchayat shall, by resolution passed at its meeting, select a tax or fee which it proposes to levy and in such resolution shall specify the rate at which it is to be levied. (b) The Panchayat shall then notify to the public the proposal together with that Part of these rules 218 which relates to that tax or fee by beat of drum in the village and by means of a notice affixed in the office of the panchayat and, at the village chavdi or chora, specifying a date, not earlier than one month after the date of such publication, on or after which the panchayat shall take the proposal into consideration. (c) Any inhabitant of the village objecting to the levy of the tax or fee proposed by the panchayat may send his objection or suggestion in writing on or before the date specified in the notice, published under clause (b). (d) On or after the date fixed under clause (b), the panchayat shall consider all objections and suggestions made under clause (c) and may finally select a tax or a fee and decide the rate at which it is to be levied. Final publication of rules relating to tax or fee to be levied. Where a panchayat finally decides to levy any tax or fee the rules in that Part, of these rules which relate to such tax or fee, together with a notice stating the tax or fee to be levied and the rate thereof, shall be published by the panchayat by affixing a copy thereof in the office of the panchayat. It shall also announce by beat of drum in the village the fact of such publication. The tax or fee shall accordingly be levied from. the date which shall be specified in the notice and which shall not be earlier than one month after the date of publication of the notice. Appeal against levy of any tax or fee A person desiring to make an appeal under sub section (5) of section 124, shall do so within sixty days from the date of publication of the notice under rule 4. The scheme of the Fees Rules is first to prescribe general rules and then to deal individually with various taxes. Part II deals with tax on Buildings and Lands; Part III with Octroi; Part IV with Pilgrim Tax; Part V with tax on Fairs, Festivals and Entertainments; Part VI with taxes on Bicycles and on Vehicles drawn by Animals; and so on. We are concerned with Part ITT. This Part consists of rules 21 to 35, and two Schedules. The important rules are rules 21, 22 and 23, and may be set out in full: "21. Fixing of octroi limits and nakas. A Panchayat shall, with the approval of the Collector or of any officer authorised by the Collector not below the rank of Mamlatdar Tehsildar, Naib Tehsildar or Mahalkari, fix octroi limits and the number and location of octroi Nakas within 219 the limits of its jurisdiction. Rate of octroi Octroi may be levied by a panchayat, after following the procedure prescribed in rules 3 and 4, on all or any of the goods specified in column 1 of Schedule 1, annexed, to this Part, which are imported into the octroi limits for consumption, use or sale therein and at such rates as may be decided by it but not below the minimum and not exceeding the maximum rates specified in columns 2 and 3, respectively, of that Schedule. Payment of octroi on introduction of goods, etc. The octroi shall be paid at the octroi Naka at the time when the articles in respect of which it is leviable are imported into the octroi limits of a panchayat. " Rules 30, 31, 32 and 33 deal with refund of octroi. We may first deal with the question of the validity of the levy of octroi duty. It seems to us that the octroi duty has been levied in accordance with law. It would be noticed that the rule which authorises the levy is r.22, but it enjoins that the procedure prescribed in rr.3 and 4 should be followed before the octroi duty can be levied. When we turn to rr.3 and 4, it would be noticed that these rules prescribe the procedure for levying tax or fee and are not confined to octroi duty only. Rule 7 which deals with tax on buildings and lands also prescribes that the panchayat shall follow the procedure prescribed in rr.3 and 4 before levying a tax on buildings and lands. Similarly, r.37 which deals with tax on pilgrims provides that the procedure prescribed in rr.3 and 4 should be followed. Again, in r.53, which deals with tax on vehicles, a reference is made to rr. 3 and 4. Rule 71 which deals with tax on professions also contains a reference to rr. 3 and 4. Rule 84 which deals with fee on markets and weekly bazars has a reference to rr.3 and 4. Rule 93 which deals with fee on cartstands and tonga stands makes the procedure in rr.3 and 4 appli cable. The scheme of the Fees Rules accordingly seems to be that the general procedure for levying taxes or fees is laid down and then this procedure is made applicable to the levy of various taxes mentioned in the other parts of the Rules. Viewed in this background, it seems to us that r.3(b) does not require the Panchayat to fix the octroi limits in the resolution passed under r.3(a). It only deals with two items; (1) selection of the tax and the rate at which it is to be levied. Rule 3(c) has to be similarly read. The inhabitants of the village would be entitled to object only to these two matters, namely, (1) the tax or fee imposed and the rate at which it is levied. Under r.3(d) what the panchayat does is to consider objections and suggestions and then finally make the choice as regards two things, i.e., the tax or fee to be imposed and the rate at which it is to be levied. 220 This interpretation is reinforced by a proper reading of r. 4. Rule 4 requires a notice stating two things; (1) the tax or fee to be levied and (2) the rate. But the learned counsel for the Company, Mr. Ashok Sen, argues that this interpretation is not correct because para 2 of r.4 says that the tax shall accordingly be levied from the date which shall be specified in the notice, and he says that if the octroi limits had not been approved of by the time the resolution is passed, how could the tax be levied from the date specified in the notice. But r.4 has to be read alongwith r.21, and if so read, it would mean that before the octroi duty can start being levied, r.21 must be complied with. In other words, para 2 of r.4. must be read to mean that the octroi will be levied from that date provided r.21 had been complied with. We are, however, unable to agree with the learned counsel for the appellant that before the octroi limits are approved octroi can be collected. We consider that the fixing of the octroi limits with the approval of the Collector is an essential condition precedent to the levy of octroi duty. The learned counsel for the appellant says that the approval of the Collector on January 14, 1964, relates back and, therefore, the levy of octroi from April 1, 1963, was regularised. We are unable to agree with this submission. Apart from the fact that it may in certain circumstances lead to illegal levies, there is nothing in the language of r.21 which indicates that the Collector can regularise an imposition made without the authority of law. The Collector may in particular cases enlarge the octroi limits or reduce the octroi limits and it would lead to great confusion if either of the things happens after the Panchayat had been collecting octroi duty within the octroi limits submitted by it to collector for approval. We may here deal with a minor point which was mentioned in the course of arguments. The High Court held that "r.3(b) must therefore be interpreted as requiring the Panchayat to notify to the public not only the the proposal about the tax selected by it for levy, but also the rules relating to that tax which must mean the action taken under the Act and the rules. " On the language of r.3(b) we are unable to appreciate how action taken under the Act and the rules is required to be notified to the public. There is nothing in the language to warrant such a construction. In conclusion we hold that the octroi duty was validly levied and that it could be imposed and collected with effect from January 14, 1964. Mr. Sen raised another point not dealt with by the High Court. He urges that there was no proper publication under r.4. We are unable to allow him to raise this point at this stage. He says that this point was raised before the High Court but it has not been 221 A dealt with by it. He points out a passage in the judgment of the High Court but we are unable to agree with him that the High Court has implied that this point was raised before it. He further says that this point was taken in the return filed on behalf of the Company. Para 2 of the return only alleged: "This respondent says that at that time no copy of the Rules required to be published by Rule 4 of the Rules was exhibited along with the said Notice. This respondent is not aware and, does not admit that the fact of publication of the Notice under Rule 4 was announced by beat of drum in the village. " This allegation is reiterated in para 9 of the return. No such specific point was taken in the grounds of appeal to the Panchayat Samiti. It was broadly stated that the procedure required to be followed for imposing octroi had not been followed in imposing the same. Similarly, in the grounds of appeal to the Standing Committee, vague allegations were made "that the village Panchayat has erred in law in not following the procedure contemplated by law in the matter of imposing the octroi and has acted contrary to the principles of natural justice on an assumption that the formalities contemplated by law were complied with." He relies on the notice which is on the record to show that as a matter of fact the publication was not in accordance with law. In the circumstances noted above we are unable to allow him to raise this point at this stage. Coming to the question of the vires of r.5, it seems to us that the High Court has placed a wrong interpretation on r.5. The High Court has held that as r. 5 applies to all appeals under s.124(5) of the Panchayat Act, the fixing of the commencement of the period of limitation as the date of publication of the notice under r.4 for all appeals is arbitrary and destructive of the right of appeal. But this interpretation, with respect is not correct, if r.5 is read in the setting in which it occurs. Rule 5 follows imme diately rr.3 and 4 and is headed "Appeal against levy of any tax or fee", and the period of sixty days of limitation commences from the date of the publication of the notice under r.4, i.e., the notice following the decision of a Panchayat to levy any tax or fee. This date shows that r.5 is dealing only with appeals against levy of any tax and not with the assessment or imposition of a tax or any further appeals to the Panchayat Simiti under section 124(5). It is true that the opening sentence makes a reference to an appeal under sub section (5) of section 124, and this opening sentence would cover all II appeals under sub section (5) of section 124, but in the context and setting, the heading of r. 5 brings out the scope of the rule. Accordingly. the appeal of the Company to the Samiti was wrongly dismissed as time barred. It follows from this that the Standing Committee was entitled to deal with the appeal on merits. 222 The only point that remains is whether the Company brought tea into the octroi limits of the Panchayat for consumption, use or sale, therein. As we have pointed out, the High Court felt difficulty in dealing with the question because neither the Panchayat Samiti nor the Standing Committee had found sufficient facts to enable it to deal with the question. Mr. Sen says that he is willing to take the facts as stated at the bar by the learned counsel for the appellant. But we consider that it is an unsatisfactory way of dealing with questions of fact. Before this question can be dealt with satisfactorily, all the relevant facts must be found by the Standing Committee, It is true that the Standing Committee inspected the premises of the Company but in their order they have given very scanty facts, They do not say whether the tea is crushed, processed or treated chemically to convert it into a marketable commodity. The learned counsel for the Panchayat contends that these things are done and that the resultant product is completely different from the tea imported into octroi limits. It is also not quite clear whether the tea which is imported by the Company is known in trade circles as a different commodity from the tea actually sent out in boxes. In the circumstances we must also decline to deal with this point. In the result the appeal is allowed, and it is declared that the Panchayat could validly impose octroi duty from January 14, 1964, in accordance with the resolutions dated February 25, 1963, and March 17, 1963. The case is remanded to the High Court to deal with the question whether the Company imported tea for the purpose of consumption, use or sale within the octroi limits of the Panchayat. The High Court may either remand the case to the Panchayat Samiti or deal with it as it may consider best in accordance with law. Under the circumstances there will be no order as to costs in this appeal. G.C. Appeal allowed.

The appellant Panchayat levied octroi duty on goods coming within its limits by following the procedure laid down in rr. 3 and 4 of the Maharashtra Village Panchayats Taxes and Fees Rules 1960. Although the resolution finally levying octroi was passed on February 25, 1963 and the octroi limits were fixed by resolution dated March 17, 1963 the approval of the Collector to the octroi limits as required by r. 21 was not obtained till January 14, 1964. When the Panchayat began collecting octroi on April 1, 1963 the respondent company appealed under section 124(5) of the Bombay Village Panchayat Act, 1958 to the Panchayat Samita. The appeal was rejected as it was considered time barred under r. 5 of the Taxes & Fees Rules which required an appeal under section 124(5) of the Act to be filed within 60 days of the publication of the notice under r. 4. On further appeal the Standing Committee, Zila Parishad, Nagpur decided in favour of the respondent company on the ground that the Panchayat had not complied with r. 21. The Panchayat filed a writ petition under article 226 of the Constitution. The High Court upheld the findIng of the Standing Committee as to the effect of non compliance with r. 21. It however further held that r. 5 in requiring all appeals under a. 124(5) of the Act to be filed within 60 days of the publication of the notice under section 4 was arbitrary and destructive of the right of appeal and therefore ultra vires. The Panchayat appealed to this Court. Held: (i) Octroi can be validly levied under r. 22 after following the procedure in rr. 3 and 4 Rule 3 deals only with (i) selection of the tax and (ii) the rate at which it is to be levied. Rule 4 deals with final publication of the notice levying octroi. The levy of octroi under r. 22 read with rr. 3 and 4 does not require prior approval to the octroi limits by the Collector under r. 21. [219D H; 220A C]. (ii) However the octroi cannnot be validly collected before the octroi limits are approved by the Collector under r. 21. Collections made earlier cannot be regularised by subsequent approval. The plea on behalf of the appellant that the approval of the Collector on January 14, 1964 should relate back to April 1, 1963 could not be accepted. [220 D E]. (iii) Rule 5 is not invalid as it does not apply to all appeals under, section 124(5). The rule follows rr. 3 and 4 and is headed "appeal against levy of any tax or fee," and the period of sixty days of limitation commences from the date of the publication of the notice 214 under r. 4 i.e. the notice following the decision of a Panchayat to levy any tax or fee. This date shows that r. 5 is dealing only with appeals against levy of any tax and not with the assessment or imposition of a tax or any further appeals to the Panchayat Samiti under section 124(5). In its context and setting the heading of r. 5 brings out the scope of the rule, [220 F H]. Accordingly the appeal of the company to the Samiti was wrongly dismissed as time barred. It followed from this that the Standing Committee was entitled to deal with the appeal on merits. [220 H].

Appeal No. 787 of 1964. Appeal from the judgment and decree dated January 5, 1961 of the Calcutta High Court in Appeal from Appellate Decree No. 1012 of 1955. A.K. Sen and D. N. Mukherjee, for the appellant. Sukumar Ghose, for respondent No. 1. The Judgment of WANCHOO, C. J. and MITTER, J. was delivered by MITTER, J. BHAGAVA, J. delivered a separate Opinion. Mitter, J. This is an appeal by a certificate granted by the High Court at Calcutta from a judgment and decree in Second Appeal passed by that court in January, 1961. The question before us is, whether the respondent No. 1 was entitled. to the benefit of the Calcutta Thika Tenancy Act, 1949, as amended finally by an Act of 1953. The facts necessary for the disposal. of this appeal are as follows. On the 18th June 1948, the plaintiff, the appellant before us, instituted Suit No. 292 of 1948 for ejectment of three Persons, namely, Abdul Rahim, Abdul Hamid and Abdul Gaffur, from the property in suit (a parcel of land about 1 cottah 8 chittaks being part of premises No. 6 / 1, Shibtola Lane, Entally, Calcutta). In the notice to quit served on the 7th May, 1948 the first two persons were described as tenants under the plaintiff and the third as a person who had purported to purchase the structures on the land and the tenancy right therein. In the plaint itself, the first two defendants were described as thika tenants. No claim was made for rents or taxes although it was alleged that the same were in arrears. The suit was contested only by the third defendant who filed a written statement in September 1948 contending that the suit was bad for non joinder of parties. The suit was decreed by a Munsif of Sealdah court, 24 Parganas on March 18, 1949 after the Calcutta Thika Tenancy Act of 1949 had come into force on February 28, 1949. The appeal filed therefrom by the third defendant was dismissed by the Subordinate Judge. Fifth Additional 172 Court, Alipore on November 23, 1949. The decree holder put the decree in execution and recovered possession of the land on December 18, 1949. The Calcutta Thika Tenancy (Amendment Ordinance), 1952 was passed on October 21, 1952 introducing various changes in the Act and substituting a new definition of a thika tenant. On March 14, 1953 the Calcutta Thika Tenancy (Amendment Act), 1953 was passed amending the definition of thika tenant still further and introducing important changes in the Act of 1949. The effect of these provisions will be considered later on. Before the Subordinate Judge, a point was taken that after the coming into force of the Act of 1949, the Rent Controller alone had jurisdiction in respect of ejectment suits as the defendant appellant was a thika tenant. The Subordinate Judge dismissed the plea on the ground that the defendant appellant had not erected the structures on the land and was not a successor in interest of the tenant but only a transferee. Abdul Gaffur preferred a Second Appeal to the High Court and this was heard and disposed of by a single Judge of that court on July 21, 1954, long after the Thika Tenancy Ordinance of 1952 and the Amending Act of 1953 had come into force. The learned Judge held that at the time when the appeal of the defendant was disposed of by the Subordinate Judge, the rights of the parties were governed by the Thika Tenancy Act of 1949 and the definition of a thika tenant in that Act was not such as to afford any protection to the appellant. In view of the amendment of the Act in 1953 however. the learned Judge felt that the question whether the appellant was entitled to the benefit of that Act had to be re examined and consequently he remanded the matter to the lower appellate court with a direction that there should be a fresh decision of the case after considering the law applicable and taking further evidence if necessary. On remand, the Subordinate Judge, Seventh Court, Alipore rejected the plea of the landlord that the appellant Gaffur could not be regarded as a thika tenant inter alia on the ground that he had sold his interest by a registered sale deed dated April 12, 1949 to one Subasini. On a consideration of the provisions of the Act and the Ordinance, the Subordinate Judge held that the appellant, Gaffur, was not liable to ejectment in the absence of any grounds therefor in the notice to quit in accordance with section 3 of the Act as he was a thika tenant within the meaning of the Act as it was finally amended. He also observed that section 4 of the Act would be applicable. The landlord went up in appeal once more to the High Court. On this occasion, the main plank of the argument on behalf of the landlord was that with the omission of section 29 civil courts became unable to remit ejectment suits to the controller with the result that the Act as finally amended could not apply to pre Act suits and thika tenants could get no relief under the Act. The learned Judges of the Division Bench of the High Court found themselves unable to accept this argument and held that the only power vested in civil courts in respect of ejectment suits against 173 thika tenants like the present one was to be found in sections 28 and 29 of the original Act and by their omission from the statute "suits for eviction became infructuous before civil courts". In the result, they dismissed the appeal. We have now to trace the relevant changes in the law made from time to time and see whether the landlord was entitled to eject Abdul Gaffur notwithstanding the Act as amended from time to time. The first attempt to give relief to persons described as thika tenants was made by West Bengal Ordinance No. XI of 1948 promulgated on October 26, 1948. The Ordinance had only six sections. Section 2 defined a thika tenant ' as meaning any person who under the system commonly known as "thika" "thika masik utbandi", "thika masik", "thika bastu", or under and other like system held land under another person whether under a written lease or otherwise and was, or but for a special contract would be, liable to pay rent at a monthly or any other periodical rate, for that land to such other person and had erected any structure on such land and was entitled to use it for residential purposes or for manufacturing or business purposes and included the suc cessors in interest of such person. Section 3 Provided that notwithstanding anything contained in any other law for the time being in force, no decree or order for the ejectment of a thika tenant shall be executed during the continuance in operation of the Ordinance. We need not consider the proviso to the section as we are not concerned with the condition mentioned therein. It is to be noted that by the definition of thika tenant, a person could only get the protection of the Ordinance if he could establish that he was holding land under any of the systems expressly mention ed or any other like system. A comprehensive Act was later passed i.e., West Bengal Act II of 1949 which, as already noted, came into force on Feb ruary 28, 1949. The definition of a thika tenant was modified slightly but the change affected thereby need not be taken account of because the respondent Gaffur 's position was not improved thereby. The incidents of thika tenancy were mentioned in various sections from section 3 to section II contained in Chapter 11 of the Act. section 3 provided that notwithstanding anything contained in any other law for the time being in force or in any contract, a thika tenant shall, subject to the provisions of the Act, be liable to ejectment from his holding on one or more of the specified grounds and not otherwise. The six grounds mentioned are: (i) failure to pay an arrear of rent due to the landlord in respect of the holding; (ii) user of the land comprised in the holding in a manner when rendered it unfit for any of the purposes mentioned in cl. (5) of section 2 (the definition of a thika tenant) or violation of a condition consistent with the Act by a breach of which he was under the terms of a contract between himself and his landlord liable to be ejected; (iii) refusal to agree to pay rent at such enhanced rate as might be determined under section 25; (iv) requirement 174 of the land by the landlord for his own occupation or for the purpose of building on the land or otherwise developing the land except during any period limited by a registered lease under which the tenant might be holding; (v) failure on the part of the holding for his own residential, manufacturing or business purpose for more than six consecutive months (omitting the priviso); and (vi) on the expiry of a registered lease in favour of the tenant. S 4 provided: "It shall not be competent for a landlord to eject any thika tenant from his holding unless the landlord has given the thika tenant notice in the manner provided in section 106 of the : (a) in the case where he wishes to eject the thika tenant on any of the grounds specified in clauses (i), (ii), (iii) and (iv) of section .1 at least one month 's notice in writing expiring with the end of a month of the tenancy; and (b) in the case where he wishes to eject the thika tenant on the ground specified in clause (iv) of section 3 at least three months ' notice in writing expiring with the end of a month of the tenancy. " The section has two provisos one of which laid down that no thika tenant Shall be ejected from his holding on any of the grounds specified in cls. '(iv) and (v) of _. 3 except on payment to him or 0 deposit with the Controller for payment to him such compensations might be agreed upon 'or might be determined in ' 'the manner prescribed by"the Controller. 5 enacted that: "(1) Notwithstanding anything contained in any other law for the time being in force, a landlord wishing to eject a thika tenant on one or more of the grounds specified in section 3 shall apply in the prescribedmanner to the Controller for an order in that behalf and,on receipt of such application, the Controller shall after giving the thika tenant a notice to show cause within thirty days from the date of service of the notice why the application shall not be allowed and after making an inquiry in the prescribed manner either allow the application or reject it after recording the reasons for making such order. " The section further provided that no ' order allowing an application was to be made unlesscompensation payable to the tenant was either deposited with the Controller or paid to the tenant Chapter IV of the Act, by several sections, provided for appeals, reviews etc. Under section 27 any person aggrieved by an order of the Controller might present an appeal in writing either to the Chief Judge of the Court of Small Causes in the Presidency town or to 175 the District Judge of a district in which the holding was situate. Sub section (5) of the section provided for reviews. Section 28 enactect that: "Where any decree or order for the recovery of possession of any holding from a thika tenant has been made before the date of commencement of this Act but the ' possession of such holding has not been recovered from the thika tenant by the execution of such decree or order, the Court by. which the decree or order was made may, if it is of opinion that the decree or order is not in conformity with any provision of this Act other than sub section (1) of section 5 or section 27, rescind or vary the decree or order in such manner as the Court may think fit for the purpose of giving effect to such provision and a decree or order so varied by any Court shall be transferred by such Court to the Controller for execution under this Act as if it were an order made under and in accordance with the, provisions of this Act". Section 29 ran as follows: "The provisions of this Act shall apply to all suits and proceedings, including 'proceedings _ in execution, for ejectment of a thika tenant which are pending at the date of commencement of this Act, and if any such suit or proceeding relates to any matter in respect of which the Controller is competent after the date of such commendment to pass orders under this Act, such suit or proceeding shall be transferred to the Controller who shall on, suit transfer 'deal with it in accordance with the provisions of this Act as if this Act had been in operation on, the date of institution of the suit or proceeding: Provided that in applying the provisions of the Act to any suit or proceeding instituted for the ejectment of a thika tenant so transferred, the provisions regarding notice in section 4 of this Act shall not apply". Section 33 provided that on the expiry of the Calcutta Thika Tenancy Ordinance, 1948, the provisions of section 8 of the Bengal General Clauses Act, 1899 would apply as if it were an enactment then repealed by a, West Bengal Act. It will be noted from the provisions of the Act that it was intended to benefit all thika tenants expressly covered thereby. Unfortunately, the Act did not afford any real protection to persons for whom it Was meant because of the peculiar definition of thika tenant in it. A series of decisions of the Calcutta High Court shows that the tenants failed to get any relief because they could not prove any system either of the kind specifically mentioned in section 2 sub section (5) or an other like system. It is however 'clear that the benefit of section 28 was available only if the decree or order for the recovery of possession had been made before the date of the commencement of the Act but 176 possession of such holding had not been recovered from him. Section 29 on the other hand was made applicable to all proceedings including proceedings in execution which were pending at the date of the commencement of the Act. No exception was made under section 29 to cases where possession of the holding had been recovered from the thika tenant. The consequence was that even if the tenant had lost possession but any proceeding even arising from an execution proceeding was pending, the provisions of the Act would be attracted. If any such pending suit or proceeding related to any matter in respect of which the Controller was competent to pass orders, the suit or proceeding would be transferred to the Controller who would deal with it in accordance with the provisions of the Act just as if the Act had been in operation on the date of the commencement of the suit or proceeding. The only qualification was that even if the suit had been filed before the Act but was riot disposed of by that date, the landlord had to establish that be was entitled to possession because of the existence of any of the grounds mentioned in section 3. He was however not to be bound he could not have done because of the passing of the Act after the filing of his suit. As already stated, the Act failed to achieve its object see Murari vs Prokash(1) and Mohammad Mateen vs Baijnath Bajoria.(2) To get over this difficulty, an Ordinance, namely, the Calcutta Thika Tenancy (Amendment) Ordinance, XV of 1952 was promulgated on October 21, 1952. By section 2 of this Ordinance, the definition of thika tenant in the Calcutta Thika 'Tenancy Act, 1949 was substituted by a new one, namely: "(5) thika tenant ' means any person who holds, whether under a written lease or otherwise, land under another person, and is but for a special contract would be liable to pay rent, at a monthly or at any other periodical rate, for that land to that another person and has erected any structure on such land for a residential, manufacturing or business purpose and includes the successor in interest .of such person, but does not include a, person: (a) who holds such land under that another person in perpetuity; or (b) who holds such land under that another person under a registered lease, in which the duration of the lease is expressly stated to be for a period of not less than twelve years; or (c) who holds such land under that another person and uses or occupies such land as a khattal". (1)A.I.R. 1950 Calcutta 230. (2)A.T.R. 1951 Calcutta 358. 177 Other amendments were made in different sections of the Act. The most important one was however that contained in section 5 sub section (1) of this section which enatced that "Save as provided in sub section (2), the provisions of the said Act as amended by this Ordinance, shall apply to all cases pending before a Court or Controller on the date of the commencement of this Ordinance". Sub section (2) of section 5 provided as follows: "If, at any time between the commencement of the said , 'Act and of this Ordinance, a decree or order has been passed for the recovery of possession of any land and for other relief, if any, and delivery of possession has not been given, then on application made in this behalf by the person against whom the decree or order was passed, within three months of the commencement of this Ordinance, the Court which or the Controller who passed the decree or the order shall decide (after hearing the parties and after taking fresh evidence if necessary) whether the person is a thika tenant within the meaning of the said Act as amended by this Ordinance. If the Court or Controller holds that the person is not such a thika tenant. it or he shall dismiss the application. If the Court or Controller holds that the person is such a thika tenant. it or he shall set aside the decree or the order and annul the execution proceedings, if any, and (ii) where the proceedings are before a Court it shall remit the case to the Controller to be dealt with by him according to law. (iii)where the proceedings are before the Controller he shall reopen the case and pass a new order". Sub section (4) provided that the provisions of this section would have effect notwithstanding anything to the contrary in any other law or elsewhere in the said Act as amended by the Ordinance. The second Explanation to the section provided that the expression " court" would include a court exercising appellate or revisional jurisdiction and the expression 'controller ' meant the controller referred to in sub section (2) of section 2 of the Calcutta Thika Tenancy Act, 1949 for the time being in force or the person deciding an appeal under section 27 of the Calcutta Thika Tenancy Act, 1949 for the time being in force as the case may be. The effect of this was that a person who before the Ordinance would not come within the pale of the Act because he could not prove a system came within its protection because of the amendment of the definition of a thika tenant. Sub section (1) of section 5 made the Act, as amended by the Ordinance, applicable to all cases pending before a court or a controller. This was irrespective of the question whether the suit had been filed before the Act or 178 after the Act, or whether a decree had been passed before the Act or thereafter. Sub section (2) of section 5 made a special provision for cases where a decree or order for possession had been made between the commencement of the Act and of the Ordinance and delivery of possession had not been given to the decree holder. In such a case it became open to a person covered by the new definition of a thika tenant to make an application within three months of the commencement of the Ordinance either to the court or to the Controller as the case may be for relief on the basis that the applicant was a thika tenant. Such an application could be made even if, the decree for ejectment had become final and order, for recovery of possession made but actual delivery of possession had not been given. In such a case, if it was found that the person applying was a thika tenant, the court before whom the proceedings were pending had to remit the case to the controller and if the authority before whom the application was made was a controller, he had to re open the case and pass a new order. If the matter was in appeal, the appellate court had to exercise jurisdiction under this sub section, determine whether the tenant was a thika tenant and send the matter to the controller 'if it was found that the tenant was entitled to the benefit of the Act '. Even if no proceedings were pending in any court, it was open to the thika tenant to apply for relief provided delivery of possession had not been given. Finally came the Thika Tenancy (Amendment) Act (VI of 1953). It made important changes in the Act itself. It came into force on March 14, 1953 on which date the Calcutta Thika Tenancy (Amendment) Ordinance, 1952 ceased to operate. Sub section (2) of section 1 provided that the Act was to come into force immediately on the Calcutta Thika Tenancy (Amendment) Ordinance, 1952 ceasing to operate: provided that the provisions of the Calcutta Thika Tenancy Act, 1949 as amended by this Act were subject to the provisions of section 9 to apply and be deemed to have always applied to all suits, appeals and proceedings (a) before any court, or (b) before the Controller, or (c) before a person deciding an appeal under section 27 of the said Act, on the date of the commencement of the Calcutta Thika Tenancy (Amendment) Ordinance, 1952 i.e., 21st October, 1952. Section 2 of the Act amended the definition of 'thika tenant ' still further by giving the benefit of the Act to persons who had erected or acquired by pur chase or gift any structure on the land for a residential, manufacturing or business purpose and was to include the successors in interest of such person. The word 'successor in interest ' had not been defined in the Act or in the Ordinance but as words in the Act were under section 2 sub section (6) to have the same meaning as those used in the and the Bengal Tenancy Act, 1885 it would, but for the amendment of the definition of a thika tenant, have meant only those persons who inherited from tenants and 179 not those who acquired by purchase. Sections 3, 4 and 5 introduced changes with which we are not concerned, Section 8 laid down that sections 28 and 29 of the Act of 1949 shall be omitted. Under section 9 any proceedings commenced under sub section (2) of section 5 of the Calcutta Thika Tenancy (Amendment) Ordinance were to be continued as if such sub sections (2), (3) and (4) of that section and the Explanation to that section were in force. The net result seems to be that after the Amendment Act of 1953 came into force, the position of a tenant had to be examined in the light of the Act as it finally emerged. Sub section (2) of section 1 made the provisions of the Calcutta Thika Tenancy Act, 1949 as amended by the Act of 1953, applicable to all suits, appeals and proceedings pending on 21st October before any court or before the controller or before a person deciding an appeal under section 27 of the Act. No reference is made in this subsection to the date when the suit was instituted. Only suits which were pending on 21st October 1952 were to be decided in terms of the Act as finally amended. The question therefore arises, whether a tenant could claim the benefit of the Act in a. pre Act suit. It is a general principle of law that statutes are not to operate retrospectively so as to defeat vested rights, but such operation may be given by express enactment or by necessary implication from the language employed. According to Craies on Statute Law (Sixth Edition) at p. 391: "If it is a necessary implication from the language employed that the legislature intended a particular section to have a retrospective operation, the courts will give it such an operation". The learned author points out at p. 397: "It is a well recognised rule that statutes should be interpreted, if possible, so as to respect vested rights, and such a construction should: never be adopted if the words are open to another construction. . . For it is not to be presumed that interference with existing rights is intended by the, legislature, and if a statute be ambiguous the court should lean to the interpretation which would support existing rights. " Again at page 398, the learned author states: "In the absence of anything in an Act to show that it is to have a retrospective operation, it cannot be so construed as to have the effect of altering the law applicable to a slaim in litigation at the time when the Act is passed, . . Where, however, the necessary intendment of an Act is to affect pending causes of action, the Court will give effect to the intention of the legislature even though there is no express reference to pending actions". 180 Reference may be made to the case of Knight vs Lee(1) where Parke B. in his judgment, said: "It seems a strong thing to hold that the legislature could have meant that a party who under a contract made prior to the Act had as perfect title to recover a sum of money as he had to any of his personal property, should be totally deprived of it without compensation". This was decided in terms of the Gaming Act, 1845, section 18 of which enacted that " no suit shall be brought or maintained for recovering any such sum of money " and the question was whether that enactment was retrospective so as to defeat an action already commenced. The Gaming Act,1922 enacted that "no action for the recovery of money under the said section (section 2 of the Gaming Act, 1835) shall be entertained by any court". In Headling vs Goll(1) it was held that the section was not retrospective and that the Act did not operate to put an end to pending actions. According to Halsbury 's Laws of England, third edition, Vol. 36, page 413, article 627: "Unless it is clearly and unambiguously intended to do so, a statute should not be construed so as to interfere with or prejudice established private rights under contracts or the title to property or so as to deprive a man of his property without his having an opportunity of being heard". The provisions of the Act of 1949 as finally amended by the Act of 1953 have to be examined to show how far they disturb the rights of landlord to recover possession of the property from a person who would be a thika tenant on 28th February, 1949. Section 3 of the Act which cuts down the right of the landlord to recover possession except on the grounds therein specified musi be held to apply to all suits even though filed before 28th February 1949. The language of the section leaves no room for doubt as to this. It expressly states that notwithstanding anything contained in any other law for the time being in force or in any contract, a thika tenant shall be liable to ejectment on ground specified and not otherwise. Consequently, a landlord who had filed a suit before the 28th October 1949 but was unable to ,establish any of the grounds mentioned in section 3 could not claim to eject his tenant. But the provisions of sections 4 and 5 of the Act are not couched in the same kind of language as section 3. The legislature clearly meant section 4 to be prospective because according to its language "the landlord who wishes to eject the thika tenant (1) (2) 39 Times Law Reporter 31. 181 must give at least one month 's notice in writing" or three months ' notice as the case may be. A landlord who had already filed the suit before the Act had evinced his intention and the question of his wishing to eject the thika tenant afresh after the Act or giving a notice for the purpose did not arise. Again section 5 lays down in clear terms that a "landlord wishing to eject a thika tenant" on one or more of the grounds specified in section 3 "shall apply in the prescribed manner to the controller". This is only consistent with the wish of a landlord after the Act has come into force. Before the Act had come into force, the landlord could not possibly know that his suit would be liable to be defeated unless he applied to the controller because there was no such authority functioning then. The section shows clearly that when a landlord wished to eject a thika tenant after the Act had come into force, he had to consider whether any of the grounds in section 3 was available to him, and if so, he did not have to file a suit but apply to the controller for an order in that behalf. The language of sections 4 and 5 leave no room for doubt that after the coming into force of the Act it was not open to the landlord to file a suit. He could only make an application under section 5 after giving notice under section 4. Sections 28 and 29 of the Act which were omitted as a result of the enactment of the Act of 1953 bring this out in clear terms. Section 28 was meant to give relief to a thika tenant in a case where a decree or order for recovery of possession of any holding from a thika tenant had been made before the date of commencement of the Act. It could not apply to the facts of a case like the present where the decree was made after the Act had come into force. Section 29, on the other hand, shows that it was to be applicable to all suits and proceedings which were pending at the date of the commencement of the Act of 1949. In other words, it was to apply to any suit or appeal or any proceeding in execution which was pending on 28th February, 1949. In any such case, the suit or proceeding wherever it was pending had to be transferred to the controller. The controller in his turn had to deal with the matter in accordance with the provisions of the Act of 1949 as if it had been in operation on the date of the institution of the suit or proceeding which might be before the commencement of the Act; but he was to deal with all pre Act suits on the basis that no notice under section 4 was necessary. If the legislature did not want to impose the bar of section 4 to pre Act suits in 1949 it does not stand to reason that the legislature should seek to impose it in the year 1953 to be operative in all suits pending not on February 28, 1949 but on 21st October, 1952. The logical conclusion is that the legislature always proceeded on the basis that section 4 was prospective. The language of section 5 being closely similar to that used in section 4 that section should also be held to be prospective only. 182 We cannot speculate as to why the legislature thought fit to omit sections 28 and 29 from the Act of 1949. The effect of omission of section 28 has been considered by this Court in Mahadeolal Kanodia vs Administrator General of West Bengal(1) where it was held that a thika tenant against whom proceedings for execution of the decree for eviction were pending and who had applied for relief under section 28 lost the protection of that section as a result of the Amending Act of 1953. The effect of omission of section 29 is that we must measure the rights of the parties in the appeal before us on the 'basis that the section had never been on the statute book. The situation which arises as a result thereof is that we must deal with the rights of the parties to a suit filed before the Act of 1949 was enacted in terms of such provisions as were clearly applicable thereto. As Abdul Gaffur came under the definition of a thika tenant by the Amending Act of 1953 we have to proceed on the basis that he was such a tenant in 1949 with the result that he could claim the benefit of section 4 of the Act. As already noted, sections 4 and 5 could not be made to apply to such a suit which in the view expressed, were prospective and not retrospective. Consequently, the absence of a notice under section 4 would not stand in the way of the landlord nor could his suit be rejected on the ground that he had not applied to the controller. There being no provision for transfer of the proceedings of the suit to the controller, the court had to apply the Act as it found applicable to the facts of the case. It is open to the legislature to impose a bar or a qualification to the rights of the parties by the use of suitable words such as "notwithstanding any law to the contrary or in any agreement between the parties". In such a case, a litigant desiring to have relief in a suit must show that the bar does not affect his case. For instance, it is open to the legislature to enact that notwithstanding the rights which a landlord may have against a tenant under the ordinary law of the land, he shall not be entitled to eject the tenant unless he makes out a special ground for eviction, as has been done by section 3 in this case. Most of the Rent Control Acts all over India contain similar provisions and courts have always held such provisions applicable to pending proceedings. Whereas before the enactment of the Calcutta Thika Tenancy Act, 1949 it was not necessary for the landlord either to allege any of the grounds specified in section 3 or to prove the existence thereof at the hearing of the suit, he had to establish the existence of such a ground when the suit was heard. The ground need not be specified in the plaint, but nevertheless it had to be established in the suit. In this case, the learned Subordinate Judge, Seventh Court, Alipore who was directed by the remand order of the Calcutta High Court to take fresh evidence, if necessary, was not called upon by any of the parties to hear or record fresh evidence. He however directed his attention to the (1) [1960]3 S.C.R. 578. 183 question as to whether the tenant appellant was entitled to press into service the provisions of sections 3 and 4 of the Act. According to him both these sections would apply to the facts of this case. The learned Subordinate Judge seems to have been of the opinion that it was necessary to state some ground under section 3 on the basis of which the landlord wanted to eject the tenant. Referring to the notice of ejectment served in this case, he said: "Not any one of the grounds as enumerated in section 3 was called in aid or could be called in aid". He was not right in his view that the grounds specified in section 3 could not be called in aid. Section 3 does not purport to lay down that the grounds mentioned therein had got to be stated in the notice of ejectment. All that the section lays down is that ejectment could not be had unless the existence of one of the grounds was proved. Such proof could have been adduced at the trial even if no mention of the grounds had been made before. As section 4 of the Act was prospective only, it could not apply to this case. The decision of the Subordinate Judge is however right inasmuch as the landlord made no attempt to establish any of the grounds for eviction mentioned in section 3. The decision of the High Court, when the matter was heard for the second time must be upheld on that ground. However, the. view expressed by the Calcutta High Court finally hearing the appeal that suits for eviction of thika tenants became infructuous before civil courts after the omission of section 29 is not correct. The correct view is that sections 4 and 5 being prospective and as such inapplicable to pre Act suits, the landlord had to establish the existence of one of the grounds specified in section 3 in order to succeed. There being no provision for transfer of pending suits and appeals, the court hearing the appeal would have to pass a decree for ejectment even if the defendant was a thika tenant after taking into account section 3. The tenant could not however ask for any compensation for the structures but could only remove them in terms of section 108(h) of the Transfer of Proper ty Act. For reasons we cannot speculate upon, the legislature limited the applicability of the Act only to suits and appeals pending on 21st October 1952 and not in February, 1949 i.e. the date of the commencement of the Act of 1949. It may be because before the Ordinance of 1952 no one could establish his rights as a thika tenant in view of the vague definition of "thika tenant" in the Act of 1949 which led to the decisions of the Calcutta High Court against persons who sought to establish their rights as such. The legislature cannot be taken to have imposed a ban on all pre Act suits by the circuitous process of sections 4 and 5 of the Act. It could then have said in clear terms that all pre Act suits shall be stayed. Clearly that never was the intention of the legislature as section 29 of the Act of 1949 amply demonstrates. In the result, as the landlord has not established any of the grounds specified in section 3 entitling him to ejectment, the appeal 184 must be dismissed. On the special facts of the case, we make no order as to costs. Bhargava, J. I agree with the judgment of my brother, Mitter, J. with the exception that I would like to reserve my opinion on the question whether section 4 of the Calcutta Thika Tenancy Act, 1949, as amended up to 1953, is prospective or not. On the view that this appeal must be dismissed because the respondent was entitled to the benefit of section 3, it does not appear to me to be necessary to express any opinion on whether compliance with section 4 was also required, or whether it being prospective only no such compliance by the appellant was needed.

In June 1948 the appellant instituted a suit against the first respondent and others for their ejectment from the property in suit, On February 28, 1949 the Calcutta Thika Tenancy Act came into force. The first respondent was not a thika tenant within the definition therefore of given in the Act. The suit was decreed by the Munsif in March 1949. In November 1949 the appeal filed by the first respondent was ,dismissed by the first appellate court. He then filed a second ,,appeal in the High Court which was heard in 1954. Before that the Calcutta Thika Tenancy (Amendment) Act, 1953 was passed. Under this Act the first respondent came within the definition of thika tenant. The High Court remanded the case to the Subordinate Judge for trying the case in the light of the amended Act. The Subordinate Judge held that the first respondent was a thika tenant and could not be ejected as none of the grounds mentioned in section 3 of the Act had been established by the appellant. The latter appealed to the High Court and urged that with the omission of section 29 in the 1953 Act Civil Courts became, unable to remit ejectment suits to the Rent Controller with the result that the Act as amended could not apply to pre Act suits. The High Court however took the view that after the omission of sections 28 and 29 from the Act suits for eviction before civil courts became infructuous and, accordingly, dismissed the appeal. The appellant with certificate came to this Court. The questions that fell for consideration were: (i) whether the tenant could take the benefit of section 3 in a pre Act suit, (ii) whether in view of the omission of sections 28 and 29 from the Act the civil courts had jurisdiction to try such a suit. HELD:Per Wanchoo C.J. & Mitter J. (i) While it is a general principle of law that statutes are not to operate retrospectively so as to defeat vested interests; such operation may be given by express enactment or by necessary implication from the language employed. The language of section 3 leaves no room for doubt that it is retrospective since it expressly states that notwithstanding anything contained in any other law for the time being in force or in any contract, a thika tenant will be liable to ejectment on grounds specified therein and not otherwise. [179 D E; 180 F G]. Knight vs Lee, and Beadling vs Goll, 39 Times Law Reporter 31, referred to. Section 3 does not purport to lay down that the grounds mentioned therein have got to be stated in the notice of ejectment. All that the section lays down is that ejectment could not be had unless the ,existence of one of the grounds was proved. Such proof could have been adduced at the trial even if no mention of the grounds had been made before. The appellant not having given such proof the case was rightly decided against him. [183 C D]. 171 (ii) However In a pre Act suit no notice under section 4 could be insisted on as that section , clearly prospective. Section 5 which required proceedings to be filed before the Controller was also clearly prospective. [180 H; 181 A; B H]. (iii) The High Court was wrong in holding, that suits for the eviction of thika tenants became infructious before civil courts after the omission of sections 28 and 29. There being no longer any provision for transfer of pending suits and appeals, the court hearing the appeal would have to pass a decree for ejectment even if the defendant was a thika tenant after taking into account section 3. [183 D F]. Per Bhargava, J. This appeal must be dismissed because the respondent was entitled to the benefit of section 3. It was not necessary to express any opinion whether compliance With section 4 was also required or whether it being prospective only no such compliance by the appellant was needed. [184 B].

ivil Appeals No. 625630 of 1967. Appeals by special leave from the judgment and order dated ' March 6, 1967 of the Orissa High Court in O.J.C. Nos. 495 and 496 of 1966, and 3, 4, 27 and 28 of 1967 respectively. C.K. Daphtary, Attorney General, N.S. Bindra, G. Rath and R.N. Sachthey, for the appellant (in all the appeals). Sarjoo Prasad and S.N. Prasad, for respondents Nos. 8, 23, 8 ' and 5 (in C.As. Nos. 6.25; 627,629 and 630 of 1967 respectively). , N.M. Patnaik and Vinoo Bhagar, for respondents Nos. 5 to 7 (in C.As. 625 and 629 of 1967) and respondents Nos. 20 to 22 (in C.A. No. 627 of 1967). 156 The Judgment of the Court was delivered by Hegde, J. These cases are the outcome of an unfortunate conflict between the High Court and the government of Orissa. The Orissa Superior Judicial Service (senior branch) is a combined cadre consisting of officers holding purely judicial posts as well as posts which are essentially administrative in character. It consists of eight district and sessions judges, two additional district and sessions judges, secretary to government in law department, superintendent and legal remembrancer, law department, deputy secretary to government in the law department, member administrative tribunal and the Registrar of the Orissa High Court, in all 15 in number. All these officers are the members of the Orissa '"Judicial Service" within the meaning of that expression in article 236(b) of the Constitution. Out of these, the district and sessions judges and additional district and sessions judges were discharging purely judicial functions. In view of article 229 of the Constitution. the power to appoint the Registrar of the High Court is exclusively that of the Chief Justice. Neither the High Court as such nor the Governor has any hand in his appointment. The power to appoint the secretaries to the government is that of the Governor. Under the Government of India Act 1935, the power to transfer a district judge from one post to another was that of the Governor though that power was always exercised in consultation with the High Court and by and large on the recommendation of the High Court. In Orissa, as in most of the other States, that practice continued till the decision of tiffs Court in the State of Assam vs Ranga Mahammad and others(1). Obviously when the Governor promulgated the Orissa Superior Judicial Service Rules 1963, he proceeded on the basis that the power to transfer the district judges and addl. district judges, from one post to another whether as a judge or to one of the posts in the secretariat was in his hands. It appears that for some time past there were differences between the High Court and the government about the posting of some of the judicial officers. The High Court was anxious that a judicial officer occupying one of the administrative posts enumerated above, should not, in the interest of judicial work, continue in that post for an unduly long time. The High Court insisted that ordinarily judicial officers should: not hold those posts for more than three years. The High Court was repeatedly requesting the government to send back judicial officers working in administrative posts as district judges or as addl. district judges as the case may be, after they had held those posts for three years or more. But those requests were not respected. On that account, there appears to have been some friction between the High Court and the gov ernment for some years past. (1) ; 157 Shri B.K. Patro one of the district and sessions. judges, was posted as superintendent and legal remembrancer in March 1962 Shri K.K. Bose, addl. district and sessions judge, was posted as joint secretary in the law department in the same month. He worked in that capacity till February 1965. Thereafter, he was, posted as superintendent and legal remembrancer. Shri P.C. Dey. a district and sessions judge, was posted as member sales tax tribunal on 31 1 62. That was a non cadre post. In February 1965, the High Court took a policy decision to the effect that as a general rule, judicial officers working in special posts whether cadre or non cadre, outside their regular line, should be recalled to the regular line after the completion of three years. in the interest of the service as well as the officers, so that "Officers may not deteriorate by remaining out of touch from regular judicial work for continuously long periods and the service will not suffer by being deprived of the services of senior and experienced officers in manning the posts in the regular judicial line. " It is of utmost importance that judicial officers should not be kept away from judicial work for a long time lest they should lose touch. with judicial work and even more than that should become indifferent to judicial approach. The above. policy decision was duly communicated to the government. The government by its letter of April 2, 1965, intimated that it had no objection to adhere to the principle of three years service in an appointment at a particular station against a special post. But when it came to the question of implementing that policy, the government was reluctant. Every time the High Court requested the government to release the three officers mentioned above for 'being posted as district and sessions judges or addl. district and sessions judges as the case may be, the government turned down those requests on one ground or the other. We do not think that it was proper for the government to do so. But at that stage the High Court felt helpless as it was under the impression that under law the Governor was the sole authority to effect the. necessary transfers. On September 21 1966, this Court rendered its decision in Ranga Mahammad 's(1) case. Therein this Court held that power to transfer judges presiding over courts vested with the High Court under article 235 of the Constitution. Soon after that decision was rendered and without any further dialogue with government in the ' light of that decision, the High Court took the precipitate step of transferring the aforementioned officers to other posts and in their place posted officers who were doing judicial work till then. By its order dated October 10, 1966, the High Court ordered the following transfers: (a) Shri K.B. Panda who was attached to the commission of enquiry in connection with students ' (1) ; 158 agitation, as law secretary to the government of Orissa, (b) Shri B.K. Patro, the then law secretary as district and sessions judge of Ganjam Boudh, (c) Shri T. Misra, district and sessions judge, Ganjam Boudh, as superintendent and legal remembrance and ex officio additional law secretary to the government of Orissa, (d) Shri K.K. Bose, the then superintendent and legal remembrance and additional law secretary as district and sessions judge of Mayurbhanj Keonjhar. (e) Shri P.K. Mohanti, district and sessions judge, Bolangir Kalahandi, as deputy secretary to the law department, a post which was vacant then, and (f) Shri P.C. Dey, member sales tax tribunal, as district and sessions judge, Bolangir Kalahandi. These orders were duly notified in the Orissa Gazette. In pursuance of those orders, Shri K.B. Panda, Shri T. Misra and Shri P. K. Mohanti handed over charge of the posts they were holding and reported themselves at the secretariat for assuming charge of the posts to which they were posted. But the government refused to accept them. Further it directed Shri Patro, Shri Bose and Shri Dey to continue in the posts they were holding. Those officers acted in accordance with the orders of the government. Consequently, the sessions divisions of Ganjam Boudh, Mayurbhanj Keonjhar and Bolangir Kalahandi were without district and sessions judges for several days. It is at this stage the petitions which have given rise to those appeals were filed by some of the advocates practising in one or the other of the sessions divisions mentioned above, praying for a writ of mandamus against the government as well as the concerned officers to implement the transfers ordered by the High Court on October 10, 1966 and also a writ of quo warranto against Shri B.K. Patro, Shri K.K. Bose and Shri P.C. Dey requiring them to show cause under what authority they were holding the posts of the law secretary the superintendent and legal remembrancer and member sales tax tribunal, respectively. In every one of those petitions, rule nisi was issued. The government as well as the concerned officers in the returns made by them justified the action taken by the government. On March 6, 1967 a special Bench of the High Court by majority allowed those petitions and made the rule absolute. The High Court overruled the prayer made on behalf of the government to stay the operation of its decision till necessary orders were obtained from this Court. It directed the government to imple 159 ment its orders forthwith. Having No. alternative before it, the government implemented the orders in question on March 6 1967, on the very day the decision of the High Court was rendered. The government 's prayer for necessary certificates for leave to appeal to this Court was rejected. Therefore, these appeals were filed after obtaining special leave from this Court. The order of the High Court consists of two parts, namely, (1) holding that Shri B.K. Patro, Shri K.K. Bose and Shri P.C. Dey had no authority to act as law secretary, superintendent and legal remembrancer and member sales tax tribunal, respectively, on and after October 10, 1966, and (2) commanding the State of Orissa, the Chief Secretary to the government of Orissa, the Home Secretary to the government of Orissa, Shri P.C. Dey, Shri K.K. Bose and Shri Patro to implement the transfers ordered by the High Court on October 10, 1966. It was not the case of the contesting respondents that Shri P.C. Dey, Shri K.K. Bose and Shri B.K. Patro had not the necessary qualifications to hold the posts they were holding. It was also not disputed that they had been validly appointed to those posts. In these circumstances we fail to see how the High Court could have held that they had no authority to hold the posts in question. Shri Sarjoo Prasad learned counsel for the High Court of Orissa at the very commencement of his arguments conceded that the order of the High Court holding that those officers had no authority to hold the posts in question is unsustainable. In view of that concession it is unnecessary for us to go into that question further. As mentioned earlier, member, sales tax tribunal, was an ex cadre post. Hence in the case of Shri P.C. Dey it must be assumed that his services were placed by the High Court at the disposal of the government for being posted as member sales tax tribunal. It is not the case of the parties that he was placed at the disposal of the government for any definite period. AS seen earlier, he was holding the post in question ever since 1962.In those circumstances, the High Court was entitled to recall him and post him as a district and sessions judge. Hence that part of the High Court 's order is unassailable. Before going into the validity of the orders of transfer relating to the other officers, it is necessary to ascertain the law bearing on the subject. As seen earlier, the cadre of the superior judicial service (senior branch) consisted of not only the posts of district and sessions judges and addl. district and sessions judges but also officers holding other posts. One of the officers included there is the Registrar of the High Court. Neither the government nor the High Court could have posted any officer as the Registrar of the High Court as that post can be filled only by 160 the Chief Justice. To hold otherwise would be to contravene article 229 of the Constitution. Similarly the posts of the law secretary, deputy law secretary and file superintendent and legal remembrancer cannot be considered as district courts or courts subordinate to district courts within the meaning of those words in article 235 of the Constitution. Those posts are similar to. the corresponding posts in other departments in the secretariat. Prima facie it is for the Governor to fill up those posts. It was conceded that if those posts had not been included in the cadre of superior judicial service the High Court would not have had any right to fill those posts. But we were told that in view of the decisions of this Court in State of West Bengal vs Nripendra Nath Bagchi(1) and State of Assam vs Ranga Mahammad(2) the High Court must be held to have that right as those posts are included in the cadre of superior judicial service. Before considering the correctness of that submission it is necessary to notice that this argument breaks down when we come to the question of filling up the post of the Registrar. If the argument advanced on behalf of the High Court is correct. the High Court must also have, the power to fill up the post of the Registrar as that is also Included in the cadre. Now let us consider the ratio of the decisions in Nripendra Nath Bagchi 's case (1), and Ranga Mahammad 's (2) case. In Bagchi 's case,(1), this Court laid down that the word "control" found in article 235 includes disciplinary jurisdiction as well. The only question that fell for decision in that case was whether the government of West Bengal was competent to institute disciplinary proceedings against an addl. district and sessions judge. This Court upheld the decision of the High Court of Calcutta holding that it had no such jurisdiction. That was the single question decided in that case. It is true that in the course of the judgment. this Court observed that the High Court is made the sole custodian of the control of the judiciary, but that observation was made only in the context of the question that arose for decision. In Ranga Mahammad 's case(2), the point that arose for decision was as to who was the authority to transfer a district judge. the State government or the High Court. In that case, the State government ordered the transfer of certain district judges without even consulting the High Court. The rule laid down in that decision is of no assistance in determining the question as to whether the High Court has power to fill up some of the posts in the secretariat. In the course of that judgment, this Court observed (at page 459 of the report): "The question we have posed resolves itself into a question of a very different but somewhat limited form. (1) ; (2) ; 161 namely, whether the power to transfer District Judges is included in the 'control ' exercisable by the High Court over District Courts under article 235, or in the power of 'appointment of persons to be and the posting and promotion, of district judges ' which is to be exercised by the Governor under article 233, albeit in consultation with the High Court. If the sense of the matter be the former, then the High Court and if the latter, the Governor, would possess that 'power. The right approach is, therefore, to enquire what is meant by 'posting ' and whether the term does not mean the initial posting of a District Judge on appointment or promotion to a vacancy in the cadre, permanent or temporary. If this be the meaning, as the High Court holds. then the transfer of District Judges already appointed or promoted and posted in the cadre must necessarily be outside the power of the Governor and fall to be made by the High Court as part of the control vested in it by article 235." After analysing articles 233 and 235 and noticing the development of the law on the subject this Court held that under article 233, the Governor is only concerned with the appointment, promotion and posting to the cadre of district judges but not with the transfer of district judges already appointed or promoted and posted to the cadre which power is vested in the High Court under article 235 as the control given to the High Court over the district courts under that Article includes control over the officers who preside over those courts. Proceeding further this Court observed: "This is, of course, as it should be, the High Court is in the day to day control of courts and knows the capacity for work of individuals and the requirements of a particular station or Court. The High Court is better suited to make transfers than a Minister. For however well meaning a Minister may be he can never possess the same intimate knowledge of the working of the judiciary as a whole and of individual Judges, as the High Court. He must depend on his department for information. The Chief Justice and his colleagues know these matters and deal with them personally. There is less chance of being influenced by secretaries who may withhold some vital information if they are interested themselves. It is also well known that all stations are not similar in climate and education, medical and 162 other facilities. Some are good stations and some are not so good. There is less chance of success for a person seeking advantage for himself if the Chief Justice and his colleagues, with personal information, deal with the matter, than when a Minister deals with it on notes and information supplied by a secretary. The reason of the rule and the sense of the matter combine to suggest the narrow meaning accepted by us. The policy displayed by the Constitution has been in this direction as has been explained in earlier cases of this Court. " Obviously relying on the observation of this Court that after a judicial officer is posted to the cadre, it is for the High Court to effect his transfers, the court below has come to the conclusion that as the posts of the law secretary, deputy law secretary and superintendent and legal remembrancer are included in the cadre, the High Court has the power to fill those posts by transfer of judicial officers. The cadre this Court was considering in Ranga Mahammad 's(1) case, namely, Assam Superior Judicial Services Cadre consisted of the Registrar of the Assam High Court and three district judges in the first grade and some additional district judges in grade II. In that cadre, no officer holding any post under the government was included. Hence the reference by this Court to the cadre is a reference to.a cadre consisting essentially ,of officers under the direct control of the High Court. It was in that context this Court spoke of the cadre. The question of law considered in that decision was as regards the scope of the expression "control over district court" in article 235. The reference to the cadre was merely incidental. A decision is only an authority for what it actually decides. What is of the essence in a decision is its ratio and not every observation found therein nor what logically follows from the various observations made in it. On this topic this is what Earl of Halsbury L.C. said in Quinn vs Leathem(2): "Now before discussing the case of Allen vs Flood and what was decided therein, there are two observations of a general character which I wish to make, and one is to repeat what I have very often said before, that every judgment must be read as applicable to the particular facts proved, or assumed to be proved, since the generality of the expressions which may be found there are not intended to be expositions of the whole law, but governed and qualified by the particular facts of the case in which such expressions are to. be found. The other is that a case is only an authority for what it actually decides. I entirely deny that it can (1) ; (2) [1901] A.C. 495. 163 be quoted for a proposition that may seem to follow logically from it. Such a mode of reasoning assumes that the law is necessarily a logical code, whereas every lawyer must acknowledge that the law is not always logical at all. " It is not a profitable task to extract a sentence here and there from a judgment and to build upon it. Neither Bagchi 's case nor Ranga Mahammad 's case is of any assistance to us in deciding the question whether the High Court has competence to fill some of the posts in the secretariat by transfer judicial officers under Its control. Just as the executive cannot know the requirements of a particular court, the High Court also cannot know the requirements of any post in the secretariat. Just as the High Court resents any interference by the executive in the functioning of the judiciary, the executive has a right to ask the High Court not to interfere with its functions. It is for the executive to say whether a particular officer would meet its requirements or not. The High Court cannot, as contended by the learned Attorney General, foist any officer on the government. The cadre with which we are concerned in this case consists of three parts i.e., (1) presiding officers of district courts, (2) the Registrar of the High Court and (3) the judicial officers working in the secretariat. No doubt all these officers belong to the judicial service of the State and they were before 1962 presiding over district courts or courts subordinate to them and as such were under the control of the High Court. Hence without the consent of the High Court the government could not have posted them to administrative posts in 1962. It must be presumed that they were taken over by the government with the consent of the High Court. While sparing the service of any judicial officer to the government it is open to the High Court to fix the period during which he may hold any executive post. At the end of that period, the government is bound to allow him to go back to his parent department unless the High Court agrees to spare his services for some more time. In other words, the period during which a judicial officer should serve in an executive post must be settled by agreement between the High Court and the government. If there is no such agreement it is open to the government to send him back to his parent department at any time it pleases. It is equally open to the High Court to recall him whenever 'it thinks fit. If only there is mutual understanding and appreciation of the difficulties of the one by the other, there will be harmony. There is no reason why there should be any conflict between the High Court and the government. Except for very good reasons we think the High Court should always be 164 willing to spare for an agreed period the services of any of the officers under its control for filling up such executive posts as may require the services of judicial officers. The government, in its turn should appreciate the anxiety of the High Court that judicial officers should not be allowed to acquire vested interest in the secretariat. Both the High Court and the government should not forget the fact that powers are conferred on them for the good of the public and they should act in such a way as to advance public interest. If they act with that purpose in view as they should, then there is no room for conflict and no question of one dominating the other arises. Each of the organs of the State has a special role of its own. But our Constitution expects all of them to work in harmony in a spirit of service. As Shri K.K. Bose and Shri B.K. Patro had not been placed at the disposal of the government for any definite period, it was open to the High Court to recall them and post them as presiding officers of district courts. Hence, the High Court was within its powers in posting Shri B.K. Patro as district and sessions judge of Ganjam Boudh division, Shri K.K. Bose as district and sessions judge of Mayurbhanj Keonjhar division, and Shri P.C. Dey as district and sessions judge of Bolangir kalahandi division though it would have been graceful if it had effected those transfers after reasonable notice to the government. But it was beyond the powers of the High Court to post Shri K.B. Panda as the law secretary, Shri T. Misra as superintendent and legal remembrancer and Shri P.K. Mohanti as the deputy law secretary. That part of the High Court 's order is clearly unsustainable. But as mentioned earlier, the government has already implemented that part of the order as well. Those officers are now functioning in the posts to which they were transferred. The learned Attorney General told 'us that the government has no objection to those officers continuing in those posts for the present. We are sure if any change is required the same will be effected by mutual understanding between the High Court and the government. In the result these appeals are partly allowed and the order of the High Court holding that Shri B.K. Patro, Shri K.K. Bose and Shri P.C. Dey had no authority to hold the posts they were holding on or after October 10, 1966 is set aside. Though we hold that the orders of the High Court posting Shri B.K. Panda as law secretary, Shri T. Misra as superintendent and legal remembrancer and Shri P.K. Mohanti as deputy law secretary were excess of its powers, we do not set aside the mandamus issued by it for the reasons mentioned earlier. In other respects the judgment appealed against is upheld. The parties will bear their own costs in these appeals. R.K.P.S. Appeals allowed in part.

The Orissa Superior Judicial Service consisted of 15 posts. 10 of which were District and Sessions Judges or Additional District and Sessions Judges; of the other five, one was Registrar of the High Court and four were officers of the State Government. P, one of the District and Sessions Judges was posted as Superintendent and Legal Remembrance in March 1962. B. an Additional Judge. was posted as Joint Secretary in the Law Department in the same month and sometime thereafter was posted as Superintendent and Legal Remembrance. D, a District and Sessions judge was posted in January 1962 as member. Sales Tax Tribunal, which was a non cadre post. In February 1965 the High Court took a policy decision to the effect that as a general rule, judicial officers working in special posts. whether cadre or non cadre. outside their regular line, should be called to the regular line after the completion of three years in the interest of the service as well as the officers, so that the officers did not become out of touch with judicial work. Although this policy decision was accepted by the State Government. it was not implemented ' in respect of P, B and D. The High Court being under the impression at the time that in law the Governor was the sole authority to effect the necessary transfers. did not take any action itself. After the decision of this Court in Ranga Mohammad 's case ; holding that the power to transfer Judges presiding over Courts vested with the High Court under article 235 of the Constitution. the High Court. issued an order on October 10. transferring P. B and D to judicial posts and posting to the administrative posts in their place, K. T and M who were doing judicial work till then. In pursuance of those orders K. T and M handed over charge of the posts they were holding and reported to the Secretariat for assuming charge of the administrative posts to which they were assigned. but the Government refused to accept them. The State Government directed P. B and D to continue in the posts they were previously holding and those officers acted in accordance with the orders of the Government. Consequently. some of the Sessions Divisions in the State were without District and Sessions Judges for several days and some Advocates practising in those Divisions filet/petitions before the High Court for a writ of mandamus against the Government. as well as the concerned officers to implement the transfers ordered by the High Court. They also sought a writ of quo warranto against P. B and D questioning the authority under which they were holding the administrative posts held by them until then. The High Court allowed the petition and directed the Governments to implement its orders forthwith. The Government implemented these orders on March 6. 1967 and thereafter appealed to this Court, by special leave. 155 HELD: (i) Although the High Court was within its powers. in posting P. B and D, the three officers holding administrative posts. as District and Sessions Judges, it was beyond its powers to post in their places three other officers to the administrative posts. Just as the executive cannot know the requirements of a particular court, the High Court cannot also know the requirements of any post in the Secretariat. It is for the Executive to say whether a particular officer would meet its requirements or not. The High Court cannot foist an officer on the Government. [163C D] While sparing the service of any judicial officer to the government it is open to the High Court to fix the period during which he may hold any executive post. At the end of that period, the government is bound to allow him to go back to his parent department unless the High Court agrees to spare his services for some more time. In other words, the period during which a judicial officer should serve in an executive post must be settled by agreement between the High Court and the government. If there is no such agreement it is open to the Government to send him back to his parent department at any time it pleases. It is equally open to the High Court to recall him whenever it thinks [163 F H] It was not the case of the contesting respondents that P, B and D did ' not have the necessary qualifications to hold the posts that they were holding or that they had not been validly appointed to those posts. In these circumstances the High Court could not have held that they had no authority to hold the posts in question. [159D] State of Assam vs Ranga Mohammad and Ors. ; ; State of West Bengal vs Nripendra Nath Baghi; ; ; explained and distinguished. (ii) A decision is only an authority for what it actually decides. What is of the essence in a decision is its ratio and not other observations found therein nor what logically follows from the various observations made in it. [162E F] Quin vs Leathem, ; ; referred to.

ases Nos. 297 and 298 of 1951. Appeals under article 132 (1) of the Constitution from the judgment and order dated 28th August, 1951, of the High Court of Judicature at Calcutta (Harries C.J., Chakravarthi, Das, Banerjee and S.R. Das Gupta JJ.) in Civil Revision Cases Nos. 942 and 1113 of 1951. The facts of the case and the argument of Counsel appear fully in the judgment. M.C. Setalvad, Attorney General for India (B. Sen, with him) for the appellant in Case No. 297. Jitendra Nath Ghose (R. P. Bagchi, with him) for the respondent in Case No. 297. A.A. Peerbhoy and J.B. Dadachanji for Habib Mohammad (Intervener). V. Rajaram Iyer, Advocate General of Hyderabad (R. Ganapathy Iyer, with him) for the State of Hyderabad. A.R. Sornanatha Iyer, Advocate General of Mysore (K. Ramaseshayya Choudhry, with him) for the State of Mysore. B. Sen, for the appellant in Case No. 298. N.C. Chatterjee (section K. Kapur, with him) for the respond ent in Case No. 298. 1952. January 11. The following judgments were deliv ered. 289 PATANJALI SASTRI C.J. This is an appeal by the State of West Bengal from a judgment of a Full Bench of the High Court of Judicature at Calcutta quashing the conviction of the respondent by the Special Court established under sec tion 3 of the West Bengal Special Courts Ordinance, 1949, (Ordinance No. 3 of 1949) which was replaced in March, 1950, by the West Bengal Special Courts Act, 1950, (West Bengal Act X of 1950) (hereinafter referred to as "the Act"). The respondent and 49 other persons were charged with various offences alleged to have been committed by them in the course of their raid as an armed gang on a certain factory known as the Jessop Factory at Dum Dum, and they were convicted and sentenced to varying terms of imprison ment by the Special Court to which the case was sent for trial by the Governor of West Bengal by a notification dated 26th January, 1950, in exercise of the powers conferred by section 5 (1) of the Act. Thereupon the respondent applied to the High Court under article 226 of the Constitution for the issue of a writ of certiorari quashing the conviction and sentence on the ground that the Special Court had no jurisdiction to try the case inasmuch as section 5 (1), under which it was sent to that Court for trial, was uncon stitutional and void under article 13 (2)as it denied to the respondent the equal protection of the laws enjoined by article 14. The High Court by a Full Bench consisting of the Chief Justice and four other Judges quashed the conviction and directed the trial of the respondent and the other accused persons according to law. Hence the appeal. The Act is intituled "An Act to provide for the speedier trial of certain offences ", and the preamble declares that "it is expedient to provide for the speedier trial of cer tain offences ". Section 3 empowers the State Government by notification in the official gazette to constitute Special Courts, and section 4 provides for the appointment of spe cial judges to preside over such courts. Section 5, whose constitutionality is impugned, runs thus: 290 "5(1) A Special Court shall try such offences or classes of cases, as the classes of offences or cases State Government may by general or special order in writing, direct. (2) No.direction shall be made under sub section (1) for the trial of an offence for which an accused person was being tried at the commencement of this Act before any court but, save as aforesaid, such direction may be made in re spect of an offence, whether such ' offence was committed before or after the commencement of this Act. " Sections 6 to 15 prescribe the special procedure which the court has to follow in the trial of the cases referred to it. The main features of such procedure which mark a departure from the established procedure for criminal trials under the Code of Criminal Procedure are the elimination of the committal procedure in sessions cases and the substitu tion of the procedure laid down in the Code for trial of warrant cases by the Magistrate, trial without jury or assessors, restriction of the court 's power in granting adjournments, special powers to deal with refractory accused and dispensation of de novo trial on transfer of a case from one special court to another. While some of these departures from the normal procedure might, in practice, operate in some respects to the disadvantage of persons tried before the Special Court, it cannot be said that they derogate from the essential requirements of a fair and impartial trial, so as to give rise, from their very nature, to an inference of a discriminatory design. In other words, it cannot be said that the special procedure provided in the Act is, on its face, calculated to prejudice the fair trial of persons subjected to it. The departure in each case is plainly calculated to shorten the trial and thus to attain the declared objective of the statute. Harries C.J. who delivered the leading judgment, which Das and Banerjee JJ. concurred, applied the test of what may be called "reasonable classification" and held that, although the need for a speedier trial than what is possible under the procedure prescribed 291 by the Code of Criminal Procedure might form the basis of a reasonable classification and section 5 (1) could not be regarded as discriminatory in so far as it authorises the State Government to direct that certain offences or classes of offences or classes of cases should be tried by a special court, the provision was discriminatory and violative of article 14 of the Constitution in so far as it purported to vest in the State Government an absolute and arbitrary power to refer to a special court for trial "any cases ", which must include an individual case, "whether the duration of such a case is likely to be long or not ". The learned Chief Justice rejected the argument that the word "cases" in the sub section should, in view of the title and preamble of the Act. be construed as meaning cases requiring speedier trial." He found it" impossible to cut down the plain meaning of the word 'cases ' as used in the section". He realised that "the powers under the sub section could be so exercised as not to involve discrimination, but they also could, in my view, be exercised in a manner involving dis crimination. When an Act gives power which may and can offend against a provision or provisions of the Constitution such an Act is ultra vires though it could be administered so as not to offend against the Constitution", and he relied in support of this view on certain observations in the judgment of the majority in the Crossroads case(1). Chakravartti and Das JJ. delivered separate judgments agreeing with the conclusion of the Chief Justice, Das Gupta J,, however, going further and holding that section 5 (1) was unconstitutional in its entirety inasmuch as "the clas sification sought to be made on the expediency of speedier trial is not a well defined classification. It is too indef inite and there can hardly be any definite objective test to determine it. " Before considering whether section 5(1) infringes, to any and what extent, the constitutional prohibition under article 14, it is necessary to ascertain the true scope and intendment of the impugned provision. It (1) ; 603. 292 purports to provide for the matters to be tried by a special court and does not, in form, seek to define the kind or class of offences or cases which the State Government is empowered under the Act to assign to such a court for trial. In other words, the purpose of section 5 (1) is to define the jurisdiction of a special court appointed under the Act and not the scope of the power conferred on the State Gov ernment to refer cases to such court. As the very object of the Act was to provide for speedier trials by instituting a system of special courts with a simplified and shortened procedure, it is reasonable to conclude that, so far as the legislature was concerned, its intention was that courts constituted under the Act and applying such procedure should deal only with cases requiring speedier trial and that, accordingly, the State Government should refer to such courts only cases of that description. The principle of construction applicable here is perhaps nowhere better stated than by Lord Tenterden C.J. in Halton vs Cove(1): "It is very true, as was argued for the plaintiff, that the enacting words of an Act of Parliament are not always to be limited by the words of the preamble, but must in many cases go beyond it. Yet, on a sound construction of every Act of Parliament, I take it the words of the enacting part must be confined to that which is the plain object and general intention of the legislature in passing the Act, and that the preamble affords a good clue to discover what that object was". The same view was expressed by Holmes J. in an American case, Carroll vs Greenwich Insc. Co. (2). "The object of the law, we assume, until the lower Court shall decide otherwise, is single to keep up competition and the general language is to be restricted by the specific provi sions and to the particular end. " The title and the preamble as well as the other specific provisions of the Act here in question show unmistakably that the whole object and purpose of the legislation was to devise machinery for "speedier trial of certain offences", (which must mean trial of cases involving the commission of certain (1) (1830) I B. & Ad. 538, 558. (2) ; 293 offences as there can, of course, be no trial of offences in the abstract) and the general expressions used in providing for the power to set that machinery in operation must be restricted to that end in accordance with the intention of the legislature; for, a literal construction of the general language would impute to the legislature an intention to confer an arbitrary power of reference which would be incon sistent not only with the declared object of the statute but also with the constitutional prohibition against discrimina tion, which the legislature must be taken to have been aware of when it deliberately re enacted the provisions of the old Ordinance. The discretion vested in the State Government in selecting cases for reference to a special court may not be subject to judicial review and may, in that sense, be abso lute, but that is very different from saying that it was intended to be arbitrary. Its exercise must involve bona fide consideration of special features or circumstances which call for a comparatively prompt disposal of the case or cases proposed to be referred. In other words, section 5 (1) must, in my opinion, be read as empowering the State Government to direct a special court to try such offences or classes of offences or cases or classes of cases as, in its judgment, require speedier trial. The question next arises as to whether the provision, thus understood, violates the prohibition under article 14 of the Constitution. The first part of the article, which appears to have been adopted from the Irish Constitution, is a declaration of equality of the civil rights of all persons within the territories of India and thus enshrines what American Judges regard as the "basic principle of republi canism" [cf. Ward vs Flood (1)]. 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 Ameri can Constitution, enjoins that equal protection shall be secured to all such persons in the enjoyment of their rights and liberties without discrimination or favouritism, or as an American Judge put it "it is a (1) 17 Am. Rep.405. 294 pledge of the protection of equal laws" [Yick Wo vs Hopkins (1)], that is, Jaws that operate alike on all persons under like circumstances. And as the prohibition under the article is directed against the State, which is defined in article 12 as including not only the legislatures but also the Governments in the country, article 14 secures all persons within the territories of India against arbitrary laws as well as arbitrary application of laws. This is further made clear by defining "law" in article 13 (which renders void any law which takes away or abridges the rights conferred by Part III) as including, among other things, any "order" or "notification", so that even executive orders or notifica tions must not infringe article 14. This trilogy of arti cles thus ensures non discrimination in State action both in the legislative and the administrative spheres in the demo cratic republic of India. This, however, cannot mean that all laws must be general in character and universal in application. As pointed out in Chiranjit Lal 's case(2) and in numerous American decisions dealing with the equal pro tection clause of the 14th Amendment, the State in the exercise of its governmental power must of necessity make laws operating differently on 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. But classi fication necessarily implies discrimination between persons classified and those who are not members of that class. "It is the essence of a classification" said Mr. Justice Brewer in Atchison, Topeka & Santa Fe R. Co. vs Matthews (3), "that upon the class are cast duties and burdens different from those resting upon the general public. Indeed the very idea of classification is that of inequality, so that it goes without saying that the mere fact of inequality in no manner determines this matter of constitutionality". Commenting on this observation in his dissenting opinion in Connoly vs Union Sewer Pipe Co. (4) (which later prevailed in Tigner vs (1).118 U.S. 356, 369. (3) ; , 106. (2) ; (4) ; 566, 567, 568. 295 Texas(1)) Mr. Justice McKenna posed a problem and proceeded to answer it. "It seems like a contradiction to say that a law having equality of operation may yet give equality of protection. Viewed rightly, however, the contradiction disappears. Government is not a simple thing. It encounters and must deal with the problems which come from persons in an infinite variety of relations. Classification is the recognition of those relations, and, in making it, a legislature must be allowed a wide latitude of discretion and judgment. Classification based on those relations need not be constituted by an exact or scientific exclusion or inclusion of persons or things. Therefore it has been repeatedly declared that classification is justified if it is not palpably arbitrary". (italics mine.) Thus, the general language of article 14, as of its American counterpart, has been greatly qualified by the recognition of the State 's regulative power to make laws operating differently on different classes of persons in the governance of its subjects, with the result that the princi ple of equality of civil rights and of equal protection of the laws is only given effect to as a safeguard against arbitrary State action. It follows that in adjudging a given law as discriminatory and unconstitutional two aspects have to be considered. First, it has to be seen whether it ob serves equality between all the persons on whom it is to operate. An affirmative finding on the point may not, howev er, be decisive of the issue. If the impugned legislation is a special law applicable only to a certain class of persons, the court must further enquire whether the classi fication is founded on a reasonable basis having regard to the object to be attained, or is arbitrary. Thus, the rea sonableness of classification comes into question only in those cases where special legislation affecting a class of persons is challenged as discriminatory. But there are other types of legislation such as, for instance, the Land Acquisition Act, which do not rest on classification, and no question of reasonable classification could fairly arise in respect of such (1) ; , 296 enactments. Nor, obviously, could it arise when executive orders or notifications directed against individual citi zens are assailed as discriminatory. It is interesting to find that the trend of recent decisions in America has been to lean strongly toward sus taining State action both in the legislative and in the administrative spheres against attacks based on hostile discrimination. Classifications condemned as discriminatory have been subsequently upheld as being within the powers of the legislature. In Tigner vs Texas (1), the majority view in Connolly 's case(2) holding that an Illinois anti trust law, which made certain forbidden acts criminal if done by merchants and manufacturers but declared them to be civil wrongs if done by farmers and stockmen, was "manifestly a denial of the equal protection of the laws ") was consid ered to be no longer "controlling ". While in Gulf, Colorado & Santa Fe R. Co. vs Ellis (3) a Texas statute imposing an attorney 's fee in addition to costs upon railway corpora tions which unsuccessfully defended actions for damages for stock killed or injured by their train was struck down as discriminatory because such corporations could not recover any such fee if their defence was successful, a similar provision in a Kansas statute in respect of an action against railroad companies for damages by fire caused by operating the rail road was upheld as not discriminatory in Atchison, Topeka & Santa Fe R. Co vs Matthews (4), the earlier case being distinguished on some ground which Harlon J. in his dissenting opinion confessed he was not "astute enough to perceive". And the latest decision in Kotch vs Pilot Comm 'rs(5) marks, perhaps, the farthest swing of the pendulum. A Louisiana pilotage law authorised the appoint ment of State pilots only upon certification by a State Board of river pilot commissioners who were themselves State Pilots. Among the prescribed qualifications was apprentice ship under a State pilot for a certain period. By admitting only their relatives and friends (1) ; (4) ; (2) ; (5) ; , (3) 297 to apprenticeship, the members of the board made it impossi ble, with occasional exceptions, for others to be appointed as State pilots. Upholding the constitutionality of the law as well as the manner in which it was administered, the Court said: "The constitutional command for a State to afford equal protection of the laws sets a goal not attain able by the invention and application of a precise formula. This Court has never attempted that impossible task. A law which affects the activities of some groups differently from the way in which it affects the activities of other groups is not necessarily banned by the 14th Amendment. Otherwise, effective regulation in the public interest could not be provided, however essential that regulation might be. " These decisions seem, to my mind, to reveal a change of approach marked by an increasing respect for the State 's regulatory power in dealing with equal protection claims and underline the futility of wordy formulation of so called "tests" in solving problems presented by concrete cases. Great reliance was placed on behalf of the respondent upon the decision in Truax vs Corrigan(1) and Yick Wo vs Hopkins(2). In the former case it was held by a majority of 5:4 that a law which denied the remedy of injunction in a dispute between employer and his ex employees was a denial of the equal protection of laws, aS such a remedy was al lowed in all other cases. But it is to be noted that the minority, which included Holmes and Brandeis JJ., expressed the opinion that it was within the power of the State to make such differentiation and the law was perfectly consti tutional. The legislation was obviously applicable to a class of persons and the decision was an instance where the classification was held to be arbitrary and is not of much assistance to the respondent. In the other case a San Francisco Ordinance, which prohibited the carrying on of a laundry business within the limits of the City without having first obtained the consent of (1) ; (2) 39 298 the Board of Supervisors unless it was located in a building constructed of brick or stone, was held discriminatory and unconstitutional. The undisputed facts disclosed in the record were that out of 320 laundries in San Francisco about 310 were constructed of wood, and about 240 of the 320 were owned and conducted by subjects of China. The petitioner, a chairman, and about 200 of his countrymen applied to the Board of Supervisors to continue their clotheswashing busi ness in wooden buildings which they had been occupying for many years, but in all cases licence was refused, whereas not a single one of the petitions presented by 80 persons who were not subjects of China had been refused. Dealing with these facts the court observed: "Though the law itself be fair on its face and impartial in appearance, yet if it is applied and administered by public authority with an evil eye and an unequal hand so as to practically make unjust and illegal discrimination between persons in similar circum stances, material to their rights, the denial of equal justice is still within the prohibition of the Constitution." (Italics mine). It is to be noted that the law was "administered", i.e., not merely applied in a few stray cases, but regularly and systematically applied, making a hostile discrimination against a particular class of persons on grounds of race and colour. Such systematic discriminatory administration in practice of the ordinance though impartial on its face, was, evidently, taken to give rise to the inference that it was designed to be so adminis tered. That is how the decision has been explained in later cases. For instance, in Atchison Topeka & Santa Fe R. Co. vs Matthews"(1) it was said "In that case (Yick Wo 's case (2)) a municipal ordinance of San Francisco designed to prevent the Chinese from carrying on the laundry business was adjudged void. This Court looked beyond the mere letter of the ordinance to the condition of things as they existed in San Francisco and saw under the guise of regula tion an arbitrary classification was intended and accom plished" (Italics raine). (1) ; , 105. (2) 299 That is to say, the ordinance was what the Privy Council called a "colourable legislative expedient" which, under the "guise or pretence" of doing what is constitutionally per missible, "in substance and purpose seeks to effect discrim ination": Morgan Proprietary Ltd. vs Deputy Commissioner of Taxation for New South Wales (1). Thus explained, the Yick Wo case is no authority for the view that the vesting in a public authority of a discretion which is liable to abuse by arbitrary exercise contrary to its intendment is a suffi cient ground for condemning a statute as discriminatory and unconstitutional. On the other hand, there is ample authority in the American decisions for the view that the necessarily large powers vested in a legislature must include the power of entrusting to an administrative body a plenary but not arbitrary discretion to be exercised so as to carry out the purpose of an enactment. In Engel vs O ' Malley (2) a New York statute prohibiting individuals or partnerships to engage in the business of receiving deposits of money with out a licence from the controller "who may approve or disap prove the application for a licence in his discretion" was sustained as constitutional. In answer to the argument that the controller might refuse a licence on his arbitrary whim, Holmes J. said: "We should suppose that in each case the controller was expected to act for cause. But the nature and extent of the remedy, if any, for a breach of duty on his part, we think it unnecessary to consider; for the power of the state to make the pursuit of a calling dependent upon obtaining a licence is well established where safety seems to require it." In New York ex rel. Lieberman vs Van De Carr(3) a provi sion in the Sanitary Code of the City of New York vested discretion in Local Health Boards to grant or withhold licences for carrying on milk business in the City. Uphold ing the constitutionality of the (1) , 858. (3) ; (2) ; 300 provision, Day J. observed after referring to certain prior decisions : "These cases leave in no doubt the proposition that the conferring of discretionary power upon administrative boards to grant or withhold permission to carry on a trade or business which is the proper subject of regulation within the police power of the state is not violative of rights secured by the 14th Amendment. There is no presumption that the power will be arbitrarily exercised, and when it is shown to be thus exercised against the individual, under sanction of state authority, this court has not hesitated to interfere for his protection, when the case has come before it in such manner as to authorise the interference of a Federal Court." And Holmes J. added that, although it did not appear from the statute that the action of the Board of Health was intended to be subject to judicial revision as to its rea sonableness, he agreed that it was not hit at by the 14th Amendment. In the light of the foregoing discussion, it seems to me difficult to hold that section 5 (1) in whole or in part is discriminatory. It does not, either in terms or by necessary implication, discriminate as between persons or classes of persons; nor does it purport to deny to any one equality before the law or the equal protection of the laws. Indeed, it does not by its own force make the special procedure provided in the Act applicable to the trial of any offence or classes of offences or classes of cases; for, it is the State Government 's notification under the section that attracts the application of the procedure. Nor is that procedure, as I have endeavoured to show, calculated to impair the chances of a fair trial of the cases to which it may be made applicable, and no discriminatory intent or design is discernible on its face, unless every departure from the normal procedure is to be regarded as involving a hostile discrimination. I have already held, as a matter of construction, that section 5 (1)vests a discretion in the State Government to refer to a special court for trial such offences or classes of offences or 301 cases or classes of cases as may, in its opinion, require a speedier trial. Such discretion the State Government is expected to exercise honestly and reasonably, and the mere fact that it is not made subject to judicial review cannot mean that it was intended to be exercised in an arbitrary manner without reference to the declared object of the Act or, as Harries C.J. put it, "whether the duration of a case is likely to be long or not. " In the face of all these considerations, it seems to me difficult to condemn section 5 (1) as violative of article 14. If the discretion given to the State Government should be exercised improperly or arbitrarily, the administrative action may be challenged as discriminatory, but it cannot affect the constitutionality of the law. Whether a law conferring discretionary powers on an administrative authority is constitutionally valid or not should not be determined on the assumption that such authority will act in an arbitrary manner in exercising the discretion committed to it. As observed by Kania C.J. in Dr. Khare 's case(1), "It is improper to start with such an assumption and decide the legality of an Act on that basis. Abuse of power given by law sometimes occurs; but the valid ity of the law cannot be contested because of such an appre hension. " On the contrary, it is to be presumed that a public authority will act honestly and reasonably in the exercise of its statutory powers, and that the State Govern ment in the present case will, before directing a case to be tried by a Special Court, consider whether there are special features and circumstances which might unduly protract its trial under the ordinary procedure and mark it off for speedier trial under the Act. But it was said that the possibility of the Act being applied in an unauthorised and arbitrary manner was suffi cient to make it unconstitutional according to the decisions of this Court in Romesh Thapar vs The State of Madras(2) and Chintaman Rao vs The State of Madhya Pradesh (3). It will be recalled that this was the main (1) ; , 526. (3) ; (2) ; 302 ground on which the learned Judges in the High Court rested their decision. With respect, those decisions have, I think, no application here. In Romesh Thapar 's case the constitu tionality of a provincial enactment purporting to authorise the Provincial Government to regulate the circulation of a news sheet in the Province of Madras for the purpose of "securing the public safety or the maintenance of public order" was challenged as being inconsistent with the peti tioner 's fundamental right to freedom of speech and expres sion conferred by article 19(1)(a) of the Constitution. But the only relevant constitutional limitation on freedom of speech was that the State could make a law directed against the undermining of the security of the State or the over throw of it, and as the impugned enactment covered a wider ground by authorising curtailment of that freedom for the purpose of securing the public safety or the maintenance of public order, this Court held it to be wholly unconstitu tional and void, observing : "Where a law purports to authorise the imposition of restrictions on a fundamental right in language wide enough to cover restrictions both within and without the limits of constitutionally permissible legislative action affecting such right, it is not possible to uphold it even so far as it may be applied within the constitutional limits, as it is not severable. So long as the possibility of its being applied for purposes not sanctioned by the Constitution cannot be ruled out, it must be held to be wholly unconsti tutional and void. In other words, clause (2) of article 19 having allowed the imposition of restrictions on the freedom of speech and expression only in cases where danger to the State is involved, an enactment, which is capable of being applied to cases where no such danger could arise, cannot be held to be constitutional and valid to any extent. " This passage, which was relied on by the learned Chief Justice, lends no support to the view that the mere possibility of an Act being used in a manner not contem plated by the legislature, though 303 such use may not be subject to judicial review on that ground, or, in other words, the mere possibility of its abuse in practice would justify its condemnation as uncon stitutional. The important distinction is that in Romesh Thapar 's case, the impugned enactment, having been passed before the commencement of the Constitution, did contemplate the use to which it was actually put, but such use was outside the permissible constitutional restrictions on the freedom of speech, that is to say, the Act was not condemned on the ground of the possibility of its being abused but on the ground that even the contemplated and authorised use was outside the limits of constitutionally permissible restric tions. The same remarks apply to the other decision relied on. The observations of Kania C.J. quoted above indicate the correct approach. Even from the point of view of reasonable classifica tion, I can see no reason why the validity of the Act should not be sustained. As already pointed out, wide latitude must be allowed to a legislature in classifying persons and things to be brought under the operation of a special law, and such classification need not be based on an exact or scientific exclusion or inclusion. I cannot share the view of Das Gupta J. that the expediency of speedier trial is "too vague and indefinite" to be the basis of a "well de fined" classification. Legislative judgment in such matters should not be canvassed by courts applying doctrinaire "definite objective tests". The Court should not insist in such cases on what Holmes J. called "delusive exactness" (Truax vs Corrigan, supra). All that the court is expected to see, in dealing with equal protection claims, is whether the law impugned is "palpably discriminatory", and, in considering such a question great weight ought to be at tached to the fact that a majority of the elected represen tatives of the people who made the law did not think so, though that is not, of course, conclusive. They alone know the local conditions and circumstances which demanded the enactment of such a law and it must be remembered that "legislatures are ultimate guardians of the liberties and 304 welfare of the people in quite as great a degree as the Courts" (per Holmes J. in Missouri K. & T.R. Co. vs Mary(1) ). After all, what the Legislature of West Bengal has sought to do by passing this Act is to regulate criminal trials within its territories by instituting a system of special courts with a shortened and simplified procedure, without impairing the requirements of a fair and impartial trial, which is to be made applicable to such cases or classes of cases as, in the opinion of the executive govern ment, require speedier disposal. I do not think that article 14 denies to the State Legislature such regulative power. Missouri vs Lewis (1)). To sustain a law as not being discriminatory is not, however, to leave the party affected by a discriminatory application of the law without a remedy, for, as we have seen, state action on the adminis trative side can also be challenged as a denial of equal protection and unconstitutional. That brings us to the consideration of the validity of the notification issued in the present case. In Snowden vs Hughes (2) it was laid down that ' 'the unlawful administra tion by State officers of a State statute fair on its face resulting in its unequal application to those who were entitled to be treated alike is not a denial of equal pro tection unless there is shown to be present in it an element of intentional or purposeful discrimination. This may appear on the face of the action taken with respect to a particular class or person or it may only be shown by ex trinsic evidence showing a discriminatory design to favour one individual or a class over another not to be inferred from the action itself. But a discriminatory purpose is not presumed; there must be a showing of clear and intentional discrimination ' '. No attempt has been made in the present case to prove that the State Government was influenced by any discriminatory motive or design. On the other hand, the facts appearing on the record would seem to justify the reference of the case to the special court for trial. As pointed out by Chakravartti J. (1) ; (2) 321 U.S. I. 305 "The notification by which the case of Anwar Ali Sirkar (the respondent herein) was directed to be tried by the special court did not relate merely to that case but covered five more cases in each of which the accused were several in number. In Anwar Ali 's case itself, there were 49 other accused. All these cases related to the armed raid on the premises of Jessop & Co. in the course of which crimes of the utmost brutality were committed on a large scale and to incidents following the raid. There can be no question at all that the cases were of a very exceptional character and although the offences committed were technically offences defined in the Indian Penal Code, the Indian Arms Act and the High Explosives Act, it would be futile to contend that the offenders in these cases were of the same class as ordinary criminals, committing the same offences or that the acts which constituted the offences were of the ordinary types. . All these cases again have arisen out of serious disturbances which, according to the prosecution, partook of the nature of an organised revolt. " In view of these facts it seems to me impossible to say the State Government has acted arbitrarily or with a dis criminatory intention in referring these cases to the Spe cial Court, for there are obviously special features which mark of this group of cases as requiring speedier disposal than would be possible under the ordinary procedure, and the charge of discriminatory treatment must fail. I would allow this appeal as also Appeal No. 298 of 1951 (The State of West Bengal vs Gajen Mali) which raises the same questions. FAZL ALl J. I have come to the conclusion that these appeals should be dismissed, and since that is also the conclusion which has been arrived at by several of my col leagues and they have written very full and elaborate judg ments in support of it, I shall only supplement what they have said by stating briefly how I view some of the crucial points arising in the case. 40 306 There is no doubt that the West Bengal Special Courts Ordinance, 1949, which was later replaced by the impugned Act (West Bengal Special Courts Act X of 1950, to be herein after referred to as "the Act"), was a valid Ordinance when it was promulgated on the 17th August, 1949. The Act, which came into effect on the 15th March, 1950, is a verbatim reproduction of the earlier Ordinance, and what we have to decide is whether it is invalid because it offends against article 14 of the Constitution. In dealing with this ques tion, the following facts have to be borne in mind: (1) The framers of the Act have merely copied the provi sions of the Ordinance of 1949 which was promulgated when there was no provision similar to article 14 of the present Constitution. (2) The provision of the American Constitution which corresponds to article 14 has, ever since that Constitution has been in force, greatly exercised the minds of the Ameri can Judges, who, notwithstanding their efforts to restrict its application within reasonable limits, have had to de clare a number of laws and executive acts to be unconstitu tional. One is also amazed at the volume of case law which has grown round this provision, which shows the extent to which its wide language can be stretched and the large variety of situations in which it has been invoked. (3) Article 14 is as widely worded as, if not more widely worded than, its counterpart in the American Consti tution, and is bound to lead to some inconvenient results and seriously affect some pre Constitution laws. (4) The meaning and scope of article 14 have been elaborately explained in two earlier decisions of this Court, viz., Chiranjit Lal Chowdhury vs The Union of India and Others (1) and The State of Bombay and Another vs F.N. Balsara C), and the principles laid down in those decisions have to be kept in view in deciding the present case. One of these principles is that article 14 is designed to pro tect all persons placed in similar circumstances against legislative discrimination, and if the legislature takes care to (1) ; (2) ; 307 reasonably classify persons for legislative purposes and if it deals equally with all persons belonging to a well de fined class, it is not open to the charge of denial of equal protection on the ground that the law does not apply to other persons. (5) There is nothing sacred or sacrosanct about the test of reasonable classification, but it has undoubtedly proved to be a useful basis for meeting attacks on laws and offi cial acts on the ground of infringement of the equality principle. (6) It follows from the two foregoing paragraphs that one of the ways in which the impugned Act can be saved is to show that it is based on a reasonable classification of the persons to whom or the offences in respect of which the procedure laid down in it is to apply, and hence it is necessary to ascertain whether it is actually based on such a classification. With these introductory remarks, I will proceed to deal with some of the more important aspects of the case. The first thing to be noticed is that the preamble of the Act mentions speedier trial of certain offences as its object. Now the framers of the Criminal Procedure Code (which is hereinafter referred to as "the Code") also were alive to the desirability of having a speedy trial in cer tain classes of cases, and with this end in view they made four different sets of provisions for the trial of four classes of cases, these being provisions relating to summary trials, trial of summons cases, trial of warrant cases and trial of cases triable by a court of session. Broadly speak ing, their classification of the offences for the purpose of applying these different sets of provisions was according to the gravity of the offences, though in classifying the offences fit for summary trial the experience and power of the trying Magistrate was also taken into consideration. The net result of these provisions is that offences which are summarily triable can be more speedily tried than summons cases, summons cases can be more speedily tried than warrant cases, and warrant cases can be more speedily tried than sessions cases. The 308 framers of the Code appear to have been generally of the view that the graver the offence the more elaborate should be the procedure for its trial, which was undoubtedly an understandable point of view, and no one has suggested that their classification of offences for the four different modes of trial to which reference has been made is unreason able in any sense. The impugned Act has completely ignored the principle of classification followed in the Code and it proceeds to lay down a new procedure without making any attempt to particularize or classify the offences or cases to which it is to apply. Indeed section 5 of the Act, which is the most vital section, baldly states that the "Special Court shall try such offences or classes of offences or cases or classes of cases, as the State Government may,by general or special order in writing direct". I agree with my learned brothers that to say that the reference to speedier trial in the preamble of the Act is the basis of classification is to read into the Act something which it does not contain and to ascribe to its authors what they never intended. As I have already stated, the Act is a verbatim copy of the earlier Ordinance which was framed before the present Constitution came into force, and article 14 could not have been before the minds of those who framed it because that Article was not then in existence. The second point to be noted is that in consequence of the Act, two procedures, one laid down in the Code and the other laid down in the Act, exist side by side in the area to which the Act applies, and hence the provisions of the Act are apt to give rise to certain anomalous results; some of which may be stated as follows : (1) A grave offence may be tried according to the procedure laid down in the Act, while a less grave offence may be tried according to the procedure laid down in the Code. (2) An accused person charged with a particular of fence may be tried under the Act while another accused person charged with the same offence may be tried under the Code. 309 (3) Certain offences belonging to a particular group or category of offences may be tried under the Act whereas other offences belonging to the same group or category may be tried under the Code. Some of my learned colleagues have examined the provi sions of the Act and shown that of the two procedures one laid down in the Act and the other in the Code the latter affords greater facilities to the accused for the purpose of defending himself than the former; and once it is estab lished that one procedure is less advantageous to the ac cused than the other, any person tried by a Special Court constituted under the Act, who but for the Act would have been entitled to be tried according to the more elaborate procedure of the Code, may legitimately enquire: Why is this discrimination being made against me and why should I be tried according to a procedure which has not the same advantages as the normal procedure and which even carries with it the possibility of one 's being prejudiced in one 's defence ? It was suggested that the reply to this query is that the Act itself being general and applicable to all persons and to all offences, cannot be said to discriminate in favour of or against any particular case or classes of persons or cases, and if any charge of discrimination can be levelled at all, it can be levelled only against the act of the executive authority if the Act is misused. This kind of argument however does not appear to me to solve the diffi culty. The result of accepting it would be that even where discrimination is quite evident one cannot challenge the Act simply because it is couched in general terms; and one cannot also challenge the act of the executive authority whose duty it is to administer the Act, because that author ity will say : I am not to blame as I am acting under the Act. 'It is clear that if the argument were to be accepted, article 14 could be easily defeated. I think the fallacy of the argument lies in overlooking the fact that the "insid ious discrimination complained of is incorporated in the Act itself", it being so drafted that whenever any 310 discrimination is made such discrimination would be ulti mately traceable to it. The Act itself lays down a proce dure which is less advantageous to the accused than the ordinary procedure, and this fact must in all cases be the root cause of the discrimination which may result by the application of the Act. In the course of the arguments, it was suggested that the Act is open to criticism on two different and distinct grounds, these being , (1) that it involves excessive delegation of legislative authority amounting to its abdication in so far as it gives unfettered discretion to the executive, without laying down any standards or rules of guidance, to make use of the procedure laid down by it; and (2) that it infringes article 14 of the Constitution. The first criticism which is by no means an unsubstantial one, may possibly be met by relying on the decision of this Court in Special Reference No. 1 of 1951, In re , etc.(1), but the second criticism cannot be so easily met, since an Act which gives uncontrolled authority to discriminate cannot but be hit by article 14 and it will be no answer simply to say that the legislature having more or less the unlimited power to delegate has merely exercised that power. Curiously enough, what I regard as the weakest point of the Act (viz., its being drafted in such general terms) is said to be its main strength and merit, but I really cannot see how the generality of language which gives unlimited authority to discriminate can save the Act. In some American cases, there is a reference to "pur poseful or intentional discrimination", and it was argued that unless we can discover an evil intention or a deliber ate design to mete out unequal treatment behind the Act, it cannot be impugned. It should be noted however that the words which I have put in inverted commas, have been used in a few American cases with reference only to executive ac tion, where certain Acts were found to be innocuous but they were (1) ; 311 administered by public authority with "an evil eye and an unequal hand. " I suggest most respectfully that it will be extremely unsafe to lay down that unless there was evidence that discrimination was "purposeful or intentional" the equality clause would not be infringed. In my opinion, the true position is as follows : As a general rule, if the Act is fair and good, the public authority who has to administer it will be protected. To this general rule, however, there is an exception, which comes into play when there is evi dence of mala fides in the application of the Act. The basic question however still remains whether the Act itself is fair and good, which must be decided mainly with refer ence to the specific provisions of the Act. It should be noted that there is no reference to intention in article 14 and the gravamen of that Article is equality of treatment. In my opinion, it will be dangerous to introduce a subjec tive test when the Article itself lays down a clear and objective test. I must confess that I have been trying hard to think how the Act can be saved, and the best argument that came to my mind in support of it was this : The Act should be held to be a good one, because it embodies all the essentials of a fair and proper trial, namely, (1) notice of the charge, (2) right to be heard and the right to test and rebut the prose cution evidence, (3) access to legal aid, and (4)trial by an impartial and experienced court. If these are the requi sites, so I argued with myself, to which all accused persons are equally entitled, why should a particular procedure which ensures all those requisites not be substi tuted for another procedure, if such substitution is neces sitated by administrative exigencies or is in public inter est, even though the new procedure may be different from and less elaborate than the normal procedure. This seemed to me to be the best argument in favour of the Act but the more I thought of it the more it appeared to me that it was not a complete answer to the problem before us. In the first place, it brings in the "due process" idea of the American Constitution, which our Constitution has 312 not chosen to adopt. Secondly, the Act itself does not state that public interest and administrative exigencies will provide the occasion for its application. Lastly, the discrimination involved in the application of the Act is too evident to be explained away. The framers of the Constitution have referred to equali ty in the Preamble, and have devoted as many as five arti cles, namely, articles 14, 15, 16.17, and 18 in the Chapter on Fundamental Rights, to ensure equality in all its as pects. Some of these Articles are confined to citizens only and some can be availed of by non citizens also; but on reading these provisions as a whole, one can see the great importance attached to the principle of equality in the Constitution. That being so, it will be wrong to whittle down the meaning of article 14, and however well intentioned the impugned Act may be and however reluctant one may feel to hold it invalid, it seems to me that section 5 of the Act, or at least that part of it with which alone we are concerned in this appeal, does offend against article 14 of the Constitution and is therefore unconstitutional and void. The Act is really modelled upon a pre Constitution pattern and will have to be suitably redrafted in order to conform to the requirements of the Constitution. MAHAJAN J. I had the advantage of reading the judgment prepared by my brother Mukherjea and I am in respectful agreement with his opinion. Section 5 of the West Bengal Special Courts Act is hit by article 14 of the Constitution inasmuch as it mentions no basis for the differential treatment prescribed in the Act for trial of criminals in certain cases and for certain offences. The learned AttorneyGeneral argued that the Act had grouped cases requiring speedier trial as forming a class in themselves, differentiating that class from cases not needing expedition and that it was on this basis that the special procedure prescribed in the Act was applicable. In order to appreciate this contention, it is necessary to state shortly the scope of article 14 of the 313 Constitution. It is designed to prevent any person or class of persons for being singled out as a special subject for discriminatory and hostile legislation. Democracy im plies respect for the elementary rights of man, however suspect or unworthy. Equality of right is a principle of republicanism and article 14 enunciates this equality prin ciple in the administration of justice. In its application to legal proceedings the article assures to everyone the same rules of evidence and modes of procedure. In other words, the same rule must exist for all in similar circum stances. This principle, however, does not mean that every law must have universal application for all persons who are not by nature, attainment or circumstance, in the same position. By the process of classification the State has the power of determining who should be regarded as a class for pur poses 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 of equal protection on the ground that it has no application to other persons. The classification permissible, however, must be based on some real and substantial distinction bearing a just and reasona ble relation to the objects sought to be attained and cannot be made arbitrarily and without any substantial basis. Classification thus means segregation in 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 class es arbitrarily. Thus the legislature may fix the age at which persons shall be deemed competent to contract between themselves, but no one will claim that competency to con tract can be made to depend upon the stature or colour of the hair. "Such a classification for such a purpose would be arbitrary and a piece of legislative despotism"(1): (1) Vide Gulf Colorado & Santa Fe Railway Co. vs W.H. Ellis; , 41 314 Speedier trial of offences may be the reason and motive for the legislation but it does not amount either to a classification of offences or of cases. As pointed out by Chakravarti J. the necessity of a speedy trial is too vague and uncertain a criterion to form the basis of a valid and reasonable classification. In the words of Das Gupta J. it is too indefinite as there can hardly be any definite objec tive test to determine it. In my opinion, it is no classifi cation at all in the real sense of the term as it is not based on any characteristics which are peculiar to persons or to cases which are to be subject to the special procedure prescribed by the Act. The mere fact of classification is not sufficient to relieve a statute from the reach of the equality clause of article 14. To get out of its reach it must appear that not only a classification has been made but also that it is one based upon a reasonable ground on some difference which bears a just and proper relation to the attempted classification and is not a mere arbitrary selec tion. Persons concerned in offences or cases needing so called speedier trial are entitled to inquire "Why are they being made the subject of a law which has short circuited the normal procedure of trial; why has it grouped them in that category and why has the law deprived them of the protection and safeguards which are allowed in the case of accused tried under the procedure mentioned in the Criminal Procedure Code; what makes the legislature or the executive to think that their cases need speedier trial than those of others like them?" The only answer, that so far as I am able to see, the Act gives to these inquiries is that they are being made the subject of this special treatment because they need it in the opinion of the provincial government; in other words, because such is the choice of their prosecu tor. This answer neither sounds rational nor reasonable. The only answer for withholding from such persons the pro tection of article 14 that could reasonably be given to these inquiries would be that "Of all other accused persons they are a class by themselves and there is a reasonable 315 difference between them and those other persons who may have committed similar offences. " They could be told that the law regards persons guilty of offences against the security of the State as a class in themselves. The Code of Criminal Procedure has by the process of classification prescribed different modes of procedure for trial of different of fences. Minor offences can be summarily tried, while for grave and heinous offences an elaborate mode of procedure has been laid down. The present statute suggests No. rea sonable basis or classification, either in respect of of fences or in respect of cases. It has laid down no yard stick or measure for the grouping either of persons or of cases or of offences by which measure these groups could be distinguished from those who are outside the purview of the Special Act. The Act has left this matter entirely to the unregulated discretion of the provincial government. It has the power to pick out a case of a person similarly situate and hand it over to the special tribunal and leave the case of the other person in the same circumstance to be tried by the procedure laid down in the Criminal Procedure Code. The State government is authorized, if it so chooses, to hand over an ordinary case of simple hurt to the special tribu nal, leaving the case of dacoity with murder to be tried in the ordinary way. It is open under this Act for the provin cial grovernment to direct that a case of dacoity with firearms and accompanied by murder, where the persons killed are Europeans, be tried by the Special Court, while exactly similar cases where the persons killed are Indians may be tried under the procedure of the Code. That the Special Act lays down substantially different rules for trial of offences and cases than laid down in the general law of the land, i.e., the Code of Criminal Proce dure, cannot be seriously denied. It short circuits that procedure in material particulars. It imposes heavier liabilities on the alleged culprits than are ordained by the Code. It deprives them of certain privileges which the Code affords them for their protection. Those singled out for treatment under the 316 procedure of the Special Act are to a considerable extent prejudiced by the deprivation of the trial by the procedure prescribed under the Criminal Procedure Code. Not only does the special law deprive them of the safeguard of the commit tal procedure and of the trial with the help of jury or assessors, but it also deprives them of the right of a de novo trial in case of transfer and makes them liable for conviction and punishment for major offences other than those for which they may have been charged or tried. The right of the accused to call witnesses in defence has been curtailed and made dependent on the discretion of the spe cial judge. To a certain extent the remedies to which an accused person is entitled for redress in the higher courts have been cut down. Even if it be said that the statute on the face of it is not discriminatory, it is so in its effect and operation inasmuch as it vests in the executive govern ment unregulated official discretion and therefore has to be adjudged unconstitutional. It was suggested that good faith and knowledge of exist ing conditions on the part of a legislature has to be pre sumed. That is so; yet to carry that presumption to the extent of always holding that there must be some undisclosed intention or reason for subjecting certain individuals to a hostile and discriminatory legislation is to make the pro tection clause of article 14, in the words of an American decision, a mere rope of sand, in no manner restraining State action. The protection afforded by the article is not a mere eyewash but it is a real one and unless a just cause for discrimination on the basis of a reasonable classifica tion is put forth as a defence, the statute has to be de clared unconstitutional. No just cause has been shown in the present instance. The result is that the appeals fail and are dismissed. MUKHERJEA J. These two appeals are directed against the judgment of a Special Bench of the Calcutta High Court dated the 28th of August, 1951, and they arise out of two peti tions presented, respectively, by the respondent in the two appeals under article 226 of 317 the Constitution praying for writs of certiorari to quash two criminal proceedings, one of which has ended in the trial court, resulting in conviction of the accused, while the other is still pending hearing. The questions requiring consideration in both the appeals are the same and the whole controversy centres round the point as to whether the provi sion of section 5(1) of the West Bengal Special Courts Act, 1950, as well as certain notifications issued under it are ultra vires the Constitution by reason of their being in conflict with article 14 of the Constitution. The material facts, which are not controverted, may be shortly stated as follows. On August 17, 1949, an Ordinance, known as the West Bengal Special Courts Ordinance, was promulgated by the Governor of West Bengal under section 88 of the Government of India Act, 1935. On 15th March, 1950, this Ordinance was superseded and replaced by the West Bengal Special Courts Act which contained provisions almost identical with those of the Ordinance. Section 3 of the Act empowers the State Government to constitute, by notification, Special Courts of criminal jurisdiction for such areas and to sit at such places as may be notified in the notification. Section 4 provides for appointment of a Special Judge to preside over a Special Court and it mentions the qualifications which a Special Judge should possess. Section 5 (1) then lays down that a Special Court shall try such offences or classes of offences or cases or classes of cases as the State Gov ernment may, by general or special order, in writing direct. Sections 6 to 15 set out in details the procedure which the Special Court has to follow in the trial of cases referred to it. Briefly stated, the trial is to be without any jury or assessors, and the court has to follow the procedure that is laid down for trial of warrant cases by the Magistrate under the Criminal Procedure Code. The procedure for committal in the sessions cases is omitted altogether; the court 's powers of granting adjournment are restricted and special provisions are made to deal with refractory accused and also for cases which are transferred from one 318 Special Court to another. The Court is expressly empowered to convict a person of an offence with which he was not charged if it transpires from the evidence adduced at the time of trial that such offence was committed by him, and it is immaterial that the offence is not a minor offence. The right of revision to the High Court has been taken away entirely, though appeals have been allowed in all cases both at the instance of the accused as well as of the State and they lie both on questions of fact and law. On October 28, 1949, when the Ordinance was still in force, the West Bengal Government appointed Shri S.N. Guha Roy, who was then the Sessions Judge of Alipore, a Special Judge, with powers to try cases under the Ordinance. Anwar Ali Sarkar, who is the respondent in Appeal No. 297, along with 49 other persons, were the accused in what is known as Dum Dum Factory Raid case, where crimes of the utmost bru tality were committed by an armed gang of men on the factory of Messrs. Jessop and Company at Dum Dum. The raid took place on February 26, 1949. The accused or most of them were arrested some time after the Ordinance was promulgated. On 25th of January, 1950, the State Government by a notifica tion directed that the case of Anwar Ali and his 49 co accused should be tried by Mr. S.N. Guha Roy in accordance with the provisions" of the Ordinance. A formal complaint was lodged before the Special Judge in respect of these 50 persons on April 2, 1950, that is to say, after the Special Courts Act was passed, superseding the Ordinance. The trial lasted for several months and by his judgment dated the 31st of March, 1951, the Special Judge convicted the accused under various sections of the Indian Penal Code, some of them being sentenced to transportation for life, while others were sentenced to undergo various terms of imprison ment according to the gravity of their offence. The State Government applied for enhancement of sentence with regard to some of the accused and a rule was actually issued by the High Court upon them tO show cause why they should not be sentenced 319 to death. On May 1, 1951, Anwar Ali, the respondent in Appeal No. 297, presented an application before Mr. Justice Bose of the Calcutta High Court under article 226 of the Constitution and a rule was issued by the learned Judge upon that petition calling upon the State of West Bengal to show cause why the proceedings, conviction and sentence, passed by the Special Court on the petitioner and his co accused should not be quashed. On 21st of May following, a similar application for quashing a pending criminal trial was filed by Gajen Mali, the respondent in the other appeal, who along with 5 other persons is being tried for offences of murder and conspiracy to murder before Mr. M. Bhattacharya, another Special Judge, appointed under the West Bengal Special Courts Act. A rule was issued on this application also. Both the rules came up for hearing before Mr. Justice Bose, and as the learned Judge was of opinion that they involved questions of general constitutional importance, he referred them to the Chief Justice for decision by a larger Bench. Accordingly a Special Bench was constituted, consisting of the Chief Justice and four other Judges who heard both these cases. It was conceded during the hearing of these rules by the State Government that al though in the case of Anwar Ali the notification was issued a day before the coming into force of the Constitution, the provisions of the Constitution of India, which came into force on the 26th of January, 1950, applied to his case also. On the 28th of August, 1951. the Special Bench made the rules absolute and held that section 5 (1) of the West Bengal Special Courts Act was void to the extent that it empowers the State to direct any case to be tried by the Special Court. The notifications issued under that sub section were also held to be invalid for the same reason. It is against this decision that these two appeals have been taken to this court by the State of West Bengal. In order to appreciate the points that have been can vassed before us, it would be convenient first of all 320 to refer to the provision of article 14 of the Constitution with a view to determine the nature and scope of the guaran tee that is implied in it. The article lays down that "the State shall not deny to any person equality before the law or the equal protection of the laws within the territory of India. " It is, in substance, modelled upon the equal pro tection clause, occurring in the Fourteenth Amendment of the American Constitution with a further addition of the rule of "equality before the law", which is an established maxim of the English Constitution. A number of American decisions have been cited before us on behalf of both par ties in course of the arguments; and while a too rigid adherence to the views expressed by the Judges of the Su preme Court of America while dealing with the equal protec tion clause in their own Constitution may not be necessary or desirable for the purpose of determining the true meaning and scope of article 14 of the Indian Constitution, it cannot be denied that the general principles enunciated in many of these cases do afford considerable help and guidance in the matter. It can be taken to be well settled that the principle underlying the guarantee in 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 circum stances(1). It only means that all persons similarly circum stanced shall be treated alike both in privileges conferred and liabilities imposed(2). 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 subjectmatter of the legislation their position is substantially the same. This brings in the question of clas sification. As there is no infringement of the equal protec tion rule, if the law deals alike with all of a certain class, the legislature has the undoubted right of classify ing (1) Chiranjit Lal Chowdhuri vs The Union of India ; (2)Old Dearborn Distributing Co. vs Seagram Distillers Corporation ; 321 persons and placing those whose conditions are 'substantial ly similar under the same rule of law, while applying dif ferent rules to persons differently situated. It is said that the entire problem under the equal protection clause is one of classification or of drawing lines(1). In making the classification the legislature cannot certainly be expected to provide "abstract symmetry. " It 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 "degrees of evil "(2), but the classification should never be arbitrary, artificial or evasive. It must rest always upon real and substantial distinction bearing a reasonable and just relation to the thing in respect to which the classification is made; and classification made without any reasonable basis should be regarded as invalid(3). These propositions have not been controverted before us and it is not disputed also on behalf of the respondents that the presumption is always in favour of the constitutionality of an enactment and the burden is upon him who attacks it, to show that there has been transgression of constitutional principles. The learned Attorney General, appearing in support of the appeal, has put forward his contentions under two dif ferent heads. His first line of argument is that quite apart from the question of classification there has been no infringement of article 14 of the Constitution in the present case. It is said that the State has full control over procedure in courts, both in civil and criminal cases, it can effect such changes as it likes for securing due and efficient administration of justice and a legislation of the character which we have got here and which merely regulates the mode of trial in certain cases cannot come within the description of discriminatory or hostile legislation. It is further argued that the differences that have been made in the procedure for criminal trial under the West Bengal (1) Vide Dowling: Cases on Constitutional Law, 4th edn. 1139. (2) Vide Skinner vs Oklahoma ; at 540). (3) Southern Railway Co. vs Greene ; at 412). 42 322 Special Courts Act, 1950, are of a minor character and there are no substantial grounds upon which discrimination could be alleged or founded. The second head of arguments ad vanced by the Attorney General is that there is a classifi cation and a justifiable classification on the basis of which differences in the procedure have been made by the West Bengal Act; and even if any unguided power has been conferred on the executive, the Act itself cannot be said to have violated the equality clause, though questions relating to proper exercise of such power or the limits of permissi ble delegation of authority might arise. As regards the first point, it cannot be disputed that a competent legislature is entitled to alter the procedure in criminal trials in such way as it considers proper. Article 21 of the Constitution only guarantees that "no person shall be deprived of his life or personal liberty except in accordance with the procedure established by law. " The word "law" in the Article means a State made law(1), but it must be a valid and binding law having regard not merely to the competency of the legislature and the subject it relates to, but it must not also infringe any of the funda mental rights guaranteed under Part III of the Constitu tion. A rule of procedure laid down by law comes as much within the purview of article 14 as any rule of substantive law and it is necessary that all litigants, who are similar ly situated, are able to avail themselves of the same proce dural rights for relief and for defence with like protection and without discrimination(2). The two cases referred to by the learned Attorney General in this connection do not really support his contention. In Hayes vs Missouri(a) the subject matter of complaint was a provision of the revised statutes of Missouri which allowed the State, in capital cases, fifteen peremptory challenges in cities having a population of 100,000 inhabitants in place of eight in other parts of the State. This was held to be a valid exercise of legislative discretion not (1) Vide A.K. Gopalan vs The State of Madras ; (2) Weaver: Constitutional Law, page 407. (3) ; ; 323 contravening the equality clause in the Fourteenth Amend ment. It was said that the power of the Legislature to prescribe the number of challenges was limited by the necessity of having impartial jury. With a view to secure that end, the legislature could take into consideration the conditions of different communities and the strength of population in a particular city; and if all the persons within particular territorial limits are given equal rights in like cases, there could not be any question of discrimi nation. The other case relied upon by the learned Attorney General is the case of Brown vs The State of New Jersey(1). In this case the question was whether the provision of the State Constitution relating to struck jury in murder cases was in conflict with the equal protection clause. The griev ance made was that the procedure of struck jury denies the defendant the same number of peremptory challenges as he would have had in a trial before an ordinary jury. It was held by the Supreme Court that the equal protection clause was not violated by this provision. "It is true", thus observes Mr. Justice Brewer, "that here there is no territo rial distribution but in all cases in which a struck jury is ordered the same number of challenges is permitted and similarly in all cases in which the trial is by an ordinary jury either party, State or defendant, may apply for a struck jury and the matter is one which is determined by the court in the exercise of a sound discretion. That in a given case the discretion of the court in awarding a trial by a struck jury was improperly exercised may perhaps present a matter for consideration in appeal but it amounts to nothing more". Thus it was held that the procedure of struck jury did not involve any discrimination between one person and another. Each party was at liberty to apply for a struck jury if he so chose and the application could be granted by the court if it thought proper having regard to the circumstances of each individual case. The procedure would be identical in respect of all persons when it was allowed and (1) ; 175 U.S. 171: 324 all parties would have equal opportunities of availing themselves of this procedure if they so liked. That a judicial discretion has to be exercised on the basis of the facts of each case in the matter of granting the application for a struck jury does not really involve discrimination. These decisions, in my opinion, have no bearing on the present case. I am not at all impressed by the argument of the learned Attorney General that to enable the respondents to invoke the protection of article 14 of the Constitution it has got to be shown that the legislation complained of is a piece of "hostile" legislation. The expressions "discrimi natory" and "hostile" are found to be used by American Judges often simultaneously and almost as synonymous expres sions in connection with discussions on the equal protection clause. If a legislation is discriminatory and discrimi nates one person or class of persons against others similar ly situated and denies to the former the privileges that are enjoyed by the latter, it cannot but be regarded as "hos tile" in the sense that it affects injuriously the interests of that person or class. Of course, if one 's interests are not at all affected by a particular piece of legislation, he may have no right to complain. But if it is established that the person complaining has been discriminated against as a result of legislation and denied equal privileges with others occupying the same position, I do not think that it is incumbent upon him, before he can claim relief on the basis of his fundamental rights, to assert and prove that in making the law, the legislature was actuated by a hostile or inimical intention against a particular person or class. For the same reason I cannot agree with the learned Attorney General that in cases like these, we should enquire as to what was the dominant intention of the legislature in enact ing the law and that the operation of article 14 would be excluded if it is proved that the legislature had no inten tion to discriminate, though discrimination was the necessary consequence of the Act. discrimination is alleged against officials in carrying 325 out the law, a question of intention may be material in ascertaining whether the officer acted mala fide or not(1); but no question of intention can arise when discrimination follows or arises on the express terms of the law itself. I agree with the Attorney General that if the dif ferences are not material, there may not be any discrimina tion in the proper sense of the word and minor deviations from the general standard might not amount to denial of equal rights. I find it difficult however, to hold that the difference in the procedure that has been introduced by the West Bengal Special Courts Act is of a minor or unsubstan tial character which has not prejudiced the interests of the accused. The first difference is that made in section 6 of the Act which lays down that the Special Court may take cognizance of an offence without the accused being committed to it for trial, and that in trying the accused it has to follow the procedure for trial of warrant cases by Magis trates. It is urged by the Attorney General that the elimi nation of the committal proceedings is a matter of no impor tance and that the warrant procedure, which the Special Court has got to follow, affords a scope for a preliminary examination of the evidence against the accused before a charge is framed. ' It cannot be denied that there is a difference between the two proceedings. In a warrant case the entire proceeding is before the same Magistrate and the same officer who frames the charge hears the case finally. In a sessions case, on the other hand, the trial is actually before another Judge, who was not connected with the earlier proceeding. It is also clear that after the committal and before the sessions judge actually hears the case, there is generally a large interval of time which gives the accused ample opportunity of preparing his defence, he being ac quainted beforehand with the entire evidence that the prose cution wants to adduce against him. He cannot have the same advantage in a warrant case even ii an adjournment is granted by the Magistrate after the charge is (1) sunday Lake Iron Company vs wakefield ; 326 framed. Be that as it may, this is not the only matter upon which the normal procedure has been departed from in the Special Courts Act. One of the most important departures is that the trial by the Special Court is without the aid of jury or assessors. The trial by jury is undoubtedly one of the most valuable rights which the accused can have. It is true that the trial by jury is not guaranteed by the Constitution and section 269(1) of the Criminal Procedure Code empowers the State Government to direct that the trial of all offences or any particular class of offences before any sessions court shall be by jury in any district; and it may revoke or alter such orders. There is nothing wrong therefore if the State discontinues trial by jury in any district with regard to all or any particular class of offences; but as has been pointed out by Mr. Justice Chakra varti of the Calcutta High Court, it cannot revoke jury trial in respect of a particular case or a particular ac cused while in respect of other cases involving the same offences the order still remains. Amongst other important changes, reference may be made to the provision of section 13 of the Act which empowers the Special Court to convict an accused of any offence if the commission of such offence is proved during trial, although he was not charged with the same or could be charged with it in the manner contemplated by section 236 of the Criminal Procedure Code, nor was it a minor offence within the meaning of section 238 of the Code. Under section a50 of the Criminal Procedure Code, when a case after being heard in part goes for disposal before another Magistrate, the accused has the right to demand, before the second Magistrate commences the proceedings, that the witnesses already examined should be re examined and re heard. This right has been taken away from the accused in cases where a case is transferred from one Special Court to another under the provision of section 7 of the Special Courts Act. Further the right of revision to the High Court does not exist at all under the new procedure, although the rights under the Constitution of India are retained. 327 It has been pointed out and quite correctly by one of the learned Counsel for respondents that an application for bail cannot be made before the High Court on behalf of an accused after the Special Court has refused bail. These and other provisions of the Act make it clear that the rights of the accused have been curtailed in a substantial manner by the impugned legislation; and if the rights are curtailed only in certain cases and not in others, even though the circum stances in the latter cases are the same, a question of discrimination may certainly arise. The first line of argu ment adopted by the learned Attorney General cannot, there fore, be accepted. I now come to the other head of arguments put forward by him and the principal point for our consideration is whether the apparent discriminations that have been made in the Act can be justified on the basis of a reasonable classifica tion. Section 5(1) of the West Bengal Special Courts Act lays down that "A Special Court shall try such offences or classes offences or cases or classes of cases as the State Govern ment may, by general or special order in writing direct." The learned Attorney General urges that the principle of classification upon which the differences have been made between cases and offences triable by the Special Court and those by ordinary courts is indicated in the preamble to the Act which runs as follows: "Whereas it is expedient to provide for the speedier trial of certain offences". What is said is, that the preamble is to be read as a part of section 5(1) and the proper interpretation to be put upon the sub section is that those cases and offences which in the opinion of the State Government would require speedi er trial could be assigned by it to the Special Court. In my opinion, this contention cannot be accepted for more reasons than one. In the first place, I agree with the learned Chief Justice of the Calcutta High Court that the express provision of an enactment, if it is clear and unam biguous, cannot be 328 curtailed or extended with the aid of the preamble to the Act. It is only when the object or meaning of the enactment is not clear that recourse can be had to the preamble to explain it (1). In the case before us the language of section 5(1) is perfectly clear and free from any ambiguity. It vests an unrestricted discretion in the State Government to direct any cases or classes of cases to be tried by the Special Court in accordance with the procedure laid down in the Act. It is not stated that it is only when speedier trial is necessary that the discretion should be exercised. In the second place, assuming that the preamble throws any light upon the interpretation of the section, I am definite ly of opinion that the necessity of a speedier trial is too vague, uncertain and elusive a criterion to form a rational basis for the discriminations made. The necessity for speedier trial may be the object which the legislature had in view or it may be the occasion for making the enactment. In a sense quick disposal is a thing which is desirable in all legal proceedings. The word used here is "speedier" which is a comparative term and as there may be degrees of speediness, the word undoubtedly introduces an uncertain and variable element. But the question is: how is this necessi ty of speedier trial to be determined ? Not by reference to the nature of the offences or the circumstances under which or the area in which they are committed, nor even by refer ence to any peculiarities or antecedents of the offenders themselves, but the selection is left to the absolute and unfettered discretion of the executive government with nothing in the law to guide or control its action. This is not a reasonable classification at all but an arbitrary selection. A line is drawn artificially between two classes of cases. On one side of the line are grouped those cases which the State Government chooses to assign to the Special Court; on the other side stand the rest which the State Government does not think fit and proper to touch. It has been observed in many cases by the Supreme Court of America that the fact that some (1) See Craies on Statute Law, 4th edn., 184. 329 sort of classification has been attempted at will not re lieve a statute from the reach of the equality clause. "It must appear not only that a classification has been made but also that it is based upon some reasonable ground some difference which bears a just and proper relation to the attempted classification"(1). The question in each case would be whether the characteristics of the class are such as to provide a rational justification for the differ ences introduced ? Judged by this test, the answer in the present case should be in the negative; for the difference in the treatment rests here solely on arbitrary selection by the State Government. It is true that the presumption should always be that the legislature understands and cor rectly appreciates the needs of its own people and that its discriminations are based on adequate grounds (2); but as was said by Mr. Justice Brewer in Gulf Colorado etc. Company vs Ellis (3), "to carry the presumption to the extent of holding that there must be some undisclosed and unknown reason for subjecting certain individuals or corporations to hostile and discriminatory legislation is to make the pro tection clauses of the Fourteenth Amendment a mere rope of sand. " A point was made by the Attorney General in course of his arguments that the equality rule is not violated simply because a statute confers unregulated discretion on officers or on administrative agencies. In such cases it may be possible to attack the legislation on the ground of improper delegation of authority or the acts of the officers may be challenged on the ground of wrongful or mala fide exercise of powers; but no question of infringement of article 14 of the Constitution could possibly arise. We were referred to a number of authorities on this point but I do not think that the authorities really support the proposition of law in the way it is formulated. In the well known case of Yick Wo vs Hopkins (4), the question was, whether the provision of a certain ordinance of the City and County of San (1) Gulf Colorado etc. vs Ellis ; (2) Middleton vs Texas Power & Light Co. ; (3) ; (4) 43 330 Francisco was invalid by reason of its being in conflict with the equal protection clause. The order in question laid down that it would be unlawful for any person to engage in laundry business within the corporate limits "without having first obtained the consent of the Board of Supervi sors except the same to be located in a building constructed either of brick or stone. " The question was answered in the affirmative. It was pointed out by Matthews, J., who deliv ered the opinion of the court, that the ordinance in ques tion did not merely prescribe a rule and condition for the regulation of the laundry business. It allowed without restriction the use for such purposes of building of brick or stone, but as to wooden buildings constituting nearly all those in previous use, it divided the owners or occupiers into two classes, not having respect to their personal character and qualifications of the business, nor the situa tion and nature and adaptation of the buildings themselves, but merely by an arbitrary line, on one side of which were those who were permitted to pursue their industry by the mere will and consent of the supervisors and on the other those from whom that consent was withheld at their will and pleasure. This sort of committing to the unrestrained will of a public officer the power to deprive a citizen of his right to carry on lawful business was ' held to constitute an invasion of the Fourteenth Amendment. The learned Judge pointed out in course of his judgment that there are cases where discretion is lodged by law in public officers or bodies to grant or withhold licences to keep taverns or places for sale of spirituous liquor and the like. But all these cases stood on a different footing altogether. The same view was reiterated in Crowley vs Christensen(1) which related to an ordinance regulating the issue of licences to sell liquors. It appears to be an accepted doctrine of American courts that the purpose of the equal protection clause is to secure every person within the States against arbitrary discrimination, whether occasioned by the express terms of the statute or by their (1) ; 331 improper application through duly constituted agents. This was clearly laid down in Sunday Lake Iron Cornparty vs Wakefield (1). In this case the complaint was against a. taxing officer, who was alleged to have assessed the plain tiff 's properties at their full value, while all other persons in the county were assessed at not more than one third of the worth of their properties. It was held that the equal protection clause could be availed of against the taxing officer; but if he was found to have acted bona fide and the discrimination was the result of a mere error of judgment on his part, the action would fail. The position, therefore, is that when the statute is not itself discrimi natory and the charge of violation of equal protection is only against the official, who is entrusted with the duty of carrying it into operation, the equal protection clause could be availed of in such cases; but the officer would have a good defence if he could prove bona fides. But when the statute itself makes a discrimination without any proper or reasonable basis, the statute would be invalidated for being in conflict with the equal protection clause, and the question as to how it is actually worked out may not neces sarily be a material fact for consideration. As I have said already, in the present case the discrimination arises on the terms of the Act itself. The fact that it gives unre strained power to the State Government to select in any way it likes the particular cases or offences which should go to a Special Tribunal and withdraw in such cases the protec tion which the accused normally enjoy under the criminal law of the country, is on the face of it discriminatory. It may be noted in this connection that in the present case the High Court has ' held the provision of section 5 (1) of the West Bengal Special Courts Act to be ultra vires the Constitution only so far as it allows the State Government to direct any case to be tried by the Special Court. In the opinion of the learned Chief Justice, if the State Govern ment had directed certain offences or classes of offences committed within the (1) ; 332 territory of West Bengal to be tried by the Special Court, the law or order could not have been impeached as discrimi natory. It is to be noted that the Act itself does not mention in what classes of cases or offences such direction could be given; nor does it purport to lay down the crite rion or the basis upon which the classification is to be made. It is not strictly correct to say that if certain specified offences throughout the State were directed to be tried by the Special Court, there could not be any infringe ment of the equality rule. It may be that in making the selection the authorities would exclude from the list of offences other offences of a cognate character in respect to which no difference in treatment is justifiable. In such circumstances also the law or order would be offending against the equality provision in the Constitution. This is illustrated by the case of Skinner vs Oklahorna(1). There a statute of Oklahoma provided for the sterilization of cer tain habitual criminals, who were convicted two or more times in any State, of felonies involving moral turpitudell. The statute applied to persons guilty of larceny, which was regarded as a felony but not to embezzlement. It was held that the statute violated the equal protection clause. It is said that in cases where the law does not lay down a standard or form in accordance with which the classification is to be made, it would be the duty of the officers entrust ed with the execution of the law, to make the classification in the way consonant with the principles of the Constitution (2). If that be the position, then an action might lie for annulling the acts of the officers if they are found not to be in conformity with the equality clause. Moreover, in the present case the notification by the State Government could come within the definition of law as given in article 13(3) of the Constitution and can be impeached apart from the Act if it violates article 14 of the Constitution. I do not consider it necessary to pursue this matter any further, as in my opinion even on the (1) (2) Vide Willis on Constitutional Law, Page 587. 333 limited ground upon which the High Court bases its decision, these appeals are bound to fail. DAS J. I concur in dismissing these appeals but I am not persuaded that the whole of section 5(1) of the West Bengal Special Courts Act is invalid. As I find myself in substantial agreement with the interpretation put upon that section by the majority of the Full Bench of the Calcutta High Court and most of the reasons adopted by Harries, C.J. in support thereof, I do not feel called upon to express myself in very great detail. I propose only to note the points urged before us and shortly state my conclusions thereon. There is no dispute that the question of the validity of section 5 of the West Bengal Special Courts Act, 1950, has to be determined in the light of the provisions of the Constitution of India which came into force on January 26, 1950. The contention of the respondents, who were petition ers before the High Court, has been and is that the whole of section 5 of the Act or, at any rate, that part of it which authorises the State government to direct particular "cases" to be tried by the Special Court offends against the guaran tee of equality before the law secured by article 14. If the provision of section 5 of the Act is invalid even to the limited extent mentioned above. then also the whole proceed ings before the Special Court which was directed by the State government to try these particular "cases" must neces sarily have been without jurisdiction as has been held by the High Court Full Bench and these appeals would have to be dismissed. Article 14 of our Constitution, it is well known, corre sponds to the last portion of section 1 of the Fourteenth Amendment to the American Constitution except that our article 14 has also adopted the English doctrine of rule of law by the addition of the words "equality before the law. " It has not, however, been urged before us that the addition of these extra words has made any substantial difference in its practical application. The meaning, scope and effect of 334 article 14 of our Constitution have been discussed and laid down by this Court in the case of Chiranjit Lal Chowdhury vs The Union of India and Others (1). Although Sastri J., as he then was, and myself differed from the actual deci sion of the majority of the Court, there was no disagree ment between us and the majority as to the principles underlying the provisions of article 14. The difference of opinion in that case was not so much on the principles to be applied as to the effect of the application of such principles. Those principles were again considered and summarised by this Court in The State of Bombay vs F.N. Balsara (2). It is now well established that while arti cle 14 is designed to prevent a person or class of persons from being singled out from others similarly situated for the purpose of being specially subjected to discriminating and hostile legislation, it does not insist on an "abstract symmetry" in the sense that every piece of legislation must have universal application. All persons are not, by nature, attainment or circumstances, equal and the varying needs of different classes of persons often require separate treatment and, therefore, the protecting clause has been construed as a guarantee against discrimi nation amongst equals only and not as taking away from the State the power to classify persons for the purpose of legislation. This classification may be on different bases. It may be geographical or according to objects or occupa tions or the like. Mere classification, however, is not enough to get over the inhibition of the Article. 'The classification must not be arbitrary but must be rational, that is to say, it must not only be based on some quali ties or characteristics which are to be found in all the persons grouped together and not in others who are left 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 (1) ; (2) ; 335 and (2) that that differentia must have a rational relation to the object sought to be achieved by the Act. The differ entia which is the basis of the classification and the object of the Act are distinct things and what is necessary is that there must be a nexus between them. In short, while the Article forbids class legislation in the sense of making improper discrimination by conferring privileges or imposing liabilities upon persons arbitrarily selected out of a large number of other persons similarly situated in relation to the privileges sought to be conferred or the liability proposed to be imposed, it does not forbid classification for the purpose of legislation, provided such classification is not arbitrary in the sense I have just explained. The doctrine, as expounded by this Court in the two cases I have mentioned, leaves a considerable latitude to the Court in the matter of the application of article 14 and consequently has the merit of flexibility. The learned Attorney General, appearing in support of these appeals, however, contends that while a reasonable classification of the kind mentioned above may be a test of the validity of a particular piece of legislation, it may not be the only test which will cover all cases and that there may be other tests also. In answer to the query of the Court he formulates an alternative test in the following words: If there is in fact inequality of treatment and such inequality is not made with a special intention of prejudic ing any. particular person or persons but is made in the general interest of administration, there is no infringement of article 14. It is at once obvious that, according to the test thus formulated, the validity of State action, legisla tive or executive, is made entirely dependent on the state of mind of the authority. This test will permit even fla grantly discriminatory State action on the specious plea of good faith and of the subjective view of the executive authority as to the existence of a supposed general interest of administration. This test, if accepted, will amount to adding at the end of article 14 the words "except in good faith and in the 336 general interest of administration. " This is clearly not permissible for the Court to do. Further, it is obvious that the addition of these words will, in the language of Brewer, J., in Gulf, Colorado and Santa Fe Railway Co. vs W.H. Ellis(1), make the protecting clause a mere rope of sand, in no manner restraining State action. I am not, therefore, prepared to accept the proposition propounded by the learned Attorney General, unsupported as it is by any judicial decision, as a sound test for determining the validity of State action. The learned Attorney General next contends, on the authority of a passage in Cooley 's Constitutional Limita tions, 8th Edition, Vol. 2, p. 816, that inequalities of minor importance do not render a law invalid and that the constitutional limitations must be treated as flexible enough to permit of practical application. The passage purports to be founded on the decision in Jeffrey Manufac turing Co. vs Blagg (2). A careful perusal of this decision will make it quite clear that the Court upheld the validity of the statute impugned in that case, not on the ground that the inequality was of minor importance but, on the ground that the classification of establishments according to the number of workmen employed therein was based on an intelli gible distinction having a rational relation to the subject matter of the legislation in question. That deci sion, therefore, does not support the proposition so widely stated in the passage apparently added by the editor to the original text of Judge Cooley. The difference brought about by a statute may be of such a trivial, unsub stantial and illusory nature that that circumstance alone may be regarded as cogent ground for holding that the stat ute has not discriminated at all and that no inequality has in fact been created. This aspect of the matter apart, if a statute brings about inequality in fact and in substance, it will be illogical and highly undesirable to make the consti tutionality of such a statute depend on the degree of the inequality so (1) ; (2) ; ; 337 brought about. The adoption of such a principle will run counter to the plain language of article 14. At one stage of his arguments the learned AttorneyGener al just put forward an argument, which he did not press very strongly, that the Article is a protection against the inequality of substantive law only and not against that of a procedural law. I am quite definitely not prepared to countenance that argument. There is no logical basis for this distinction. A procedural law may easily inflict very great hardship on persons subjected to it, as, indeed, this very Act under consideration will presently be seen to have obviously done. That the Act has prescribed a procedure of trial which is materially different from that laid down in the Code of Criminal Procedure cannot be disputed. The different sec tions of the Act have been analysed and the important dif ferences have been clearly indicated by the learned Chief Justice of West Bengal and need not be repeated in detail. The elimination of the committal proceedings and of trial by jury (sec. 6), the taking away of the right to a de novo trial on transfer (sec. 7), the vesting of discretion in the Special Court to refuse to summon a defence witness if it be satisfied that his evidence will not be material (sec. 8), the liability to be convicted of an offence higher than that for which the accused was sent up for trial under the Act (sec. 13), the exclusion of interference of other Courts by way of revision or transfer or under section 491 of the Code (sec. 16) are some of the glaring instances of inequality brought about by the impugned Act. The learned Attorney General has drawn our attention to various sections of the Code of Criminal Procedure in an endeavour to establish that provisions somewhat similar to those enacted in this Act are also contained in the Code. A comparison between the lan guage of those sections of the Code and that of the several sections of this Act mentioned above will clearly show that the Act has gone much beyond the proViSions of the Code and the Act cannot by any means 44 338 be said to be an innocuous substitute for the procedure prescribed by the Code. The far reaching effect of the elimination of the committal proceedings cannot possibly be ignored merely by stating that the warrant procedure under the Code in a way also involves a committal by the trial Magistrate, namely to himself, for the warrant procedure minimises the chances of the prosecution being thrown out at the preliminary stage. as may be done by the committing Magistrate, and deprives the accused person of the opportu nity of knowing, well in advance of the actual trial before the Sessions Court, the case sought to be made against him and the evidence in support of it and, what is of the utmost importance, of the benefit of a trial before and the deci sion of a different and independent mind. The liability to be convicted of a higher offence has no parallel in the Code. It is true that the State can, under section 269 (1) of the Code, do away with trial by jury but that section, as pointed out by Chakravartti J. does not clearly contemplate elimination of that procedure only in particular cases which is precisely what the Act authorises the Government to do. On a fair reading of the Act there can be no escape from the fact that it quite definitely brings about a substantial inequality of treatment, in the matter of trial, between persons subjected to it and others who are left to be gov erned by the ordinary procedure laid down. in the Code. The question is whether section 5 (1) which really imposes this substantial inequality on particular persons can be saved from the operation of article 14 on the principle of ration al classification of the kind permissible in law. Section 5 (1) of the Act runs as follows": " A Special Court shall try such offences or classes of offences or cases or classes of cases, as the State Government may, by general or special order in writing, direct". It will be noticed that the sub section refers to four distinct categories, namely, "offences", ' 'classes of of fences", "cases" and "classes of cases" and empowers 339 the State government to direct any one or more of these categories to be tried by the Special Court constituted under the Act. I shall first deal with the section in so far as it authorises the State government to direct "of fences", "classes of offences" and "classes of cases" to be tried by a Special Court. These expressions clearly indi cate, and obviously imply, a process of classification of offences or cases. Prima facie those words do not contem plate any particular offender or any particular accused in any particular case. The emphasis is on "offences", ' 'classes of offences" or "classes of cases". The classifi cation of ' 'offences" by itself is not calculated to touch any individual as such, although it may, after the classifi cation is made, affect all individuals who may commit the particular offence. In short, the classification implied in this part of the sub section has no reference to, and is not directed towards the singling out of any particular person as an object of hostile State action but is concerned only with the grouping of "offences", "classes of offences" and "classes of cases" for the purpose of being tried by a Special Court. Such being the meaning and implication of this part of section 5 (1), the question arises whether the process of classification thus contemplated by the Act conforms to the requirements of reasonable classification which does not offend against the Constitution. Learned Attorney General claims that the impugned Act satisfies even this test of rational classification. His contention is that offences may be grouped into two classes, namely, those that require speedier trial, that is speedier than what is provided for in the Code and those that do not require a speedier trial. The Act, according to him, purports to deal only with offences of the first class. He first draws our attention to the fact that the Act is inti tuled "An Act to provide for the speedier trial of certain offences" and then points out that the purpose of the Act, as stated in its preamble, also is "to provide for the speedier trial of certain offences". He next refers us to the different sections of the Act and urges 340 that all the procedural changes introduced by the Act are designed to accomplish the object of securing speedier trial. The Act accordingly empowers the State government to direct the offences, which, in its view, require speedier trial, to be tried by a Special Court according to the special procedure provided by it for the speedier trial of those offences. This construction of the section, he main tains, is consonant with the object of the Act as recited in the preamble and does not offend against the inhibition of article 14 of our Constitution. Learned counsel for the respondents, on the other hand, urge that there is no ambi guity whatever in the language used in the sub section, that there is no indication in the sub section itself of any restriction or qualification on the power of classification conferred by it on the State government and that the power thus given to the State government cannot be controlled and cut down by calling in aid the preamble of the Act, for the preamble cannot abridge or enlarge the meaning of the plain language of the sub section. This argument was accept ed by the High Court in its application to the other part of the section dealing with selection of "cases" but in judging whether this argument applies, with equal force, to that part of the section I am now considering, it must be borne in mind that, although the preamble of an Act cannot over ride the plain meaning of the language of its operative parts, it may, nevertheless, assist in ascertaining what the true meaning or implication of a particular section is, for the preamble is, as it were a key to the understanding of the Act. I therefore, proceed to examine this part of section 5(1) in the light of the preamble so as to ascertain the true meaning of it. I have already stated that this part of the sub section contemplates a process of classification of "of fences", "classes of offences" and "classes of cases". This classification must, in order that it may not infringe the constitutional prohibition, fulfil the two conditions I have mentioned. The preamble of the Act under consideration recites the expediency of providing for the speedier trial of certain 341 offences. The provision for the speedier trial of certain offences is, therefore, the object of the Act. To achieve this object, offences or cases have to be classified upon the basis of some differentia which will distinguish those offences or cases from others and which will have a reasona ble relation to the recited object of the Act. The differen tia and the object being, as I have said, different ele ments, it follows that the object by itself cannot be the basis of the classification of offences or the cases, for, in the absence of any special circumstances which may dis tinguish one offence or one class of offences or one class of cases from another offence, or class of offences or class of cases, speedier trial is desirable in the disposal of all offences or classes of offences or classes of cases. Offences or cases cannot be classified in two categories on the basis of the preamble alone as suggested by the learned Attorney General. Learned counsel for the respondents then contended that as the object of the Act as recited in the preamble cannot be the basis of classification, then this part of sub sec tion 5 (1) gives an uncontrolled and unguided power of classification which may well be exercised by the State government capriciously or "with an evil eye and an unequal band" so as to deliberately bring about invidious discrimi nation between man and man, although both of them are situ ated in exactly the same or similar circumstances. By way of illustration it is pointed out that in the Indian Penal Code there are different chapters dealing with offences relating tO different matters, e.g., Chapter XVII which deals with offences against property, that under this generic head are set forth different species of offences against property, e.g., theft (section 378), theft in a dwelling house (sec tion 380), theft by a servant (section 381), to take only a few examples, and that according to the language of section 5(1) of the impugned Act it will be open to the State government to direct all offences of theft in a dwell ing house under section 380 to be tried by the Special Court according to the special procedure laid down in the Act leaving all offences of theft by a servant under section 381 to be dealt with in the 342 ordinary Court in the usual way. In other words, if a stranger is charged with theft in a dwelling house, he may be sent up for trial before the Special Court under section 380 whereas if a servant is accused of theft in a dwelling house he may be left to be tried under the Code for an offence under section 381. The argument is that although there is no apparent reason why an offence of theft in a dwelling house by a stranger should require speedier trial any more than an offence of theft in a dwelling house by a servant should do, the State government may nevertheless select the former offence for special and discriminatory treatment in the matter of its trial by bringing it under the Act. A little reflection will show that this argument is not sound. The part of sub section 5(1) which I am now examining confers a power on the State government to make a classification of offences, classes of offences or classes of cases, which, as said by Chakravartti J., "means a proper classification. " In order to be a proper classification so as not to offend against the Constitution it must be based on some intelligible differentia which should have a reason able relation to the object of the Act as recited in the preamble. In the illustration taken above the two offences are only two species of the same genus, the only difference being that in the first the alleged offender is a stranger and in the latter he is a servant of the owner whose proper ty has been stolen. Even if this difference in the circum stances of the two alleged offenders can be made the basis of a classification, there is no nexus between this differ ence and the object of the Act, for, in the absence of any special circumstances, there is no apparent reason why the offence of theft in a dwelling house by a stranger should require a speedier trial any more than the offence of theft by a servant should do. Such classification will be wholly arbitrary and will be liable to be hit by the principles on which the Supreme Court of the United States in Jack Skinner vs Oklahoma(1) struck down the Oklahoma Habitual Criminal Sterilisation Act which (1) ; 216 US. 535; 343 imposed sterilisation on a person convicted more than twice of larceny but not on one who was convicted of embezzlement on numerous occasions. That sort of classification will, therefore, not clearly be a proper classification such as the Act must be deemed to contemplate. On the other hand, it is easy to visualise a situation when certain offences, e.g., theft in a dwelling house, by reason of the frequency of their perpetration or other attending circumstances, may legitimately call for a speedi er trial and swift retribution by way of punishment to check the commission of such offences. Are we not familiar with gruesome crimes of murder, arson, loot and rape committed on a large scale during communal riots in particular localities and are they not really different from a case of a stray murder, arson, loot or rape in another district which may not be affected by any communal upheaval ? Do not the existence of the communal riot and the concomitant crimes committed on a large scale call for prompt and speedier trial in the very interest and safety of the community ? May not political murders or crimes against the State or a class of the community, e.g., women, assume such proportions as would be sufficient to constitute them into a special class of offences requiring special treatment ? Do not these special circumstances add a peculiar quality to these of fences or classes of offences or classes of cases which distinguish them from stray cases of similar crimes and is it not reasonable and even necessary to arm the State with power to classify them into a separate group and deal with them promptly ? I have no doubt in my mind that the surrounding circumstances and the special features I have mentioned above will furnish a very cogent and reasonable basis of classification, for it is obvious that they do clearly distinguish these offences from similar or even same species of offences committed elsewhere and under ordinary circumstances. This differentia quite clearly has a reasona ble relation to the object sought to be achieved by the Act, namely, the speedier trial of certain offences. Such a classification will not be 344 repugnant to the equal protection clause of our Constitution for there will be no discrimination, for whoever may commit the specified offence in the specified area in the specified circumstances will be treated alike and sent up before a Special Court for trial under the special procedure. Persons thus sent up for trial by a Special Court cannot point their fingers to the other persons who may be charged before an ordinary Court with similar or even same species of offences in a different place and in different circum stances and complain of unequal treatment, for those other persons are of a different category and are not their equals. Section 5(1), in so far as it empowers the State government to direct "offences" or "classes of offences" or "classes of cases" to be tried by a Special Court, also, by necessary implication and intendment, empowers the State government to classify the "offences" or "classes of of fences" or "classes of cases ", that is to say, to make a proper classification in the sense I have explained. In my judgment, this part of the section, properly construed and understood, does not confer an uncontrolled and unguided power on the State government. On the contrary, this power is controlled by the necessity for making a proper classifi cation which is guided by the preamble in the sense that the classification must have a rational relation to the object of the Act as recited in the preamble. It is, therefore, not an arbitary power. I, therefore, agree with Harries, C.J. that this part of section 5(1) is valid. if the State gov ernment classifies offences arbitrarily and not on any reasonable basis having a relation to the object of the Act, its action will be either an abuse of its power if it is purposeful or in excess of its powers even if it is done in good faith and in either case the resulting discrimination will encounter the challenge of the Constitution and the Court will strike down, not the law which is good, but the abuse or misuse or the unconstitutional administration of the law creating or resulting in unconstitutional discrimi nation. 345 In the present case, however, the State government has not purported to proceed under that part of section 5(1) which I have been discussing so far. It has, on the other hand, acted under that part of the section which authorises it to direct" cases" to be tried by the Special Court, for by the notifications it has directed certain specific cases identified by their individual numbers in the records of the particular than as to be tried by the Special Court. There is ostensibly no attempt at, or pretence of, any classifica tion on any basis whatever. The notifications simply direct certain "cases" to be tried by the Special Court and are obviously issued under that part of section 5(1) which authorises the State government to direct "cases" to be tried by the Special Court. The word "cases" has been used to signify a category distinct from "classes of cases". The idea of classification is, therefore, excluded. This 'means that this part of the sub section empowers the State Govern ment to pick out or select particular cases against particu lar persons for being sent up to the Special Court for trial. It is urged by the learned AttorneyGeneral that this selection of cases must also be made in the light of the object of the Act as expressed in its preamble, that is to say, the State government can only select those cases which, in their view, require speedier trial. Turning to the pream ble, I find that the object of the Act is "to provide for the speedier trial of certain offences" and not of a partic ular case or cases. In other words, this part of section 5 (1) lies beyond the ambit of the object laid down in the preamble and, therefore, the preamble can have no manner of application in the selection of "cases" as distinct from "offences", "classes of offences" or "classes of cases". I agree with Harries C.J. that the preamble cannot control this part of the sub section where the language is plain and unambiguous. Further, as I have already explained, the object of the Act cannot, by itself, be the basis of the selection which, I repeat, must be based on some differentia distinguishing the ' 'case" from other ' 'cases" and having a relation to the 45 346 object of the Act. It is difficult, if not impossible, to conceive of an individual "case", as distinct from a "class of cases", as a class by itself within the rule of permissi ble and legitimate classification. An individual case of a crime committed with gruesome atrocity or committed upon an eminent person may shock our moral sense to a greater extent but, on ultimate analysis and in the absence of special circumstances such as I have mentioned, it is not basically different from another individual case of a simi lar crime although committed with less vehemence or on a less eminent person. In any case, there is no particular bond connecting the circumstances of the first mentioned case with the necessity for a speedier trial. In the absence of special circumstances of the kind I have described above, one individual case, say of murder, cannot require speedier trial any more than another individual case of murder may do. It is, therefore, clear, for the foregoing reasons, that the power to direct "cases" as distinct from "classes of cases" to be tried by a Special Court contem plates and involves a purely arbitrary selection based on nothing more substantial than the whim and pleasure of State Government and without any appreciable relation to the necessity for a speedier trial. Here the law lays an unequal hand on those who have committed intrinsically the same quality of offence. ]his power must inevitably result in discrimination and this discrimination is, in terms incorpo rated in this part of the section itself and, therefore, this part of the section itself must incur our condemnation. It is not a question of an unconstitutional administration of a statute otherwise valid on its face but here the uncon stitutionality is writ large on the face of the statute itself. I, therefore, agree with the High Court that section 5(1) of the Act in so far as it empowers the State Govern ment to direct "cases" to be tried by a Special Court of fends against the provisions of article 14 and therefore the Special Court had no jurisdiction to try these "cases" of the respondents. In ray judgment, the High Court was right in quashing the conviction 347 of the respondents in the one case and in prohibiting fur ther proceedings in the other case and these appeals should be dismissed. CHANDRASEKHARA AIYAR J. The short question that arises for consideration in these cases is whether the whole, or any portion of the West Bengal Special Courts Act, X of 1950, is invalid as being opposed to equality before the law and the equal protection of the laws guaran teed under article 14 of the Constitution of India. The facts which have led up to the cases have been stated in the judgments of the High Court at Calcutta and their recapitu lation is unnecessary. I agree in the conclusion reached by my learned brothers that the appeals should be dismissed and I propose to indicate my views as shortly as possible on a few only of the points raised and discussed. The preamble to the Constitution mentions one of the objects to be to secure to all its citizens equality of status and opportunity. Article 14 provides: "The State shall not deny to any person equality before the law or the equal protection of the laws within the territory of India." Then follow articles 15 and 16, the former prohibiting discrimination on grounds of religion, race, caste, sex, place of birth, or any of them and the latter providing for equality of opportunity in matters of public employment. Leaving aside articles 17 to 19 as irrelevant for present purposes, we proceed to articles 20, 21 and 22, which deal with prosecutions and convictions for offences and cases of preventive detention and prescribe, in rough and general outline, certain matters of procedure. Article 21 is, so to say, the key of this group or bunch and it is in these terms : "No person shall be deprived of his life or personal liberty except according to procedure established by law". There can be no doubt that as regards the cases to be sent before the Special Court or Courts, the Act 348 under scrutiny has deviated in many matters of importance from the procedure prescribed by the Criminal Procedure Code for the trial of offences and that this departure has been definitely adverse to the accused. Preliminary inquiry before committal to the sessions, trial by jury or with the aid of assessors, the right of a de novo trial on transfer of a case from one Court to another, have been taken away from the accused who are to be tried by a Special Court; even graver is section 13, which provides that a person may be convicted of an offence disclosed by the evidence as having been committed by him, even though he was not charged with it and it happens to be a more serious offence. This power of the Special Court is much wider than the powers of ordinary courts. The points of prejudice against the ac cused which appear in the challenged Act have been pointed out in detail in the judgment of Trevor Harries C.J. They cannot all be brushed aside as variations of minor and unsubstantial importance. The argument that changes in procedural law are not material and cannot be said to deny equality before the law or the equal protection of the laws so long as the substan tive law remains unchanged or that only the fundamental rights referred to in articles 20 to 22 should be safeguard ed is, on the face of it, unsound. The right to equality postulated by article 14 is as much a fundamental right as any other fundamental right dealt with in Part III of the Constitution. Procedural law may and does confer very valu able rights on a person, and their protection must be as much the object of a court 's solicitude as those conferred under substantive law. The learned Attorney General contended that if the object of the legislation was a laudable one and had a public purpose in view, as in this case, which provided for the speedier trial of certain offences, the fact that dis crimination resulted as a bye product would not offend the provisions of article 14. His point was that if the inequal ity of treatment was not specifically intended to prejudice any particular person or group 349 persons but was in the general interests of administra tion, it could not be urged that there is a denial of equal ity before the law. To accept this position would be to neutralize, if not to abrogate altogether, article 14. Almost every piece of legislation has got a public purpose in view and is generally intended, or said to be intended, to promote the general progress of the country and the better administration of Government. ' The intention behind the legislation may be unexceptionable and the object sought to be achieved may be praiseworthy but the question which falls to be considered under article 14 is whether the legislation is discriminatory in its nature, and this has to be determined not so much by its purpose or objects but by its effects. There is scarcely any authority for the posi tion taken up by the Attorney General. It is well settled that equality before the law or the equal protection of laws does not mean identity or abstract symmetry of treatment. Distinctions have to be made for different classes and groups of persons and a rational or reasonable classification is permitted, as otherwise it would be almost impossible to carry on the work of Govern ment of any State or country. To use the felicitous language of Mr. Justice Holmes in Bain Peanut Co. vs Pinson(1) "We must remember that the machinery of government could not work if it were not allowed a little play in its joints. " The law on the subject has been well stated in a passage from Willis on Constitutional Law (1936 Edition, at page 579) and an extract from the pronouncement this Court in what is known as the Prohibition Case, The State of. Bombay and Another vs F.N. Balsara(2), where my learned brother Fazl Ali J. has distilled in the form of seven principles most of the useful observations of this Court in the Sholapur Mills case, ChiranLal Chowdhury vs The Union of India and Others(3) Willis says : "The guaranty of the equal protection of the laws means the protection of equal laws. It forbids (1) ; at p. 501. (3) ; (2) ; 350 class legislation, but does not forbid classification which rests upon reasonable grounds of distinction. It does not prohibit legislation, which is limited either in the objects to which it is directed or by the territory within which it is to operate. "It merely requires that all persons subject to such legislation shall be treated alike under like cir cumstances and conditions both in the privileges conferred and in the liabilities imposed." "The inhibition of the amendment was designed to prevent any person or class of persons from being singled out as a special subject for discriminating and hostile legislation. " It does not take from the states the power to classify either in the adoption of police laws, or tax laws, or eminent domain laws, but permits to them the exercise of a wide scope of discretion, and nullifies what they do only when it is without any reasonable basis. Mathematical nicety and perfect equality are not required. Similarity, not identity of treatment, is enough. If any state of facts can reasonably be conceived to sustain a classification, the existence of that state of facts must be assumed. One who assails a classification must carry the burden of showing that it does not rest upon any reasonable basis. " The seven principles formulated by Fazl Ali J. are as follows : "1. The presumption is always in favour of the constitu tionality of an enactment, since it must be assumed that the legislature understands and correctly appreciates the needs of its own people, that its laws are directed to problems made manifest by experience and its discriminations are based on adequate grounds. The presumption may be rebutted in certain cases by showing that on the face of the statute, there is no classi fication at all and no difference peculiar to any individual or class and not applicable to any other individual or class, and yet the law hits only a particular individual or class. The principle of equality does not mean that every law must have universal application for all 351 persons who are not by nature, attainment or circumstances in the same position, and the varying needs of different classes of persons often require separate treatment. The principle does not take away from the State the power of classifying persons for legitimate purposes. Every classification is in some degree likely to produce some inequality, and mere production of inequality is not enough. If a law deals equally with members of a welldefined class, it is not obnoxious and it is not open to the charge of denial of equal protection on the ground that it has no application to other persons. While reasonable classification is permissible, such classification must be based upon some real and substantial distinction bearing a reasonable and just relation to the object sought to be attained, and the classification cannot be made arbitrarily and without any substantial basis." After these citations, it is really unnecessary to refer to or discuss in detail most of the American decisions cited at the Bar. Their number is legion and it is possible to alight on decisions in support of propositions, apparently even conflicting, if we divorce them from the context of the particular facts and circumstances and ignore the setting or the background in which they were delivered. With great respect, I fail to see why we should allow ourselves to be unduly weighted down or over encumbered in this manner. To say this is not to shut out illumining light from any quarter; it is merely to utter a note of caution that we need not stray far into distant fields and try to clutch at something which may not after all be very helpful. What we have to find out is whether the statute now m question before us offends to any extent the equal protection of the laws guaranteed by our written Constitution. Whether the classification, ii any, is reasonable or arbitrary, or is substantial or unreal, has to be adjudicated upon by 352 the courts and the decision must turn more on one 's common sense than on over refined legal distinctions or subtleties. The Attorney General argued that if the principle of classification has to be applied as a necessary test, there is a classification in the impugned Act as it says that it is intended to provide for the speedier trial of certain offences; and in the opinion of the legislature certain offences may require more expeditious trial than other offences and this was a good enough classification. But as speedy administration of justice, especially in the field of the law of crimes, is a necessary characteristic of every civilised Government, there is not much point in stating that there is a class of offences that require such speedy trial. Of course, there may be certain offences whose trial requires priority over the rest and quick progress, owing to their frequent occurrence, grave danger to public peace or tranquillity, and any other special features that may be prevalent at a particular time in a specified area. And when it is intended to provide that they should be tried more speedily than other offences, requiring in certain respects a departure from the procedure prescribed for the general class of offences, it is but reasonable to expect the legis lature to indicate the basis for any such classification. If the Act does not state what exactly are the offences which in its opinion need a speedier trial and why it is so considered, a mere statement in general words of the object sought to be achieved, as we find in this case, is of no avail because the classification, if any, is illusive or evasive. The policy or idea behind the classification should at least be adumbrated, if not stated, so that the court which has to decide on the constitutionality might be seized of something on which it could base its view about the propriety of the enactment from the standpoint of dis crimination or equal protection. Any arbitrary division or ridge will render the equal protection clause moribund or lifeless. Apart from the absence of any reasonable or rational classification we have in this case the additional feature 353 of a carte blanche being given to the State Government to send any offences or cases for trial by a Special Court. Section 5, sub clause (1), of the impugned Act is in these terms : " A Special Court shall try such offences or classes of offences or cases or classes of cases, as the State Govern ment may, by general or special order in writing, direct. " If the scope or the ' meaning of the Act is doubtful, the preamble can be referred to for ascertaining its extent and purpose. But where the operative parts of the Act are clear and there is no ambiguity, the preamble cannot be allowed to control the express provisions. On the terms of section 5, it would be perfectly open to the State Government to send before the Special Court any case, whatever its nature, whether it has arisen out of a particular incident or re lates to a crime of normal occurrence, whether the offence involved is grave or simple, whether it needs more expedi tious trial or not. Thus, we have before us an enactment which does not make any reasonable classification and which confers on the executive an uncontrolled and unguided power of discrimination. The question whether there is any proper classification where no standard is set up by the enactment to control executive action has arisen for consideration before the American courts and has been differently answered. Willis says at page 586 : "Is it proper classification to put in one class those who get the consent of a board or of an official and into another class those who do not, where no standard is set up to control the action of the board or official ? Some cases answer. this question in the affirmative, while other cases answer it in the negative. Perhaps the best view on this subject is that due process and equality are not violated by the mere conference of unguided power, but only by its arbitrary exercise by those upon whom it is conferred. " The case cited in support of this view, Plymouth Coal Co. vs Pennsylvania(1), is really on authority for (1) 46 354 any such position. In that case, the statute provided that it was "obligatory on the owners of adjoining coal proper ties to leave, or cause to be left, a pillar of coal in each seam or vein of coal worked by them, along the line of adjoining property, of such width that, taken in connection with the pillar to be left by the adjoining property owner, will be a sufficient barrier for the safety of the employees of either mine in case the other should be abandoned and allowed to fill with water; such width of pillar to be determined by the engineers of the adjoining property owners together with the inspector of the district in which the mine is situated. " When the Inspector of Mines wrote to the plaintiff company, Plymouth Coal Co., asking their engineer to meet him so that they can meet the engineer of the neigh bouring coal company to decide about the thickness of the barrier pillar to be left unmined between the two adjoining coal properties, the plaintiff company declined to co oper ate. Thereupon the Inspector filed a bill of complaint against the plaintiff company for a preliminary and a per petual injunction from working its mines without leaving a barrier pillar of the dimensions he thought necessary. The plaintiff company urged that the Act upon which the bill was based "was confiscatory, unconstitutional, and void". The bill of complaint succeeded but it was provided in the final order that it was without prejudice to the Plymouth Coal Co. 's right to get dissolution or modification of the in junction. The matter came up on appeal to the Supreme Court. The legislative Act was challenged by the Plymouth Coal Co. on the grounds that the method of fixing the width of the barrier pillar indicated in the Act was crude, uncer tain and unjust, that there was uncertainty and want of uniformity in the membership of the statutory tribunal, that there was no provision of notice to the parties interested, that the procedure to be followed was not prescribed, and that there was noright of appeal. All these objections were negatived. The Court observed on the main contention that "it was competent for the legislature to lay 355 down a general rule, and then establish an administrative tribunal with authority to fix the precise width or thick ness of pillar that will suit the necessities of the partic ular situation, and constitute a compliance with the general rule." This case is no authority for the position that the mere conferment of naked or uncontrolled power is no viola tion of the due process or c equality clauses. it is true that the power to deal with a particular situation within the general rule prescribed by the enactment may be con ferred on an administrative body or even on a single indi vidual but this entrustment or delegation is subject to the condition that the statute must itself be a valid one, as not being opposed to the 5th or 14th Amendment of the Ameri can Constitution, corresponding to articles 14 and 22 of our Constitution. Discrimination may not appear in the statute itself but may be evident in the administration of the law. If an uncontrolled or unguided power is conferred without any reasonable and proper standards or limits being laid down in the enactment, the statute itself may be challenged and not merely the particular administrative act. Citing the case of Sunday Lake Iron Co. vs Wakefield, Rogers vs Alabama and Concordia Fire Ins. Co. vs Illinois, Prof. Weaver says at page 404 of his compendious book on Constitutional Law under the heading of ' DISCRIMINATION IN THE ADMiNiSTRATION OF THE LAWS ': "Discrimination may exist in the administration of the laws and it is the purpose of the equal protection clause to secure all the inhabitants of the state from intentional and arbitrary discrimination arising in their improper or preju diced execution, as well as by the express terms of the law itself. The validity or invalidity of a statute often depends on how it is construed and applied. It may be valid when given a particular application and invalid when given another. " A difficulty was suggested and discussed in the course of the arguments in case article 14 was to receive a very wide interpretation. Under article 12 of the 356 Constitution, even a local authority comes within the defi nition of "the State" and section 13 provides in sub clause (3) that " 'law ' includes any ordinance, order, bye law, rule, regulation, notification. . " Therefore any ordinance or notification issued by a local authority acting under the powers conferred on it by a statute might be challenged as discriminatory and if this is permitted, the work of administration might be paralysed altogether. This, no doubt, is a possible result but the difficulty envisaged is by no means insurmountable. If the statute or the enact ment makes a reasonable or rational classification and if the power conferred by the statute on a local authority is exercised to the prejudice of a person visa vis other per sons similarly situated, two answers would be possible. One is that there was no discrimination at all in the exercise of the power. The second is that the power was exercised in good faith within the limitations imposed by the Act and for the achievement of the objects the enactment had in view and that the person who alleges that he has been discriminated against will have to establish mala fides in the sense that the step was taken intentionally for the purpose of injuring him; in other words, it was a hostile act directed against him. If the legislation itself is open to attack on the ground of discrimination, the question of any act done by a local or other authority under the power or powers vested in it will not arise. If the Act itself is invalid on the ground that it is ultra vires, the notification, ordinance, or rule falls to the ground with it, but if the Act remains, the validity of the notification or order etc., when im pugned, may have to be considered independently. There may be cases where individual acts of state offi cials are questioned and not the legislation itself. As regards such cases, Willoughby states at page 1932 of his Volume III on the Constitution of the United States : "It is, however, to be observed in this connection, that the prohibitions apply to the acts of State officials even when they are done in pursuance of some 357 State legislative direction, for, while no constitutional objection may be made to any law of the State, it has been held that its officials may exercise their public authority in such a discriminatory or arbitrary manner as to bring them within the scope of the prohibitions of the Fourteenth Amendment. This, it will be remembered, was one of the grounds upon which, in Yick Wo vs Hopkins it was held that due process of law had been denied. In Tarrance vs Florida ; the administration of a State law and not the law itself was challenged and the court said: 'Such an actual discrimination is as potential in creating a denial of equality of rights as a discrimina tion made by law. '" There is only one other point that I would like to deal with. Trevor Harries C.J. has taken the view that section 5 of the Act would have been unexceptionable had it only provided for the trial by a Special Court of certain of fences or classes of offences or certain classes of cases and that in his opinion the discrimination arose by the provision for the trial of cases, as distinguished from classes of cases. It is rather difficult, however, to appreciate this distinction. If the statute makes no classi fication at all, or if the classification purported to be made is not reasonable or rational but is arbitrary and illusory, as in this case, Section 5 would be void as con travening article. It is no doubt true that totally different considerations might arise if specified offences or groups of offences in a particular area or arising out of a particular event or incident were to be,tried by a Special Court but this is not the case here. I am unable to see how if the Act merely provided that certain "classes of cases" as distinguished from "cases" should be tried by a Special Court, the attack against discrimination could be avoided, as even then the test of rationality or reasonableness would still remain to be satisfied. If the Act does not enunciate any principle on the basis of which the State Government could select offences or classes of offences or cases or classes of cases and the State Government is left free to make 358 any arbitrary selection according to their will and pleasure then the Act is void. On this point, I would invite special attention to the view taken by Mr. Justice Das Gupta in the following passage of his Judgment: "The Act lays down no principle on which selection of "classes of offences" or "classes of cases" should be made by the State Government. The State Government may even arbitrarily determine the classes of cases to be tried by the Special Court and if it does so its action will be well within its powers conferred by the Act. The Act indicates no basis whatsoever on which such classification should be made. I am of opinion that the whole Act is ultra vires the Constitution and deletion of the word "cases" from section 5 would not save the rest of the Act from being invalid. " Bose J. We are concerned here with article 14 of the Constitution and in particular with the words "equality before the law" and "equal protection of the law. " Now I yield to none in my insistence that plain unambiguous words in a statute, or in the Constitution, must having regard to the context, be interpreted according to their ordinary meaning and be given full effect. But that predicates a position where the words are plain and unambiguous. I am clear that that is not the case here. Take first the words "equality before the law". It is to be observed that equality in the abstract is not guaran teed but only equality before the law. That at once leads to the question, what is the law, and whether "the law" does not draw distinctions between man and man and make for inequalities in the sense of differentiation? One has only to look to the differing personal laws which are applied daily to see that it does; to trusts and foundations from which only one particular race or community may benefit, to places of worship from which all but members of particular faith are excluded, to cemeteries and towers of silence which none but the faithful may use, to the 359 laws of property, marriage and divorce. All that is part and parcel of the law of the land and equality before it in any literal sense is impossible unless these laws are swept away, but that is not what the Constitution says, for these very laws are preserved and along with equality before the law is also guaranteed the right to the practice of one 's faith. Then, again, what does "equality" mean? All men are not alike. Some are rich and some are poor. Some by the mere accident of birth inherit riches, others are born to pover ty. There are differences in social standing and economic status. High sounding phrases cannot alter such fundamental facts. It is therefore impossible to apply rules of abstract equality to conditions which predicate in equality from the start; and yet the words have meaning though in my judgment their true content is not to be gathered by simply taking the words in one hand and a dictionary in the other, for the provisions of the Constitution are not mathematical formula which have their essence in mere form. They constitute a frame work of government written for men of fundamentally differing opinions and written as much for the future as the present. They are not just pages from a text book but form the means of ordering the life of a progressive people. There is consequently grave danger in endeavouring to confine them in watertight compartments made up of ready made generalisations like classification. I have no doubt those tests serve as a rough and ready guide in some cases but they are not the only tests, nor are they the true tests on a final analysis. What, after all, is classification? It is merely a systematic arrangement of things into groups or classes, usually in accordance with some definite scheme. But the scheme can be anything and the laws which are laid down to govern the grouping must necessarily be arbitrarily select ed; also granted the right to select, the classification can be as broadbased as one pleases, or it can be broken down and down until finally just one solitary unit is divided off from the rest. Even those 360 who propound this theory are driven to making qualifica tions. Thus, it is not enough merely to classify but the classification must not be 'discriminatory ', it must not amount to 'hostile action ', there must be 'reasonable grounds for distinction ', it must be 'rational ' and there must be no 'substantial discrimination '. But what then becomes of the classification? and who are to be the judges of the reasonableness and the substantiality or otherwise of the discrimination? And, much more important, whose stand ards of reasonableness are to be applied? the judges '? the government 's? or that of the mythical ordi nary reasonable man of law which is no single man but a composite of many men whose reasonableness can be measured and gauged even though he can neither be seen nor heard nor felt? With the utmost respect I cannot see how these vague generalisations serve to clarify the position. To my mind they do not carry us one whit beyond the original words and are no more satisfactory than saying that all men are equal before the law and that all shall be equally treated and be given equal protection. The problem is not solved by sub stituting one generalisation for another. To say that the law shall not be discriminatory carries us nowhere for unless the law is discriminatory the question cannot arise. The whole problem is to pick out from among the laws which make for differentiation the ones which do not offend article 14 and separate them from those which do. It is true the word can also be used in the sense of showing favouritism, but in so far as it means that, it suffers from the same defect as the 'hostile action ' test. We are then compelled to import into the question the element of motive and delve into the minds of those who make the differentia tion or pass the discriminatory law and thus at once substi tute a subjective test for an objective analysis. I would always be slow to impute want of good faith in these cases. I have no doubt that the motive, except in rare cases, is beyond reproach and were it not for the fact that the Constitution demands 361 equality of treatment these laws would, in my opinion, be valid. But that apart. What material have we for delving into the mind of a legislature? It is useless to say that a man shall be judged by his acts, for acts of this kind can spring from good motives as well as bad, and in the absence of other material the presumption must be overwhelmingly in favour of the former. I can conceive of cases where there is the utmost good faith and where the classification is scientific and ration al and yet which would offend this law. Let us take an imaginary case in which a State legislature considers that all accused persons whose skull measurements are below a certain standard, or who cannot pass a given series of intelligence tests, shall be tried summarily whatever the offence on the ground that the less complicated the trial the fairer it is to their sub standard of intelli gence. Here is classification. It is scientific and systematic. The intention and motive are good. There is no question of favouritism, and yet I can hardly believe that such a law would be allowed to stand. But what would be the true basis of the decision? Surely simply this that the judges would not consider that fair and proper. However much the real ground of decision may be hidden behind a screen of words like 'reasonable ', 'substantial ', 'rational ' and 'arbitrary ' the fact would remain that judges are sub stituting their own judgment of what is right and proper and reasonable and just for that of the legislature; and up to a point that, I think, is inevitable when a judge is called upon to crystallise a vague generality like article 14 into a concrete concept. Even in England, where Parliament is supreme, that is inevitable, for, as Dicey tells us in his Law of the Constitution, "Parliament is the supreme legislator, but from the moment Parliament has uttered its will as lawgiver, that will becomes subject to the interpretation put upon it by the judges of the land, and the judges, who are influenced by the feelings of magistrates no 47 362 less than by the general spirit of the common law, are disposed to construe statutory exceptions to common law principles in a mode which would not commend itself either to a body of officials, or to the Houses of Parliament, if the Houses were called upon to interpret their own enact ments. " This, however, does not mean that judges are to deter mine what is for the good of the people and substitute their individual and personal opinions for that of the government of the day, or that they may usurp the functions of the legislature. That is not their province and though there must always be a a narrow margin within which judges, who are human, will always be influenced by subjective factors, their training and their tradition makes the main body of their decisions speak with the same voice and reach impersonal results whatever their personal predilections or their individual backgrounds. It is the function of the legislature alone, headed by the government of the day, to determine what is, and what is not, good and proper for the people of the land; and they must be given the widest lati tude to exercise their functions within the ambit of their powers, else all progress is barred. But, because of the Constitution, there are limits beyond which they cannot go and even though it fails to the lot of judges to determine where those limits lie, the basis of their decision cannot be whether the Court thinks the law is for the benefit of the people or not. Cases of this type must be decided solely on the basis whether the Constitution forbids it. I realise that this is a function which is incapable of exact definition but I do not view that with dismay. The common law of England grew up in that way. It was gradually added to as each concrete case arose and a decision was given ad hoc on the facts of that particular case. It is true the judges who thus contributed to its growth were not importing personal predilections into the result and merely stated what was the law applicable to that particular ease. But though they did not purport to make the law and merely applied 363 what according to them, had always been the law handed down by custom and tradition, they nevertheless had to draw for their material on a nebulous mass of undefined rules which, though they existed in fact and left a vague awareness in man 's minds, nevertheless were neither clearly definable, nor even necessarily identifiable, until crystallised into concrete existence by a judicial decision; nor indeed is it necessary to travel as far afield. Much of the existing Hindu law has grown up in that way from instance to in stance, the threads being gathered now from the rishis, now from custom, now from tradition. In the same way, the laws of liberty, of freedom and of protection under the Constitu tion will also slowly assume recognisable shape as decision is added to decision. They cannot, in my judgment, be enunciated in static form by hidebound rules and arbitrarily applied standards or tests. I find it impossible to read these portions of the Con stitution without regard to the background out of which they arose. I cannot blot out their history and omit from consid eration the brooding spirit of the times. They are not just dull, lifeless words static and hide boundas in some mummi fied manuscript, but, living flames intended to give life to a great nation and order its being, tongues of dynamic fire, potent to mould the future as well as guide t, he present. The Constitution must, in my judgment, be left elastic enough to meet from time to time the altering conditions of a changing world with its shifting emphasis and differing needs. I feel therefore that in each case judges must look straight into the heart of things and regard the facts of each case concretely much as a jury would do; and yet, not quite as a jury, for we are considering here a matter of law and not just one of fact: Do these "laws" which have been called in question offend a still greater law before which even they must bow? Doing that, what is the history of these provisions ? They arose out of the fight for freedom in this land and are but the endeavour to compress into a few 364 pregnant phrases some of the main attributes of a sovereign democratic republic as seen through Indian eyes. There was present to the collective mind of the Constituent Assembly, reflecting the mood of the peoples of India, the memory of grim trials by hastily constituted tribunals with novel forms of procedure set forth in Ordinances promulgated in haste because of what was then felt to be the urgent neces sities of the moment. Without casting the slightest reflec tion on the Judges and the Courts so constituted, the fact remains that when these tribunals were declared invalid and the same persons were retried in the ordinary Courts, many were acquitted, many who had been sentenced to death were absolved. That was not the fault of the judges but of the imperfect tools with which they were compelled to work. The whole proceedings were repugnant to the peoples of this land and, to my mind, article 14 is but a reflex of this mood. What I am concerned to see is not whether there is absolute equality in any academical sense of the term but whether the collective conscience of a sovereign democratic republic can regard the impugned law, contrasted with the ordinary law of the land, as the sort of substantially equal treatment which men of resolute minds and unbiassed views can regard as right and proper in a democracy of the kind we have proclaimed ourselves to be. Such views must take into consideration the practical necessities of government, the right to alter the laws and many other facts, but in the forefront must remain the freedom of the individual from unjust and unequal treatment, unequal in the broad sense in which a democracy would view it. In my opinion, 'law ' as used in article 14 does not mean the "legal precepts which are actually recognised and applied in the tribunals of a given time and place" but "the more general body of doctrine and tradition from which those precepts are chiefly drawn, and by which we criticise, them." (Dean Pound in at 452). I grant that this means that the same things will be viewed differently at different times. What is 365 considered right and proper in a given set of circumstances will be considered improper in another age and vice versa. But that will not be because the law has changed but because the times have altered and it is no longer necessary for government to wield the powers which were essential in an earlier and more troubled world. That is what I mean by flexibility of interpretation. This is no new or startling doctrine. It is just what happened in the cases of blasphemy and sedition in England. Lord Sumner has explained this in Bowman 's case(1) and the Federal Court in Niharendu Dutt Majumdar 's case(2) and so did Puranik J. and I in the Nagpur High Court in Bhagwati Charan Shukla 's case(3). Coming now to the concrete cases with which we have to deal here. I am far from suggesting that the departures made from the procedure prescribed by the Criminal Procedure Code are bad or undesirable in themselves. Some may be good in the sense that they will better promote the ends of justice and would thus form welcome additions to the law of the land. But I am not here to consider that. That is no part of a Judge 's province. What I have to determine is whether the differentiation made offends what I may call the social conscience of a sovereign democratic republic. That is not a question which can be answered in the abstract. but, viewed in the background of our history. I am of opin ion that it does. It is not that these laws are necessarily bad in themselves. It is the differentiation which matters; the singling out of cases or groups of cases, or even of offences or classes of offences, of a kind fraught with the most serious consequences to the individuals concerned, for special, and what some would regard as peculiar, treatment. It may be that justice would be fully done by following the new procedure. It may even be that it would be more truly done. But it would not be satisfactorily done, satis factory that is to say, not from (1) at 454, 466 and 467. (2) at Nag. 865 at 878 and 879. 366 the point of view of the governments who prosecute, but satisfactory in the view of the ordinary reasonable man, the man in the street. It is not enough that justice should be done. Justice must also be seen to be done and a sense of satisfaction and confidence in it engendered. That cannot be when Ramchandra is tried by one procedure and Sakharam, similarly placed, facing equally serious charges, also answering for his life and liberty, 'by another which differs radically from the first. The law of the Constitution is not only for those who govern or for the theorist, but also for the bulk of the people, for the common man for whose benefit and pride and safeguard the Constitution has also been written. Unless and until these fundamental provisions are altered by the constituent processes of Parliament they must be interpreted in a sense which the common man, not versed in the niceties of grammar and dialectical logic, can under stand and appreciate so that he may have faith and confi dence and unshaken trust in that which has been enacted for his benefit and protection. Tested in the light of these considerations, I am of opinion that the whole of the West Bengal Special Courts Act of 1950 offends the provisions of article 14 and is therefore bad. When the froth and the foam of discussion is cleared away and learned dialectics placed on one side, we reach at last the human element which to my mind is the most important of all. We find men accused of heinous crimes called upon to answer for their lives and liber ties. We find them picked out from their fellows, and however much the new procedure may give them a few crumbs of advantage, in the bulk they are deprived of substantial and valuable privileges of defence which others, similarly charged, are able to claim. It matters not to me, nor indeed to them and their families and their friends, whether this be done in good faith, whether it be done for the convenience of government, whether the process can be scientifically classified and labelled, or whether it is an experiment in speedier trials made for the good 367 of society at large. It matters not how lofty and laudable the motives are. The question with which I charge myself is, can fair minded, reasonable unbiassed and resolute men, who are not swayed by emotion or prejudice, regard this with equanimity and call it reasonable, just and fair, regard it as that equal treatment and protection in the defence of liberties which is expected of a sovereign democratic repub lic in the conditions which obtain in India today ? I have but one answer to that. On that short and simple ground I would decide this case and hold the Act bad. Appeals dismissed. Agent for the appellant in Case No. 297: P.K. Bose. Agent for the respondent in Case No. 297: Sukumar Ghose. Agent for Habib Mohammad (Intervener): Rajinder Narain. Agent for the State of Hyderabad and for the State of Mysore (Interveners):P. A. Mehta. Agent for the appellant in Case No. 298: P.K. Bose Agent for the respondent in Case No. 298: Sukumar Ghose.

The West Bengal Special Courts Act (X of 1950) was entitled "An Act to provide for the speedier trial of cer tain offences," and the object of the Act. as declared in the preamble, was "to provide for the speedier trial of certain offences". Section 3 of the Act empowered the State Government by notification in the official gazette to con stitute Special Courts, and sec. 5 provided that "A Special Court shall try such offences or classes of offences or cases or classes of cases, as the State Government may by general or special order in writing, direct. " The Act laid down a procedure for trial before Special Courts which was different in several respects from that laid down by the Criminal Procedure Code for trial of offences generally. The respondent, who was convicted by a Special Court which tried his case under a notification issued by the Government under sec. 5, contended that the said section was unconsti tutional and void inasmuch as it contravened article 14 of the Constitution, which provides that "the State shall not deny to any person equality before the law or the equal protec tion of the laws within the territory of India". 285 Held, per FAZL ALl, MAHAJAN, MUKHERJEA, CHANDRASEKHARA AIYAR and BOsE JJ. (PATANJALI SASTRI C.J., dissenting) Section 5 (1) of the West Bengal Special Courts Act, 1950, contravenes article 14 of the Constitution and is void inasmuch as (per FAZL ALl, MAHAJAN, MUKHERJEA, and CHANDRASEKHARA AIYAR JJ.) the procedure laid down by the Act for the trial by the Special Courts varied substantially from that laid down for the trial of offences generally by the Code of Criminal Procedure and the Act did not classify, or lay down any basis for classification, of the cases which may be directed to be tried by the Special Court, but left it to the uncontrolled discretion of the State Government to direct any case which it liked to be tried by the Special Court. DAs J. Section 5 Il) of the Act, in so far as it empowered the State Government to direct "offences" or "classes of offences" or "classes of cases" to be tried by a Special Court, does not confer an uncontrolled and unguided power on the State Government but by necessary implication contemplates a proper classification and is not void. That part of the section which empowered the Government to direct "cases" as distinct from "classes of cases" to be tried by a Special Court is void. PATANJALI SASTRI C.J. Section 5 (1) of the Act is not void or unconstitutional wholly or even in part. Per FAZL ALl, MAHAJAN, MUKHERJEA and CHANDRASEKHARA AIYAR JJ. A rule of procedure laid down by law comes as much within the purview of article 14 of the Constitution as any rule of substantive law and it is necessary that all litigants, who are similarly situated, are able to avail themselves of the same procedural rights for rebel and for defence with like protection and without discrimination. (ii) If it is established that the person complaining has been discriminated against as a result of legislation and denied equal privileges with others occupying the same position, it is not incumbent upon him before he can claim relief on the basis of fundamental rights to assert and prove that, in making the law, the legislature was actuated by a hostile or inimical intention against a particular person or class ; nor would the operation of article 14 be excluded merely because it is proved that the legislature had no intention to discriminate, though discrimination was the necessary consequence of the Act. The question of intention may arise in ascertaining whether an officer acted mala fide or not; but it cannot arise when discrimination follows or arises on the express terms of the law itself. (iii) The language of sec. 5 (1) clearly and unambigu ously vests the State Government with unrestricted discre tion to direct any cases or class of cases to be tried by the Special Court, not a discretion to refer cases only when it is of opinion that a speedier trial is necessary 286 (iv) Assuming that the preamble throws any light on the section, the necessity of speedier trial is too vague, uncertain and elusive a criterion to form a rational basis for discrimination. (v) It cannot be said that an Act does not contravene the equality rule laid down by article 14 simply because it confers unregulated discretion on officers or administrative bodies. The true position is that if the statute itself is not discriminatory the charge of Violation of the article may be only against the official who administers it, but if the statute itself makes a discrimination without any proper or reasonable basis, it would be void for being in conflict with article 14. (vi) The notification issued under the Act in the present case would also come within the definition of law and could be impeached apart from the Act if it violates article 14. DAS J. (1) Article 14 does not insist that every piece of legislation must have universal application and it does not take away from the State the power to classify persons for the purposes of legislation, but the classification must be rational, and in order to satisfy this test (i) the classification must be founded on an intelligible differen tia which distinguished those that are grouped together from others, and (ii) that differentia must have a rational relation to the object sought to be achieved by the Act. The differentia which is the basis of the classification and the object of the Act are distinct things and what is necessary is that there must be a nexus between them. But the mere fact that the inequality has not been made with the special intention of prejudicing a particular person or persons but in the general interest of administration will not validate a law if in fact it results in inequality of treatment. Nor can the constitutionality of a statute depend on the degree of the inequality brought about by the law. (2) Although the preamble to an Act cannot override the plain meaning of its operative parts, it may nevertheless assist in ascertaining what the true meaning or implication of a particular section is; and the part of sec. 5 ( 1 ) of the Act which relates to "offences ' ', "Classes of offences" and "classes of cases", construed in the light of the pream ble, does not confer an uncontrolled and unguided power on the State Government, but by necessary implication and intendment empowers the State to classify the offences or classes of offences or classes of cases, that is to say, to make a proper classification having a relation to the object of the Act as recited in the preamble; and this part of sec. 5 (1) foes not therefore contravene article 14. (3) That part of sec. 5(1) which empowers the State Government to direct "cases" as distinct from "classes of cases" to be cried by the Special Court lies beyond the ambit of the object aid down by the preamble and contem plates and involves a purely arbitrary selection based on nothing more substantial 287 than the whim and pleasure of the State Government without any appreciable relation to the necessity for a speedier trial and therefore offends against the provisions of article 14 and is void. Bose J. The test under article 14 is neither classifica tion nor whether there is absolute equality in any academi cal sense of the term but whether the collective conscience of a sovereign democratic republic as reflected in the views of fair minded, reasonable, unbiassed men, who are not swayed by emotion or prejudice, can consider the impugned laws as reasonable, just and fair and regard them as that equal treatment and protection in the defence of liberties which is expected of a sovereign democratic republic in the conditions which obtain in India to day. PATANJALI SASTRI C.J. (dissenting). Section 5 (1) of the impugned Act is not void or unconstitutional wholly or even in part because: (1)The words in the enacting part of a statute must be confined to that which is the plain object and general intention of the legislature in passing the Act and the preamble affords a good clue to discover what that object was. The title and the preamble of the Act in the present case show unmistakably that the whole object and purpose of the Act was to devise machinery for the speedier trial of certain offences. The discretion intended to be exercised by the State Government must be exercised bona fide on a consideration of the special features or circum stances which call for comparatively prompt disposal of a case or cases proposed to be referred and sec. 5 (11 must be read as empowering the Government to direct the Special Court to try such offences or classes of offences or cases or classes of cases as in its judgment, require speedier trial. (2) Article 14 of the Constitution does not mean that all laws must be general in character and universal in application. The State must possess the power of distin guishing and classifying persons or things to be subjected to particular laws and in making a classification the legis lature must be allowed a wide latitude of discretion and judgment. The classification is justified if it is not palpably arbitrary but is founded on a reasonable basis having regard to the object to be attained. The powers of the legislature must include the power of entrusting an administrative body With a plenary but not arbitrary discre tion to be exercised so as to carry out the purpose of the Act and the mere fact that the discretion might be exercised arbitrarily by the administrative body cannot make the law itself unconstitutional. (4)The impugned Act does not in terms or by implication discriminate between persons or classes of persons nor does it purport to deny to any one equality before the law or the equal protection of the laws. (5) Even from the point of view of reasonable classification the expediency of speedier trial is not too vague or indefi nite to be the basis of classification. (6) The notifica tion of the Government in the present case referring the case to the Special Court did not contravene article 14 and is not void inasmuch as there is nothing 288 to show that the Government was influenced by any discrimi natory motive or design or acted arbitrarily, but on the other hand there are obviously special features which mark off the group of cases referred as requiring speedier dis posal. Judgment of the Calcutta High Court affirmed. Romesh Tappar vs The Stale of Madras ([1950] S.C.R. 594), Chintaman Rao vs State of Madhya Pradesh ([1950] S.C.R. 759), Dr. Khare 's Case ([1950] S.C.R. 519), Chiranjit Lal vs Union of India and Others ([1950] S.C R. 869) and Slate of Bombay vs F.N. Balsara ([1951] S.C.R. 682), ex plained. Truax vs Corrigan ; , Yick Wo vs Hopkins and other American cases on the right to equal protection of the laws considered.

iminal Appeal No.112 of 1965. Appeal by special leave from the jurisdiction and order dated April 29, 1965 of the Allahabad High Court in Criminal Misc. 'Contempt Case No. 43 of 1965. A. section R. Chari, M. K. Ramamurthi, Vineet Kumar and Shyamala Pappu, for the appellants. O. P. Rana, for respondent No. 1. J. P. Goyal, V. C. Prasar and section P. Singh for respondent No. 2. The Judgment of the Court was delivered by Sikri, J. This appeal by special leave is directed against the judgment of the Allahabad High Court adjudging the five appellants guilty of contempt of court and sentencing each of them to pay a fine of Rs. 1,000/ and further ordering that in case of default they shall undergo simple imprisonment for two weeks. The High Court held that the five appellants had disobeyed an order of stay passed by it staying proceedings pending before the Nyaya Panchayat, Jokha Khas, District Deoria. The relevant facts are these. On September 2, 1963, Yashoda, son of Raj Kumar, filed a complaint before the Nyaya Panchayat, Jokha Khas, against Jagdeo, Mahabir and Laxmi alleging that he had been abused and be laboured and his property worth Rs. 40/ damaged. On September 10, 1963, the Nyaya Panchayat assembled and evidence was led before it. The case was adjourned to December 25, 1963. On October 11, 1963, Mahabir, accused, made an application under section 85 of the U.P. Panchayat Raj Act, 1947, to S.D.M., Deoria, to transfer the proceedings on the ground that the complainant Yashoda was father of Bunna Prasad, Sarpanch of Nyaya Panchayat, Jokha Khas. On November 28, 1963, the S.D.M. rejected this application. On December 13, 1963, a notice was issued to the five members of the Panchayat to assemble on December 25, 1963, and hear the case. On December 20, 1963, Mahabir moved an application under article 227 of the Constitution challenging the order of the S.D.M., dated November 28, 1963, and on the same day the High Court admitted the application and stayed further proceedings before the Nyaya Panchayat. An urgent copy of the order was applied for and obtained on that very day and the counsel sent a telegram in the following words "Allahabad He 20 Baldeopd cashier Trust Sdr GR Mahabir application admitted stay granted Banwarilal. " 117 It is alleged on the side of the applicant, Mahabir, that immediately after the receipt of the telegram an application accompanied by an affidavit and the telegram of his counsel in the High Court was presented before the Nyaya Panchayat with the prayer to stay further proceedings but the Sarpanch refused to take it. This fact was denied and the High Court seems not to have relied on this fact in its judgment. It seems to us that it is not proved on the evidence here that any such application was made before the Nyaya Panchayat. No application dated December 21, 1963, which was not accepted by the Nyaya Panchayat, has been produced. On December 23, 1963, Mahabir submitted an application in the Court of Shri R. Singh, S.D.M., Deoria, alleging that "writ petition has been admitted and a stay order has been issued. But notwithstanding my informing the Panchayat Adalat of that, I am not getting any hearing there, and when an application is made there, it is not entertained." He prayed that the Panchayat Adalat be directed to postpone proceedings pending the receipt of the stay order. He produced the telegram received from the Advocate before the S.D.M. In the affidavit accompanying the application, however, no mention was made about Mahabir having informed the Panchayat Adalat of the stay order or the fact that the order and the application was not being entertained by the Adalat. It happened that the S.D.M. was absent on December 23, 1963, and papers were put up before Shri section K. Srivas tava, Additional Sub Divisional Magistrate, who issued the order "Put up with records". Apparently he did not take any further action till December 26, 1963. But as the notice against Shri Srivastava has been discharged by the High Court, we need not give any further details about his various orders, On December 25, 1963, the Nyaya Panchayat met and proceeded to hear the case. The order sheet reads thus : "Put up today the 25th December, 1963. The complainant and the accused are present. The statements of the complainant and his witnesses, Bhabhuti and Damri, are recorded. The accused refused to make statements and put down their signatures. Today, the 25th December, 1963, Mahabir has made an applica tion to the Court and signed it before it. Hence judgment shall be given on 25 12 63. " This order was signed by three Panchas, Phagu Parsad, Jagat Dubey and Badri Yadav. On the same day a final order was made holding the accused guilty and imposing a fine of Rs. 3/ each on accused Nos. 1 and 3, and Rs. 9/ on accused No. 2. The application of Mahabir, referred to in the order, reads thus: 118 .lm15 Sir, It is submitted that I have filed a writ petition in the above case, in the High Court. It has been admitted by the High Court which has stayed proceedings also in this case. It is, therefore, prayed that the proceedings in this case may be stayed." A document purporting to be an affidavit was also attached, in which it was stated "I make oath and say that in the above case I have filed a writ petition in the High Court, that it has been admitted, and that proceedings in the case have been stayed by the High Court. " We looked at this so called affidavit and found. that it has not been sworn to before any person authorised to administer oaths. On May 21, 1964, Mahabir filed an application under sections 4 and 5 of the , against the five appellants and section K. Srivastava, A.S.D.M. The main allegation, apart from reciting the facts which we have already detailed above, was that "in spite of the knowledge of the interim stay dated 20 12 63 passed by the Hon 'ble High Court the Sarpanch, the Opposite Party No. 1 and the members of the Bench, Opposite Parties Nos. 2 to 5 disobeyed the order of the Hon 'ble High Court and disposed of the case on 25 12 63 and thus they committed contempt of the Hon 'ble High Court. " Affidavits were filed in the High Court by Baldeo Prasad, pairokar of Mahabir, Burma Prasad, the Sarpanch, and Mahabir, and statements of Phagu Prasad and Bunna Prasad were recorded on oath. Bunna Prasad, in his affidavit, stated that as the Nyaya Panchayat was not satisfied for want of evidence by way of proper affidavit etc. , the Nyaya Panchayats proceeded with the case. Phagu Prasad. in his statement, stated "As the paper of Mahabir 's application and affidavit was not good, we had asked him to get them written on a proper paper obtained from the Tehsil. We had also told him to get the affidavit verified before some Tehsil authority. We had told Mahabir as above before we had read the application and affidavit presented before the Nyaya Panchayat. Mahabir told us that he is not prepared to go to Tehsil, but is presenting before the Panchayat whatever he has got in his possession." Phagu Prasad further stated that "no other affidavit had ever been filed before us, but we knew that in the law courts the 119 affidavits,which are filed, are verified by some authority."He further added that "the reason why we did not believe theaffidavit of Mahabir was that it did not contain any date of theHigh Court 's stay order." Bunna Prasad, in his statement, stated that he had told Mahabir to bring the affidavit on a good quality paper of full size, and Mahabir thereupon told him that he would present whatever he had. According to him, the Panchas did not tell Mahabir that his affidavit was not proper; they, however, told him to get it verified in Tehsil and that it should be duly sealed. The High Court, on examination of the evidence, came to the conclusion that it was the Sarpanch who bad initially declared that the affidavit of the applicant was not proper and that the matter should file a proper affidavit in support of his allegations, though the Sarpanch had admitted in his deposition that he had to authority to tell Mahabir that his affidavit was not proper. It appeared to the High Court that "the Sarpanch first wanted to avoid the petitioner 's affidavit being brought on the record by declaring that it was not proper because it did not fully evidence the fact that the High Court had passed an order staying proceedings before the Nyaya Panchayat." The High Court further held that "the Nyaya Panchas faithfully accepted the objections raised by the Sarpanch and dittoed him about the impropriety of the petitioner 's affidavit and inadequacy of the evidence contained therein regarding the stay order alleged to have been. passed by the High Court. " The High Court disbelieved the explanation of the Panchas given before it because no mention of these was made in the order sheet dated December 25, 1963. The High Court held : "There was no reasonable ground for the Panchas to have doubted the averments made in the application and affidavit of Mahabir that the High Court had stayed further proceedings before the Panchayat, nor is there any thing in the order sheet to show that the Panchas did not believe the contents of the application, and affidavit of Mahabir. However, if they wanted to ascertain the matter, they should have at best stayed the proceedings for a short while and should have asked the applicant to produce a certified copy of the stay order. In the alternative, they should have verified from the Sub Divi sional Magistrate whether Mahabir had really filed an application and affidavit before him along with the original telegram received from his counsel at Allahabad saying that the High Court had already stayed the proceedings before the Nyaya Panchayat. But the Panchas did nothing of the kind. The action of the Nyaya Panchas in not doing so was obviously not bona fide and 120 amounts to wilful disobedience of the High Court 's order. The learned counsel for the appellants, Mr. Chari, says that no contempt of court has been established because a Court is entitled not to act on an application which is not accompanied by an affidavit properly sworn to or a certified copy of the order He urges that the Nyaya Panchayats exercised judicial powers and, even if the Panchas erred in not staying proceedings, before finding them guilty of contempt of court it should be definitely proved that the order was passed deliberately to by pass the order of the High Court. This Court quoted with approval the following passage from Oswald 's Contempt of Court, in Hoshiar Singh vs Gurbachan. Singh(1): "The judgment or order should be served on the party personally, except in the following cases : (1) prohibitive orders, the drawing up of which is not completed;. . In order to justify committal for breach of a prohibitive order it is not necessary that the order should have been served upon the party against whom it has been granted, if it be proved that he had notice of the order aliunde, as by telegram, or newspaper report, or otherwise, and knew that it was intended to be enforced, or if he consented to the order, or if he was present in Court when the order Was pronounced, or *hen the motion was made, although he left before the order was pronounced. " We need not consider whether it makes any differnce in law if the order has been drawn up. We will for the purpose of this case assume that it does not make any difference. It is also clear that in such matters those who assert that a person had knowledge of the order must prove this fact beyond all reasonable doubt. If there is any doubt, the benefit ought to be given to the person charged with contempt of court. If a person bona fide comes to the conclusion on the material placed before him that the source of information is not authentic he cannot be held guilty of contempt of court for disobeying the order. The question then arises whether the Sarpanch and the Pan chas had knowledge of the existence of the order of the High Court dated December 20, 1963. The only material before them was the application dated December 25, 1963, which was not supported by any affidavit sworn to before a person authorised to (1) [1962] Supp. 3 S.C.R. 127,138. 121 administer oaths. Further, the application did not contain the .date of the order; even a copy of the telegram was not attached to the application; and the application seems to have been made after the proceedings on that date had commenced and evidence taken. We are unable to appreciate how on this material the bona fides of the Panchas can be doubted if they refused to accept the mere statement of the party that the High Court had stayed proceedings before them. It seems to us that the High Court did not appreciate that the so called affidavit which was filed before the Panchas was in fact not an affidavit at all. it had not been sworn to before any person authorised to administer oaths. It was no part of the duty of the Panchas to enquire from the S.D.M. about the filing of the application before him. At any rate, he has apparently no jurisdiction to stay proceedings before the Nyaya Panchayats when no Proceeding is pending before him. It is true that in certain cases proceedings can be adjourned to enable the parties to file better proof, but a judicial officer is not bound to do so and, if he bona fide does not in his discretion adjourn proceedings, it cannot be said that he has committed contempt of court. It must also be borne in mind that Panchas are not well versed in law and procedure and the records maintained by them should not be judged in the same manner as that of ordinary courts. With respect, the High Court should not have drawn an adverse inference from the fact that the reasons for not accepting the prayer for stay were not recorded. Contempt of court is a serious matter and a High Court should be chary of finding a judicial officer guilty of contempt of court for disobeying its orders unless there is unimpeachable evidence that the judicial officer had knowledge of the order of the High Court. In our opinion, there is no such evidence in this case. The learned counsel for the State contends that we should not reappreciate the facts, but, with respects, it seems to us that the High Court, while dealing with the evidence, has not kept in mind the principles which we have mentioned above. In the result we allow the appeal and set aside the judgment and order of the High Court. R.K.P.S. Appeal allowed.

M, an accused person in certain proceedings pending before the Nyaya Panchayat filed a petition under article 227 in the High Court and obtained a stay of the proceedings on December 20, 1963 . Thereafter when the Panchayat met to proceed with the matter, he made an application supported by a document purporting to be an affidavit stating that the High Court had admitted his writ petition and had stayed further proceedings before the Panchayat; and that therefore nothing further should be done in the matter. However, the, Panchayat did not allow his application and proceeded (to hold M and others guilty and imposing fines on them. M, thereafter filed an application under sections 4 and 5 of the , alleging contempt of the High Court by the Panchayat. An affidavit filed before the High Court by the Sarpanch stated that the document filed by M, by way of an affidavit in support of his application had not been verified by any proper authority and for this and other reasons the Panchayat did not believe that the High Court had stayed the proceedings. The High Court held the members of the Panchayat guilty of contempt and observed that if they wanted to ascertain the matter, they should have at best stayed the proceedings for a short while and asked the applicant to produce a certified copy of the stay order; in not doing so, the Panchas had obviously not acted bona fide and their action amounted to, wilful disobedience of the High Court 's order. On appeal to this Court, HELD : The appeal must be allowed and the judgment and order of the High Court set aside. The only material before the Panchayat was the application dated December 25. 1963, which was not supported by 'any affidavit sworn to before a person authorised to administer oaths. Further, the application did not contain the date of the order; even a copy of the telegram stated to have been sent by M 's advocate in the High Court was not attached to the application. On this material the bona fides of the Panchas could not be doubted if they refused to accept the mere statement of the party that the High Court had stayed the proceedings before them. In such matters those who assert that a person had knowledge of the order must prove this fact beyond all reasonable doubt. If there is any doubt. the benefit, ought to be given to the person charged with contempt of court.[120 F H; 121 A B] It is true that in certain cases proceedings can be adjourned to enable the parties to file better proof, but a judicial officer is not bound (to do so and, if the bona fide does not in his discretion adjourn proceedings, it cannot be said that he has committed contempt of court. [121 C D]

Appeal No. 390 of 1966. Appeal by special leave from the Award, dated January 11, 13, 1964 of the Industrial Tribunal, Orissa, Cuttack in Industrial Dispute Case No. 8 of 1962. D.L. Sengupta, Janardan Sharma, Anil Das Chowdhury and S.K. Nandy, for the appellants. H.R. Gokhale, K. Gobind Das, N.C. Shah, Krishna Sen and R. Gopalakrishnan, for the respondent. The Judgment of the Court was delivered by Bhargava, J. The. workmen of Orient Paper Mills Ltd., Brajrajnagar, have come up in this appeal by special leave against an award of the Industrial Tribunal, Orissa. An industrial dispute between these workmen and the management of Orient Paper Mills Ltd. (hereinafter referred to as "the Company") was referred by the State Government under section 10(1) (d) of the Industrial Disputes Act (hereinafter referred to as "the Act") for adjudication by the Tribunal enumerating 30 different items of dispute. The Tribunal gave its award on all the thirty items. The special leave in this Court was sought and granted in respect of two matters covering some of these items. The first matter related to fixation of wages, including minimum wages, and this was covered by items Nos. 1, 3, 4, 22 and 26 in the Schedule attached to the Order of Reference. The second matter in the appeal related to bonus covered by item No. 2 of that Schedule. In the course of the hearing of the appeal, learned counsel appearing on behalf of the workmen further gave up some of the points which were the subject matter of the items mentioned above, so that in this judgment we need deal with only those points which were argued by him in support of the appeal. The first and the main point argued with regard to wages was that the Tribunal, after holding that there was no identical industry in this region comparable with the Company, came to. the view that there were other industries in the region in which minimum wages were higher than the minimum wages paid by the Company, but failed to fix the minimum wages in the award in accordance with the minimum wages being paid in those industries. Instead, what the Tribunal did was to work out the minimum wages, which should be paid, on an entirely different basis. It was also urged in the alternative that, even in adopting the latter course, the Tribunal committed an error inasmuch as, in making the calculation, the Tribunal only tried to neutralise about 36 per cent of the cost of living 9n the basis of the rise in Price Index instead 669 of permitting neutralisation to the extent of at least 90%, which could have been done when fixing the minimum wages for the owest, class of workmen. The principle for fixation of minimum wages that should ordinarily be adopted was laid down by this Court in the case of French Motor Car Co. Limited. vs Workmen(1) where it was held : "It is now well settled that the principle of industry cum region has to be applied by an Industrial Court, when it proceeds to consider questions like wage structure, dearness allowance and similar conditions of service. In applying that principle, industrial courts have to compare wage scales prevailing in sinular concerns in the region with which it is dealing, and generally speaking similar concerns would be those in the same line of business as the concern with respect to which the dispute is under consideration. Further, even in the same line of business, it would not be proper to compare (for example) a small struggling concern with a large flourishing concern. " The Tribunal, in giving its decision, kept this principle in view, but came to the finding of fact that there were no other concerns in the same line of business as the Company in the region which could be compared with the Company. The Tribunal found that there are only two other paper mills in the region. They are Titaghur Paper Mill No. 3 situated at Chaudwar, and the J.K. Paper Mills at Rayagada. The Tribunal found that the Company is an old established business carrying on manufacture of paper on a very large scale. The Titaghur Paper Mill No. 3 started production only in April, 1960, while the J.K. Paper Mills at Rayagada started production in 1961 62. These two Paper Mills were, therefore, both of very recent origin compared with the Company. The strength of their labour force and the annual production were also very mueh lower. Even the profits earned were much smaller. On these facts, the Tribunal held that it would not be proper to compare the wage structure for these Paper Mills with that of the Company. TIffs is a finding of fact recorded by the Tribunal and nothing has been shown by learned counsel for the Company which would induce us to interfere with this finding of fact. In fact, learned counsel was unable to urge that this finding of fact suffered from any error at all. On this finding, it is clear that the region cure industry principle laid down in the ease of French Motor Car Co. Ltd. (1) could not have been applied by the Tribunal when fixing the wages in the Company. (1) [1963] Supp. 670 This Court in the same case of the French Motor Car Co. (x) further indicated what principles should be adopted in such a situation where there is no concern in the same industry in the region comparable with the concern in which wages have to be fixed. That situation was envisaged as occurring whenever the particular concern in question happens to be already paying the; highest wages in its particular line of business. It was held that such a case: "there should be greater emphasis on the region part of the industry cum region principle, though it would be the duty of the industrial court to see that for purposes of comparison such other industries in the region are taken into account as are as nearly similar to the concern before it as possible. Though, therefore, in a case where a particular concern is already paying the highest wages in its own line of business, the industrial courts would be justified in looking at wages paid in that region in other lines of business, it should take care to see that the concerns from other lines of business taken into account are such as are as nearly similar as possible, to the line of business carried on by the concern before it. It should also take care to see that such concerns are not so disproportionately large as to afford no proper basis for comparison. " In the light of these views which were brought to the notice of the Tribunal, the Tribunal proceeded to consider the minimum wages paid by three Collieries, Orient Colliery, Ibe Colliery and Himgiri Rampur Colliery, the Rourkela Steel Plant, the Cement Factory at Rajgangpur and the Indian Aluminum Company, Hirakud which the Tribunal found were situated not very far away from the place where the Company had its factory. The Tribunal mentioned that, according to the Coal Award, the minimum wage in the Collieries at the then existing Price Index was Rs. 93 7 0; in the Cement Factory Rs. 96.88; in the Steel Plant Rs. 95.00 and in the Aluminium Company Rs. 97.84 nP. The Tribunal then also took into account the minimum wages being paid by other Paper Mills situated outside the region and thereafter recorded its own decision in the following words : "The conclusion that flows from these figures is that the lowest paid worker in the Paper Mill at Brajrajnagar gets more than what is paid as minimum wage in the other two Paper Mills of Orissa, but it is less than what is paid to the lowest paid worker in some of the Paper Mills outside the State. In other industries, which are comparatively close to the paper industry at (1) [1963] Supp. 671 Brajrajnagar, the minimum wage is above Rs. 90 in almost all the cases. " On the basis of this finding of fact, the Tribunal held that, if the minimum wage in the Company is to be fixed more on the basis of the minimum wage prevailing in other industries in that region which, in its opinion, would be appropriate under the circumstances of the case, then, a revision was really necessary. We think that the criticism of learned counsel for the workmen that the Tribunal committed an error at this stage in merely holding that the facts found by it justified a revision and in not proceeding to fix minimum wages on the basis of the other industries in the region, is fully justified. It is to be noted that there is no mention in the award of the Tribunal that the Company at any stage put forward the case that the Collieries, the Steel Plant, the Cement Factory, and the Aluminjure Company were concerns which were not comparable with the Company. In fact, in the course of arguments before us, we asked learned counsel for the Company to point out whether such a plea was taken at any stage by the Company and whether evidence was led to show that these concerns were not comparable with the Company. Learned counsel had to admit that no specific plea was taken by the Company in this behalf and at least no evidence at all was led to show that these concerns are not comparable with the Company. The workmen in their written statement had relied on the wage structure in these concerns obviously on the basis that they were comparable. Since the Company never took the plea that they were not comparable, no occasion arose for the workmen to give evidence of the concerns being comparable. In fact, the Tribunal also accepted them as being comparable 'and that is why, in its conclusion, the Tribunal held that, in its opinion, it would be appropriate under the circumstances of the case to fix the minimum wage in the Company on the basis of the minimum wage prevailing in other industries in that region. By the expression "other industries in the region" the Tribunal was obviously referring to these concerns. Having come to this view, it is clear that, to give full effect to the principle laid down by this Court the case of French Motor Car Co.(1), the Tribunal should have proceeded to fix the minimum wage in the Company on the basis of the average minimum wage prevailing in these concerns. We have already quoted the figures of the minimum wage prevailing these concerns. On their basis, it appears to us that there will be full justification for fixing the minimum wage in the Company at Rs. 95 per mensum which is about the average of the wages prevailing in all those concerns. In this connection, we may take notice of the fact that, in the written statement of the workmen, the minimum wages prevailing in these concerns were (1) [1963] Supp. 672 shown at figures lower than those mentioned by the Tribunal; but it appears that those lower figures were given, because the, wages mentioned in the written statement were based on a lower Price Index. The Tribunal considered the minimum wages in these concerns on the basis of the prevailing Price Index of 441 a ' Sambalpur taking 100 as the basic Price Index for the year 1939 Even when fixing the minimum wage ,for the Company on the basis of the alternative calculation made by the Tribunal, the Tribunal has proceeded on the assumption that the minimum wage is being fixed for the Price Index No. 441 prevailing at the time of the award taking 100 as the basic index for the year 1939 In these circumstances, we think that the minimum wage in the Company should have been fixed by the Tribunalmensera, following the principle laid down by this Court in the case of French Motor Car Co.(1). The Tribunal should not have proceeded to make the alternative calculation on some other basis so as to arrive at a lower figure of Rs. 73 p.m. as the wage covering the basic wage and the dearness allowance, in addition to Rs. 11 p.to. payable as production bonus. Learned counsel for the Company urged before us that the principle of fixation of wages on the basis of Comparison in the region laid down in the French Motor Car Co. 's case(1) is not rigid and, it is not. necessary that the minimum wage. in the Company must be fixed at the average level of 'wages in the other comparable industries in the region. According to him, note should be taken of the fact that, at least . in the paper industry in this. area, the other concerns are paying much lower wages. This point has to be 'rejected straightaway in view of the finding that. those concerns are very small and not comparable with the Company. It was also urged that, in fixing the minimum wage, the wages payable in the paper industry in other. parts of the country. should also be kept in view. We do. not think that such a consideration should be taken. into account. when applying the principle of fixing the minimum wage primarily on the basis of comparison. between. different industries. in the same region. Finally, it was argued that other amenities being provided by the Company should also be taken into account when fixing the minimum wage. In this case, however, there is nothing to show that the Company is providing any such amenities which are different from the amenities that are being provided by those concerns in the region which. are being.compared with the Company for the purpose of fixation of the minimum wage Consequently, we do not think that there is any justification for departing from the figure of Rs.95 which is the average minimum wage payable by those industries (1) [1963] Supp. 673 We may, at this stage, take notice of the fact that, in con sidering the question of minimum wage, the Tribunal had in view the total wage packet to be received by each workman and, in the opinion of the Tribunal, it consisted of three elements. These elements are basic wage, dearness allowance and production bonus. The Tribunal, in its award, held that the minimum wage in so far as it consists of basic wage and dearness allowance,, should be fixed at Rs. 73 and there should be paid, in addition, production bonus to the extent of Rs. 11 in each case. Thus, the total minimum wage packet which a workman should be entitled to receive was fixed by the Tribunal at Rs. 84. It is for this figure of Rs. 84 that we think the Tribunal should have substituted the figure of Rs. 95. From the facts noted in the Award or appearing on the record, it appears that production bonus, in addition to the minimum wage, is payable in the case of Aluminium Company, Hirakud; but there does not appear to be any, production bonus payable in the three Collieties, in the Steel Plant and in the Cement Factory. In the majority of the industries, which are being compared with the Company in the region, consequently, the minimum wage is the total wage packet receivable by the workman and there is no extra amount received as production bonus. There is only an exception in the case of Indian Aluminium Company. That particular Company, it appears, has some special features which have been brought out in the evidence of the Management 's witness, B.B. Panda. He has stated that the Alumihium Factory at Hirakud carries on its work with the help of highly automatic machines and is ' supplied electricity by the Government at subsidised rates. The nature of work is such that the total number of workmen employed does not exceed 125 which is a very small number as compared ' with the number of workmen employed by the Company. It is clear that, in the Aluminium Factory, the number of workmen, who have to be paid production bonus is very small and almost insignificant as compared with the number in the Company 'In these circumstances, it would be more appropriate to compare the total wage packet of the Company with the wage packet received by the workmen of other industries in the region, viz., the three Collieries, the Rourkela Steel Plant, and the Cement Factory at Rajgangour. Comparing with them, there is justification for fixing the total wage packet of the workmen in the Company 'at Rs. 95 which would include production bonus. So far as annual profit bonus is concerned, it is payable in the Company also as in those other concerns. Consequently, in varying the award of the Tribunal we would direct that the 'total minimum wage packet of a workman in the Company shall be fixed ,at Rs. 95 consisting of ' the three elements of basic wage; dearness allowance and production bonus. The break up of this wage into the three 'elements is of some importance in this case because of the principle on which the 674 profit bonus is paid by tiffs Company. The profit bonus that is paid is three months ' basic wage and does not take into account the dearness allowance and the production bonus elements of the total wage. The Company has always treated the total wage of a workman as consisting of these three elements in the proportion of 3:3: 1. On behalf of the workmen, it was urged before the Tribunal that the proportion should be 3: 1: 1, so that the production bonus and the dearness allowance would both be equal and 1/3rd of the basic wage. This plea of the workmen was rejected by the Tribunal primarily on the ground that the other break up urged on behalf of the Company was the break up which had been accepted by mutual consent between the workmen and the Company in an earlier settlement which had been arrived at in the year 1959. We are unable to hold that the Tribunal committed any error in arriving at this decision and, consequently, the total minimum wage fixed by us must also be deemed to have the same break up. As a result, it would have to be held that the total minimum wage of Rs. 95 will consist of Rs. 41 as basic wage, Rs. 41 as dearness allowance and Rs. 13 as production bonus. In connection with the fixation of minimum wage, one point vehemently argued by learned counsel for the workmen was that at least the dearness allowance element of the wage should have been made variable with the Price Index, so that the labour could automatically be compensated for further rise in the cost of living subsequent to the making of the award. Learned counsel was, however, unable to show to us that this Court or any other Tribunal has ever laid down the principle that, where the dearness allowance forms a part of the consolidated wage fixed, there should be such linking so as to bring in continuous variation of the wage, depending on the variation in the Price Index. It appears to us that an Industrial Tribunal has the discretion, in appropriate cases, of making a direction linking the dearness allowance element of a wage to the Price Index; but, at the same time, the Tribunal is entitled to choose the alternative course of fixing the wage at the prevailing Price Index and leaving the labour to raise a fresh demand and, if necessary, a fresh industrial dispute for further rise in wages, in case there is marked variation in the Price Index and the wage fixed in the award becomes out dated. Reference in this connection may be made to the decision of this Court in Hydro (Engineers) Pvt. Ltd. vs The Workmen,(x) where also the Court did not hold that it was compulsory to link minimum wage with the cost of living index and only envisaged that such linking may be permissible by holding that : "It is thus clear that the concept of minimum wage, does take in the factor of the prevailing cost of essen (1) ; 675 tial commodities whenever such minimum wage is to be fixed. The idea of fixing such wage in the light of cost of living at a particular juncture of time and of neutralising the rising prices of essential commodities by linking up scales of minimum wages with the cost of living index cannot, therefore, be said to be alien to the concept of a minimum wage. " In the present case, the Tribunal chose the course of leaving it to the workmen to ask for increase in minimum wage on any further rise in Price Index and did not consider it advisable to link the wages with it. In fact, from the Award, it appears that, so far as the Tribunal was concerned, the workmen did not press for such linking when the award was being given. Consequently, we are unable to hold that the Tribunal has committed any error and that, in this respect, any interference by us is called for. The only 'other point argued before us in respect of wages by learned counsel was that casual workers should also be paid minimum wages on the same basis as the permanent workers for whom the minimum wage was fixed by the Tribunal which is being varied by us by increasing it to a total wage packet of Rs. 95. It appears that the Tribunal did not accept this demand primarily on the ground that the distinction between casual workers and ' the permanent workers was recognised by both the parties in the agreement of 1959. It may be noticed that, by the very nature of employment being casual, it can be presumed that a casual worker is on a lower footing and cannot expect the same wagesas a permanent employee. Therefore, the decision by the Tribunal not to equate the casual workers with the permanent employees. cannot be held to be incorrect and must be upheld. The Tribunal had directed that the increase of Rs. 12 p.m. in the total minimum wage packet allowed by it will enure to the benefit of the lowest paid female, badIi and permanent dailyrated workers also. This principle will remain effective with the modification that these workers will be entitled to the increase of Rs. 23 p.m. substituted by us for the increase of Rs. 12 allowed by the Tribunal. Learned counsel appearing for the Company drew our attention to the fact that the revised wages are payable with effect from 13th December, 1962 and, by this time, a period of 5 to 6 years has elapsed, so that the Company will have to pay arrears of wages for this long period. It was urged that this would cast a very heavy burden on the Company. We do not think that this reason advanced on behalf of the Company will justify our making a direction that the increase in wages should be effective from some later date. The previous agreement of 1959 was binding only up to 12th December, 1962 and we think that the Tribunal 213 Sup. C.I./68 12 676 was right in directing that the revised wages must take effect from 13th December, 1962. Even though arrears will have to be paid for about 6 years, it has to be kept in view that, since then, there has been a very considerable rise in the Price index and the labour has not so far raised a fresh dispute for a further revision of wages over and above the wages fixed by the Tribunal which are being now refixed by us. In all these circumstances, we think that the revised wages should take effect from 13th December, 1962. The only other dispute raised in this appeal related to the bonus for the year 1962 63. Initially, the workmen had challenged the decision of the Tribunal with regard to, bonus for all five years from 1959 60 to 1963 64, but, in the course. of arguments at the last stage before us, learned counsel for the workmen confined his arguments to the bonus for the year 1962 63 only. The main point urged by learned counsel was that, in giving the decision with regard to bonus for this year, the Tribunal committed the error of not making calculation of surplus available on the basis of the Full Bench Formula approved by this Court in the case of The Associated Cement Companies Ltd., Dwarka Cement Works, Dwarka vs Its Workmen and Another.(x) The Company is paying profit bonus equivalent to three months ' basic wage of each workman. The demand made by the workmen was for bonus equivalent to six months ' wages, and the argument was that, if the Tribunal had worked out the surplus available on the correct basis, that surplus would have certainly justified grant of profit bonus at the rate of six months ' wages. This argument fails, because it appears to us that the demand, as put forward before the Tribunal for bonus equivalent to six months ' wages, was, in fact, never made by the workmen on the basis that the surplus calculated under the Full Bench Formula would justify bonus being granted at that rate. The 'tribunal, in this connection, has quoted the pleading of the workmen in their written statement before it. The pleading makes it clear that the claim for six months ' wages was not based on the Full Bench Formula, but on the ground that certain clerical staff was being paid bonus which, in effect, amounted to about six months ' basic wages, because the bonus was calculated ;in their case by taking into account the consolidated wages, including dearness allowance, while in the case of the workmen, the dearness allowance element of the wages was being ignored and bonus was calculated only by taking into account basic wages. We agree with this interpretation of the pleadings of the workmen. Further, there is one very significant circumstance, viz. that this dispute was raised by the workmen 'before the expiry of the year 1962 63. Initially, there was an attempt that the dispute be referred to the Industrial (1)[1959] S.C.R. 925. 677 Tribunal under section 10(2) of the Act on the basis of an agreed enumeration of subjects of dispute drawn up by the workmen and the Company together. That reference under section 10(2) of the Act, however, failed due to some technical defect. The reference was ultimately made by the Government under section 10(1) of the Act, but it was made in the same form in which the parties had agreed to. refer it. The reference was made by the Government on the 4th October, 1962. At that time, the year 1962 63 was still running and the accounts for that year could not possibly have been closed and made available. The balance sheet and the profit and loss. account of that year could only be prepared after the closure of the year on 31st March, 1963. In fact, the reference included a dispute even for the year 1963 64 which year had not even started running. On the face of it, at the time of the reference, there could be no question of applying the Full Bench Formula for calculation of surplus, because there were no completed accounts for the two years 1962 63 and 1963 64. This circumstance makes it clear that the claim for higher bonus could not, at the time of reference, have been based on the availability of surplus according to the Full Bench Formula. The Tribunal was, therefore, quite correct in not trying to work out the surplus according to the Full Bench Formula and in awarding bonus on that basis. In this connection, learned counsel for the workmen urged that, at least by the time when the Award was given, the completed accounts for the year 1962 63 were available; but it seems to us that this circumstance is of no assistance. The award had to cover the year 1963 64 also and at least for that year the accounts could not possibly have been completed, as that year was still running when the award was given by the Tribunal on the 11 th January, 1964. Further, the Tribunal was expected to decide the dispute only as referred to it and, at the time of reference at least, there was not and there could possibly not be a claim for higher bonus on the basis of the application of the Full Bench Formula. The claim was, in fact, based on the circumstances that, according to the workmen, the bonus in their case was being calculated as equivalent to three months ' basic wages, while, the case of some clerical staff, the calculation was made on the basis of their consolidated wages consisting of basic wages and dearness allowance. The argument is incorrect. In the case of even the lowest paid clerical staff, to whom dearness allowance is separately payable, the bonus is only calculated on the basis of basic wages, and the dearness allowance is ignored. There is some clerical staff which does not get any dearness allowance at all and it is only in those cases. that the bonus is worked out on the basis of the total wages paid. In such cases, the calculation is still on the basis of basic wage, because it cannot be assumed that their wage is a consolidated wage consisting of the two 678 elements of basic wage and dearness allowance lumped together. In fact, the principle which is being applied is the simple one of calculating the bonus payable at the rate of three months ' basic wage in each case and in no case is the dearness allowance taken into account. There is, therefore, no discrimination or inequality as urged on behalf of the workmen. Finally it was urged that even the casual and badIi workers should be allowed bonus on the same basis as the permanent workers. The Tribunal rejected this demand on the ground that, under the Agreement of 1959, the workmen and the Company had agreed specifically to exclude these classes of workers in regard to payment of bonus. We are unable to hold that the Tribunal committed any error of law, requiring interference by us, in basing its decision on the principle contained in the earlier Agreement of the parties and in holding that there was no justification to introduce a new element of payment of bonus to casual and badIi workers at this stage. The claim in this respect also fails. As a result, the appeal is only partly allowed inasmuch as the minimum wage fixed by the Tribunal in the Award is carried as indicated by us above. The rest of the Award of the Tribunal is upheld. Since, in this appeal, the principal dispute related to the fixation of minimum wage of the workmen and we are allowing the appeal of the workmen in that respect, we direct that the workmen will be entitled to their costs of this appeal from the Company. V.P.S. Appeal allowed in part.

An industrial dispute regarding fixation of wages and bonus, between the respondent paper mills and its workmen, the appellants, was referred to the Industrial Tribunal in October, 1962, and the reference included a dispute about bonus payable for the years 1962 63 and 1963 64. The Tribunal held: (1 ) that there were in the region no ' other concerns in the same line of business which could be compared with the respondent but that there were three collieries, a steel plant, a cement factory and an aluminum company in the region which were comparable with the resportdent, that as the minimum wage in those industries which was about Rs. 95 was above that of the respondent, a revision of the minimum wage in the respondent mills was justified. that such minimum wage should be fixed for the price index prevailing at the time of the award taking 100 as the basic index for the year 1939, and that on that basis, the basic wage and dearness allowance should be Pa. 73, and that Pa. 11 was payable as production bonus; (2) that the dearness allowance element need not be linked to the price index, but that wage should be fixed at the prevailing price index leaving it to the workmen to ask for increase in minimum wage on any further rise in price index; (3 ) that the revised wages were payable with effect from 13th December, 1962; (4) that the three elements of basic wage, dearness allowance, and production bonus which make up the total minimum wage packet of Rs. 84 (Rs. 73 + Pa. 11) should be in the proportion of 3: 3: 1, and that profit bonus was payable at three months ' basic wage. The proportion of 3:3: 1 was fixed by the Tribunal, because, under an agreement of 1959 the management and workmen accepted that proportion by mutual consent. On the basis of that agreement, the Tribunal also held that; (5) casual workers should not be equated to permanent workers for purpose of minimum wages, and that casual and radii workers should not be allowed bonus on the same basis as the permanent workers; (6) The appellants also claimed before the Tribunal 6 months ' basic wage instead of 3 months ' basic wage, which was being paid by the respondent, on the assumption that certain before staff were being paid as bonus 3 months ' consolidated wage consisting of basic wage and dearness allowance; but the Tribunal rejected the claim. In appeal to this Court. HELD: (1) This Court laid down in French Motor Car Co. Ltd. vs Its Workmen, [1963] Supp. that where there is no concern in the same industry in the region comparable with the concern in which wages have to be fixed, greater emphasis should be laid on the region part of the industry cum region principle. To give full effect to this rule the Tribunal should have proceeded to fix the minimum wage in the respondent mills on the basis of the average minimum wage prevailing 667 in the other industries in that region. The respondent was not providing any amenities which should be taken into account in fixing the minimum wage, different from the amenities provided by those concerns in the region which were being compared. Therefore, the Tribunal should have fixed the minimum wage packet at Rs. 95 per mensem which was the average wage prevailing in all those concerns and should not have fixed the wages on an entirely different basis. [671 F H; 672 G H] (2) The Industrial, Tribunal has the discretion, in appropriate cases, of making a direction linking the dearness allowance element of a wage to the price index, or to fix the wage at the prevailing price index leaving the labour to raise a fresh demand and, if necessary, a fresh industrial dispute for further rise in wages, in case there is marked variation in price index and the wage fixed becomes outdated; and therefore. the Tribunal was not wrong in choosing the latter alternative. [674 F G; 675 B] Hydra (Engineers), vs The Workmen, ; , referred (3) This direction ' was objected to by respondents, on the ground that the respondent may have to pay arrears for 5 or 6 years which would be a heavy burden. But the previous agreement of 1959 was binding only upto 12th December, 1962. So, the Tribunal was right in directing that the revised wages should take effect from 13th December, 1962, in view of the considerable rise in the price index and the fact that the labour had not raised a fresh dispute for a further revision of wages since the date of the award. [675 G H] (4) No error was committed by the Tribunal in the break up of the wages into the 3 elements of basic wage, dearness allowance and production bonus in the proportion of 3: 3: 1. The contention of the workmen that the proportion should be 3:1: 1: so as to increase the basic wage element and consequently the profit bonus. was rightly rejected by the Tribunal, because. the proportion of 3:3:1 was accepted by mutual consent. [674 B C] (5) The distinction between casual workers and permanent workers for purpose of minimum wage, and casual and badli workers on the hand and permanent workers on the other for purpose of bonus, was recognised by the parties themselves in the agreement of 1959, and therefore, the Tribunal was right in keeping up the distinction in its award. [675 D E; 678 B C] (6) The allegation that some clerical staff was receiving what amounted to 6 months ' basic wage as bonus was incorrect. There was some clerical staff which did not get any dearness allowance and the bonus in their case was worked out on the basis of their wages which was only the basic wage. The appellants were wrong in assuming that the wage of such clerical staff was a consolidated wage consisting of the 2 elements of basic wage and dearness allowance. Therefore, the appellants could not claim 3 months ' consolidated wages as bonus which would amount to 6 months ' basic wage. [677 G H; 678 A B] It could not be urged by the appellants that calculation of available. surplus for purposes of bonus should have been on the basis of the Full Bench formula approved by this Court in Associated Cement Companies Ltd. vs Its Workmen, , for justifying 6 months ' basic wages as bonus, because, that was not the basis of the claim before the Tribunal. Further, the Tribunal was expected to decide the dispute only as referred to it, and at the time of the reference the accounts for the years 1962 63 and 1963 64 could not have been available, and therefore, 668 there could not possibly be a claim for higher bonus on the basis of the application of the Full Bench Formula. [676 D F; 677 C D]

Appeal No. 647 of 1966. Appeal by special leave from the judgment and decree dated June 19, 24, 1963 of the Gujarat High Court in Appeal No. 704 of 1960 from Appellate Decree. P. K. Chatterjee and section P. Nayar, for the appellant. I. N. Shroff, for respondent No. 1. section K. Dholakia and Vineet Kumar, for respondent No. 2. The Judgment of the Court was delivered by Sikri, J. This appeal by special leave arises out of the suit filed by Bhaishankar Avalram Joshi, hereinafter referred to as the plaintiff, for a declaration that the order of dismissal, dated February 2/4, 1955, passed by the Inspector General of Prisons, Saurashtra, was illegal and void on the ground that it contravened the provisions of article 311 (2) of the Constitution. The plaintiff also prayed for a decree for Rs. 2,690 being arrears of his pay from April 1, 1954 to May 7, 1956. The plaintiff failed before the Civil Judge, Rajkot, but on appeal succeeded before the District Judge, Central Saurashtra, inasmuch as he declared order dated February 2/4, 1955, illegal and void. The plaintiff appealed to the High Court claiming arrears of salary and the State of Bombay filed cross objections praying that the suit be dismissed. The second appeal was heard by the High Court of Gujarat (Miabhoy, J.) who directed that the decree passed by the lower appellate court "be varied so as to show that the appellant (plaintiff) continued to be in Government service till the date of the suit only and there will be a decree for Rs. 2,690 919 being arrears of pay due to the appellant (plaintiff) upto the date of the suit. There will be a further provision in the decree that the liability arising out of the declaration that the appellant is in Government service is the liability of the State of Gujarat and that the liability for the payment of the arrears of pay is the liability of the State of Maharashtra". The State of Maharashtra filed as application for leave to appeal under the Letters Patent but this ' was dismissed. The appeal is now before us. The learned counsel for the appellant the state of Maharashtra , contends ,first, that the High Court erred in holding that there had been a breach of article 311(2) of the Constitution, as, according to him, there was no duty to supply a copy of the report of the enquiry held against the plaintiff. Secondly, he contends that the High Court erred in fastening the liability in respect of the arrears of pay on the State of Maharashtra. Before we deal with the above points we may give a few facts. The plaintiff entered service in the Gondal State in 1927 as a jailor. The Gondal State merged with the United States of Saurashtra. On March 6, 1953, the plaintiff was appointed senior jailor, Surendranagar District Jail. On March 25, 1954, he was suspended, and at that time he was acting as Accountant at Rajkot Central Jail. On March 7, 1954, he was served with a charge sheet. In substance the charges were that while he was serving at Surendranagar he had committed certain acts of mis appropriation of food stuffs meant for prisoners, maltreatment of prisoners and acceptance of illegal gratification from them. The plaintiff filed a written statement on September 4, 1954, and an enquiry was held by Mr. Gangopadhyay. The plaintiff appeared before that officer and cross examined witnesses. He also examined himself and some witnesses. He was also allowed to appear through an Advocate in the enquiry proceedings. The Enquiry Officer made a report and on or about January 7, 1955, the following notice was issued to him calling upon him to show cause why he should not be dismissed from service "To Shri Bhaishanker A. Joshi, Accountant, Rajkot Central Prison (Under suspension) Charges framed against you under this office No. C/ 14 dated 27 3 54 and in particular the charges of having accepted illegal gratification from prisoner Ratilal Jivan have been established to the satisfaction of Government. You are hereby asked to show cause why the punishment of dismissal from service should not be inflicted upon You. 920 You should please submit your reply to this office, through the Superintendent, Rajkot Central Prison,, within a week from the date of receipt of this letter without fail. Sd/ M. J. BHATT Inspector General of Prisons, Government of Saurashtra. " The plaintiff filed a written statement. He was dismissed by the Inspector General of Prisons by his order dated February 2/4, 1955. This order was amended on February 9, 1955, in which it was stated that "the aforesaid order should be read so as to show that the plaintiff was dismissed from service on account of charge of accepting, illegal gratification from prisoner Ratilal Jivan having been conclusively proved against him in the departmental inquiries conducted against him by the Government". In the plaint the plaintiff alleged that copy of the enquiry report was never supplied to him, and consequently he had not been given reasonable opportunity within the meaning of article 311 of the Constitution. The State of Bombay admitted that the plaintiff was not supplied with a copy of the report of the Enquiry Officer, but pleaded that the plaintiff had not asked for copy of the report and had not been prejudiced by the non supply of the copy of the report. The High Court held that the failure on the part of the competent authority to provide the plaintiff with a copy of the report of the Enquiry Officer amounted to denial of reasonable opportunity contemplated by article 311(2) of the Constitution. It seems to us that the High Court came to a correct conclu sion. The plaintiff was not aware whether the Enquiry Officer reported in his favour or against him. If the report was in his favour, in his representation to the Government he would have utilised its reasoning to dissuade the Inspector General from coming to a contrary conclusion, and if the report was against him he would have put such arguments or material as he could to dissuade the Inspector General from accepting the report of the Enquiry Officer. Moreover, as pointed out by the High Court, the Inspector General of Prisons had the report before him and the tentative conclusions arrived at by the Enquiry Officer were bound to influence him, and in depriving the plaintiff of a copy of the report he was handicapped is not knowing what material was influencing the Inspector General of Prisons. 921 As observed by Gajendragadkar, J., as he then was, in Union of lndia vs H. C. Goel(1), "the enquiry report along with the evidence recorded constitute the material on which the Government has ultimately to act. That is the only purpose of the enquiry held by competent officer and the report he makes as a result of the said enquiry". It is true that the question whether reasonable opportunity has or has not been afforded to the Government servant must depend on the facts of each case, but it would be in very rare cases indeed in which it could be said that the Government servant is not prejudiced by the non supply of the report of the Enquiry Officer. In the result we must over rule the first contention urged on behalf of the appellant, the State of Maharashtra. The plaintiff is not concerned with the second contention but it is a dispute between the State of Maharashtra and the State of Gujarat. As is well known, the State of Bombay was reorganised into the above two States and the Bombay Reorganisation Act, 1960, contained various provisions for the apportionment of assets and liabilities between the two States. We are here concerned with sections 60 and 61 of the Bombay Reorganisation 1960, which read thus : "60. (1) Where, before the appointed day, the State of Bombay has made any contract in the exercise of its executive power for any purposes of the State, that contract shall be deemed to have been made in the exercise of the executive power, ( a) if such purposes are, as from that day, exclusively purposes of either the State of Maharashtra or the State of Gujarat, of that State; and (b) in any other case, of the State of Maharashtra; and all rights and liabilities which have accrued, or may accrue, under any such contract shall, to the extent to which they would have been rights or liabilities of the State of Bombay, be rights or liabilities of the State of Maharashtra or the State of Gujarat, as the case may be; Provided that in any such case as is referred to in clause (b), the initial allocation of 'rights and liabilities made by this sub section shall be subject to such financial adjustment as may be agreed upon between the State (1) ; ,728. 922 of Maharashtra and the State of Gujarat, or, in default of such agreement, as the Central Government may by order direct. (2) For the purposes of this section there shall be deemed to be included in the liabilities which have accrued or may accrue under any contract (a)any liability to satisfy an order or award made by any court or other tribunal in proceedings relating to the contract; and (b any liability in respect of expenses incurred in or in connection with any such proceedings. (3)This section shall have effect subject to the other provisions of this Part relating to the apportionment of liabilities in respect of loans, guarantees and other financial obligations; and bank balances and securities shall, notwithstanding that they partake of the nature of contractual rights, be dealt with under those provisions. Where, immediately before the appointed day, the State of Bombay is subject to any liability in respect of any actionable wrong other than breach of contract, that liability shall, (a) if the cause of action arose wholly within the territories which, as from that day, are the territories of the State of Maharashtra or the State of Gujarat, be a liability of that State; and (b) in any other case, be initially a liability of the State of Maharashtra but subject to such financial adjustment as may be agreed upon between the States of Maharashtra and Gujarat or, in default of such agreement, as the Central Government may by order direct." The learned counsel for the State of Maharashtra contends that the liability to pay arrears of pay was not a liability arising out of a contract but was a liability in respect of an actionable wrong other than a. breach of contract. This Court in State of Bihar vs Abdul Majid(1) held "that the rule of English Law that a civil servant cannot maintain a suit against the Crown for the recovery of arrears of salary does not prevail in India and it has been negatived by the provisions of the statute law in India". Mahajan, C.J., speaking for the Court, observed at p. 802: "As regard torts of its servants in exercise of sovereign powers, the company was not, and the Crown in (1) ; 923 India was not, liable unless the act has been ordered or ratified by it. Be that as it may, that rule has no application to the case of arrears of salary earned by a public servant for the period that he was actually in office. The present claim is not based on tort but is based on quantum meruit or contract and the court is entitled to give relief to him. " It may be that these observations are not conclusive on the point under consideration. It seems to us, however, that some elements of relationship between a public servant and Government are based on contract within the meaning of section 60 of the Bombay Reorganisation Act, 1960. In particular, the liability to pay salary, when it has been fixed, arises out of a contract to pay salary. Authority is not lacking even in England where a special relationship exists between the Crown and its public servants. In Owner or section section Raphael v, Brandy(1) the head note reads A stoker on board a merchant ship, who was en titled to wages from the shipowners, and also as a stoker in the Royal Naval Reserve to 6 pound a year as a retainer, was injured by an accident on the ship which disabled him from continuing to serve in the Royal Naval Reserve Held, that the stoker was entitled under the Workmen 's Compensation Act, 1906, to compensation from the shipowners not only in respect of his wages but also of the retainer, which must be taken into account as earnings under a concurrent contract of service. " The Lord Chancellor in the course of the speech observed "A point was made before your Lordships which does not appear to have been made in the Court below, that there was no contract with the Crown at all here. The authorities cited_go no further than to say that when there is an engagement between the Crown and a military or naval officer the Crown is always entitled to determine it at pleasure, and that no obligation contrary to that would be recognized or valid in law. It was then said that there were not here concurrent contracts. I agree with Fletcher Moulton L.J. that this is almost a typical case of concurrent contracts, because the workman was being paid wages for his services on board a merchant ship, and at the same time he was earning his 6 pound a year by virtue of his engagement with the Crown; and he was giving an equivalent for that, (1) 924 because he was keeping himself fit and doing the work which he stipulated to do. " It is true that Lord Goddard, C.J., in Inland Revenue Commissioners vs Hambrook(1) observed : "If I may be bold enough to express a conclusion on a matter on which the Judicial Committee hesitated in Reilly vs R (2) , it is that an established civil servant is appointed to an office and is a public officer, remune rated by moneys provided by Parliament, so that his employment depends not on a contract with the Crown but on appointment by the Crown, though there may be as indicated in Reilly vs R. (2) exceptional cases, as for instance an engagement for a definite period where there is a contractual element in or collateral to his employment." But in the Court of Appeal nothing was said about these observations. It will be remembered that the Privy Council had said in Reilly vs R(2) that "their Lordships are not prepared to accede to this view of the contract, if contract there be. If the terms of the appointment definitely prescribe a term and expressly provide for a power to determine "for cause" it appears necessarily to follow that any implication of a power to dismiss at pleasure is excluded. " Even Lord Goddard, C.J., in Terrell vs Secretary of State for the Colonies(3) observed that "the case (Reilly vs R.) (2) shows that there may be contractual rights existing before determination of a contract at will which are not inconsistent with a power to determine," and he stuck to this in Hambrook 's case(1) by stating : "Although it is clear that no action for wrongful dismissal can 'be brought by a discharged civil servant, I may be allowed to say that I adhere to the opinion which I expressed in Terrell vs Secretary of State for the Colonies(1) that he could recover his salary for the time during which he has served. He would claim on a quantum mersuit and I am fortified in this view by Reilly vs R. (2), by R. vs Doultre(4) and by Bushe vs R(5) referred to in Robertson 's book at p, 338." (1)[1956] 1 All E.R. 807, 811 12. (2) ; 179. (3) [1953] 2Q.B.482,499. (4) (5) (May 29, We are here concerned with a choice between section 60 and section 61, which lay down two broad categories. It seems to us that the decree of the High Court decreeing payment of arrears of salary is truly a liability in proceedings relating to a contract within section 60(2)(a) of the Act. It is true, as held by this Court in the State of Tripura vs The Province of East Bengal(1), that the words ,actionable wrong other than breach of contract ' in this context are wide words and include something more than torts, but even so where a suit is brought by a Government servant for arrears of salary, the decree more properly falls under section 60 of the Act rather than under section 61. In the result the appeal fails and is dismissed with costs to the respondent, Baishankar Avalram Joshi. The State ' of Gujarat will bear its own costs in this appeal. R.K.P.S. Appeal dismissed.

The first respondent while he was holding the post of a Senior Jailor in March, 1954, was suspended on the allegations that he had committed certain acts of misappropriation and maltreatment of prisoners. After January, 1955. A show cause notice was then issued to him to which he replied by a written statement. The respondent was dismissed by an order of Inspector General of Prisons in February, 1955. The respondent filed a suit for a declaration that enquiry report was never supplied to him and consequently he had not been given reasonable opportunity within the meaning of article 311 of the Constitution. He also prayed for a decree for arrears of pay from April, 1954 to May, 1960. His suit was dismissed by the trial court but he succeeded in the first appeal where the order of dismissal was declared illegal and void. An appeal by the respondent to the High Court claiming arrears of salary was allowed. As the State of Bombay had, in the meantime, been reorganised, the High Court also directed that the liability for arrears of salary upto the date of suit would be that of the State of Maharashtra and the liability arising out of the declaration that the appellant was in Government service would be the liability of the State of Gujarat. A Letters Patent appeal filed by the State of Maharashtra was dismissed. In appeal to this Court, it was contended, inter alia, on behalf of the appellant that the liability to pay arrears of pay was not a liability arising out of a contract within the meaning of section 60 of the Bombay Reorganisation Act of 1960 but it was a liability in respect of an actionable wrong other than a breach of contract within the meaning of section 61 of the Act. HELD: (1) The High Court had rightly found that the failure on the part of the competent authority to provide the respondent with a copy of the report of the Enquiry Officer amounted to denial of reasonable opportunity contemplated by article 311(2) of the Constitution. The Inspector General of Prisons had the report before him and the tentative conclusions arrived at by the Enquiry Officer were bound to influence him and in depriving the plaintiff of a copy of the report he was handicapped in not knowing what material was influencing the Inspector General of Prisons. [920 F] Union of India vs H. C. Goel, ; , 728, referred to. It is true that the question whether reasonable opportunity has or has not been ' afforded to the Government servant must depend on the facts 918 of each case, but it would be in very rare cases indeed in which it could be said that the Government servant is not prejudiced by the non supply of the report of the Enquiry officer. [921 B] (2) The decree of the High Court decreeing payment of arrears of salary is truly a liability in proceedings relating to a contract within section 60(2) (a) of the Act. Although the words 'actionable wrong ' other than breach of contract in this context are wide words and include something more than torts, but even so where a suit is brought by a Government servant for arrears of salary the decree more properly falls under section 60 of the Act rather than under a. 61. [925 B] State of Tripura vs The Province of East Bengal, ; , 44, State of Bihar vs Abdul Majid, [1954] S.C.R. 786, Owner of section section Raphael vs Brandy, , Inland Revenue Commissioner vs Hambrook, [1956] 1 AR E.R. 807, 811 12, Reilly vs R., , 179; Terrell vs Secretary of State for the Colonies, , 499; R. vs Doultre, and Bushe vs R., (May 29, 1869, The Times), considered.

No. 65 of 1969. Petition under article 32 of the Constitution of India for enforcement of fundamental rights. section V. Gupte, P. A. Choudhury and K. Rajendra Chaudhuri, for the petitioners. M. C. Setalvad, P. Ramachandra, Rao, Advocate General, Andhra Pradesh, A. Raghubir and A. V. Rangam, for respondent No. 1. M. C. Setalvad and R. N. Sachthey, for respondent No. 2. R. V. Pillai, H. section Gururai Rao and Subodh Markandeya, for respondents Nos. 3 to 45. Sardar Ali Khan, P. N. Duda and J. B. Dadachanji, for res pondent No. 46. P. A. Choudhury, K. Rajendra Chaudhuri and C. section Sreenivasa Rao, for the interveners. The Judgment of the Court was delivered by Hidayatullah, C.J. The petitioners are persons employed in the ministerial services of the Andhra Pradesh Government. All of them were working in various offices located in the cities of Hyderabad and Secunderabad. On January 19, 1969, leaders, of all political parties in the Legislature of the Andhra Pradesh State appeared to have met and reached the decision that to Implement what are called Telengana Safeguards ', the following measures should be taken : "All non domicile persons, who have been appointed either directly, by promotion or by transfer to posts reserved under the Andhra Pradesh Public Employment (Requirement as to Residence) Rules, 1959 for domiciles of Telengana region will be immediately relieved from service. The posts so rendered vacant will be filled by qualified candidates possessing domicile qualifications and in cases where such candidates are not available the posts shall be left unfilled till qualified domicile candidates become available Action on the above lines will be taken immediately. All non domicile employees so relieved shall be provided employment in the Andhra region without break in service and by creating supernumerary posts, if necessary. " 117 The Government of Andhra Pradesh then passed an order (G.O.Ms. 36, G.A. (SR) Dept.) on January 21, 1969 relieving before February 28, 1969 all non domicile persons appointed on or after November 1, 1956 to certain categories of posts reserved for domiciles of Telengana under the Andhra Pradesh Public Employment (Requirement as to Residence) Rules, 1959. Names of such incumbents were to be shown in a proforma and they were to be employed in the Andhra region without break in service by creating supernumerary posts, if necessary. These supernumerary posts were to be treated as temporary addition to the strength of the office concerned and were to be adjusted against future vacancies in corresponding posts as they arose. The action was based upon section 3 of the Public Employment (Requirement as to Residence Act, 1957 (44 of 1957) which was an Act of Parliament made in pursuance of cl. (3) of article 16 of the Constitution making special provision for requirement as to residence and brought into force on March 21, 1959. Section 3 of the Act gave the power to make Rules in respect of certain classes of employment in certain areas. It provided: "3. Power to make rules in respect of certain classes of public employment in certain areas. (1)The Central Government may, by notification in the Official Gazette, make rules prescribing, in regard to appointments to (a)any subordinate service or post under the State Government of Andhra Pradesh, or any requirement as to residence within the Telengana area or the said Union territory as the case may be, prior to such appointment. (2) In this section, (a). . . . . (b)"Telengana area" comprises all the territories specified in sub section (1) of section 3 of the ." Under section 4, the Rules had to be laid before each House of Parliament for a period of not less than 30 d s and Parliament could make such alterations as it liked. Under section 5 the Rules had a life of 5 years but by subsequent legislation the period was extended to 10 years. It is said that the period 118 is to be extended by another 5 years. The Rules were made on March 21, 1959. They are called the Andhra Pradesh Public Employment (Requirement as to Residence) Rules, 1959. Rule 3 provides : "3. Requirement as to residence Prior to Appointment : A person shall not be eligible for appointment to a post within the Telengana area under the State Government of Andhra Pradesh or to a post under a local authority (other than a cantonment board) in the said area unless (i)he has been continuously residing within the said area for a period of not less than fifteen years immediately preceeding the prescribed date; and (ii)he produces before the appointing authority ,concerned, if so required by it, a certificate of eligibility granted under these rules; Provided that in relation to posts in the Secretariat Departments and the Offices of the Heads of Departments of the State Government of Andhra Pradesh situated in the cities of Hyderabad and Secunderabad, the requirement as to residence laid down in this rule shall apply to the filling of only the second vacancy in every unit of three vacancies which are to be filled by direct requirement; Provided further that any period of temporary absence from Telengana area for the purpose of prosecuting his studies or for undergoing medical treatment or any period of such temporary absence not exceeding three months for any other reason shall not be deemed to constitute a break in the continuity of such residence, but for purpose of calculating the said period of fifteen years any such period of temporary absence shall be excluded. " The petitioners were appointed between December 27, 1956 and July 4, 1968. They challenge the Act, the Rules and the proposed action as ultra vires the Constitution. Their case is that article 16(3) under which the Act and the Rules purport to be made has been misunderstood as conferring a power to make, a law prescribing requirement as to residence in a part of a State. For this reason section 3 of the Act is challenged as ultra vires the Constitution. 119 Article 16 on which the Act, the Rules and the present action are all based, reads : "16. Equality of opportunity in matters of public employment. (1)There shall be equality of opportunity for all citizens in matters relating to employment or appointment to any office under the State. (2) No citizen shall, on ground only of religion, race, caste, sex, descent, place of birth, residence or any of them, be ineligible for, or discriminated 'against in respect of, any employment or office under the State. (3)Nothing in this article shall prevent Parliament from making any law prescribing, in regard to a class or classes of employment or appointment to an office under the Government of, or any local or other authority within, a State or Union territory, any requirement as to residence within that State or Union territory prior to such employment or appointment. (4). . . . (5). . . . The question is one of construction of this article, particularly of the first three clauses, to find out the ambit of the law taking power of Parliament. The first clause emphasises that ware shall be in India equality of opportunity for all citizens in matters of employment or appointment to any office under the late. The word 'State ' here is to be understood in the extended use given to it by the definition of that word article 12. The second clause then specifies a prohibition against discrimination only on the grounds of religion, race, sex, descent, place of birth, residence or any of them. The intention here is make every office or employment open and available to every citizen, and inter alia to make offices or employment in one part India open to citizens in all other parts of India. The third pause then makes an exception. This clause was amended by the Constitution (Seventh Amendment) Act, 1956. For the original words of the clause 'under any State specified in the First schedule or any local or other authority within its territory any requirement as to residence within that State ', the present words from 'under the Government ' to 'Union territory ' have been substituted. Nothing turns upon the amendment which seeks to apply of the exception in the clause to Union territory and to remove ambiguity in language. 120 The clause thus enables Parliament to make a law in a special case prescribing any requirement As to residence within a State or Union territory prior to appointment, as a condition of employment in the State or Union territory. Under article 35(a) this power is conferred upon Parliament but is denied to the Legislatures of the States, notwithstanding anything in the Constitution, and under (b) any law in force immediately before the commencement of the Constitution in respect to the matter shall subject to the terms thereof and subject to such adaptations that may be made under article 372 is to continue in force until altered or repealed or amended by Parliament. The legislative power to create residential qualification for employment is thus exclusively conferred on Parliament. Parliament can make any law which prescribes. any requirement as to residence within the State or Union territory prior to employment or appointment to an office in that State or Union territory. Two questions arise here. Firstly, whether Parliament ', while prescribing the requirement, may prescribe the requirement of residence in a particular part of the State and, secondly, whether Par liament can delegate this function by making a declaration and leaving the details to be filled in by the rule making power of the Central or State Governments. Mr. section V. Gupte, for the petitioners, points out that the ;Constitution is speaking of State and Union territory. It has already made a declaration that no person shall be disqualified for any office in the territory of India because of his residence in any particular part of India. The exception, therefore, must be viewed narrowly and not carried to excess by interpretation. The article speaks of residence in a State and means only that. If it chose to speak of residence in parts of State such as Districts, talauqas, cities, towns etc. more appropriate and specific language could have been used such as 'any requirement as to residence within that State or Union territory or part of that State or Union territory '. Having used the word State, the unit State is only meant and not any part thereof. Reference is made to the history of the drafting of the Article and the debates in the Constituent Assembly which bear out this contention. On the other hand, Mr. Setalvad bases his argument on two things. He contends that the power is given to Parliament to make any law and, therefore, Parliament is supreme and can make any law on the subject as the article says. He very ingeniously shifts the emphasis to the words 'any requirement ' and contends that the requirement may be also as to residence in the State or any particular part of state. 121 The claim for supremacy of Parliament is misconceived. Par liament in this, as in other matters, is supreme only in so far as the Constitution makes it. Where the Constitution does not concede supremacy, Parliament must, act within its appointed functions and not transgress them. What the Constitution says is a matter for,construction of the language of the Constitution. Which is the proper construction of the two suggested? By the first clause equality of opportunity in employment or appointment to an office is guaranteed. By the second clause, there can be no discrimination, among other things, on the ground of residence. Realising, however, that sometimes local sentiments may have to be respected or sometimes an inroad from more advance States into less developed States may have to be prevented, and a residential qualification may, therefore, have to be prescribed, the exception in clause (3) was made. Even so,, that clause spoke of residence within the State. The claim of Mr. Setalvad that Parliament can make a provision regarding residence in any particular part of a State would render the general prohibition lose all its meaning. The words 'any requirement ' cannot be read to warrant something which could have been said more specifically. These words bear upon the kind of residence or its duration rather than its location within the State. We accept the argument of Mr. Gupte that the Constitution, as it stands, speaks of a whole State as the venue for residential qualification and it is impossible to think that the Constituent Assembly was thinking of residence in Districts, Taluqas, cities, towns or villages. The fact that this clause is an exception and came as an amendment must dictate that a narrow construction upon the exception should be placed as indeed the debates in the Constituent Assembly also seem to indicate. We accordingly reject the contention of Mr. Setalvad seeking to put a very wide and liberal construction upon the words 'any law ' and 'any requirement '. These words are obviously controlled by the words 'residence within the State or Union territory ' which words mean what they say, neither more nor less. It follows, therefore, that section 3 of the Public Employment (Requirement as to Residence) Act, 1957, in so far as it relates to Telengana (and we say nothing about the other parts) and Rule 3 of the Rules under it are ultra vires the Constitution. In view of our conclusion on this point it is not necessary to express any opinion whether delegation to the Central and/or State Governments to provide by rules for the further implementing of the law made by Parliament is valid or not. It was argued that the Mulki Rules existing in the former Hyderabad State must continue to operate by virtue of article 35(b) in this area. This point is not raised by the petitions under consideration and no expression of opinion by us 'is desirable. L12 Sup Cl/69 9 122 For the reasons given above we quash the orders passed and declare section 3 of the Public Employment (Requirement as to Residence) Act, 1957 as also Rule 3 of the Rules ultra vires the Constitution. The petitions shall be allowed but there shall be no order about costs. Y. P. Petitions allowed.

The Parliament enacted the Public Employment (Requirement as to Residence) Act, 1957 in pursuance of cl. (3) of article 16 of the Constitution of India making special provision for requirement as to residence in public employment. Section 3 of the Act gave the power to make rules in respect of certain classes of employment in certain areas, and accord ingly the Andhra Pradesh Public Employment (Requirement as to Residence) Rules were made prescribing the requirement , as to residence prior to appointment to certain posts, within the Telengana area of the State. The petitioners who were non domicile persons appointed to the posts reserved for the domiciles of Telengana under the rules, were by an order relieved from their posts and employed in the other 'region of the State. The petitioners, filed a petition under article 32 of the Constitution challenging the Act, the Rules and the order as ultra vires the Constitution. Quashing the order, this Court, HELD : Section 3 of the Public Employment (Requirement as to Residence) Act, 1957 in so far as it related to, Telengana and Rule 3 of other Rules under it were ultra vires the Constitution. [122 A] Clause (3) of article 16 of the Constitution enables Parliament to make a law in a special case prescribing any requirement as to residence within a State or Union Territory prior to appointment, in the State or Union Territory. The provision speaks of a whole State as the venue for residential qualification and it is impossible to think that the Constituent Assembly was thinking of residence in Districts, Talukas, cities, towns or villages. The fact that the clause is an exception and came as an amendment must dictate that a narrow construction upon the exception should be placed as indeed the debates in the Constituent Assembly also seem to, indicate. The words 'any law ' and 'any requirement ' cannot be given wide and liberal construction. These words are controlled by the words . residence within the State or Union Territory ' which words mean what they say neither more or less. [121 D G] 116

Appeal No. 1940 of 1967. Appeal by special leave from the judgment and order dated April 17, 27, 1967 of the Gujarat High Court in Civil Revision Application 328 of 1967. section T. Desai and I. N. Shroff for the appellants. M. P. Amin, P. M. Amin, P. N. Dua and J. B. Dadachanji, for respondent No. 1. R. P. Kapur, for respondents Nos. 2 and 3. The Judgment of the Court was delivered by Shah, J. By insistence upon procedural wrangling in a com paratively simple suit pending in the Court of Small Causes at Ahmedabad the parties have effectively prevented all progress in the suit during the last six years. A building in the town of Ahmedabad used as a cinematograph theatre belonged originally to Messrs. Popatlal Punjabhai. estate of the owners and on August 19, 1954, the receivers ,estate of the owners and on August 19, 1954, The receivers granted a lease of the theatre on certain terms and conditions to two persons, Raval and Faraqui. By an agreement dated November 27, 1954, between Raval and Faraqui on the one hand and Messrs. Filmistan Distributors (India) Private Ltd. hereinafter called "Filmistan on the other hand, right to exhibit cinematograph films was granted to the latter on certain terms and conditions. "Filmistan" instituted suit No. 149 of 1960 in the Court of the Civil Judge (Senior Division) at Ahmedabad against Raval and Faraqui and two other persons claiming a declaration that it 437 was entitled pursuant to the agreement dated November 27, 1954, to exhibit motion pictures in the theatre. By an order dated December 1, 1960 the suit was disposed of as compromised. It was inter alia agreed that Raval and Faraqui were bound and liable to allow Filmistan to exercise its "exhibition rights" in the theatre; that Raval and Faraqui, their servants and agents were not to have any right to exhibit any picture in contravention of the terms and conditions of the agreement dated November 27, 1954; and that Raval and Faraqui shall "execute and register" an agreement in writing incorporating the said agreement with the variation as to rental. Pursuant to this agreement, a fresh agreement was executed on December 1, 1960. On September 1, 1963, Filmistan filed suit No. 1465 of 1963 in the Court of Small Causes at Ahmedabad, inter alia, for a declaration that as sub lessee or as lessee under law it was entitled to obtain and remain in possession of the theatre and to exhibit cinematograph films and to hold "entertainment performances" etc. in the theatre, and that one Shabeer Hussain Khan Tejabwala had no right, title or interest in the theatre, that the defendants in the suit be ordered to hand over vacant and peaceful possession of the theatre, and the defendants, their servants and agents be restrained by an injunction from interfering directly or indirectly with its rights to obtain and remain in possession of the theatre or any part thereof and to exercise its right of exhibiting "motion pictures" and entertainment performances etc. This suit was filed against the receivers in insolvency of the owners of the theatre, against Raval and Faraqui, against Tejabwala and also against Baldevdas Shivlal who claimed to be the owner of the theatre. The suit was based on the claim by Filmistan as lessees or sub lessees of the theatre and was exclusively triable by the Court of Small Causes by virtue of section 28 of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947. Three sets of written statements were filed against the claim made by Filmistan, but no reference need be made thereto, since at this stage in deciding appeal the merits of the pleas raised by the defendants are not relevant. After issues were raised on June 20, 1966, the plaint was amended and additional written statements were filed by the Defendants. The learned Judge was then requested to frame three additional issues in view of the amended pleadings : the issues were: 1. Whether in view of the said consent decree in suit No. 149 of 1960 defendants Nos. 5 and 6 are debarred on principles of res judicata from agitating the question that the said document dated November 27, 1954 as confirmed by their letter dated January 31, L13 Sup. CI/69 17 438 1955 and further confirmed by document dated December 1, 1960 is not a lease? 12. Whether in view of the said consent decree, defendants 5 and 6 are estopped from contending and leading any evidence and putting questions in crossexamination of plaintiffs witnesses to show that the said document dated November 27, 1954 as confirmed by their letter dated January 31, 1955 and further confirmed by document dated December 1, 1960 is not a lease ? 13. Whether in respect of the terms of the said consent decree as also of the said document dated November 27, 1954, as confirmed by their letter dated January 31, 1955 and further confirmed by document dated December 1, 1960 defendants Nos. 5 and 6 are debarred from leading any evidence of the, plaintiffs witnesses in view of section 92 of the Evidence Act ?" In drawing up the additional issues not much care was apparently exercised : whether a party is entitled to lead evidence or to put questions in cross examination of the plaintiff 's witnesses cannot form the subject matter of an issue. Filmistan then applied to the Court of Small Causes for an order that issues Nos. 11, 12 & 13 be tried as preliminary issues. The learned Judge observed that the issues were not purely of law, that in any event the case or any part thereof was not likely to be disposed of on these issues, and that ordinarily in "appealable cases" the Court should, as far as possible, decide all the issues together and that piecemeal trial might result in protracting the litigation. He also observed that the issues were not of law going to the root of the case and were on that account not capable of being decided without recording evidence. A revision application against that order was dismissed in limine by the High Court of Gujarat. When the case reached hearing and the evidence of a representative of Filmistan was. being recorded, counsel for the defendants asked in cross examination the question whether the "agreement between the plaintiff and defendant Nos. 5 and 6 was a commercial transaction and was not a lease ?" The question was objected to by counsel appearing for Filmistan. Thereafter elaborate arguments were advanced and the Trial Judge passed an order disallowing the objection. The objection to the question raised by Filmistan was not that it related to a matter to be decided by the Court and on which the opinion of witnesses was irrelevant. The objection was raised as 439 an attempt to reopen the previous decision given by the Trial Judge refusing to try issues Nos. 11, 12 & 13 as preliminary issues. Counsel for Filmistan contended that an enquiry into the nature of the legal relationship arising out of the agreement dated December 1, 1960 "was barred by the principle of res judicata and estoppel under the provisions of section 92 of the Evidence Act", since the question was already concluded by the consent decree in suit No. 149 of 1960. The Trial Judge observed that he had carefully gone through the consent decree and the registered agreement dated December 1, 1960, and he found that the consent decree had not decided that the transaction between the parties of the year 1954 was in the nature of a lease; that in the plaint in the earlier suit it was not even averred that the rights granted were in the nature of leasehold rights; that suit No. 149 of 1960 was for declaration of the rights of Filmistan to exhibit motion pictures, in the theatre under the agreement dated November 27, 1954, and for an injunction restraining the defendants from violating the said rights of Filmistan under the agreement; and that the agreement dated December 1, 1960 was "not plain enough to exclude the oral evidence of the surrounding circumstances and conduct of the parties to explain its terms and language". Accordingly he held that the question asked in cross examination of the witnesses for Filmistan intended to secure disclosure of the surrounding circumstances and conduct of the parties in order to show in what manner the language of the document was related to the existing facts, could not be excluded. The Court also rejected the contention that there was any bar of estoppel, and held that evidence as to the true nature of the transaction was not inadmissible by virtue of section 92 of the Evidence Act. Filmistan feeling dissatisfied with the order invoked the revisional jurisdiction of the High Court of Gujarat under section 115 of ' the Code of Civil Procedure. The revision petition was entertained and elaborate arguments were advanced at the Bar. The High Court referred to a number of authorities and observed that the correctness of the findings of the Trial Court on issues Nos. 12 and 13 may not be examined in exercise of the powers under section 115 of the Code of Civil Procedure. The Court proceeded to, observe : "The question then arises for consideration whether in fact the subordinate Court has decided the question of res judicata", and that "it is true that the jurisdiction of the Court of mall Causes to decide disputes between a tenant and his landlord and falling within the purview of section 28 of the Bombay Rent Control Act is derived from section 28 of the said Act, but at the same time if an issue is in fact barred by res judicata, then the Court has no 440 jurisdiction on principles of res judicata to go into that question or to decide that question over again to the extent to which the Court, viz., the trial court in the instant case, proposed to go into that question and allow the whole question, that was closed once for all by consent decree of December 1, 1960, to be reopened, it is proposing to exercise the jurisdiction which is not vested in it by law. It is not open to any Court of law to try an issue over again or reopen the same if an earlier decision operates as res judicata. Once the jurisdiction of the Court has been taken away, any proposal to reopen the question closed by the earlier decision would be exercise of jurisdiction which is not vested in the Court by law and to that extent the decision would become revisable, even if it is the decision as to the res judicata of an issue", and concluded "It is not open to me in revision at this stage to express any opinion about the rights and contentions of the parties with reference to the agreement of December 1, 1960. But the only thing that can be said is that so far as the agreement of November 27, 1954, is con cerned, it must be held, in view of the consent decree of December 1, 1960, that that document of November 27, 1954, created a lease. . The consent decree must be held to create a bar of res judicata as far as the question of document of November 27, 1954, creatin g a lease is, concerned. The learned Judge will not proceed with the trial". By section 115 of the Code of Civil Procedure the High Court is invested with power to call for the record of any case decided by any Court subordinate to such High Court and in which no appeal lies thereo, 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 (c) to have acted in the exercise of its jurisdiction illegally or with material irregularity, and to make such order in the case as it thinks fit. Exercise of the power is broadly subject to three important conditions (1) that the decision is of a Court subordinate to the High Court; (2) that there is a case which has been decided by the subordinate Court; and (3) that the subordinate Court has exercised jurisdiction not vested in it by law or to have failed to exercise a jurisdiction so vested, or to have acted in the exercise of its jurisdiction illegally or with material irregularity. 441 In the present case the Court of Small Causes had only decided that a question seeking information about the true legal relationship arising out of the document could be permitted to 'be put to the witnesses for Filmistan. The Court gave no finding expressly or by implication on the issue of res judicata or any other issue. In the view of the Trial Court the question whether the legal relationship arising out of the agreement dated December 1, 1960 was in the nature of a lease or of other character had to be decided at the trial and the previous judgment being a judgment by consent , 'could not operate as res judicata", for, it was not a decision of the Court, and that the consent decree in suit No. 149 of 1960 had not decided that the agreement dated March 27, 1954, was of the nature of a lease, and that in the plaint in that suit it was not even averred that it was a lease. The Trial Judge in overruling the objection did not decide any issues at the stage of recording evidence : he was not called upon to decide any issues at that stage. The observations made by him obviously relate to the arguments advanced at the Bar and can in no sense be regarded even indirectly as a decision on any of the issues. But the High Court has recorded a finding that the agreement dated November 27, 1954, created a lease and that the consent decree operated as res judicata. A consent decree, accord ing to the decisions of this Court, does not operate as res judicata, because a consent decree is merely the record of a contract between the parties to a suit, to which is superadded the seal of the Court. A matter in contest in a suit may operate as res judicata only if there is an adjudication by the Court : the terms of section II of the Code leave no scope for a contrary view. Again it was for the Trial Court in the first instance to decide that question and there after the High Court could, if the matter were brought before it by way of appeal or in exercise of its revisional jurisdiction, have decided that question. In our judgment, the High Court had no jurisdiction to record any finding on the issue of res judicata in a revision application filed against an order refusing to uphold an objection to certain question asked to a witness under examination. The true nature of the order brought before the High Court and the dimensions of the dispute covered thereby apparently got blurred and the High Court proceeded to decide matters on which no decision was till then recorded by the Trial Court, and which could not be decided by the High Court until the parties had opportunity to lead evidence thereon. It may also be observed that by ordering that a question may properly to put to a witness who was being examined, no case was decided by the Trial Court. The expression "case" is not limited in its import to the entirety of the matter in dispute in an action. 442 This Court observed in Major section section Khanna vs Brig. F. J. Dillon(1) that the expression "case" is a word of comprehensive import : it includes a civil proceeding and is not restricted by anything contained in section 115 of the Code to the entirety of the proceeding in a civil court. To interpret the expression "case" as an entire proceeding only and not a part of the proceeding imposes an unwarranted restriction on the exercise of powers of superintendence and may result in certain cases in denying relief to the aggrieved litigant where it is most needed and may result in the perpetration of gross injustice. But it was not decided in Major section section Khanna 's case(1) that every order of the Court in the course of a suit amounts to a case decided. A case may be said to be decided, if the Court adjudicates for the purposes of the suit some right or obligation of the parties in controversy; every order in the suit cannot be regarded as a case decided within the meaning of section 115 of the Code of Civil Procedure. The order passed by the High Court is set aside and the Trial Court is directed to proceed and dispose of the suit. We trust that the suit will be taken up early for hearing and disposed of expeditiously. We recommend that the form of the issues Nos. 11, 12 and 13 will be rectified by the learned Trial Judge. Filmistan will pay the costs of the appeal in this Court and in the High Court. G.C. Appeal allowed.

R and F who held a cinema building in Ahmedabad on lease entered on November 27, 1954 into an agreement with respondent No. 1 giving the latter a right to exhibit cinematograph films in the said building. Later respondent No. 1 filed 'suit No. 149 of 1960 to assert his right to exhibit films in the building. The suit resulted in a compromise decree. In pursuance of the compromise a further agreement dated December 1, 1960 was executed between the parties. However in 1963 respondent No. 1 again filed a suit claiming as a sub lessee or as lessee a right to exhibit films in the said building and praying that the defendants be restrained from interfering with that right. The suit was filed under section 28 of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 in the Court of Small Causes. In this suit respondent No. 1 asked the court to try additional issues Nos. 11, 12 and 13 as preliminary issues. In issue No. 11 the question raised was whether the consent decree in the earlier suit operated as res judicata so that R & F could not question that the agreements between them and respondent No. 1 constituted a lease. Issue No. 12 raised the question whether in view of the consent decree R & F were estopped from leading evidence and asking questions in cross examination to show that the said agreements did not constitute a lease. Issue No. 13 raised the question whether section 92 of the Indian Evidence Act debarred R & F from leading evidence to the effect that the documents in question did not constitute a lease. The Trial Court refused to try these as preliminary issues and its order was upheld by the High Court. At the hearing of the case when the counsel for the defendants sought to ask a witness for respondent No. 1 whether the agreement dated November 27, 1954 was a commercial transaction and not a lease respondent No. 1 objected to the question. The objection was disallowed by the trial court. In revision under section 115 of the Code of Civil Procedure the High Court did not interfere with the trial court 's order in respect of issues Nos. 12 and 13. In respect of issue No. 11, the High Court held that the agreement dated November 27, 1954 must in view of the consent decree in suit No. 149 of 1960 be held to be a lease, and that the consent decree created a bar of res judicata in respect of the issue whether the said agreement created a lease. The defendants appellants appealed to this Court. HELD : (i) The High Court had no jurisdiction to record any finding on the issue of res judicata in a revision application filed against an order refusing to uphold an objection to certain question asked to a witness under examination. The Court erred in proceeding to decide matters on which no decision was till then recorded by the trial court and which could not be decided by the High Court until the parties had opportunity of leading evidence thereon. (ii) By ordering that a question may properly be put to a witness who was examined, no case was decided by the Trial Court within the meaning of section 115 of the Code of Civil Procedure. The expression 'case ' is not limited in its import to the entirety of the matter in dispute in a proceeding. Such an interpretation may result in certain cases in denying relief to the aggrieved litigant where it is most needed. But equally, it is not every order of the court in the course of a suit that amounts to a case decided. A case may be said to be decided only if the court adjudicates, for the purpose of the suit, some right or obligation of the parties in controversy. [441H 442C] Major section section Khanna vs Brig. F. J, Dillon, [1964] 4 S.C.R. 409, referred to. (iii) A consent decree, according to the decisions of this Court, does not operate as res judicata, because a consent decree is merely the record of a contract between the parties to, a suit, to which is superadded the seal of the court. A matter in contest in a suit may operate as res judicata only if there is an adjudication by the court : the terms of section 1 1 of the Code leave no scope for a contrary view. [441E]

Appeal No. 949 of 1966. Appeal by special leave from the judgment and order dated September 11, 1964 of the Madras High Court in Tax Case No. 181 of 1962. M. C. Chagla and B. R. Agarwala, for the appellant. section T. Desai, R. N. Sachthey and B. D. Sharma, for the respondent. [The appeal was originally heard by J. C. Shah, Ag. C.J., V. Ramaswami and A. N. Grover, JJ. The case was twice re manded to the Tribunal. The first Order of the Court remanding the case to the Tribunal was delivered by] Shah, Ag. C. J. M/s Amarchand Sobhachand 'a firm registered under the Indian Income tax Act, 1922, carried on business at Madras in drugs, chemicals, mercury, camphor and silk yam and as money lenders. There were two partners of the firm Mohanlal Sagmal and Seshmal Sobhachand, and Ramniklal and Lakshmichand minors were admitted to the benefits of the partnership, each with 7/32 share in the profits. The appellants had for a long time business relations with a firm styled "Bhojaji Sobhachand" carrying on business at Bombay as importers of yam and also as agents and adathias. Sobhachand, one of the partners of Bhojaji Sobhachand with 16% share in the profit and loss is the father of Seshmal, Ramniklal and Lakshmichand, partners of the appellants. In the books of account of the appellants which were main tained according to the mercantile, system there was a current sarafi account in respect of their transactions with the Bombay firm in which were credited the funds transmitted from Bombay in respect of their business transactions. Entries relating to interest were posted till the end of Samvat Year 2006 in the account on the amount due at the foot of the account. The following is a table showing the balances at the end of the Samvat years 2003 Amount Interest At the end of the Samvat Year 2003 Cr.16,951 00 2004 Dr.1,02,188 4 5Dr. 2633 9 3 2005 Cr.27,815 0 0Dr. 483 1 9 2006 Cr.11,975 0 0Cr. 1008 7 3 2007 Dr.2,02,823 12 3 2008 Dr.2,68,385 1 3 In the assessment for income tax of the appellants for the assessment year 1952 53 relevant to the account year Samvat 417 2007 all item of Rs. 2,03,147 8 O in the, account of the, Bombay was disallowed by the Income tax Officer, but in appeal the amount was allowed. in the return of income for the assessment year 1953 54 the appellants claimed allowance for Rs. 2,68,385/ due from the Bombay firm at the foot of their running account as a bad debt written off as irrecoverable. The Income tax Officer disallowed their claim holding that : "these transactions were mere accommodations which can have no bearing to the regular business carried on by the assessee. " The Appellate Assistant Commissioner agreed with the Income tax Officer. He held that the debt . did not arise, in the course of the appellants ' business as chemists and druggists nor in the course of their money lending business. The Income tax Appellate Tribunal accordingly confirmed the order of the Appellate Assistant Commissioner. The assessee firm then applied to the Tribunal to refer the following question to the High Court of Madras "Whether on the facts and in the circumstances of the case the disallowance of the bad debt of Rs. 2,68,385 is right in law ?" The Tribunal rejected the application, but pursuant to an order made by the High Court of, Madras under section 66(2) submitted a statement of the case on the following question "Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the debt of Rs. 2,68,385/ was not one incurred in the course of money lending business of the assessee ?" In the opinion of the High Court the debt of Rs. 2,68,385/ due to the appellants was not a bad and doubtful debt in its money lending business not a debt representing loss sustained in the other business. The question referred was, therefore, answered in the affirmative and against the appellants. Section 10(2) (xi) of the Indian Income tax Act, 1922, as in force at the relevant time provided : "(2) Such profits or gains shall be computed after making the following allowances, namely : (xi) When the assessee 's accounts in respect of any part of his business, profession or vocation are not kept on the cash basis, such sum, in respect of bad and doubtful debts, due to the assessee in 807SupCI/71 418 respect of that part of his business, profession or vocation, and in the case of an assessee carrying on a banking or money lending business, such sum in respect of loans made in the ordinary course of such business as the Income tax Officer may estimate to be irrecoverable but not exceeding the amount actually written off as irrecoverable in the books of the assessee, Provided. . . . . " Clause (xi) was in two parts. A bad and doubtful debt due to the taxpayer, written off as irrecoverable in the books of account was properly allowable in computing the taxable profits from business, profession or vocation, where accounts were not kept on the cash basis, if the debt was in respect of a loan made in the course of the taxpayer 's business as a banker or money lender, or when the taxpayer was carrying on any other business the debt was in respect of that other business. debt written off relying upon both the branches of section 10 (2) (xi) and by the application under section 66(1) of the Income tax Act a question covering both the branches of the section was also sought to be raised. But the question on which the Tribunal was called upon to state the case was in form imprecise and in import somewhat vague. A bad and doubtful debt due to an assessee in respect of banking or money lending business is allowable under section 10(2) (xi) if it is in respect of loans made in the ordinary course of such business. A bad and doubtful debt in respect of a business other than banking or money lending is allowable even if it is not in respect of loan : but a debt due in the course of the business of a money lending is not allowable unless it is, in respect of loans made in the ordinary course of his business. We are of the view that the question should have been referred in the form suggested by the appellants in their application under section 66(1) with appropriate variations. In the interest of justice, we direct that the question be reframed as follows : "Whether on the facts and in the circumstances of the case the Tribunal erred in disallowing the debt of Rs. 2,68,385/ written off by the assessee in their books of account as irrecoverable. " The two branches of the question as reframed then are (1) Whether the debt or any part thereof is in respect of loans made 419 in the ordinary course of money lending business of the appellants; and (2) whether the debt or any part thereof is in respect of the other business of the appellants. We are of the view that before the question may be answered, it is necessary to call for a supplementary statement of the case from the Tribunal. The Tribunal 's order is very brief : it gives no reasons in support of the conclusions. The argument based on the first part of section 10(2) (xi) that the debts were due in respect of the business of the appellants other than money lending was not considered at all, and the Tribunal disposed of the second part of the case by merely observing that it was an "accommodation" account to enable the Bombay firm to tide over the "financial crisis" threatening it in Samvat Year 2007, and that the trans actions in the account were totally unconnected with the normal business of the appellants. An "accommodation" advance is a neutral expression : it may be of the nature of a loan advanced in the ordinary course of business by a money lender; it may be an advance the money lending or other business of the assessee but not in the nature of a loan; or it may be wholly unrelated to the business of the tax payer. The statement submitted by the Tribunal is also inadequate. It contains only a summary of the business relations between. the appellants and the Bombay firm, a statement as to the amounts due at the end of each year at the foot of the account, the interest if any charged and a summary of the orders made by the Income tax Officer, the Appellate Assistant Commissioner and the Tribunal. The statement of the case does not analyse the evidence and throws no light upon the two branches of the argument raised before the Tribunal and which, in our view, arose out of the question on which they were required to submit a statement of the case. Counsel for the Revenue, however, contended that there are three important circumstances which appear from the order of the Appellate Assistant Commissioner and the Income tax Officer from which it may be inferred that the advances made by the appellants to the Bombay firm were not in respect of loans in the ordinary course of the business of the appellants, nor in respect of their other business. Counsel said that (1) Sobhagchand Amarchand partner of the Bombay firm is the father of Seshmal one of the partners of the appellants and of the minors Ramniklal and Lakshmichand who are admitted to the benefits of partnership; (2) that large amounts of money were advanced shortly before the Bombay firm closed its business; and (3) that there was a consistant practice for paying or receiving interest on the 420 amounts due at the, foot of the account, but no interest was charged by the appellants in respect of the dues at the foot of the account at the end of Samvat Years 2007 and 2008. But the Tribunal has not raised any inference from these circumstances and has merely observed that charging of interest cannot make it a money lending account. We, therefore, direct that the Income tax Appellate Tribunal do submit a supplementary statement of the case on the, question reframed, on both the branches of section 10(2)(xi) of the Indian Income tax Act, 1922. The Tribunal will give opportunity to both the parties of being heard, but will restrict themselves to the ,evidence on the record. The supplementary statement to be submitted within three months from the date the papers reach the Tribunal. [After receipt of the supplementary statement of case from the Tribunal the appeal was heard by J. C. Shah, K. section Hegde and A. N. Grover, JJ. The order of the Court was delivered by] Shah, J. By our order dated July 29, 1969 we called for the light of the two branches of section 10(2) (xi) of the Indian In come tax Act, 1922. We have now received a statement of case from the Tribunal. The Tribunal has set out in great detail the arguments advanced before it by the assessee and by the Revenue but it has not set out the facts found by it from the evidence on the record in the light of the arguments advanced. The statement of case is intended to be a finding on facts and not a catalogue of the arguments advanced at the Bar. Since the Tribunal has not found the facts we are constrained to send back the case again to the Tribunal for submitting to this Court a supplementary statement on facts found by the Tribunal. The Tribunal will submit the statement within three months from the date on which the papers reach the Tribunal. [After receipt of the second supplementary statement of case from the Tribunal the appeal was finally heard by J. C. Shah, C.J., K. section Hegde and A. N. Grover, JJ. The Judgment of the Court was delivered 'by] Hegde, J. The appellant firm (which will hereinafter be referred to as the "assessee") carried on business in drugs, chemicals, mercury, camphor and art silk yam as also in money lending, over a number of years. The accounting year with which we are concerned in this appeal is Samvat year 2008 commencing from October 31, 1951 and ending on Oct. 18, 1952. The firm 421 consisted of two partners, Mohanlal Baginal and Sashmal Sobha Chand. Two minors, Ramniklal Sobhachand and Lakshmichand Sobhachand were admitted to the benefits of the partnership. The assessee had dealings for several years with a firm known as "Bhojaji Sobhachand" (to be hereinafter referred to as the Bombay firm). Sobhachand Amarchand, a partner of the Bombay firm, is the father of Seshmal, Ramaniklal and Lakshmichand and he was having sixteen percent share in the Bombay firm. That firm became insolvent in April 1952. The Bombay firm owed certain amount to the assessee. In the assessment of income tax of the appellant for the assessment year 1952 53, relevant to the account year Samvat 2008, the assessee claimed a deduction of Rs. 2,68,385/ as bad debt due from the Bombay firm, incurred by that firm in the course of business transactions. The Incometax Officer disallowed that claim holding that "these transactions were mere accommodations which can have no bearing to the regular business carried on by the assessee. In, appeal the Appellate Assistant Commissioner agreed with the Income tax Officer. He held that the debt did not arise in the course of the assessee 's business as Chemists and Druggists nor in the course of their money lending business. On a further appeal taken by, the assessee to the Income tax Appellate Tribunal, the tribunal confirmed the order of the Appellate Assistant Commissioner. 'The assessee thereafter applied to the tribunal under section 66(1) of the Indian Income tax Act, 1922 to submit a statement of the case with the question "whether on the facts and in the circumstances of the case the disallowance of the bad debt of Rs. 2,68,385/ is right in law" to the High Court of Madras for its opinion. The tribunal rejected that application but pursuant to an order of the High Court under section 66(2), the tribunal submitted a statement of the case on the following question "Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the debt of Rs. 2,68,385/ was not one incurred in the course of money lending business of the assessee." The High Court opined that the debt in question was not a bad and doubtful debt in the assessee 's money lending business nor a debt representing loss sustained in the other business. The question referred was, therefore, answered in the affirmative and against the asses see. Thereafter the present appeal was brought after obtaining special leave from this Court. At the hearing of the appeal this Court found that the tribunal 's order was very brief and that it gave no reasons in support of its conclusions. It also found that the statement submitted by the tribunal was in adequate. This Court took the view that the question framed at 422 the instance of the High Court did not bring out the real question arising for decision. It accordingly . reframed the question as follows "Whether on the facts and in the circumstances of the case the Appellate Tribunal erred in disallowing a sum of Rs. 2,68,385/ written off by the assessee in their books of accounts as irrecoverable ?" By its order dated July 29, 1969 this Court called upon the Tribunal to submit a supplementary statement of case on the reframed question. The tribunal accordingly submitted a fresh statement of the case on the question referred. But that statement merely catalogued the arguments advanced at the bar. The tribunal did not give any findings on the points arising for decision. Hence by its order dated April 7, 1970, this Court directed the tribunal to submit a further statement. The tribunal has accordingly submitted a further statement. The facts found by the tribunal are found in paragraphs 11 ;and 12 of the statement. They read : " 11. We have taken into consideration the available materials and the rival submissions. The only facts in favour of the assessee are that incidental charges are debited to the Bombay firm in respect of some of the remittances and there is a flow of moneys to the Bombay firm up to 10 3 1952 when the last of the remittances was sent to it before the firm collapsed in about April 1952. On the other hand, the narrations in the entries, as they stand, the failure to adjust interest in the account of the Bombay firm at the stage at which it became a debtor in Samvat year 2007, the manner in which the partner of the appellant firm tried to explain the position in March, 1954 and the stand of the firm itself at all earlier stages support the case of the Department." "12. Having considered all the circumstances of the case, we are of the opinion that the sums in question were not sent to the Bombay firm as loans made in the ordinary course of the money lending business of the assessee nor in respect of any other business of the assessee. As this is the finding with regard to the whole of the amount of Rs. 2,68,385/ there is no question of ,#locating any portion thereof as between the business of money lending or for any other purpose as preferred to para 7 above. " 423 It is true as contended by the learned Counsel for the asstssee that the conclusions reached by the tribunal are not supported by proper discussion of the material before it. It is also true that the tribunal after catalogueing the arguments advanced at the bar, has come to certain abrupt conclusions, but all the tame it cannot be denied that the findings reached by the tribunal are findings of fact and those findings are supported by the evidence on record. The tribunal has found that the monies sent by the assessee to the Bombay firm were not loans made in the ordinary course of its money lending business, nor in respect of any other business of the assessee. This finding covers the entire amount sought to be deducted. In view of this finding, which is binding on this Court, our answer to the question reframed has to be in the negative and in favour of the Department. The appeal fails and is dismissed. No costs. G.C. Appeal dismissed.

The appellants we 're a registered partnership firm engaged in money lending business as well as business in certain chemical goods, and silk yarn. Another firm had a current account with the appellants between the samvat years 2003 and 2008. At the end of the latter year the said account had a debit balance of Rs. 268385 1 3. In the return of income for the assessment year 1953 54 the appellants claimed allowance for the said sum of Rs. 268385 as a bad debt written off as irrecoverable. The claim was disallowed by the authorities under the Income tax Act, 1922. The Tribunal referred to the High Court under section 66(2) of the Income tax Act, 192Z the question whether on the facts and circumstances of the case the Tribunal 's finding that the sum in question did not relate to the appellants money lending business was correct. The High Court answered the question in the affirmative against the appellants. This Court in appeal by special leave re framed the question to be answered by the Tribunal so as to cover not only the money lending business of the appellants but also the business in chemicals etc. The Court directed the Tribunal to submit a supplementary statement of case. The supplementary statement of case submitted by the Tribunal was however found unsatisfactory in as much as it contained a summary of arguments on both sides but no findings on the,facts of the case. Hence supplementary statement on 'facts was called for. The findings given by the Tribunal were against the appellants. On the contention that the conclusion reached by the Tribunal was not supported by proper discussion of the materials before it, HELD : The findings reached by the Tribunal were findings of fact and those findings were supported by the evidence on record. The Tribunal had found that the loans were not made in the course of money lending business of the assessee nor in respect of any other business of the assessee. This finding covered the entire amount sought to be deducted. In view of this finding which was binding on this Court, the answer to the question re framed had to be in favour of the department. [423 B] Also held : (i) The Tribunal in submitting its statement,of case must give not only the facts of the case or the arguments of parties but also its own findings on the, facts and evidence. [410 D] (ii) When the assessee had money lending as well as other business, its claim for a bad debt under section 10 (2) (xi) of the Act must be considered in relation to both the businesses and the question submitted by the Tribunal must cover the claim in both its aspects. [418 F 419 A] 416

l Misc. Petitions Nos. 401/and 4012 of 1968. Applications by respondent No. 1 for revocation of the certificate granted by the Madras High Court on 15th October, 1968 under article 133(1)(a) & (b) of the Constitution of India. AND Civil Appeals Nos. 2183 and 2184 of 1968. Appeals from the judgment and order elated October 9, 1968 of the Madras High Court in O.S.A. No. 25 and 27 of 1968. M.C. Setalvad. V.P. Raman, D.N. Mishra, and J.B. Dadachanji, for the appellant. section Mohan Kumaramangalam. M.K. Ramamurthi, Shyamala Pappu and Vineet Kumar, for respondent No. 1. Rameshwar Nath and Mahinder Narain, for respondent No. 2. The Judgment of the Court was delivered by Shah, J. M/s. Tarapore & Company hereinafter called the plaintiffs applied in Suit No. 118 of 1967 for an interim injunction restraining the Bank of India Ltd. the first defendant in the suit from taking any steps in pursuance of a letter of credit opened in favour of M/s. V/O Tractors Export, Moscow, the second defendant. Ramamurthi, J., by order dated April 12, 1968, granted an interim injunction restraining encashment of the letters of credit pending disposal of the suit. In appeals under the Letters Patent preferred by the second defendant,. the High Court of Madras set aside that order. Against the orders passed in the two appeals, the plaintiffs applied for certificate under Arts.133(1)(a) and 133(1)(b) of the Constitution. The High Court observed that an order granting interim injunction "is a final order, as far as this Court is concerned, determining the rights of parties within this lit or proceeding, which is independent though ancillary to the suit", and they were competent to grant the certificate. By our order dated October 28, 1968, we ordered that the certificate granted by the High Court do stand revoked. We set out the reasons in support of that order. Article 133 (1) provides, insofar as it is material: "(1) An appeal shall lie to the Supreme Court from any judgment, decree or final order in a civil proceeding of a High Court in the territory of India if the High Court certifies (a) that the amount or value of the subject matter of the dispute in the court of first instance and still in dispute on appeal was and is not less than twenty thou sand rupees or such other sum as may be specified in that behalf by Parliament by law; or 701 (b) that the judgment, decree or final order involves directly or indirectly some claim or question respecting property of the like amount or value; or "(c) . . where the. judgment, decree or final order appealed from affirms the decision of the Court immediately below in any case other than a case referred to in sub clause (c), if the High Court further certifies that the appeal involves some substantial question of law. " The suit filed by the plaintiffs is a civil proceeding, and the suit involves some claim or question respecting property of not less than twenty thousand rupees. That is a matter not in dispute. The expression "judgment" in article 133 ( 1 ) in the context in which it occurs means a final adjudication by the Court of the rights of the parties, 'and that an interlocutory judgment even if it decides an issue or issues without finally determining the rights and liabilities of the parties is not a judgment, however cardinal the issue may be. In the present case not even an issue has been decided, and it is not contended that the order of the High Court amounts to a judgment or 'a decree. The expression "final order" it has been held by a long course of authorities, occurring in section 205 of the Government of India Act, 1935, section 109 of the Code of Civil Procedure and article 133(1) of the Constitution means a final decision on the rights of the parties in dispute in a suit or proceeding; if the rights of the parties in dispute in the suit or proceeding remain to be tried, after the order, the order is not final. In Ramchand Manjimal vs Goverdhandas Vishindas RatanChand(1), it was held by the Judicial Committee that an order of the Judicial Commissioner of Sind vacating an order of stay granted under section 19 o,f the Indian Arbitration Act, 1899, and refusing to stay a proceeding was not a final order within the meaning of section 109(a) of the Code of Civil Procedure. Viscount Cave referred to Salaman vs Warner(2); Bozson Altrincham Urban District Council(a) and Issacs vs Salbstein(4) and observed: "The effect of those and other judgments is that an order is final if it finally disposes of the rights of the parties. The orders now under appeal do not finally dispose of those rights, but leave them to be determined by the Courts in the ordinary way. " In Abdul Rahman vs D.K. Cassim & Sons(5) the Judicial Committee observed that the expression "final order" within the meaning of section 109(a) of the Code of Civil Procedure, 1908, is an (1) L.R. 47 I.A. 124. (2) (3) (4) (5) L.R. 60 I.A. 76. C.I./69 12 702 order which finally disposes of the rights of the parties in relation to the whole suit. In Abdul Rahman 's case(1) a suit was instituted by D.K. Cassim and Sons claiming damages against the appellant Abdul Rahman. Soon after the suit was instituted the plaintiff firm was adjudicated insolvent and the official assignee was impleaded as an additional plaintiff. The official assignee declined to proceed with the suit, and the suit was dismissed by the trial court. In appeal it was held by the High Court of Calcutta that the cause of action was personal to the insolvents and did not vest in the assignee, and accordingly they set aside the decree and remanded the suit for trial. Against that order an appeal was preferred to the Judicial Committee which was held not maintainable. Kuppusami Rao vs The King(2) The Federal Court held that the expression "final order" in section 205 (1 ) of the Government of India Act, 1935, means an order which finally determines the points in dispute and brings the case to an end. The test of finality, according to the court, is whether the order finally disposes of the rights of the parties, and not whether the order decides an important point or even a vital issue in the case. Mukherjea, J., in interpreting the expression "judgment, decree or final order" in section 205 of the Government of India Act, 1935, in Mohammad Amin Brothers Ltd. and others vs Dominion India and others ( 3 ) observed: "The expression "final order" has been used in contradistinction to what is known as "interlocutory order" . . If the decision on an issue puts an end to the suit, the order will undoubtedly be a final one, but if the suit is still left alive and has got to be tried in the ordinary way, no finality could attach to the order." In Mohammad Amin Brothers ' case(3) an issue was decided by the trial court in a petition for winding up of a Company as to the maintainability of a claim for recovery of income tax dues. In appeal the High Court overruled the objection raised by the Company about the maintainability of the claim, and finding that a bona fide dispute was pending before the Income tax authorities relating to a substantial part of the debt on which the application for winding up was made and that the solvency of the Company could not be determined before that dispute was decided, set aside the order of the Trial Judge and remanded the case to him. The Federal Court held that the order appealed against was not a "final order". In Sardar Syedna Taher Saifuddin Saheb vs The State of Bombay(4) a suit was filed for a declaration that the order of ex (1) L.R. 60LA. 76 (2) (3) (4) 703 communication passed by the appellant religious head of a community was invalid. During the pendency of the suit them Bombay Prevention of Ex communication Act 42 of 1949 was enacted and one of the issues raised in the suit was whether the order of ex communication was invalid. This issue was tried as a preliminary issue and as it raised the question of the vires of the Bombay prevention 'of Ex communication Act, 1949, the State of Bombay was impleaded as a party defendant in the suit. The trial court decided the issue against the appellant and the order was confirmed in appeal by the High Court of Bombay. Against the order deciding the issue, an appeal was preferred to this Court with certificate granted by the High Court under article 132 and article 133 of the Constitution, and it was held that the appeal was not maintainable since the decision on the issue did not finally dispose of the dispute between the parties. In Srinivasa Prasad Singh vs Kesho Prasad Singh(1) an order deciding that circumstances had not been established such as would justify an order for stay of execution of a decree under appeal was not a 'final order" and was on that account not appealable to the judicial Committee. Similarly in Druva Coal Company vs Benaras Bank(2) it was held that an order by the High Court reversing the order of the Court of First Instance granting a temporary injunction was not a final order within the meaning of section 109 of the Code of Civil Procedure. There is, therefore, 'abundant authority in support of the view that an order is final within the meaning of article 133 of the Constitution, under section 109 Code of Civil Procedure or section 205 of the Government of India Act, 1935, if it amounts to final decision on the rights of the parties in dispute in the suit or proceeding; if after the order is made, the suit or proceeding still remains to be tried, and the rights in disputes have to be determined, the order is interlocutory. Counsel for the appellant strongly relied upon a recent judgment of this Court in Mohanlal Maganlal Thakkar vs State of Gujarat(3) and contended that the view expressed in the earlier cases is superseded. In Mohanlal Thakkar 's case(a) after an enquiry under section 476 Code of Criminal Procedure, 1898, a Magistrate ordered that a complaint be filed against a person in respect of offences under sections 205, 467 and 468 read with section 114 I.P. Code. In appeal the Additional Sessions Judge held that the complaint was competent only in respect of the offence under section 205 read with section 114. The High Court dismissed a revision application against the order of the Court of Session. Certificate was there (1) 13 C.L.J. 681. (2) (3) ; 704 after issued by the High Court under article 134(1)(c) of the Con stitution for leave to appeal against the order. The competence of the High Court to grant the certificate was challenged at the hearing of the appeal. This Court held (Bachawat & Mitter JJ., dissenting) that the order passed was a final order within the meaning of article 134(1) (c) since the controversy between the parties when the the complaint in respect of offences under sections 467 and 468 read with section 114 I.P. Code was disposed of by the order of dismissal and the proceeding regarding that question was finally decided It was observed that the finality of that order was not to be judged by co relating it with the controversy in the complaint, viz., when then the appellant had committed the offence charged ,against him therein. There is nothing in that judgment which supports the contention that this Court has departed from the principle of the earlier decisions or has suggested a different test for determining the finality of orders. The Court in that case was concerned merely with an order passed by the High Court which maintained the order of the Additional Sessions Judge that a complaint under section 205 read with section 114 I.P. Code could be filed against the appellant. The order of the High Court finally disposed of the proceeding in the Magistrate 's court relating to the expediency of instituting criminal proceedings against the appellant. It was thereafter for the court trying the complaint to decide whether the offence complained of was committed by the appellant. The proceeding for filing a complaint under section 476 of the Code of Criminal Procedure was a self contained proceeding and was finally disposed of by the order directing the filing of a complain under section 205 read with section 114 I.P. Code. The proceeding instituted on the complaint was not part of or incidental to the proceeding for an enquiry whether a complaint should be filed. The Court in that case expressly approved of the earlier view at p. 736 where after referring to Kuppusami Rao 's case(1) observed: Syedna Taher Saifuddin Saheb 's case(") observed: " . these were cases where the impugned orders were passed in appeals or revisions and since an appeal or a revision in continuation of the original suit or proceeding the test applied was whether the order disposed of the original suit or proceeding. If it did not, and the suit or proceeding was a live one, yet to be tried, the order was held not to be final. Different tests have been applied, however, to orders made in proceeding independent of the original or the main proceeding. " In our judgment an order passed by the High Court in appeal which does not finally dispose of a suit or proceeding and leave the rights and obligations of the parties for determination in the suit or proceeding from which appeal has arisen, is not final within (1) (2) E[1958] S.C.R. 1007. 705 he meaning of article 133(1)(a) and (b). The order refusing to grant an interim injunction did not determine the rights and obligations of the parties in relation to the matter in dispute in the suit. We are unable to hold that, because the plaintiff 's suit as a result of the order of the High Court may become infructuous as framed and the plaintiffs may have to seek amendment of the plaint to get effective relief, an order which is essentially an interlocutory order may be deemed final for the purposes of article 133 (1) of the Constitution. In our judgment, Mohanlal Maganlal ThakKar 's case(1) makes no departure from the earlier judgments of the Judicial Committee, the Federal Court and this Court. The plaintiffs will pay the costs of the petitioners of the application for revocation of the certificate. G.C. Certificate revoked.

M/s Tarapore & Co. who were plaintiffs in a suit applied for an interim injunction restraining the first defendant in the suit from taking any steps in pursuance of a letter of credit opened in favour of the second defendant. A single judge of the High Court granted an interim injunction restraining encashment of the letters of credit pending disposal of the suit. In appeals under the Letters Patent preferred by the second dependent, the High Court of Madras set aside that order. Against the orders passed in the two appeals, the plaintiffs applied for certificate under articles 133(1) (a) and 133(1)(b) of the Constitution. The High Court observed that an order granting interim injunction "is a final order, as far as this Court is concerned, determining the rights of parties within this his or proceeding, which is independent though ancillary to the suit", and they were competent to grant certificate. In this Court the defendants applied for revocation of the certificate. HELD: The certificate must be revoked. An order passed by the, High Court in appeal which does not finally dispose of a suit or proceeding and leaves the rights and obligations of the parties for determination in the suit or proceeding from which the appeal has arisen, is not final within the meaning of article 133(1)(a) and (h). The order refusing to grant an interim injunction did not determine the rights and obligations of the parties in relation to the matter in dispute in the suit. It could not be held that because the plaintiffs suit as a result of the order of the High Court may become infructuous as framed and the plaintiff may have to amend his plaint to obtain effective relief an order which is essentially an interlocutory order may be deemed final for the purpose of article 133(1) of the Constitution. [704 H] Mohanlal Maganlal Thakkar 's case makes no departure from the earlier judgments of the judicial Committee, the Federal Court and this Court. Ramchand Manjimal vs Goverdhandas Vishindas Ratanchand, L.R. 47 I.A. 124; Salaman vs Warner, ; Bazson vs Altrincham Urban District Council, [1903] 1 K.B. 547; Isaacs vs Selbstein, , Abdul Rahrnan vs D.K. Cassim & Sons, L.R. 60 I.A. 76; section Kuppusami Rao vs The King, ; Mohammad Amin Brothers Ltd, and Others vs Dominion of India and Others, ; Sardar Syedna Taher Saifuddin Saheb vs The State of Bombay, ; Srinivasa Prasad Singh vs Kesho Prasad Singh 13 C.L.J. 681 and Druva Coal Company vs Benaras Bank, , referred to. Mohanlal Maganlal Thakkar vs State of Gujarat. A.I.R. , explained.

o. 196 of 1954. Under article 32 of the Constitution of India for the enforcement of fundamental rights. P. R. Das and K. P. Khaitan, (B. Sen, A. K. Mukherjea and B. P. Maheswari, with them) for the petitioner. C. K. Daphtary, Solicitor General for lndia, (Porus A. Mehta and P. G. Gokhale, with ', him) for the respondents. May 28. The Judgment of the Court was delivered by I MEHR CHAND MAHAJAN C.J. The principal question canvassed in this case is whether certain sections of the Taxation on Income (Investigation Commission) Act, 1947, i.e., Act XXX of 1947, have become void from the date of the commencement of the Constitution of India by reason of article 14 of the ' Constitution. The petitioner, Suraj Mall Mohta & Co. Ltd., is a company registered under the Indian Companies Act. Suraj Mall Mohta is also the managing director of another company Messrs. Jute and Gunny Brokers Ltd. A reference had been made by the Central Government under the provisions of section 5(1) of the Act before 58 450 1st September, 1948, of the case of Messrs. Jute and Gunny Brokers Ltd. to the Investigation Commission appointed under Act XXX of 1947. During the investigation of that case which was numbered 831/30 in the records of the Commission, and during the investigation of some other cases similarly referred to the Commission, it was said to have been discovered that the petitioner company had made secret profits which it had not disclosed and had thus evaded taxa tion. On the 28th August, 1953, a report to this effect was made by the Commission to the Central Government under the provisions of section 5(4) of the Act requesting that the case of the petitioner along with the cases of Suraj Mall Mohta and other members of his family may be referred to the Commission for investigation. On the 9th September, 1953, the Central Government referred these cases to the Investigation Commission under the provisions of section 5(4) of the Act and these were numbered 831/64 69 on the records of the Commission. On the 15th of September, 1953, the Commission notified the petitioners that their cases had been referred for investigation and they were called upon to furnish certain material, as detailed in Annexure "B" of the petition, to the Commission. On the 12th April, 1954, the present petition under article 32 of the Constitution was filed for the issue of appropriate writs restraining the Commission from taking any action against the petitioner under the provisions of Act XXX of 1947, on the ground that the provisions of sections 5(1), 5(4),6,7 and 8 of Act XXX of 1947, had become void, being discriminatory in character after the coming into force of the Constitution of India. In order to appreciate the respective contentions raised and canvassed before us on behalf of the petitioner company and the State, it is necessary to set out some of the relevant provisions of the Act. The object of the Act as stated in its Preamble was to ascertain whether the actual incidence of taxation on income in recent years had been in accordance with 451 provisions of law and whether the procedure for assessment and recovery of tax, was adequate to prevent evasion thereof. Section 3 authorizes the Central Government to constitute a Commission, to be called the Income tax Investigation Commission, it,% duty, being (a) to investigate and report to the Central Government on all matters relating to taxation on income, with particular reference to the extent to which the existing law relating to, and procedure for, the assessment and collection of such taxation is adequate to prevent the evasion thereof; (b) to investigate in accordance with the provisions of this Act any case or points in a case referred to it under section 5. The composition of the Commission is set out in section 4. Section 5 of the Act reads as follows 5(1) The Central Government may at any time before the first day of September, 1948, refer to the Commission for investigation and report any case or points in a case in which the Central Government has prima facie reasons for believing that a person has to a substantial extent evaded payment of taxation on income, together with such material as may be available in support of such belief, and may at any time before the 1st day of September, 1948, apply to the Commission for the withdrawal of any case or points in a case thus referred. . (2). . . . . . . (3)No reference made by the Central Government under sub section, (1), at any time before the first day of September, 1948, shall be called in question, nor shall the sufficiency of the material on which such a reference has been made be investigated in any manner by any Court. (4)If in the course of investigation into any case or points in a case referred to it under sub section (1), the Commission has reason to believe (a) that some person other than the person whose case is being investigated has evaded payment of taxation on income, or (b)that some points other than those referred ' to it by the Central Government in respect of any case 452 also require investigation, it may make a report to the Central Government stating its reasons for such belief and, on receipt of such report, the Central Government shall, notwithstanding anything contained in subsection (1), forthwith refer to the Commission for investigation the case of such other person or such additional points as may be indicated in that report. " The powers possessed by the Commission while conducting an investigation are provided for in section 6 which is in these terms: "6(1) The Commission shall have power to require, any person or banking or other company to prepare and furnish on or before a specified date written statements of accounts and affairs verified in such manner as may be prescribed by the Commission and, if so required by the Commission, also duly verified by a qualified auditor, giving information on such points or matters as in the opinion of the Commission may, directly or indirectly, be useful for, or relevant to, any case referred to it, and any person or banking or other company so required shall be bound, notwithstanding any law to the contrary, to comply with such requirement. (2)The Commission shall also have power to administer oaths, and shall have all the powers of a civil court under the Code of Civil Procedure, 1908, for the purposes of taking evidence on oath, enforcing the attendance of witnesses and of persons whose cases are being investigated, compelling the production of documents and issuing commissions for the examination of witnesses. (3)If in the course of any investigation it 'appears to the Commission to be necessary to examine any accounts or documents or to interrogate any person or obtain any statements from any person, the Commission may authorize any income tax authority not below the rank of Income tax Officer in that behalf. (4)The authorized official shall subject to the direction of the Commission have the same powers as the Commission under sub sections (1) and (2), and 453 any person having charge or custody of accounts or documents required to be examined shall not withstanding anything in any law to the contrary be bound to produce them (5)If any person whose case or the points in whose case is or are being investigated by the Commission refuses or fails to attend in person in compliance with a notice in that behalf duly served upon him or to give any evidence or to answer questions or to produce documents or to prepare and furnish statements when called upon to do so, the Commission may, if satisfied that the refusal or failure was wailful, close the investigation of the case and proceed to draw up its report on the case or on the points to the best of its judgment and may in its discretion also direct that such sum as it may specify in the direction shall be recovered from the person by way of penalty for the refusal or failure, without prejudice to any penalty under the Indian Income tax Act, 1922 (6). . . . . . . . . (7)Where in the opinion of the Commission any person or banking or other company is likely to be in possession of any information or document which may, directly or indirectly be useful for, or relevant to, any case referred to it or any case likely to be reported by the Commission to the Central Government under the provisions of sub section (4) of section 5, the Commission and subject to the direction of the Commission any authorized official, may make enquiries in such manner as it or he may deem fit and obtain from such person or banking or other company statements on oath or ' otherwise on such points or matters as may be specified; and for the purpose of any such enquiry, the Commission and the authorized ' official shall have all the powers conferred on them by sub sections (1), (2), (2A), (3) and (4). (8) All materials gathered by the Commission or the authorised official and materials accompanying the reference under sub section (1) of section 6 may be brought on record at such stage as. the Commission may think fit. " 454 The procedure to be followed by the Commission is contained in section 7 which provides that subject to the provisions of this Act the Commission shall have power to regulate its own procedure and that the powers of the Commission under sub sections (1), (2), (3), (7) and (8) of section 6 and sub sections (2), (4) and (6) of this section, i.e. section 7 may be exercised by any member thereof authorised by the Commission in this behalf. Sub section (2) of section 7 provides as follows " 7(2) In making an investigation under clause (b) of section 3, the Commission shall act in accordance with the principles of natural justice, shall follow as far as practicable the principles of the , and shall give the person whose case is being investigated, a reasonable opportunity of rebutting any evidence adduced against him; and the power of the Commission to compel production of documents shall not be subject to the limitation imposed by section 130 of the , and the Commission shall be deemed to be a Court and its proceedings legal proceedings for the purposes of sections 5 and 6 of the . " Sub section (3) of section 7 is in these terms: "7(3) Any person whose case is being investigated by the Commission may be represented by a pleader, a registered accountant or an employee duly authorised to act on his behalf, provided that no person shall be entitled to be present or to be represented in the course of an enquiry under subsections (3) and (7) of section 6." The result of these provisions is that when the Commission is collecting the materials from different sources against the assessee he is not entitled to be present at those stages and take part in the enquiry, but after the material is ready and is placed on the record then he can be present and has to be given a reasonable opportunity of rebutting any evidence that may have been collected against him. Sub section (4) of section 7 which came in for considerable criticism provides as follows: 455 "7(4) No person shall be entitled to inspect, call for, or obtain copies of, any documents, statement or papers or materials furnished to, obtained by or produced before, the, Commission or any authorized official in any proceedings under this Act; but the, Commission and after the Commission has ceased to exist such authority as the Central Government may in this behalf appoint, may, in its discretion, allow such inspection and furnish such copies to any person . Provided that, for the purpose of enabling the person whose case or points in whose case is or are being investigated to rebut any evidence brought on the record against him, he shall, on application made in this behalf and on payment of such fees as may be prescribed by rules made under this Act, be furnished with certified copies of documents, statements, papers and materials brought on the record by the Commission. " Sub section (5) of section 7 is in these terms "7(5) Save in cases in which the Commission may exercise its powers under section 195 and Chapter XXXV of the Code of Criminal Procedure, 1898, (a)no suit, prosecution or other legal proceedings shall be instituted against any person in any civil or criminal Court for any evidence given or produced by him in any proceedings before the Commission, and , (b)no evidence so given or produced shall be admissible in evidence against such person in any suit, prosecution or other proceeding before such Court, except with the previous sanction of the Central Government. " The last section that came in for objection is section 8 which is in these terms: "8(1) Save as otherwise provided in this Act, the materials brought on record shall be considered by all the three members of the Commission sitting together and the report of the Commission shall be in accordance With the opinion of the majority. (2)After considering the report, the Central Government shall by order in writing direct that such 456 proceedings as it thinks fit under the Indian Income tax Act, 1922, the Excess Profits Tax Act, 1940, or any other law, shall be taken against the person to whose case the report relates in respect of the income of any period commencing after the 31st day of December , 1938; and upon such a direction being given, such proceedings may be taken and completed under the appropriate law notwithstanding the restrictions contained in section 34 of the Indian Income tax Act, 1922, or section 15 of the Excess Profits, Tax Act, 1940, or any other law and notwithstanding any lapse of time or any decision to a different effect given in the case by any Income tax authority or Income tax Appellate Tribunal. (3) . (4) In all assessment or reassessment proceedings taken in pursuance of a direction under sub section (2), the findings recorded by the Commission on the case or on the points referred to it shall, subject to the provisions of sub sections (5) and (6), be final; but no proceedings taken in pursuance of such direction shall be a bar to the initiation of proceedings under section 34 of the Indian Income tax Act,, 1922. (5) In respect of any order made in the course of proceedings taken in pursuance of a direction issued under sub section (2) the provisions of sections 30, 31, 33 and 33 A of the Indian Income tax Act, 1922, and the corresponding provisions of the Excess Profits Tax Act 1940, shall not apply so far as matters declared final, by sub section (4) are concerned; but the person concerned may, within 60 days of the date upon which he is served with a copy of such order, by application in the prescribed form accompanied by a fee of Rs. 100 require the appropriate Commissioner of Income tax to refer to the High Court any question of law arising out of such order, and thereupon the provisions of sections 66 and 66 A of the Indian Income tax Act, 1922, shall as far as may be apply, with the modifica tion that the reference shall be heard by a Bench of not less than three Judges of the High Court. (6) 457 (7) Notwithstanding anything to the contrary contained in this Act or in any other law for the time being in force, any evidence in the case admitted before the Commission or an authorized official shall be admissible in evidence in any proceedings directed to be taken under sub section (2). " It was not and could not be denied that the powers vested in the Commission and the procedure prescribed by the impugned Act is more comprehensive and drastic than those contained in the Indian Income tax Act. At the time when the impugned statute was passed there could possibly be taken no exception to its contents on the ground of constitutionality of it 's provisions, and the powers conferred on the Commission and the procedure it was authorized to follow were well within the ambit of the Legislative power of the Central Legislature. The impugned statute admittedly was good law till the coming into force of the Constitution. When India became a sovereign democratic Republic on 26th January, 1950, the validity of all laws had to be tested on the touchstone of the new constitution and all laws made before the coming into force of the Constitution have to stand the test for their validity on the provisions of Part III of the Constitution. The points that require consideration in the case are whether the provisions of section 5(1), sections 5(4), 6, 7 and 8 or any parts thereof contravene the guarantee of equal protection of the laws and of the equality before the law, or whether the impugned provisions of the Act are based on a valid classification which is rational in view of the objects of the Act. A further point is whether section 6(5)of the Act offends against article 20 (3) of the Constitution. Mr. P. R. Das for the petitioner attacked the provisions of section 5(1) of the Act on a two fold ground: (1) That the section was not based on any valid classification; the word "substantial" being vague and uncertain and having no fixed meaning, could furnish no basis for any classification at all; (2) That the Central Government was entitled by the, provisions of the section to discriminate between one person and another in the same class and it was authorized to pick and 59 458 choose the cases of persons who fell within the group of those who had substantially evaded taxation. It could, if it chose, send the case of one person to the Commission and show favoritism to another person ,,by not sending his case to the Commission though both of these persons be within the group of those who have evaded the payment of tax to a substantial extent. As regards sub section (4) of section 5, the learned counsel contended that this section had no independent existence and was bound to fall with subsection (1) Of section 5, if his contention regarding the invalidity of that section prevailed. In the alternative, he I contended that assuming that sub section (1) was valid even then sub section (4) had to be declared void because it gave arbitrary power to the Commission to pick and choose and secondly because the clause was highly discriminatory in character inasmuch as an evasion, whether substantial or insubstantial, came within its ambit as well as within the ambit of section 34 of the Indian Income tax Act. The learned Solicitor General combated all these arguments and contended that the Act was based on a broad and rational classification, that it only dealt with a group of persons who had evaded income tax from the, beginning of the war, 1st January, 1939, to the period ending with 1st September, 1948, as a consequence of war controls resulting in black marketing activities and huge profits. In other words, it was said that the Act only dealt with that group of persons who came within the class of war profiteers. This was a class by itself and needed special treatment and there fore the law did not offend against the equal protection of the laws clause of the Constitution. It was suggest. ed that persons coming under sub section (4) of section 5 also belonged to the same class and therefore on the same grounds that section also could not be declared void. It was further. said that there was no substantial difference in the procedure prescribed under section 34 of the Indian Income tax Act and the impugned Act and that in any case the procedure prescribed by the Act was a good substitute for that prescribed by the Indian Income tax Act. 459 In our judgment, it is not necessary in this case to deal with all the contentions raised by Mr. P. R. Das and combated by the learned Solicitor General. It will be sufficient, for the decision of this case to examine the respective contentions raised about the validity of sub section (4) of section 5 of the Act because the case of the petitioner was referred to the Commission under the provisions of this section and was not referred to the Commission by the Central Government under the provisions of section 5(1) and that being so, an enquiry into the validity of that section is really outside the scope of the present case. On the assumption therefore that sectio n 5(1) of the Act is based on a valid classification and deals with a group of persons who came within the class of war profiteers which required special treatment and that the classification is rational and that reasonable grounds existed for making distinction between those who fell within that class and others who did not come within it, but without in any way deciding or even expressing any opinion on that question, we proceed to examine the question whether sub section (4) of section 5 under which proceedings had been initiated against the petitioner offends against the guarantee of equal protection of the laws given in article 14 of the Constitution. The first question that requires consideration is whether sub section (4) of section 5 deals with the same class of persons as are said to have been grouped together in subsection (1) of section 5 as persons who to a substantial extent evaded payment of taxation on income: in other words, does sub section (4) of section 5 confer an the Commission the power merely to add to the number of persons included in section 5(1) by, the Central Government or does it confer larger power on the Commission. On the phraseology employed in the sub section it is difficult to read therein the limitations contained in sub section (1) of section 5 as contended for by the learned Solicitor General. Sub section (4) which has been set out above in clear and unambiguous terms provided that where the Commission "has reason to believe that some person ther than the person whose case is being investigated has evaded payment of taxation on income. . it may 460 make a report to the Central Government. " It does,not repeat the phraseology used in section 5(1) that some person other than the person whose case is being investigated "have to a substantial extent evaded payment of taxation on income. " On no principle of construction of statutes can the words to a "substantial extent" be read in sub clause (a) of section 5(4). On a plain reading of the section it is clear that the subsection is not limited only to persons who made extraordinary profits and to a substantial extent evaded payment of taxation on income, but applies to all persons who may have evaded payment of taxation on income, irrespective of whether the evaded profits are substantial or insubstantial. In other respects also the phraseology of the section is different from that employed in sub section (1) of section 5. Sub section (1) of section 5 provided that where the Central Government "has prima facie reasons for believing that a person has to a substantial extent evaded payment of taxation on income", while clause (a) of section 5(4). says that if the Commission "has reason to believe that some person other that the preson whose case is being investigated has evaded payment of taxation on income". The prima facie belief of the Central Government is substituted by the expression "The Commission has reason to believe". The scope of the section is thus different from the scope of section 5(1) of the Act, both in its extent and range. , It is not necessarily limited to profits made within any particular period and brings within its range all persons, whether traders, businessmen, professional people, whoever they may be, who may have at any time evaded payment of taxation on income for whatever cause. That being the true scope or construction of subsection (4), it obviously deals with the same class of persons who fall within the ambit of section 34 of the Indian Income tax Act and are dealt with in subsection (1) of that section and whose income can be caught by proceeding under that section. Assessees who have failed to disclose fully and truly all material facts necessary for the assessment under section 34 can be equated with persons who are discovered in the 461 course of the investigation conducted under section 5(1) to have evaded payment of income tax on their incomes. The result is that some of these persons can, ' be dealt with under the provisions of Act XXX of 1947, at the choice of the Commission, though they could also be proceeded with under the provisions of section 34 of the Indian Income tax Act. It is not possible to hold that all such persons who evade payment of income tax and do not truly disclose all particulars or material facts necessary for their assessment and against whom a report is made under sub section (4) of section 5 of the impugned Act by themselves form a class distinct from those who evade payment of income tax and come within the ambit of section 34 of the Indian Income tax Act. It is well settled that in its application to legal. proceedings article 14 assures to everyone the same rules of evidence and modes of procedure; in other words, the same rule must exist for all in similar circumstances. It is also well settled that this principle does not mean that every law must have universal application for all persons who are not by nature, attainment or circumstance, in the same position. The State can by classification determine who should be regarded as a class for purposes of legislation and in relation to a law enacted on a particular subject, but the classification permissible must be based on some real and substantial distinction bearing a just and reasonable relation ' to the objects sought to be attained and cannot be made arbitrarily and without any substantial basis. Classification means segregation in classes which have a systematic relation, usually found in common proper ties and characteristics. There is nothing uncommon either in properties or in characteristics between persons who are discovered as evaders of income tax during an investigation conducted under section 5(1) and those who are discovered by the Income tax Officer to have evaded payment of income tax. Both these kinds of persons have common properties and have common characteristics and therefore require equal treatment. We thus hold that both section 34 of the Indian Income tax Act and sub section (4) of 462 section 5 of the impugned Act deal with all persons who have similar characteristics and similar properties, the common characteristics being that they are persons who have not truly disclosed their income and have evaded payment of taxation on income. The next question that requires determination is whether the procedure prescribed by Act XXX of 1947 for discovering the concealed profits of those who have evaded payment of taxation on their income is substantially different and prejudicial to the assessees than the procedure prescribed in the Indian Income tax Act by section 34. The learned Solicitor General contended that the procedure prescribed by the impugned Act was a fair and good substitute for the procedure prescribed by the Indian Income tax Act and that there was really no substantial difference between the two procedures. He urged that justice could be fully done to those persons by following the new procedure and as a matter of fact, it would be more truly done by following the procedure under the impugned Act than following the procedure under the Indian Income tax Act. This argument, in our opinion, begs the question to be decided in all such cases. It is clear that if persons dealt with by the impugned Act are deprived of the substantial and valuable privileges which they would otherwise have if they were dealt with under the Indian Income tax Act, in that situation it is no defence to say that the discriminatory procedure also advances the course of justice. The matter has to be judged from the point of view of the ordinary reasonable man and not from the point of view of the Government. The ordinary reasonable man would say, when the stakes are heavy and serious charge of evasion of income tax are made against, him, why one person similarly placed should have the advantage substantially of the procedure prescribed by the Indian Income tax Act, while another person similarly situated be deprived of it. It is from this aspect that the application of article 14 to the facts of this case has to be considered. The next question for consideration is whether the procedure prescribed by the impugned Act in regard to 463 persons similarly situate with those who are proceeded with under section 34, is substantially different than under the Act, and operates to the prejudice of those persons. So far as we can see these assessees have been given discriminatory treatment even from those whose cases are referred to under section 5(1) of the Act to the Commission inasmuch as in the case of persons whose cases are referred to under section 5(1) of the Act it is the prima facie, belief of the Government that enables the reference to be made to the Commission and the Commission has after investigation to form an opinion; while in the case of persons coming within the ambit of sub section (4) of section 5 the Commission itself finds and gathers reason to believe that, these persons have evaded income tax and on its report the Government is bound to refer their cases to the same Commission who has. already arrived at the prima facie conclusion that they have evaded payment of income tax. The investigator and the judge in this situation are rolled into one. That is not so in cases coming under section 5(1). Apart from this circumstance, there are substantial differences between the two procedures, inter alia, in the following matters : 1. Under the provisions of section 8 of the impugned Act, the findings of fact given by the Commission as to factum and extent of the evasion are final and conclusive and thus the persons against whom proceedings are taken under section 5(4) are deprived of the rights of appeal, second appeal and revision conferred by sections 31, 32 and 33 of the Indian Income tax Act on assessees whose cases are dealt with under the procedure of section 34 of the Indian. Income tax Act. A person who has evaded payment of income tax and is proceeded with under section 34 and is held to have escaped income tax has a right of appeal to the Appellate Assistant Commissioner of Income tax and can challenge all the findings of fact given by the Income tax Officer. If he does not get relief from the Appellate Assistant Commissioner, he is entitled to go before the Appellate Tribunal under section 33 and can challenge all the findings of fact given by the Income tax Officer. On the other hand, a person dealt with under section 5(4) of the impugned Act has no such right. The learned Solicitor General contended that the constitution 464 of the Commission was such that it was a good substitute for the rights of appeal, second appeal and revision conferred by the Income tax Act inasmuch as the Commission is comprised of a High Court Judge and two other responsible persons and these sitting together were as good a tribunal as the totality of persons comprising the Income tax Officer, Appellate Assistant Commissioner and the Appellate Tribunal. In our opinion, the constitution of the Commission by itself cannot be held to be a sufficient safeguard and a good substitute for the rights of appeal and second appeal and revision given by the Indian Income tax Act and there can thus be no doubt that the procedure prescribed by the impugned Act deprives a person who is dealt with under that Act of these valuable rights of appeal, second appeal and revision to challenge questions of fact decided by the Judge of first instance. There is thus a material and substantial difference between the two procedures, one prescribed by the impugned Act and the other prescribed by the Indian Income tax Act. 2.When an assessment on escaped or evaded income is made under the provisions of section 34 of the Indian Income tax Act, all the provisions for arriving *at the assessment provided under section 23(3) come into operation and the assessment has to be made on all relevant materials and on evidence and the assessee ordinarily has the fullest right to inspect the record and all documents and materials that are to be used against him. Under the provisions of section 37 of the Indian Income tax Act the proceedings before the Income tax Officer are judicial proceedings and all the incidents of such judicial proceedings have to be observed before the result is arrived at. In other words, the assessee would have a right to inspect the record and all relevant documents before he is called upon to lead evidence in rebuttal. This right has not been taken away by any express provisions of the Income tax Act but the impugned Act contains a mandate in sub section (4) of section 7 to the effect that "no person shall 'be entitled to inspect, call for, or obtain copies of, any documents, statement or papers or materials furnished to, obtained by or produced before the Commission or any authorized official in. any proceedings under this 465 Act. " There is a proviso to sub section (4) which says that for the purpose of enabling the person whose case or points in whose case is or are being investigated to rebut any evidence brought on the record against him, he shall, on application made in this behalf and on payment of such fees as may be prescribed by rules, be furnished with certified copies of documents, statements, papers and materials brought on the record by the Commission. This little, mercy shown to the person whose case is being investigated by the Commission is no substitute for the fullestright of inspection which under ordinary law and the Code of Civil Procedure and in a judicial proceeding a person would have in order to meet the case made against him. He is entitled only to get copies of that portion of the materials which is brought on the record and which is going to be used against him and it is clear that portions of the material which are in his favour and which have not been brought on the record may not be available to him at all. He is not even entitled to see all the books of account which may have been impounded under the Act and taken possession of by the Commission. It may well happen that there are entries in those books which contain the rebuttal evidence, but the assessee is not entitled to have their copies. The assessee is not even entitled to see his own books which are in the possession of the Commission and take copies of those entries which are favourable to him and which would completely demolish the case made against the assessee by the Commission. The procedure thus prescribed in this matter by the impugned Act is substantially prejudicial to the assessee than the procedure prescribed under the Indian Income tax Act. It was not disputed by the learned Solicitor General that the procedure prescribed by the impugned Act in sections 6 and 7 was more drastic than the procedure prescribed in sections 37 and 38 of the Indian Income tax Act. Again, so far as the procedure for reference under subsection (4) of section, 5 is concerned, it is also to a certain extent prejudicial to the assessee. There is no doubt that there is in this matter in the first stages some similarity in the procedure to be followed for catching evaded income both under section 34 of the Indian Income tax Act and under the provisions of 69 466 subsection (4) of section 5 of the impugned Act; but the overall picture is that though under the Indian income tax Act the same officer who first arrives at a tentative conclusion hears and decides the case, his decision is not final but is subject to appeal, while under the provisions of sub section (4) of section 5 the decision of the Commission tentatively arrived at in the absence of the assessee becomes final when taken in his presence, and that makes all the difference between the two procedures. If there was a provision for reviewing the conclusions of the Investigation Commission when acting both as investigators and judges, there might not have been such substantial discrimination in the two procedures as would bring the case within article 14; but as pointed out above, there is no provision of that kind in the impugned Act. It may also be pointed out that under the provisions of section 34 investigation into escaped income or evaded income is limited to a maximum period of eight years, while under the provisions of sub section (4) of, section 5 it is not limited to any period and this certainly operates to the detriment of those dealt with under sub section (4) of section 5 of the impugned Act, and those dealt with under section 34 of the Indian Income tax Act. For the reasons given above we are of the opinion that sub section (4) of section 5 and the procedure prescribed by the impugned Act in so far as affects the persons proceeded against under that sub section being a piece of discriminatory legislation offends against the provisions of article 14 of the Constitution and is thus void and unenforceable. In reaching this decision we refrain from expressing any opinion, as above pointed out, on the validity of section 5(1) of the Act or on the question whether section 6(5) of the impugned Act offends against the provisions of article 20 sub clause (3) of the Constitution. We accordingly direct that an appropriate writ be issued against the Investigation Commission prohibiting it from taking any proceedings under the provisions of the impugned Act against the petitioner. The petitioner will have his costs of these proceedings.

Sub section (4) of section 5 of the Taxation on Income (Investigation Commission) Act, 1947, does not deal with the same class of persons as are said to have been grouped together in subsection (1) of section 5 of the Act as persons who to a substantial extent evaded payment of taxation on income. On a plain reading of the section it is clear that sub section (4) of section 5 is not limited only to persons who made extraordinary profits and to all persons who may have evaded payment of taxation on income irrespective of whether the evaded profits are substantial or insubstantial and therefore the scope of sub section (4) of section 5 is different from the scope of sub section (1) of section 5 both in extent and range. Sub section (4) of section 5 of the Act, obviously deals with the same class of persons who fall within the ambit of section 34 of the Indian Income tax Act and are dealt with in sub section (1) of that section and whose income can be caught by the proceeding under that section. It is not possible to hold that all such persons who evaded payment of income tax and do not truly disclose all particulars or material facts necessary for their assessment and against whom a, report is made under sub section (4) of section 5 of the impugned 449 Act by themselves form a class distinct from those who evade payment of income tax and come within the ambit of section 34 of the Indian Income tax Act. Both section 34 of the Indian Income tax Act, 1.922, and subsection (4) of section 5 of the Taxation on Income (Investigation Commission) Act, 1947, deal with all persons who have similar characteristics and similar properties, the common characteristics being that they are persons who have not truly disclosed their income and have evaded payment of taxation on income. The procedure prescribed by the Taxation on Income (Investigation Commission) Act, 1947, is substantially more prejudicial and more drastic to the assessee than the procedure under the Indian Income tax Act (XI of 1922). Held, therefore that sub section (4) of section 5 and the procedure prescribed by the impugned Act in so far as it affects the persons proceeded against under that sub section being a piece of discriminatory legislation offends against the provisions of article 14 of the Constitution and is thus void and unenforceable.

Appeal No. 1671 of 1966. Appeal from the judgment and decree dated March 31, 1965 of the Madras High Court in Appeal No. 276 of 1962. M.K. Ramamurthi, Vineet Kumar, L Ramamurthy and Shyamala Pappu, for the appellant. A.V. Rangam, for the respondents. 425 The Judgment of the Court was delivered by Ramaswami, J. This appeal is brought by certificate from the judgment of the Madras High Court dated March 31, 1965 in A.S. No. 276 of 1962. The appellant 'brought the suit in O.S. No. 3 of 1961 in the Court of Subordinate Judge, Nagapattinam for setting aside the order dated May 10, 1960 of respondent No. 1 the Commissioner of Hindu Religious and Charitable Endowments, Madras who had affirmed earlier the order of the second respondent, the Deputy Commissioner, holding that the trusteeship of the Kumaran Koil in Manjakollai village was not hereditary. The appellant was elected as a trustee by the Sengunatha Mudaliars of Manjakollai village at a meeting held on June 27, 1957. According to the appellant the temple was rounded two hundred years ago by the members of his community and since then the management of the temple and is affairs was always vested in the community of the Sengunatha Mudaliars and no person other than the elected trustee had at any time the right of management and control of the temple. The appellant said that the temple was declared as an "exempted" temple under the provisions of Madras Act 1 of 1925. The case of the appellant was that the trusteeship of the temple was "hereditary". The respondents, however, took a different view and proceeded on the basis that trusteeship of the Kumaran Koil was not hereditary. The Subordinate Judge held that the appellant was a hereditary trustee and the suit was not barred by limitation. The respondents took the matter in appeal to the Madras High Court which by its judgment dated March 31, 1965 allowed the appeal and set aside the judgment of the Subordinate Judge Nagapattinam. Section 6, sub section (9) of Madras Act 19 of 1951 states: "In this Act, unless there is anything repugnant in the subject or context (9) 'hereditary trustee ' means the trustee of a religious institution succession to whose office devolves by hereditary right or is regulated by usage or is specifically provided for by the founder, so long as such scheme of succession is in force;" This Act has been substituted by Madras Act 22 of 1959 but the definition of the trustee is identical in both the Acts. The question to be considered in this appeal is whether the appellant is a hereditary trustee Within the meaning of the section. The definition includes three types of cases: (1) succession to the office of trusteeship devolving by hereditary right; (2) succession 426 to such office being regulated by usage; and (3) succession being specifically provided for by the founder on condition that the scheme of such succession is still in force. It is not the case of the appellant that the trustees of the temple of the Kumaran Koil are hereditary trustees because their office ' devolves by hereditary right or because succession to that office is specifically provided for by the founder. The contention on behalf of the appellant is that the succession is "regulated by usage". It was said that according to the usage of the temple the trustees were elected for a period of one year each at a meeting of the members of the Sangunatha Mudaliar Community and so the appellant must be held to be a trustee within the meaning of section 6(9) of Act 19 of 1951. In our opinion, there is no warrant for this argument. The phrase "regulated by usage" in section 6(9) of the Act must be construed along with the phrase "succession to this office" and when so construed that part of the definition would only apply where the ordinary rules of succession under the Hindu law are modified by usage and succession has to be determined in accordance with the modified rules. The word "succession" in relation to property and rights and interests in property generally implies "passing of an interest from one person to another" (vide in Re: Hindu Women 's Right to Property Act, 1941 (1). It is now well established that the office of a hereditary trustee is in the nature of property. This is so whether the trustee has a beneficial interest of some sort or not (see Ganesh Chunder Dhur vs Lal Behary(2) and Bhabatarini vs Ashalata(3). Ordinarily a shebaitship or the office of dharmakartha is vested in the heirs of the founder unless the ,founder has laid down a special scheme of succession or except when usage or custom to the contrary is proved to exist. Mukherjea J., in Angurbala Mullick vs Debabrata Mullick(4) delivering the judgment of this Court observed: "Unless therefore, the founder has disposed of the shebaitship in any particular manner and this right of disposition is inherent in the founder or except when usage or custom of a different nature is proved to exist, shebaitship like any other species of heritable property follows the line of inheritance from the founder." In the case of mutts, whose heads are often celibates and sometimes sanyasins, special rules of succession obtain by custom and usage. In Sital Das vs Sant Ram(5) the law was taken as wellsettled that succession to mahantship of a mutt or religious institution is regulated by custom or usage of the particular institution except where the rule of succession is laid down by the founder himself who created the endowment. In that case the custom in (1) (2) 63 I. A. 448. (3) 70 I.A. 57. (4) ; ,5, (5) A.LR. 1954 S.C. 606. 427 matters of succession to mahantship was that the assembly of bairagis and worshippets of the temple appointed the successor; but the appointment had to be made from the disciples of the deceased mahant if he left any, and failing disciples, any one of his spiritual kindred. Such a succession was described as not hereditary in the sense that on the death of an existing mahant, his chela does not succeed to the office as a matter of course, because the successor acquires a right only 'by appointment and the authority to appoint is vested in the assembly of the bairagis and the worshippets. In Sri Mahant Paramanda Das Goswami vs Radhakrishna Das(1) the Madras High Court took the view that where succession to the mahantship is by nomination by the holder in office, it was not a hereditary succession. In that case Venkatasubba Rao, J. said: "If the successor owes his title to nomination or appointment, that is, his succession depends on the volition of the last incumbent and does not rest upon independent title, I am inclined to the view that the office cannot be said to be hereditary." Krishnan J., stated as follows: "Where succession is by nomination by the holder in office of his successor it seems to be impossible to contend that it is a hereditary succession. Hereditary succession is succession by the heir to the deceased under the law, the office must be transmitted to the successor according to some definite rules of descent which by their own force designate the person to succeed. There need be no blood relationship between the deceased and his successor but the right of the latter should not depend upon the choice of any individual. " It is true that the artificial definition of hereditary trustee in section 6(9) of the Act would include even such cases. But the election to the office of trustee in the present case is for a fixed period of one year and not for life. It is, therefore, difficult to hold that the office of the appellant is hereditary within the meaning of section 6(9) of the Act. It is not possible to say that there is a succession of As office to another when on the efflux of the period for which A was appointed, there is a vacancy and B is elected to that vacancy. It is quite possible that for that vacancy A himself might be reelected because a retiring trustee is eligible for reelection. The possibility of A being the successor A himself is not merely an anomaly, it is an impossible legal position. No man can succeed to his own office. In Black 's Law Dictionary the word 'succession ' is defined as follows: "The revolution of title to property under the law of descent and distribution. (1) 428 The right by which one set of men may, by succeeding another set, acquire a property in all the goods, movables, and other chattels of a corporation. The fact of the transmission of the rights, estate, obligations, and charges of a deceased person to his heir or heirs. " The view we have taken is borne out by the reasoning of the Madras High Court in State of Madras vs Ramakrishna(1). For these reasons we hold that this appeal fails and must be dismissed with costs. V.P.S. Appeal dismissed.

The appellant was elected as a trustee of a temple for one year. The temple was rounded two hundred years ago by the members of the community and according to the usage of the temple, the trustees were elected for one year, at a meeting of the members of the community. On the question whether the appellant has a hereditary trustee, because he was, under section 6(9) of the Madras Hindu Religious and Charitable Endowments Act, 1951, the 'trustee of a religious institution succession to whose office is regulated by usage ', HELD: The phrase 'succession to whose office is regulated by usage ' would only apply when the ordinary rules of succession under the Hindu law are modified by usage, and succession has to be determined in accordance with the modified rules. The office of a hereditary trustee is in the nature of property. Succession in relation to property implies passing of an interest from one person to another. [428 C D] In the present case, the election to the office was for a fixed period of one year. In such a case, it is not possible to say there is a succession to the office, because: (a) on the efflux of the period for which one trustee is appointed, there is a vacancy and another is elected to that vacancy, and (b) since there is a possibility of the same trustee being reelected, an impossible legal position arises in which a person could be a successor of himself. [429 F H] In re Hindu Women 's Right to Property Act, 1941 , Ganesh Chunder Dhur vs Lal Behary, 63 I.A. 448, Bhabatarini vs Ashalata, 70 I.A. 57, Angurbala Mullick vs Debabrata Mullick, 1134 and Sital Das vs Sant Ram, A.I.R. 1954 S.C. 606 applied. Shri Mahant Paramananda Das Goswwami vs Radhakrishna Das. , referred to. State of Madras vs Ramakrishna, I.L.R. , approved.

N: Criminal Appeal No. 87 of 1967. 721 Appeal by special leave from the judgment and order dated January 24, 1967 of the High Court of Mysore in Criminal Appeal .No. 29 of 1965. A. section R. Chari and R. V. Pillai, for the appellants. Shyamala Pappu and section P. Nayar, for the respondent. The Judgment of the Court was delivered by Hidayatullah, C.J. , These are 14 appellants who appeal against their conviction under section 395 of the Indian Penal Code and sentences of 5 years ' rigorous imprisonment and fine of Rs. 1,000/ passed on them. Originally 20 persons were tried and convicted for the same offence and received a like sentence. 14 alone have appealed to this Court. The incident which took place on July 28, 1962 was theft by dacoity of certain cotton pieces from two carts within the limits of Lingsugar Police Station at about 11 30 p.m. The facts are that two traders in cloth sent their wares in carts for sale. The cartmen halted after the market was over on the way for food. Thereafter six carts left for Mudgal at about 10 p.m. When the carts reached a Nala called Heri Halla about three miles from Lingsugur at about 11 30 p.m., 20 persons are said to have approached the carts and pelted stones. It was a dark night and the assailants were not identified. It appears that four out of the six carts escaped, but two carts were looted. The police investigated the case and arrested the 20 persons who were accused in the case as being the culprits involved in this incident. It is not necessary to go into rest of the case or the evidence on which the case of dacoity was established, because dacoity as such is not challenged before us. The accused were convicted on the sole evidence of having in their possession pieces of cloth which were later identified to belong to the traders. Searches took place between July 30, 1962 and August 17, 1962. In these searches cloth which was undoubtedly stolen at the time of the dacoity was found in their houses. The High Court, and the Court below drew from this the conclusion that the appellants were themselves the dacoits, and convicted them accordingly under section 395 of the Indian Penal Code and sentenced them to ' 5 years ' rigorous imprisonment and fine of Rs. 100/ . In this appeal, the only contention raised by Mr. A. section R. Chari is that the presumption that they were dacoits ought not to have been drawn since the circumstances do not admit the drawing of such a presumption in the case, According to Mr. Chari, the presumption to be drawn ought to have been one under section 41 1 722 of Indian Penal Code or at the most tinder section 412 of the Indian Penal Code but not of complicity in the crime of dacoity. He contends that the circumstances under which the one presumption or the other may be drawn under section 114 of the have not been stated by law and therefore it is necessary always to start with the lesser presumption and draw the higher presumption only when there is some other evidence to show the complicity of the persons in the crime itself. According to him there is no other evidence in the case which points, to the complicity of the 14 appellants in the crime of dacoity and therefore as they cannot be suspected to be dacoits themselves, the only presumption to be drawn is one of receivers of stolen property or as receivers of property which was stolen in a dacoity. In our opinion, the law advocated by Mr. Chari is not correct. If there is other evidence, to connect an accused with the crime itself, however small, the finding of the stolen property with him is a piece of evidence which connects him further with the crime. There is then no question of presumption. The evidence strengthens the other evidence already against him. It is only when the accused cannot be connected with the crime except by reason of possession of the fruits of crime that the presumption may be drawn. In what circumstances the one presumption or the other may be drawn, it is not necessary to state categorically in this case. It all depends upon the circumstances under which the discovery of the fruits of crime are made with a particular accused. It has been stated on more than one occasion that if the gap of time is, too large, the presumption that the accused was concerned with the crime itself gets weakened. The presumption is stronger when the discovery of the fruits of crime is made immediately after the crime is. committed. The reason is obvious. Disposal of the fruits of crime requires the finding of a person ready to receive them and the shortness of time, the nature of the property which is disposed of, that is to say, its quantity and its character determine whether the person who had the goods in his possession received them from another or was himself the thief or the dacoit. In some cases there may be other elements which may point to the way as to how the presumption may be drawn. They need not be stated here for they differ from case to case.(In the present case, the goods stolen were a large quantity of cloth taken for sale to the market. These goods were not sold and were being taken back to the dealers by the cartmen.) A large number of persons said to be 20 in number pelted stones at the cartmen and looted the, property. Immediately afterwards a number of searches were made and the goods were found with various persons who were prosecuted as offenders and they have been presumed to be involved in the dacoity itself. It may be 723 noticed that from each person a large number of goods of the same type such as 20 choli pieces or ten pieces of cloth were found. (It is, impossible to think that within the short time available, these goods could have been easily disposed of to receivers of stolen property or could be placed in the custody of friends till such time as the original offenders could take them away.) The time gap in some cases is as short as two days and in some others it is not more than five days. In two cases only the time gap is about 19 days. Even then we think that the time gap is too short for original offenders to have disposed of the property to these appellants Or to have left the goods in their custody till such time as the original offenders could have taken them away. We are, therefore, satisfied that the proper inference was drawn in this case. It must not be forgotton that the offence was committed at night by as many as 20 persons or more. The houses of 20 persons were searched and large quantities of the stolen goods were found in their houses. It is impossible to think that these 20 persons were merely receivers of stolen property from some other 20 persons who were the dacoits. It is legitimate therefore to raise the presumption in this case that the persons with whom the goods were found were the dacoits themselves. This presumption has been drawn and in our opinion rightly in this case The conviction was therefore correct in 'all the circumstances of the case. As regards the sentence, the offence no doubt was serious. But no injury beyond one appears to have been caused. Therefore we think that a sentence of three years ' rigorous imprisonment will meet the ends of justice in this case. The sentence is reduced to three years ' rigorous imprisonment. The sentence of fine will stand. The appeal is allowed to this extent. G.C. Appeal partly allowed.

Two carts loaded with cloth returning alongwith others from a weekly village market were looted by 20 or more persons. The houses of 20 persons including the 14 appellants were searched and the looted cloth was recovered from their Possession. They were tried and held guilty Linder section 395 of the Indian Penal Code. The High Court dismissed their appeals. In appeal by special leave to this Court their only contention was that in the absence of other evidence connecting them with the dacoity, the presumption to be drawn from the possession of stolen clothes ought to have been one under section 411 of he Indian Penal Code or at the most under section 412 of the Indian Penal Code and not of complicity in the crime of dacoity. It was urged that since section 114 of the Evidence Act did not lay down definitely the presumption to be drawn in a given set of circumstances it was necessary always to start with the lesser presumption and draw the higher presumption only when there was some other evidence to. show the complicity of the persons in the crime itself. HELD : If there is other evidence to connect an accused with the crime itself, however small, the finding of the stolen property with him is a piece of evidence which connects him further with the crime. There is then no question of presumption. The evidence strengthens the other evidence already against him. It is only when the accused cannot be conis stronger than if there is a large gap of time. Disposal of the fruits of crime that the presumption may be drawn. In what circumstances the one presumption or the other may be drawn will differ from case to case [722 D] When the discovery of the fruits of crime is made immediately after the commission of the crime the presumption of complicity in the crime nected with the crime except by reason of possession of the fruits of crime requires the finding of a person ready to receive them and the 'shortness of time, the nature of the property which is disposed of, that is to say, its quality and character determine whether the person who had the goods in his possession received them from another or was himself the thief or dacoit, [722 F] In the present case the offence was committed at night by as many as 'IO persons or more. Shortly after the offence the houses of 20 persons were searched and large quantities of the stolen goods were found in their houses. It was impossible that these 20 persons were merely 'receivers of stolen property from some other 20 persons who were the decoits. It was legitimate therefore to raise the presumption in this case that the persons with whom the goods were found were the dacoits themselves. [723 A B]

Appeal No. 1311 of 1967. Appeal by special leave from the judgment and order dated January 17, 1967 of the Patna High Court in C.W.J.C. No. 952 of 1966. M. C. Chagla, N. D. Karkhanis, section P. Chowdhury, Bhuvanesh Kumari, for the appellant. section C. Manchanda, R. N. Sachthey and B. D. Sharma, for the respondent. The Judgment of the Court was delivered by Hegde, J. This is an assessee 's, appeal by special leave against the judgment of the High Court of Patna dismissing in limini its writ petition under Arts 226 and 227 of the Constitution of India. The assessee is having construction contracts under the Railways as well as the Government. It is a partnership firm. For the assessment year 1960 61, relevant to the accounting year 1959 60, after the assessee submitted its income tax return, it was asked by the Income tax Officer during the income tax assessment proceedings to produce before him its books of account and the other relevant papers. The assessee also produced before him a statement showing various creditors from whom it had borrowed on Hundis during the accounting year in question. In that statement it gave the lull names and address of the alleged creditors. After enquiry, the assessee 's total income was assessed at Rs. 69,886/ . On June 3, 1966, the 1st respondent (Income tax Officer Ward 'A ',, Muzaffarpur) issued to the assessee a notice under section 148 of the Indian Income tax Act, 1961. The material portion of that notice reads as follows "Notice under section 148 of the Income tax Act, 1961. Income Tax Officer, Muzaffarpur Dated, the 3 6 1966. TO M/s. Chugamal Rajpal, Muzaffarpur. Whereas (1) have reason to believe that your income chargeable the income of 1960 1961 in respect of which you are assessable to tax for the assessment year 19 19 has escaped assessment within the 444 meaning of section 147 of the Income Tax Act, 1961. I therefore propose to re assess the income for the said assessment year and I hereby require you to deliver to me within 30 days from the date of service of this notice a return in the prescribed form of your income The income assessable relevant to the assessment year 1960 61 of in respect of which you are assessable for the said assessment year. The notice is being issued after obtaining the necessary satisfaction of the Commissioner of IncomeTax, Bihar and Orissa, Patna. Sd/ section P. Chaliha Income Tax Officer, Ward A, Muzaffarpur. " The assessee challenged the validity of that notice as well as proceedings taken on the strength of that notice on various grounds. As we are accepting the contention of the assessee that the impugned notice is invalid inasmuch as it did not comply with the requirements of section 151(2) of the Act, we have not thought it necessary to examine the other contentions advanced on behalf of the assessee. In this case the notice was issued after four years but before eight years of the date of the original assessment. Section 151 (2) of the Act reads "No notice shall be issued under Section 148 after the expiry of four years from the end of the relevant assessment year, unless the Commissioner is satisfied on the reasons recorded by the Income tax Officer that it is a fit case for the issue of such notice." Section 148 prescribes : "(1) Before making the assessment, re assessment or re computation under Section 147, the Income tax Officer shall serve on the assesee a notice containing all or any of the requirements which may be included in a notice under sub section (2) of Section 139 and 445 the provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that sub section. (2) The Income tax Officer shall, before issuing any notice under this section, record his reasons for doing so. " Section 147 deals with income escaping assessment. At this stage we need not refer to that section : We shall refer to that provision at a later stage. Section 139(2) says : "In the case of any person who, in the incometax Officer 's opinion, assessable under this Act, whether on his own total income or, on the total income of any other person during the previous year, the Income tax Officer may, before the end of the relevant assessment year, serve a notice upon him requiring him to furnish, within thirty days from the date of service of the notice, a return of his income or the income of such other person during the previous year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed." (proviso is not necessary for our present purpose) When this appeal came up for hearing on the last occasion, as we found the affidavit filed by the Income tax Officer to 'be vague and indefinite, we directed the learned Counsel for the Department to produce before us the records of the Incometax Officer to show that the, Income tax Officer had complied with the requirements of section 148 and section 151(2) of the Act. When the appeal was taken up for hearing on the 18th January 1971, only the report submitted by the Income tax Officer to the Commissioner and the order of the Commissioner was produced. The order sheet recording the reasons of the Income tax Officer as required by section 148(2) was not produced. Hereinbelow we have sent out the report of the Income tax Officer as well as the order of the Commissioner: Report in Connection with the starting of proceeding" under Section 147 of the Income tax Act, 1951. Name of District Ward of Circle A Ward, Muzaffarpur G. I.R. No. 303 C. 1.1. Name and address of the assessee M/S. Chugamal Rajpal, Muzaffarpur. R.F. 2.Status 3. Assessment year for which notice under section 1 48 is proposed to be issued 1960 61. 446 4. Whether it is a new case or one in which re assessment (or recomputation) has to be made Re assessment 5. If a case of reassessment (or recomputation) the income (or loss or depreciation allowance) originally assessed/determined. Rs. 73,604/ 6. Whether the case falls under cl. (a) or (b) of section 147 147(a) 7. Brief reasons for starting proceedings under Kindly see section 147 (indicate the items which are Sd/ section P. Chaliha. I.T.O. 30 4 66 believed to have escaped assessment) A Ward, Muzaffarpur. 8.Whether the Commissioner is satisfied that Yes it is a fit case for the issue of notice under Sd/ K. Narain section 148. 13 5 66 Commissioner of Income tax, Bihar and Orissa, Patna 9. Whether the Board is satisfied that it is aSecretary, Board of Revenue.fit case for the issue of notice under section 148. During the year the assessee hasshown to have taken loans from various parties of Calcutta. From D.I.s Inv. No. A/P/ Misc.(5)D.I./63 64/5623 dated 13 8 65, forwarded to this office under C.I.T. Bihar and Orissa, Patna 's letter No. Inv. (Inv.)15/ 65 66/1953 2017 dated Patna 24 9 65, it appears that these persons are name lenders and the transactions are bogus. Hence proper investigation regarding these loans is necessary. The name of some of the persons from whom money is alleged to have taken on loan on Hundis are: 1. Seth Bhagwan Singh Sricharan. Lakha Singh Lal Singh. Radhakissen Shyam Sunder. The amount of escapement involved amounts to Rs. 100,000/ . Sd/ section P. Chaliha, 30 4 66. Income tax Officer, A Ward, Muzaffarpur. " In his report the Income tax Officer does not set out any reason for coming to the conclusion that this is a fit case to issue notice under section 148. The material that he had before him for issuing notice under section 148 is not mentioned in the report. In his report he vaguely refers to certain communications received by him from the C.I.T., Bihar and Orissa. He does not mention the facts contained in those communications. All that he says is that from those communications "it appears that these persons (alleged creditors) are name lenders and the transactions are bogus". He has not even come to a prima facie conclusion 447 that the transactions to which he referred are not genuine transactions. He appears to have had only a vague feeling that they may be bogus transactions. Such a conclusion 'does not fulfil the requirements of section 151(2). What that provision requires is that he must give reasons for issuing a notice under section 148. In other words he must have some prima facie grounds before him for taking action under section 148. Further his report mentions : "Hence proper investigation regarding these loans is necessary In other words his conclusion is that there is a case for investigating as to the truth of the alleged transactions. That is not the same thing as saying that there are reasons to issue, notice under section 148. Before issuing a notice under section 148, the Income tax Officer must have either reasons to believe that by reason of the omission or failure on the part of these assessee to, make a return under section 139 for any assessment year to the Income tax Officer or to disclose fully and truly all material facts necessary for his assessment for that year, income chargeable to tax has escaped assessment for that year or alternatively not withstanding that there has been no omission or failure as mentioned above on the part of the assessee, the Income tax Officer has in consequence of information in his possession reason to believe that income chargeable to tax has escaped assessment for any assessment year. Unless the requirements of clause (a) or (b) of section 147 are satisfied, the Income tax Officer has no jurisdiction to issue a notice under section 148. From the report submitted by the Income tax Officer to the Commissioner, it is clear that he could not have had reasons to believe that by reason of the assessee 's omission to disclose fully and truly all material ' facts necessary for his assessment for the accounting year in question, income chargeable to tax has escaped assessment for that year; nor could it be said that he as a consequence of information in his possession, had reasons to believe that the income chargeable to tax has escaped assessment for that year. We are not satisfied that the Income tax Officer had any material before him which could satisfy the requirements of either cl. (a) or cl. (b) of section 147. Therefore he could not have issued a notice under section 148. Further the report submitted by him under section 151(2) does not mention any reason for coming to the conclusion that it is a fit case for the issue of a notice under section 148. We are also of the opinion that the Commissioner has mechanically accorded permission. He did not himself record that he was satisfied that this was a fit case for the issue of a notice under section 148. To Question No. 8 in the report which reads "Whether the, Commissioner is satisfied that it is a case for the I issue of notice under section 148", he just noted the word "yes" and affixed his signatures thereunder. We are of the opinion .that if only he had read the report carefully, he could never have 448 come to the conclusion on the material before him that this is a fit case to issue notice under section 148. The important safeguards provided in sections 147 and 151 were lightly treated by the Income tax Officer as well as by the Commissioner. Both of them, appear to have taken the duty imposed on them under those provisions as of little importance. They have substituted the form for the substance. In the result this appeal is allowed, the order of the High Court is set aside and the impugned notice quashed. The Respondent No. 2 shall pay the costs of the appellant both in this Court and in the High Court. G.C. Appeal allowed.

The appellant, a partnership firm, filed its return of income for the assessment year i960 61 and subsequently produced before the Incometax Officer its relevant books of accounts and papers. It also produced before him the statement showing various creditors from whom it had borrowed on Hundis during the accounting year in question, giving full names and addresses of the alleged creditors. After enquiry the Incometax Officer made an assessment. On June 3, 1966 the Income tax Officer issued to the appellant a notice under section 148 of the Income tax Act, 1961. The notice was issued after four years but before 8 years of the end of the original assessment year. The appellant challenged the validity of the notice as well as the proceedings taken on the strength of that notice in a writ petition under articles 226 and 227 of the Constitution. The High Court dismissed the petition. By special leave appeal was filed in this Court. On direction given by the Court the report submitted by the Income tax Officer to the Commissioner and the Commissioner 's order thereon were produced. In the report it was said that it appeared that the alleged creditors of the appellant were name lenders and transactions were bogus; hence proper investigation regarding those loans was necessary. Question No. 8 on the report was whether the Commissioner was satisfied that the case was fit for the issue of notice under section 148. Against this the commissioner had noted 'yes '. On these facts this Court, HELD : Under section 148 and section 151(2) the Income tax Officer Must record his reasons for issuing the notice under section 148. There must be prima facie grounds for taking action under section 148 Further before issuing such a notice the provisions of cis. (a) and (b) of section 147 must be satisfied. [447 B, E] In this case the Income tax Officer appears to have had a vague feeling that the transactions were bogus and that the alleged creditors were only name lenders. According to him proper investigation regarding the loans was necessary. That is not the same thing as saying that there ,are reasons to issue notice under section 148. [447 A C] In these circumstances it could not be held that the Income tax Officer had any material before him which could satisfy the requirements of either cl. (a) or cl. (b) of section 147. Therefore he could not have issued a notice under section 148. Further the report submitted by him under section 151(2) did not mention any reason for coming to the conclusion that it was a fit case for the issue of the notice under section 148. The Commissioner also mechanically accorded permission. Thus the important safeguards provided in sections 147 and 151 were lightly treated by the income tax Officer as well as by the Commissioner. [447 F 448 B] The appeal must accordingly be allowed.

Appeal No. 1653 of 1967. Appeal from the judgment and order dated February 23, 1967 Of the Delhi High Court in C.W. No. 403 D of 1959. B. Sen, P. L. Juneja, R. N. Sachthey and section P. Nayer, for the appellant. Sardar Bahadur and Yougindra Khushalani, for the respondent. The Judgment of the Court was delivered by Sikri, C.J. The judgment, reproduced below, was drafted by the late Mr. Justice Roy and we all had subscribed to it. We beard the matter formally again on November 19, 1971. We adopt the judgment as our own. 448 This is an appeal by the Union of India by way of special leave. On April 9, 1959, the Central Government directed removal from service of Capt. section K. Rao under r. 14 of the Army Rules, 1954. The facts leading to his removal are as follows : Rao was a commissioned officer in the Indian Army and was attached to the Army Ordnance Corps Training Centre, Secundrabad. It was alleged that on April 4, 1958, he committed acts of .gross misconduct. The allegations were as follows : "Knowing Kumari Prakash as the daughter of a brother Officer, Rao assisted her in going away from her parents protection and planning to run away with a sepoy. " "Rao, by threatening to cause harm to Kumari Prakash 's parents, intimidated her t o visit his house where he took her in his scooter to the unit lines of 51 1 1 Gurkha Rifles where he arranged her meeting with a sepoy of the unit." "He (i.e. Rao) acquiesced in the girl being met by the sepoy later at a tea shop nearby where she received a present of a sari and blouse from the sepoy in his presence." "Rao thus actively abetted in the attempt of brother officer 's daughter elope with a sepoy." "Rao then took Kumari Prakash to a hotel "Saidya Lodge ' in Hyderabad and got a room to themselves by impersonating and giving a false identity as "Mr. & Mrs. Prakash". An inquiry into the matter was made by Court of Inquiry. The Chief of the Army Staff, after going through the proceedings of the Court of Inquiry, considered that the conduct of Capt. Rao was most unbecoming of an officer. As he was of opinion that trial of the officer by a General Court Martial was inexpedient, he ordered administrative action to be taken under r. 14 of the Army Rules, 1954. By memorandum dated September 4, 1958, Rao was called upon to submit his explanation by way of defence regarding the allegations against him. The explanation of Rao was placed before the Central Government. The Central Government found it to be unsatisfactory, and on April 9, 1959, an order was passed removing the respondent from service. Rao thereupon filed a petition under article 226 of the Constitution for quashing the order of removal from service on the 449 ground, inter alia, that r. 14 of the Army Rules, 1954, was ultra vires the , and that the action taken thereunder was without any authority. In the petition Rao gave a somewhat different version of what had happened. According to him he did not assist Kumari Prakash to go away from her parents ' house. At the hearing of the petition the only point which was urged was the validity of r. 14 of the Army Rules, 1954. If this rule was intra vires the , Rao has no case. The Army Rules, 1954, including r. 14, were framed in exer cise of the powers conferred by section 191 of the . Rule 14 of the Army Rules, 1954, is as follows: "(1) When after considering the reports on an officer 's misconduct, the Central Gove rnment is satisfied or the C in C is of the opinion, that the trial of the officer by a court martial is inexpedient or impracticable but considers the further retention of the said officer in the service as undesirable, the C in C shall communicate the view of the Central Government or his views, as the case may be, to the officer together with all reports adverse to him and he shall be called upon to submit his explanation and defence. (2) In the event of the explanation of the officer being considered unsatisfactory by the "C in C, or when so directed by the Central Government, the case shall be submitted to the Central Government with the officer 's defence and the recommendation of the C in C as to whether the officer should be, (a) dismissed from the service; or (b) removed from the service; or (c) called upon to retire; or (d) called upon to resign. (3) The Central Government, after due consideration of the reports, the officer 's defence, if any, and the recommendation of the C in C, may dismiss or remove the officer with or without pension or call upon him to retire or resign, and on his refusing to do so, the officer may be retired from or gazetted out of the service on pension or gratuity, if any admissible to him." Under the aforesaid r. 14, action can be taken for misconduct against an officer whose further retention in service is not considered desirable. without the officer being tried by a court martial. 450 Before removal he must, under the rule, be asked to submit his explanation and defence. If the explanation is found to be unsatisfactory, the Central Government has been given the power to dismiss or remove the officer. Rules are framed under section 191 of the . Sub section (1) of section 191 gives power to the Central Government to make rules for the purpose of carrying into effect the provisions of the Act. Sub section 2(a) provides : "Without prejudice to the generality of the power conferred by sub section (1), the rules made thereunder may provide for (a) the removal, retirement, release or discharge from the service of persons subject to this Act." Sections 18 & 19 which appear in Ch. IV of the dealing with "Conditions of Service" provide as follows : S.18 "Every person subject to this Act shall hold office during the pleasure of the President. " section 19 "Subject to the provisions of this Act and the rules and regulations made thereunder the Central Government may dismiss, or remove from the service, any person subject to this Act. " Offenses under the have been dealt with in sections 34 to 70 in Ch. VI, of which section 45 is as follows : section 45 "Any officer, junior commissioned officer or warrant officer who behaves in a manner unbecoming his position and the character expected of him shall, on conviction by court martial, if he is an officer, be liable to be cashiered or to suffer such less punishment as is in this Act mentioned; and, if he is a junior commissioned officer or a warrant officer, be liable to be dismissed or to suffer such less punishment as is in this Act mentioned," It was argued by counsel for the respondent Rao that the contained specific provisions for punishment for unbecoming conduct, viz. section 45. To give power to the Central Government to remove an officer without being tried and convicted by court martial was in derogation of section 45 of the . Rule 14, therefore, was ultra vires the . This argument is not correct. Section 19 itself suggests that there should be rules, and subject to the provisions of the Act and such rules, the Central Government may dismiss or remove from the service any person 451 subject to the . Section 191 (2) (a) specifically gives. power to make a rule providing for the removal from the service of persons subject to the Act. It follows that there may be a valid rule where under, subject to the other provisions of the Act, the Central Government may remove a person from the service. Rule 14 is such a rule : it is, therefore, not ultra vires. It was argued that the words "subject to the provisions of this Act" occurring in section 19 makes section 19 subject to section 45, and the Central Government has thus no power to remove a person from the service in derogation of the provisions of section 45. But the power under section 19 is an independent power. Although section 19 uses the words "subject to the provisions of this Act", it speaks of removal of a person from the service. Section 45 provides that on conviction by court martial an officer is liable to be cashiered or to suffer such less punishment as is in this Act mentioned. For removal from service under section 19 of the read with r. 14 of the Army Rules, 1954, a court martial is not necessary. The two sections 19 and 45 of the Act are, therefore, mutually exclusive. The result is that r. 14 of the Army Rules, 1954, is not ultra vires the . The appeal is, therefore, allowed; but in the circumstances of the case without any order as to costs. The case will now go back to the High Court for disposal on merits on the other questions raised by the respondent herein in the High Court. V.P.S. Appeal allowed.

The respondent, a commissioned officer in the Indian Army, was found to have committed acts of gross misconduct by a Court of Inquiry. The Chief of the Army Staff was of the opinion that his trial by a General Court Martial was inexpedient, and the respondent was removed from service after following the procedure under r. 14 of the Army Rules, 1954. On the question whether r. 14, which gives power to the Central Government to remove an officer without being tried and convicted by Court Martial was in derogation of section 45, , which specifically provides for conviction by court martial and punishment for unbecoming conduct, HELD : The rule is not ultra vires. [451 D] (1) Section 19 of the Act provides that subject to the provisions of the Act and the rules made thereunder the Central Government may remove from service, any person subject to the Act. Therefore, the section itself suggests that there should be rules regarding removal from service, and section 191 (2) (a) of the Act specifically gives power to make a rule providing for the removal from the service of persons subject to the Act. [450 H; 451 A B] (2) Although section 19 uses the words "subject to the provisions of this Act", the section is not subject to section 45. The power under section 19 is independent of the power under section 45, because, while section 19 speaks of removal of a person, section 45 provides that on conviction by Court Martial an officer is liable to be cashiered or to suffer such less punishment as is in the Act mentioned. [451 B D]

iminal Appeal No. 48 of 1954. 1303 Appeal by Special Leave granted by the Supreme Court by its Order dated the 31st July 1953 from the Judgment and Order dated the 15th May 1953 of the High Court of Judicature for the State of Pepsu at Th, Patiala in Criminal Appeal No. 140 of 1952 arising out of the Judgment and Order dated the 31st March 1952 of the Court of Magistrate 1st Class, Patiala in Challan Case No. 160/102 of 1951. Jai Gopal Sethi, (Naunit Lal, with him) for the appellant. N. section Bindra, (Porus A. Mehta and P. G. Gokhale, with him) for the respondent. February 28. The Judgment of the Court was delivered by VENKATARAMA AYYAR J. The appellant was a Sub Divisional Officer in the Public Works Department, Pepsu, and was, at the material dates,, in charge of certain works at a place called Karhali. It was part of his duties to disburse the wages to the workmen employed in the works, and the procedure usually followed was that be drew the amount required from the treasury, and paid the same to the emplo yees against their signatures or thumb impressions in the monthly acquittance roll. In the roll for April 1951, one Parma was mentioned as a khalasi (menial servant), and a sum of Rs. 51 shown as paid to him for his wages, the payment being vouched by thumbimpression. The case of the prosecution was that there was, in fact, no person of the name of Parma, that the thumb impression found in the acquittance roll was that of the appellant himself, that he had included a fictitious name in the acquittance roll, with intent to himself draw the amount, and that by this expedient he had received Rs. 51 and misappropriated the same. The First Class Magistrate of Patiala, before whom the appellant was put up for trial, framed charges against him under section 465 of the Indian Penal Code for forging the thumb impression of Parma, and under section 409 of the Indian Penal Code for criminal misappropriation of Rs. 51, and after a full trial, 167 1304 acquitted him. He held on the evidence that "there was a khalasi Parma by name in the service of the accused at Kehrauli", and that though the thumbimpression in the acquittance roll was that of the appellant, the prosecution had not established that the amount drawn by him did not reach the hands of Parma. Against this judgment, there was an appeal by the State to the High Court of Pepsu, which held that proof that the thumb impression in the acquittance roll was that of the appellant was sufficient, ,.when taken along with other circumstances, to establish his guilt, and accordingly convicted him both under section 465 and section 409 of the Indian Penal Code. This appeal by special leave is directed against this judgment. In support of " the appeal it is argued by Mr. Jai Gopal Sethi that the conviction of the appellant is illegal, as sanction had not been obtained under section 197 (1) of the Code of Criminal Procedure for his prosecution, that the evidence on record is insufficient to establish an offence either under section 465 or section 409 of the Indian Penal Code and that there having been an acquittal of the appellant by the trial Magistrate, the materials on record did not justify a reversal of that verdict by the appellate Court. The question of sanction under section 197 (1) of the Code of Criminal Procedure may be taken up first for consideration, as it goes to the root of the matter. The facts bearing on this question are that there was an application by the Department for sanction to prosecute the appellant for an offence under section 409, and that, the Chief Secretary, Home Department, sent the communication, Exhibft PX, stating that he had been "directed to convey sanction of the Government to his prosecution". In view of this, no question was raised before the trial Magistrate or the High Court that the prosecution was bad for want of sanction. But after the disposal of the appeal by the High Court, it was discovered that, in fact, there was no order of the Government sanctioning the prosecution, and that the Chief Secretary had committed a mistake in sendidg the communication, Exhibit PX. 1305 The position, therefore, is that the prosecution which has resulted in the conviction of the appellant was initiated without any sanction under section 197(1) of the Code of Criminal Procedure and if sanction under that section is necessary, as contended for by Mr. Sethi, then the entire proceedings including the conviction must be quashed. According to the respondent, however, the main charge against the appellant is under section 409, and no sanction is required for a prosecution under that section. The point for decision is whether sanction under section 197 (1) of the Code of Criminal Procedure is necessary for prosecuting the appellant under section 409. There has been considerable divergence of judicial opinion on the scope of section 197(1) of the Code of Criminal Procedure. The question has latterly been the subject of consideration by the highest Courts in this country, and by the Privy Council, and the position may now be taken to be fairly well settled. Hori Ram Singh vs Emperor(1) is a decision of the Federal Court on the necessity for sanction under section 270 of the Government of India Act, 1935, which is similar in terms to section 197(1) of the Code of Criminal Procedure. The facts in that case were that a Sub Assistant Surgeon was charged under section 409 with having dishonestly removed certain medicines from a hospital which was under his charge, to his own residence, and under section 477 A, with having failed to enter them in the stock book. The sanction of the Government had not been obtained for the prosecution under section 270 of the Government of India Act, and the point for decision was whether it was necessary. It was held that the charge under section 477 A required sanction, as "the official capacity is 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". (1) 1306 In the course of his judgment, Varadachariar, J. discussed the scope of section 197(1) of the Code of Criminal Procedure and after observing that the decisions on that section were not uniform, proceeded to group them under three categories those which had held that sanction was necessary when the act complained of attached to ' the official character of the person doing it, those which had held that it was necessary in all cases in which the official character of the person gave him an opportunity for the commission of the crime, and those which had held it necessary when the offence was committed while the accused was actually engaged in the performance of official duties. The learned Judge expressed his agreement with the first of the three views. In H. H. B. Gill vs The King(1), the question arose directly with reference to section 197(1) of the Code of Criminal Procedure. There, the accused was charged under section 161 with taking bribes, and under section 120 B with conspiracy. On the question whether sanction was necessary under section 197(1) it was held by the Privy Council that there was no difference in scope between that section and section 270 of the Government of India Act, 1935, and approving the statement of the law by Varadachariar, J. in Hori Ram Singh vs Emperor(2), Lord Simonds observed: "A public servant can only be said to act or to purport to act in the discharge of his official duty, if his act is such as to lie within the scope of his official duty. . The test may well be whether the public servant, if challenged, can reasonably claim that, what he does, he does in virtue of his office". It was accordingly held that as the acts with which the accused was charged could not be justified as done by virtue of his office, no sanction was necessary. The view taken in H. H. B. Gill vs The King(1) was followed by the Privy Council in A16 ert West Meads vs The King( '), and reaffirmed in Phanindra Chandra vs (1) [1948] L.R. 75 I.A. 41. (2) (3) [1948] L.,R. 70 I.A. 185, 1307 The King(1), and adopted by this Court in R. W. Mathams V. State of We8t Bengal(1). The result of the authorities may thus be summed up: It is not every offence committed by a public servant that requires sanction for prosecution under section 197(1) of the Code of Criminal Procedure; nor even every act done by him while he is actually engaged in the performance of his official duties; but if the act complained of is directly concerned with his official duties so that, if questioned, it could be claimed to have been done by virtue of the office, then sanction would be necessary; and that would be so, irrespective of whether it was, in fact, a proper discharge of his duties, because that would really be a matter of defence on the merits, which would have to be in vestigated at the trial, and could not arise at the stage of the grant of sanction, which mu_t precede the institution of the prosecution. It is conceded for the respondent that on the principle above enunciated, sanction would be required for prosecuting the appellant under section 465, as the charge was in respect of his duty of obtaining signatures or thumb impressions of the employees before wages were paid to them. But he contends that misappropriation of funds could, under no circumstances, be said to be within the scope of the duties of a public servant, that he could not, when charged with it, claim justification for it by virtue of his office, that therefore no sanction under section 197(1) was necessary, and that the question was concluded by the decisions in Hori Ram Singh vs Emperor(1) and Albert We8t Meads vs The King(1), in both of which the charges were of criminal misappropriation. We are of opinion that this is too broad a statement of the legal position, and that the two decisions cited lend no support to it. In our judgment, even when the charge is one of misappropriation by a public servant, whether sanction is required under section 197(1) will depend upon the facts of each case. If the acts complained of are so integrally connected with the duties attach (1) [1949] L.R. 76 I.A. 10. (3) (2) [1955] 1 S.O.R. 216. (4) [1948] L.R. 75 I.A. 180, 1308 ing to the office as to be inseparable from them, then sanction under section 197(1) would be necessary; but if there was no necessary connection between them and the performance of those duties) the official status furnishing only the occasion or opportunity for the acts, then no sanction would be required. Quite recently, this Court had to consider in Shreekantiah Ramayya Munipalli vs The State of Bombay(1) the necessity for sanction under section 197(1), when the charge was one of misappropriation under section 409. There, the law was laid down in the following terms: "The section has content and its language must be given meaning. What it says is 'When any public servant. . is accused of any offence alleged to have been committed by him while acting or purporting to act in the discharge of his official duty. . We have therefore first to concentrate on the word "offence '. Now an offence seldom consists of a single act. It is usually composed of several elements and, as a rule, a whole series of acts must be proved before it can be established. In the present case, the elements alleged against the second accused are, first, that there was an 'entrustment ' and/or 'dominion '; second, that the entrustment and/or dominion was 'in his capacity as a public servant '; third, that there was a 'disposal '; and fourth, that the disposal was 'dishonest '. Now it is evident that the entrustment and/or dominion here were in an official capacity, and it is equally evident that there could in this case be no disposal, lawful or otherwise, save by an act done or purporting to be done in an official capacity". On the facts, it was held in that case that the several acts which were complained of, were official acts, and that the prosecution was bad for want of sanction. The decisions in Hori Ram Singh vs Emperor(1), and Albert West Meads vs The King(1), when properly examined, do not support the extreme contention (1) (2) (3) [1948] L.R 75 I.A. 185. 1309 urged on behalf of the respondent. In Hori Ram Singh vs Emperor(1), the medicines had not been entered in the stock book, and were removed by the accused to his residence, and the charge against him was that in so removing them he had committed MISappropriation. It was no part of the duty of the accused to remove medicines to his house, and he could not claim that he did so by virtue of his office. He could have made such a claim if he had, let us suppose, entered the medicines in the stock books and shown them as expended in the hospital. But, on the facts, no official act was involved, and that was why Varadachariar, J. observed that, ". so far as the charge under section 409 was con cerned, the acts in respect of which he was intended to be prosecuted could not be regarded as acts done or purported to be done in execution of his duty". Reference may also be made to the following observations of Sulaiman, J. in the same case: "The question whether a criminal breach of trust can be committed while purporting to act in execution of his duty is not capable of being answered hypothetically in the abstract, without any reference to the actual facts of the case. An attempt to answer the question in a generalized way has been responsible for loose language used in some of the cases cited before us. The question whether the act purported to have been done in execution of duty or not must depend on the special circumstances of each case". In Albert West Meads vs The King(1), an Army Officer had received two sums of money, and was subsequently unable to produce them. He was charged with criminal misappropriation, and convicted. He contended that the conviction was illegal for want of sanction, but the Privy Council, following H. H. B. Gill vs The King(1), rejected this contention. It is essential to note that the accused did not claim to have spent the amount in the course of his official duties, but stated that the moneys had been con sumed by fire. It is with reference to these facts that the Privy Council observed: (1) (2) [1948] L.R. 75 I.A. 185. (3) [1948] L.R. 75 I.A. 41. 1310 of which he was charged ', i.e. acts of fraudulently misapplying money entrusted to his care as a public servant, 'as acts done by him by virtue of the office that he held ' ". The result then is that whether sanction is necessary to prosecute a public servant on a charge of criminal misappropriation, will depend on whether the acts complained of hinge on his duties as a pubic servant. If they do, then sanction is requisite. But if they are unconnected with such duties, then no sanction is necessary. In this view, we have to examine whether the acts with which the appellant is charged directly bear on the duties which he has got to discharge as a public servant. The appellant received the sum of Rs. 51 alleged to have been misappropriated, as Subdivisions Officer, and he admits receipt of the same. Then it was his duty to pay that amount to the khalasi Parma, and take his signature or thumb impression in acknowledgment thereof. The accused does claim to have paid the amount to Parma, and the acquittance roll records the payment, and there is in acknowledgment thereof a thumb impression as against his name. If what appears on the face of the roll is true and whether it is true or not is not a matter relevant at the stage of sanction then the acts with which the appellant is charged fall within the scope of his duties, and can be justified by him as done by virtue of his office. Clearly, therefore, sanction was required under section 197(1) of the Code of Criminal Procedure before the appellant could be prosecuted under section 409, and the absence of such sanc tion is fatal to the maintainability of the prosecution. The conviction should, therefore, be quashed. In this view, there is no need to consider whether on the evidence, the offence of criminal misappropriation or forgery has been brought home to the appellant or not. The appeal is accordingly allowed, and the convictions and sentences passed on the appellant arc set aside. Fine, if paid, will be refunded. Appeal allowed.

It is not every offence committed by a public servant that requires sanction for prosecution under section 197 (1) of the Code of Criminal Procedure nor even every act done by him while he is actually engaged in the performance of his official duties; but if the act complained of is directly concerned with his official duties so that, if questioned, it could be claimed to have been done by virtue of the office, then sanction would be necessary; and that would be so, irrespective of whether it was, in fact, a proper discharge of his duties, because that would really be a matter of defence on the merits, which would have to be investigated at the trial, and could not arise at the stage of the grant of sanction, which must precede the institution of the prosecution. Whether sanction is necessary to prosecute a public servant on a charge of criminal misappropriation, will depend on whether the acts complained of hinge on his duties as a public servant. If they do, then sanction is requisite. But if they are unconnected with such duties, then no sanction is necessary. Hori Ram Singh vs Emperor ([1939] F.C.R. 159), H. H. B. Gill vs The King ([1948] L.R. 75 I.A. 41), Albert West Meads vs The King ([1948] L.A. 75 I.A. 185), Phanindra Chandra vs The King ([1949] L.R. 76 I.A. 10), B. W. Mothavzs vs State of West Bengal ([1955] 1 S.C.R. 216) and Shreekantiah Ramayya Munipalli vs The State of Bombay ([1955] 1 S.C.R. 1177), referred to.

N: Criminal Appeal No. 34 of 1970. Appeal by certificate under Article 134(1)(c) of the Constitution of India from the judgment and order dated 18 3 1969 of the Andhra Pradesh High Court in Criminal Revision Case No. 360 of 1968. F. section Nariman, Additional Solicitor General of India and A. V. Rangam, for the appellants. L. N. Sinha, Solicitor General of India and A. V. V. Nair, for the Advocate General Andhra Pradesh. The Judgment of the Court was delivered by ALAGIRISWAMI, J. This is an appeal against the judgment of the Full Bench of the Andhra Pradesh High Court reported in A.I.R. (1970) A.P. 70. It arises out of a complaint filed against the 1st respondent company and its directors for failure to Me with the Registrar of Companies on or before 30 10 1967 the balance sheet and profit and loss account of the company as required under section 220(1) of the , which is punishable under sub section (3) of that section. Admittedly no general body meeting had been held and, therefore, the balance sheet and profit and loss account had not been laid before a general body meeting nor could it be so laid. The Full Bench speaking through Jaganmohan Reddy, C.J., as our learned brother then was, held that if no balance sheet is laid before a general body, there can be no question of that balance sheet not being adopted nor of complying with the requirements of section 220 and though wilful omission to call a general body meeting and to lay the balance sheet and profit and loss account before it may expose the person responsible to punishment under other provisions of the Act, it certainly does not make him liable under the provisions of section 134(4) of the Companies Act, 1913 or section 220 of the . In this the Bench was taking a view contrary to that of most of the High Courts after the decision of this Court in The State of Bombay vs Bandhan Ram Bhandani & Ors.(1) In that case this Court (1) ; , 412 had taken the. view that a person charged with an offence cannot rely on his default as an answer to the charge and so, if he was responsible for not calling the general meeting, he cannot be heard to say in defence to the charges brought against him that because the general meeting had not been called, the balance sheet and profit and loss account could not be laid before it. In that case the directors of a company were prosecuted under sections 32(5) and 133(3) of the Companies Act, 1913, for breaches of sections 32 and 131 of that Act for having knowingly and wilfully authorized the failure to file the summary of share capital for the year 1953 and being knowingly and wilfully parties to the failure to lay before the company in general meeting the balance sheet and profit and loss account as at March 31, 1953. The Bombay High Court, however, following its earlier decision in Imperator vs The Pioneer Clay and Industrial Works Ltd.(1) had upheld the acquittal of the directors by the Presidency Magistrate. Referring to the decision of the Bombay High Court in that case this Court pointed out that decision turned on section 134 of the Companies Act, 1913 the language of which was to a certain extent different from the language used in sections 32 and 131 and refrained from going into the question whether the difference in language in section 134 on the one hand and sections 32 and 131 on the other made any difference to the decision of the case. After referring to the decisions in Gibson vs Barlon(2) Edmonds vs Foster(3) and Park vs Lawton(4 )where it was held that a person charged with an offence could not rely on his own default as an answer to the charge, and so, if the person charged was responsible for not calling the general meeting, he cannot be heard to say, in defence to the charge that the general meeting had not been called, and that the company and its officers were bound to perform the condition precedent if they could do that, in order that they might perform their duty, this Court considered that as the correct view to take. As we have noticed, this Court was not dealing there with the provisions of section 134 of 1913 Act which corresponds to section 220 of the 1956 Act. That question now directly arises for decision in this case. As we said earlier, most of the High Courts which have considered this question after the decision of this Court have proceeded on the basis that the decision necessarily led to the conclusion that even in a prosecution under section 134 of the 1913 Act (corresponding to section 220 of the 1956 Act) the company and its directors could not rely upon their failure to call the general body meeting as a defence to the prosecution. Under this category fall the decisions in Dulal Chandra Bhar vs Slate of West Bengal,(5) and Gopal Khaitan vs State (6) of the Calcutta High Court. Ramachandra & Sons (P) Ltd. vs State(T) of the Allahabad High Court, State vs T. C. Printers (P) Ltd. (8) of the Rajasthan (1) I.L.R. ; (2) [1875] L. R. 10 Q. B. 329. (3) (1875) 45 Law J. Rep. M. C. 41. (4) (5) (6) (7) , J. 92 & (8) A.I.R. 413 High Court, India Nutriments Ltd. vs Registrar of Companies(1) and P.S.N.S.A. Chettiar & Company vs Registrar of Companies(2) of the Madras High Court. The Orissa High Court had taken a similar view in Registrar of Companies vs Misra (3) but in a latter decision in Vulcan Industries (P) Ltd. vs Registrar of Companies, Orissa(4) it has taken a contrary view and followed the decision of the Andhra Pradesh High Court in the judgment under appeal. That decision is also pending in appeal before this Court. The Patna High Court in State vs Linkers Private Ltd.(5) and the Kerala High Court in Registrar of Companies vs Gopala Pillai & Ors. (6) have also taken a similar view. We may now refer to some of the earlier decisions on this Point. The earliest decision is the one in Debendra Nath Das Gupta vs Registrar of Joint Stock Companies. (?) In that case the principle laid down in Park vs Lawton(8) was applied and it was held that it is not open to the petitioner to plead in answer to a charge under sections 134 his prior default in respect of the calling of the prescribed general meeting and of placing before the company at such meeting a duly prepared and audited balance sheet. The decision in Ballav Dass vs Mohan Lal Sadhu(9) did not refer to the wording of the section but merely stated that the provisions of section 134 were not complied with. The same court in Bhagirath vs Emperor(10) took the same view. In re Varaszmha Rao(11) a learned Single Judge of the Madras High Court took the view that the same persons cannot be charged in respect of the same years with offences punishable both under sections 131 and 134, Companies Act because section 134 clearly contemplates the sending of a copy of the balance sheet only after it has been placed before the company at a general meeting under section 131 and that where in a case there is no such placing of the balance sheet before the company at a general meeting, the offence under section 134 cannot ',be committed. In re Gangipati Appayya(12) a view contrary to the one taken earlier by a Judge of that High Court was taken. We may now set out the reasoning which weighed with the Andhra Pradesh High Court in the decision under appeal : "The reference to Section 210 by the use of the word aforesaid" and the emphasis indicated by the words "were so laid" make the filing of copies of those balance sheets and the profit and loss accounts which are laid before the general body meeting an essential prerequisite. If no general body meeting is held, it is obvious that no copies of the balance sheet (1) (3) A.I.R. 1969 Orissa 234. (5) A.I.R. 1969 Patna 445 & (1970) 40 C.C. 17. (6) 1961 K.L.J. 490. (8) (10) A.I.R. 1948 Calcutta 42. (12) A.I.R. 1952 Madras 800. (2) A.T. R. 1966 Madras 415. (4) I.L.R. 1972 Cuttack 373. (7) I.L.R. 1918 Calcutta 486. (9) [1934 35] 39 Calcutta Weekly Notes 1152. (11) A.I.R. 1937 Madras 341. 414 and profit and loss account can be filed even though the default may be wilful. Both under section 134 of the Old Companies Act and Section 220 of the Act, the laying of the balance sheet and the profit and loss account before an annual general meeting is a condition precedent to the requirement that copies of such documents so laid should be filed before the Registrar. The intention is made further clear by the provision under sub section (2) of the respective sections of both the Acts that if the balance sheet is not adopted at the general meeting before which it is laid, a statement of that fact and of the reasons therefore have to be annexed to the balance sheet and to the copies thereof required to be filed with the Registrar. If no balance sheet is laid before a general body, there can be no question of that balance sheet not being adopted nor of complying with the requirements of the Sub section (2) of Section 134 of the Old Companies Act or Section 220 of the Act as the case may be, while wilful omission to call a general body meeting and omit to lay the balance sheet and profit and loss account before it may expose the person responsible to punishment under other provisions of the Act, it certainly does not make him liable udder aforesaid provisions. The punishment under these sections is for default in filing copies of the balance sheet or the profit and loss account which are laid before a general body and for not sending a statement of the fact that the balance sheet was not adopted. It may be that copies of the balance sheet so laid before the general body may have been forwarded under sub section (1) of Section 134 of the Old Companies Act or sub section (1) of section 220 of the Act but nonetheless if the requirements of sub section (2) of the respective sections have not been complied with even then, the persons concerned would be liable for punishment for that default. In our view, these provisions unmistakably indicate, as we said earlier, that the holding of the annual general meeting and the laying before it of the balance sheet and the profit and loss account is a sine qua non for filing of the copies thereof before the Registrar. If no general body meeting is held, the persons concerned cannot be said to have committed a default in complying with those provisions. " In this state of difference of opinion among the various High Courts and the absence of a decision of this Court on section 134 this appeal has been filed. Though the respondent was not represented before this Court the learned Addl. Solicitor General who appeared for the State of Andhra Pradesh and the learned Solicitor General who appeared for the Advocate General of Andhra Pradesh fairly placed before this Court all the decisions for and against, which we have already referred to, and also placed before us all the relevant considerations. It was urged before us that the principle accepted by this Court in The State of Bombay vs Bandhan Ram Bhandani & Ors. (supra) that a company or its directors in a prosecution under section 32 and section 133 of the 1913 Act could not in defence to such prosecution rely upon their own 415 failure to call the general body meeting, applies with equal force to a prosecution under section 134 of the Act. But it appears to us that there is a very clear distinction between sections 32 and 133 on the one hand and section 134 on the other. Section 32 relates to the preparation of a list of members of the company and of persons who have ceased to be members as well as a summary, and also provides that it shall be completed within 21 days after the day of the first or only ordinary general meeting in the year. It also provides that the company shall forthwith file with the registrar a copy of the list and summary, and any default hi complying with the requirements of the section is made punishable. Under section 131 the laying of a balance sheet and profit and loss account before the company in the general meeting is made obligatory. Under section 133 the failure to comply with section 131 is made punishable. But section 134 lays down that after balance sheet and profit and loss account or the income and expenditure account, as the case may be, have been laid before the company at the general meeting three copies thereof shall be filed with the registrar, and a failure to do so is made punishable under sub section (4) of that section. The difference in language is very clear and pointed. The responsibility of sending three copies of the balance sheet and profit and loss account or the income and expenditure account, as the case may be, arises only after they have been laid before the company at the general meeting. Without so laying copies could not be sent to the Registrar and even if they are sent it would not be a compliance with the provisions of the section. It is possible to conceive of the law providing that the balance sheet and profit and loss account shall be sent to the registrar even without the necessity of their being laid before the general body meeting of the company. In that case any failure to do so would be punishable and the question whether a general body meeting had been held and the balance sheet and profit and loss account have been laid before it Will not arise. Therefore the condition precedent or the essential prerequisite of the balance sheet and the profit and loss account being laid before the general meeting of the company not being fulfilled, the requirement of section 134 cannot be complied with. While the appeal to a question of principle might be attractive we cannot ignore the clear words of the section. Where the words of the section are very clear it is unnecessary to consider whether it embodies any principle and whether that principle is consistent with the principle as embodied a certain other sections which are differently worded. In interpreting a penal provision it is not permissible to give an extended meaning to the plain words of the section on the ground that a principle recognised in respect of certain other provisions of law requires that this section should be interpreted is the same way. We may also point out that in Park vs Lawton (supra) the principle laid in which has been adopted in this Court ' , decision in The State of Bombay vs Bandhan Ram Bhandani & Ors. (supra) it is realised that there might be circumstances where the principle laid down in that decision will not apply. The court there observed : "If it were the case that everything required to be inserted in the list was dependent on the fact of the general meeting having been held, it might perhaps have been contended with 416 some force that it is impossible to calculate a continuing penalty from a day which has never come into existence; but when one sees that section 25 requires a number of most important matters to be included in the list of members which are entirely independent of the holding of a general meeting, this very much weakens the contention that no list need be compiled if, owing to the failure to hold a general meeting, it is impossible to say what day is the fourteenth day thereafter." This observation may provide no defence to a prosecution under section 133 but it might well do so in a prosecution under section 134. This was what the learned Solicitor General was fair enough to point out with regard to the difficulty of working out the daily penalty under section 162 after the thirtieth day mentioned in section 220(1) of the 1.956 Act. He pointed out that where no meeting has been held it was not possible to calculate the period of 30 days specified in that section and it would not be possible to give effect to the provisions of that section. The Bombay High Court pointed out in Emperor vs Pioneer Clay & In dustrial Works(1) that the decision in Park vs Lawton(2) is based on section 36 (it is a mistake for section 26) of the English Act, which in its scheme and terms is entirely different from the section with which they (the Bombay High Court) were concerned, and that the section in the English Act is a composite one which lays down various requirements which are to be complied with by the company under its first four sub clauses and sub cl. (5) is the penal sub section which penalises the failure to comply with any of the requirements contained in any of the four preceding sub sections. In our Act various stages have to be gone through before we reach the stage of a copy of the balance sheet and the profit and loss account being filed with the Registrar and the failure to reach any one of the stages within the time prescribed is made penal by the 'Act. The court pointed out that this is not a case where an accused person relies on his default and pleads his innocence. What he says is, I may have committed an offence, but the offence that I have committed is not the one with which I am charged. On the facts proved by the prosecution an offence is not disclosed under section 134(4). A different offence might have been committed either under section 76(2) or under section 133(3). It is interesting to note that it was argued in Park vs Lawton(2) that the fact that section 26 makes the offence a continuing one also shows that the obligation to file the list is independent of the holding of a general meeting. The observations which we have extracted earlier will show that the submission on behalf of the prosecution that provisions (1) I.R.L. : (2) [1911] 1 K.E. 417 of section 26 show that the, obligation to file the list is independent of the holding of the general meeting was accepted. But under section 134 of the 1913 Act the obligation to send a copy of the balance sheet and profit and loss account is dependent completely on its being laid be, fore a general meeting. It is clear, therefore, that on principle and authority it should be held that no offence was committed by the directors in this case under section 134. They might have been guilty of offences under sections 76 and 133 but not under section 134. We say nothing about section 32 about which this Court has already laid down the law. The appeal is dismissed. V.P.S. Appeal dismissed.

Section 220 of the , which corresponds to section 134 of the 1913 Act, provides that within thirty days after the balance sheet and profit and loss account, as the case may be, have been laid before the company at the general meeting. three copies thereof shall be filed with the registrar and that failure to do so is punishable. The respondent company and its directors were prosecuted for failure to file with the Registrar of Companies on or before 30th October 1967, the Balance sheet and profit and loss account of the company. By 30th September, 1967, admittedly, no general body meeting had been held. The High Court held that since no general body meeting was held, there could be no question of laying the balance sheet before the general body meeting and complying with the requirements of the section; and that, though the willful omission to call a general body meeting and of laying the balance sheet and profit and loss account before it may expose the persons responsible to punishment under other provisions of the Act, it would not make them liable either under section 134(4) of the 1913 Act or section 220 of the 1956 Act. Dismissing the appeal to this Court, HELD : On principle and authority it should be held that no offence was committed under section 220 of the . [417B] (a) The principle accepted by this Court in State of Bombay vs Bandhan Ram Bhandani [1961] 1 S.C.R_ 801, that a company or its directors in a prosecution under sections 32 and 133 of the 1913 Act, could not, in defence to such prosecution, rely upon their own failure to call the general body meeting would not apply to a prosecution under section 134 of the 1913 Act or section 220 of the 1956 Act. Unlike sections 32 and 133, the responsibility of I sending to the Registrar the copies of the balance sheet and profit and loss account arises only after they have been laid before the company at the general meeting, the obligation to do so being completely dependent on its being laid before a general meeting. [414H 415E] (b) Where the words in the section are clear it is unnecessary to consider whether it embodies any principle and whether that principle is consistent with the principle as embodied in other sections which are differently worded. In interpreting a penal provision it is not permissible to give an extended meaning to the plain words of the section on the ground of a principle recognised in certain other provisions. [415F G] (c) This is not a case where an accused person relies on his default and pleads his innocence. In the , various stages have to be gone through before we reach the stage of a copy of the balance sheet and the profit and loss account being filed with the Registrar. The failure to reach any one of the stages within the time prescribed is made penal by the Act. The respondents may be guilty of any of those offences but not of the offence with which they were charged. [416E G] (d) Further a daily penalty is provided after the thirtieth day mentioned in section 220 (1) of the 1956 Act. When no general body meeting was held it is not possible to calculate the period of 30 days and there would be diffi culty in working Cut he daily penalty. [416C D)] 411 Dulal Chandra Bhar vs State of West Bengal, Gopal Khaitan vs State , Ramachandra & Sons (P) vs State, Ltd., A.I.R. India Nutriments Ltd. vs Registrar of Companies, 1934 34. Companies Cases 160 P. section N. SAA. Chettiar & Company vs Registrar of Companies, A.I.R. 1966 Madras 415, Registrar of Companies vs H. Mishra, A.I.R. 1969 Orissa 234, State vs Linkers Private Ltd. A.I.R. 1969 Patna 445 & (1970) 40 C.C. 17, Registrar of Companies vs Gopala Pillai & Ors. 1951 K.L.J. 490 Debendra Nath Das Gupta vs Registrar of Joint Stock Companies, I.L.R. 1918 Calcutta 486, Ballev Dass vs Mohan Lal Sadhu, 1934 35 39 Calcutta Weekly Notes 1152 and Bhagirath vs Emperor, A.I.R. 1948, Calcutta 42 and re Cangipati Appayya, A.I.R. 1952 Madras 800, disapproved. Imperator vs The Pioneer Clay and Industrial Works Ltd., I.L.R. , Vulcan Industries (P) Ltd. vs Registrar of Companies Orissa, I.L.R. (1972) Cuttack 373 and re Narasimha Rao, A.I.R. (1937) Madras 341, approved.

Appeal No. 1604 of 1967. From the judgment and order dated the 8th February, 1967 of Le Delhi High Court in Civil Writ No. 531 D of 1964. P.P. Rao and R. N. Sachthey, for the appellants. G.P. Pai, P. C. Bhartari and O. C. Mathur, for respondents nos. 1 & 2. The Judgment of the Court was delivered by SARKARIA J. Whether the Federation of Indian Chambers of Commerce and Industry, New Delhi (Respondent 1) is a "commercial establishment" within the meaning of s.2(5) of the Delhi Shops ,and Establishments Act, 1954 (for short the Act) is the sale question that falls for determination in this appeal by certificate directed against the judgment dated February 8, 1967 of the High Court of Delhi. The facts bearing on this question may now be stated: Respondent 1 (hereinafter referred to as the Federation) is a Company registered under section 26 of the Indian Companies Act, 1913. The primary objects of the Federation as given in the Memorandum of Association are "(a) To promote Indian business in matters of inland and foreign trade, transport, industry and manufactures, finance and all other economic subjects and to encourage Indian banking, shipping and insurance. (b) To encourage friendly feeling end unanimity among business community and association on all subjects connected with the common good of Indian business. (c) To secure organised action on all subjects mentioned above. (d) To collect and disseminate statistical and other information and to make effort for the spread of commercial and economic knowledge. (e) To take all steps by lawful means which may be necessary for promoting supporting or opposing legislation or other action affecting the aforesaid economic interests and in general to take the initiative to assist and promote trade commerce and industry. (f)To provide for arbitration in respect of disputes arising, in the course of trade, industry or transport or other business matters, and to secure the services 350 of expert technical and other men to that end if necessary or desirable. (g) To conduct, undertake the conduct of and participate in national and international exhibitions. (h) To set up museums or show rooms, to exhibit the products of India and other countries and to participate in such activities. (1) To secure the interests and well being of the Indian business communities abroad. (k) To attain those advantages by united action which each member may not be able to accomplish in its separate capacity. (m) To help in the Organisation of Chambers of Commerce or Commercial Associations in different commercial centres of the country. (n) (O) (p) (q) (r) (s) (t) (u) (v) (x) (y) To sell or dispose of the undertaking of the Federation or any part thereof for such consideration as the Federation may think fit and in particular for shares, debentures, or securities of any other association or company having objects altogether or in similar to those of the Federation. (z) To take or otherwise acquire and hold shares in any other association or company having objects altogether or in part similar to those of the Federation. (zl) To establish a Trust or Trusts and/or appoint Trustees thereof from time to time and vest the funds or the surplus income or any property of the Federation in the Trustees who shall hold and deal with the funds, surplus income or property in such manner as the Committee may decide. (z2) 351 (z3)To draw, make, accept, discount, execute and issue bills of exchange, promissory notes, bills of lading, warrants, debentures and other negotible instruments or securities. (z4) (4) The income and property of the Federation, whencesoever derived, shall be applied solely towards the promotion of the objects of the Federation as set forth in the Memorandum of Association; and no portion thereof shall be paid or transferred directly or indirectly, by way of dividend, bonus, or otherwise by way of profit to the members of the Federation. The Articles of Association inter alia provide that a Chamber or an Association can become an ordinary member of the Federation on payment of annual subscription of Rs. 1,000,/ or such higher amount as may from time to time be fixed by the Federation in addition to the admission fee of Rs. 5001 . The scales of subscription on the basis of turnover, deposits or premia for associate members have also been prescribed. The Chief Inspector of Shops and Establishments, Delhi (Appellant 2 herein) called upon the Federation to register its establishment 'he under the Act The Federation failed to comply with the direction and contended that it was not an "establishment" as defined in section 2(9) of the Act. This contention did not find favour with the Chief Inspector who, in consequence, made a complaint under the Act for prosecution of the Secretary of the Federation (Respondent 2 herein) under the appropriate penal provisions of the Act in the Court of the Magistrate. 1st Class, Parliament Street, New Delhi. The Federation then moved the High Court under Article 226 of the Constitution for bringing up and quashing the order, dated February 4, 1964 passed by the Chief Inspector (Appellant 2). They further prayed for a writ of Prohibition directing the Magistrate not to proceed with the complaint. Before the High Court, the contention of the Federation was that the premises in which the registered office of the Federation is located is not a "commercial establishment" within the meaning of section 2(5) of the Act which, in consequence had no application. From the side of the present appellant, at first a half hearted attempt was made to show that the Federation is carrying on a profession as it is "tendering advice to all businessmen and traders". This contention was negatived in these terms : " . that contention overlooks the fact that the advice in question is not tendered for any consideration. It is done in the interest of trade and business of the country. The 1st petitioner is not tendering any advice or giving any assistance to any trader in particular. It deals with the trade or busi ness in general to secure the interest of the country. it is predominantly a charitable organization and not a professional one. " 352 It was then contended that the activities of the Federation carried on in the premises in question amounted to "work in connection with, or incidental or ancillary" to trade or business in general within the latter part of the definition of "commercial establishment". This contention was also rejected with the observation that since the earlier part of the definition refers to "some particular business or trade carried on in a premises" the words "any work in connection with or incidental or necessary thereto" obviously refer to such particular business or trade and not to trade or business in general '. In the result, it was held that the premises of the Federation were not a commercial establish ment, and the writ petition was allowed. A certificate, however, was granted under Article 133(1) (c) of the Constitution that the case was fit for appeal to this Court. Hence this appeal. Before dealing with the contentions canvassed before us, it will be useful to notice briefly, the scheme and the relevant provisions of the Act. The title of the Act is Delhi Shops and Establishments Act, 1954. The main object of the Act as stated in its preamble is "regulation of hours of work, payment of wages, leave, holiday, terms of service and other conditions of work of persons employed in shop, commercial establishment, establishments for, public entertainment or amusement and other establishments and to provide for certain matters connected therewith." Section 1(4) indicates its extent and application. It shall apply in the first instance. only to the municipal areas, notified areas of Delhi and New, Delhi etc., but Government may by notification extend or apply it to shops and establishments in the other local area or areas. The definitions of "commercial establishment", "establishment" and "shop" given in sub sections (5), (9) and (27) of section 2 are material for our purpose. They read "Commercial establishment" means any premises wherein any trade, business or profession or any work in connection with, or incidental or ancillary thereto is carried on and includes a society registered under the , and charitable or other trust, whether registered or not, which carries on any business, trade or profession or work in connection with or incidental or ancillary thereto, ' journalistic and printing establishments, quarries and mines not governed by the , educational or other Institutions run for private gain and premises in which business of banking, insurance, stocks and shares, brokerage or produce exchange is, carried on, but does not include a shop or a factory registered under the , or theaters, cinemas, restaurants, eating houses residential hotels, clubs or other places of public amusement or entertainment. " "Establishment" means a shop, a commercial establishment, residential hotel, restaurant, eating house, theatre or other places of public amusement or entertainment to which this Act applies and includes such other establishment as Government may by notification in the Official Gazette, 35 3 declare to be an establishment for the purposes of the Act. " " Shop" means any premises where goods are sold, either by retail or wholesale Or where services are rendered to customers, and includes an office, a stoic room, godown, warehouse or workhouse, or work place, whether in the same premises or otherwise, used in or in connection with such trade or business but does not include a factory or commercial establishment. " It will be seen that while the definition of "establishment" includes, a 'shop ' and 'commercial establishment, the definitions of 'shop ' and commercial establishment ' are mutually exclusive. Further, the definition of "commercial establishment" is wider than that of "shop". A place in order to fall within the definition of "commercial Establishment" must in the first instance be "premises". Secondly, it should be premises wherein (a) any trade, business or profession is carried on, or (b) any work in connection with or incidental or ancillary thereto is carried on. Sub clause (b) is only ancillary to (a). There is no, doubt that the registered office of the Federation is premises. The controversy centres round the questions whether the activity of the Federation carried on in these premises is a "trade, business or profession" within the meaning of pari (a) of the definition. This question is not res integra. It came up for consideration before this Court in Management of the Federation of Indian Chambers of Commerce and Industry vs Their workman, Shri R. K. Mittal.(1) After considering its Memorandum of Association, Articles of Association and other material, which was more or less the same, as in the present case, it was held by this Court that the activity of this Federation is in the nature of a business or trade. Mr. Rao, learned Counsel for the appellants strongly relies on the aforesaid decision. Mr. Pai, learned Counsel for the Federation has firstly raised a preliminary objection that before the High Court, at no stage, it was urged on behalf of the Appellants that the activity of the Federation carried on in the premises was a business or trade. It is added that a half hearted argument was adVanced that its activity was a 'profession ' and that, too, was soon given UP In these circumstances, it is submitted, the appellants should not be allowed to commit a volte face and take up in this Court a stand which was either not taken or was given no in the High Court. In the alternative, learned Counsel contends that even if this plea is allowed to be raised, then also the primary activity of the Federation cannot, by any stretch of reasoning, be called a 'trade, business of profession within the definition of "commercial establishment" given in the Act. According to Counsel, the activity of the Federation is one of general utility; the only source of its income is from subscriptions. The occasional exhibitions or , museums organised by it are activities which are only incidental or ancillary to the primary charitable object of the Federation. No divi (1) [1972] 2 S.C.R. 353. 354 dends are declared, no profits are shared or divided among the Individual members, and no goods are sold or exchanged. in support of his contentions, learned Counsel has referred to Commissioner of Income tax vs Andhra Chamber of Commerce. (,) Mr. Pai further maintains that the ratio in R. K. Mittal 's case (supra) is not applicable to the instant case because the definition of " 'industry" in section 2(j) of the is far wider than that of "commercial establishment" in section 2(5) of the Act. Mr. Pai further doubts the correctness of the decision in R. K. Mittal 's case (supra) inasmuch as it holds that the activity of the Federation partakes the character of trade or business. This finding, it is urged, is based on a misapprehension of facts and requires reconsideration. It is pointed out that it was wrongly assumed in Mittal 's case (supra) that the Federation, was systematically assisting not only its members but also other business men and industrialists even if they were not its members. The fact of the matter is that the Respondent is a Federation of Federations and not an association of any individual traders, industrialists or businessmen. As regards the preliminary objection, it is true that before the High Court, it was not argued that the activity of the Federation amounts to the carrying on of any business or trade in the premises in question. All that was attempted to argue there was, that its activity amounted to a 'profession '. Alternatively, it was contended that the case fell within part (b) of the definition of "commercial establishment" inasmuch as its activities were connected with trade and business, generally. We do not think it proper to shut out the contentions now raised before us about the activity of the Federation being a trade or business, merely on the ground, that the point was not properly put before the High Court. This point will not require any additional material for its decision. The question is only of drawing a correct inference 'about the point in issue from the material already on record. We, therefore, overrule the preliminary objection. This takes us to the merits of the case. In R. K. Mittal 's case, this Court was considering the activity of this Federation in the context of 'industry ' as defined in s.2(j) of the . That definition reads: " "Industry" means any business, trade, undertaking, manufacture or calling of employers and includes any calling, service, employment, handicraft or industrial occupa tion or evocation of workmen. " It will be seen that "any business, trade" is an element common to the definitions of "commercial establishment" and "industry" given in the respective statutes. That was why the question, whether the ,activity of the Federation is a business or trade activity, was directly (1) ; 355 and substantially in issue in R. K. Mittal 's case. therein, the Memorandum of Association, Articles of Association and the other material placed before the court were closely examined. The entire case law was surveyed. The contentions now canvassed were also raised and considered in that case. Jagnmohan Reddy J. speaking for the Court,. posed the question for decision thus : "In our view the linch pin of the definition of 'industry ' is to ascertain the systematic activity which the organization is discharging namely, whether it partakes the nature of a business or trade; or is an undertaking or manufacture or calling of employers". (emphasis added) The answer given to this question has been correctly summed up, in the head note of the Report, as under: "The above being the position in law the were fact that the appellant Federation had charitable aims and objects would not take it out of the definition of industry. An examination of the activities of the Federation showed that the Federation carried on systematic activities to assist its members and other businessmen and industrialists and even to non members as for instance in giving them the right to subscribe to their bulletin; in taking up their cases and solving their difficulties and in obtaining concessions and facilities from them from the Government. These activities were business activities and material services rendered to businessmen, traders and industrialists who are members of the constituents of the Federation. There could be no doubt that the Federation was an industry within the meaning of s.2(j) of the Act." (The crucial words are those that have been underlined). The case under the Income tax Act wherein the main object of the organization was charitable, were also considered and found of little assistance. It was observed that: "the object of an Organisation may be charitable but nevertheless its activity may be commercial so as to satisfy the definition of an industry as explained and illustrated by this Court particularly in Safdarjang Hospital 's case.(1) We could therefore envisage an institution having its aims and objects charitable and yet its activities could bring it within the definition of industry". The above observations were made in the context of the definition of industry ' but they are equally applicable in the present case. The very definition of "commercial establishment" indicates that the activity of a registered society, charitable or other trust will not take it out of the definition if the activity carried on by it amounts to a busi (1)[1971] 1, S.C.R. 177. 356 ness, trade or profession or any work in connection therewith or incidental thereto. No doubt, the effective membership as distinguished from Honorary membership of the Federation is open only to Chambers of Commerce or Commercial Associations of requisite strength and standing, but the fact remains that it carries on systematic activities not only to assist its members but also other traders or businessmen members of the constituents of the Federation. It has set up Tribunals for arbitration in disputes arising between individual traders or business concerns in the course of trade, industry or other business matters. It takes up with the concerned authorities the specific difficulties experienced by the trade in the day today business and endeavours to attain for the traders and industrialists those material advantages by unified action which they may not be able to achieve in their individual capacity. It helps businessmen and industrialists by securing for them the services of expert technical men (vide clauses (f) and (k) of the Memorandum of Association). It undertakes regular publication of periodicals, bulletins, Reviews etc. for the benefit of businessmen, big or small and whether or not they are members of the Federation. These publications are available on payment of subscription or price even to individual businessmen or traders who are not members of the Federation. All these are business activities are carried on systematically. We therefore do not think that R. K. Mittal 's case (supra) was incorrectly decided and needs reconsideration. It is true that in R. K. Mittal 's case (supra) it was held that these activities of the Federation are also in the nature of material services within the wider definition of 'industry '. Though the rendering or services is not specifically mentioned as an element of the definition of "commercial establishment", yet this very element appears in the definition of 'shop ' in section 2(27) of the Act. Any premises where services are rendered to customers fall within the definition of a "shop". These services are material services. For the application of the Act to the Federation, it is immaterial whether its activities bring its premises within the ambit of a "shop" or a "commercial establishment '. It is well settled that a systematic activity can be a business activity even if no dividends are declared or profits shared. In the matter. of Incorporated Council of Law Reporting for England and Wales, (1) the Queens Bench was considering the interpretation of the expression "trade or business" in section 11 of the English Customs and Inland Revenue Act 1885 with reference to the activity of the Incorporated Council of Law Reporting for England and Wales. The association was established for the objects of preparing and publishing under gratuitous professional control, reports of judicial decisions; of issuing digests and other publications relating to legal subjects. In carrying them out the association employed editors, reporters, printers, and publishers and supplied its publications to subscribers and others for payment. It was condended that the activity of the Association was not "a business or trade" because by the Memorandum of Associ (1) 357 ation all the property and income of the association were applicable solely to the promotion of the above objects, and no part thereof could be paid as dividend or otherwise, to any member. Holding that the association was established for a "trade or business", Lord Coleridge C. J. repelled the contention in these terms: "Though it may be true that in the great majority of cases the carrying on of a trade does, in fact, include the idea of profit, yet the definition of the mere word 'trade ' does not necessarily mean something by which a profit is made. But putting aside the question whether they carry on a trade, how can it be denied that the Council carry on a business? They are incorporated; they have a secretary; they employ editors, reporters, and printers; they print books, they sell those books, they do all that is ordinarily done in carrying on the business of a bookseller. " The above observations apply mutatis mutandis to the activity of the Federation. It will bear repetition that the Federation also publishes periodicals, bulletins etc. and issues the same to member free of this Court in R. K. Mittal 's case (supra) we would hold that the commercial or industrial exhibitions, runs museums and makes profits. Of course, that profit is ploughed back for the purposes of the Federation as set out in its Memorandum of Association, and is not distributed among its members. But that does not alter the 'fact that its activity is a trading or business activity. For all the foregoing reasons, particularly in view of the decision of this Court in R. K. Mittals case, (supra) we would hold that the pre premises of the Federation are a "commercial establishment" within the meaning of section 2(5) of the Act. In the result we allow this appeal, set aside the judgment of the High Court and dismiss the writ petition. In the circumstances of the case we make no order as to costs. V.P.S. Appeal allowed.

The respondent was required by the Chief Inspector of Shops and Establishments to register its establishment ' under the Delhi Shops and Establishments Act, 1954. The respondent contended that it was not an 'establishment ' which is defined in section 2(9) as meaning 'a shop or a commercial estab lishment ' and did not comply with the direction. Proceedings for prosecution of its Secretary were instituted, where upon the respondent filed a petition in the High Court for quashing the order of the appellant and for directing the Magistrate not to proceed with the complaint. Before the High Court the appellant contended that the respondent was a 'commercial establishment ' because, the activity of the respondent amounted to a 'Profession ', and alternatively, that the case fell within the latter part of the definition of 'commercial establishment ' in section 2(5), inasmuch as its activities were connected with trade and business generally, but, it was not urged that the activity of the respondent amounted to carrying on any 'business or trade ' in its premises. The writ petition was allowed by the High Court, holding that premises of the respondent were not a 'commercial establishment '. In appeal to this Court it was contended that the activities of the respondent amounted to a 'trade or business ', that therefore it was a 'commercial establishment ' and that the matter was covered by Management of the Federation of Indian Chambers of Commerce and Industry vs Sri R. K. Mittal [1972] 2 S.C.R. 353. Allowing the appeal. HELD : (1) It is not proper to shut out the contentions of the appellant now raised about the activity of the respondent being a 'trade or business ' merely on the ground that the point was not properly put before the High Court. The question is only one of drawing a correct inference about the point in issue from the material already on record and will not require any additional material for decision. [354E F] (2)A place, in order to fall within the definition of 'commercial establishment ' must, in the first instance, be 'premises '. and secondly, should be premises wherein, (a) any trade, business or profession is carried on, or (b) any work in connection with or incidental or ancillary thereto is carried on. [353C D] (3) The registered office of the respondent is 'premises '. [353D] (4) All the activities of the respondent are business activities and are carried on systematically. Though the profit made by it is ploughed back for its purposes as set out in its Memorandum of Association and is not distributed among its members. Therefore, the decision in Mittal 's case [1972] 2 S.C.R. 353 that the activity of the respondent is in the nature of 'business or trade ' is correct and that case does not require reconsideration. [356A E. 357D E] (5)A systematic activity can be a business activity even if no dividends are declared or profits shared. [356F G] In the matter of Incorporated Council of Law Reporting for England and Wales , applied. (6)The premises of the respondent, therefore, are a 'commercial establishment. [357E] 349 (7)For the application of the Act to the respondent it is immaterial whether its activities bring its premises within the ambit of a 'shop ' or 'commercial establishment, within the meaning of the Act. In Mittal 's case it was held that the activities of the respondent are also in the nature of material services within the wider definition of 'industry ' and, any premises where services are rendered to customers fall within the definition of a 'shop. [356E F]

Civil Appeal No. 159 of 1974. From the Judgment and Order dated 4 4 1973 of the Punjab and Haryana High Court at Chandigarh in R.S.A. No. 1482 of 1961. 488 N. N. Goswamy and Arvind Minocha, for the appellant. Kapil Sibbal and D. Probir Mitra, for respondents. The Judgment of the Court was delivered by MATHEW, J. This is an appeal by special leave against a decree passed by the High Court of Punjab and Haryana holding that the appeal filed by the plaintiff appellant has abated and dismissing his suit. The appellant brought the suit on the allegation that there was one Shiromani Nirankari Dera at Patiala, that this institution had two branches one at Landeke in Moga Tehsil and the other at Nanga Kheri in the erstwhile Patiala State, and that he, as mahant in charge of the Shiromani Dera at Patiala had the right to manage the properties attached to the Dera at Landeke. The prayer in the plaint was for recovery of possession of the Dera and the properties attached to it. Som Dass, the defendant, contended that the Dera at Landeke was an independent Dera and that he was in possession of the properties of the Dera as its lawfully appointed mahant. The trial court decreed the suit. In appeal by the defendant the decree was reversed. Against that decree, an appeal was preferred by the appellant to the High Court. While the appeal was pending in the High Court, Som Dass, the defendant, died on 13 10 1970. No application was made by the appellant to bring on record his legal representatives within the period prescribed. An application was made on 1 2 1971 by the appellant stating that Som Dass died on 26 11 1970 leaving behind him Shiam Dass as his Chela and for impleading him. The correctness of the date of death of Som Dass was contested by Shiam Dass. The High Court referred the question to the trial Court for enquiry and decision. The trial Court, after taking evidence, found that Som Dass died on 13 10 1970. Thereafter the appellant prayed before the High Court that his application dated 1 2 1971 might be treated as an application for setting aside the abatement of the appeal and the ground for setting aside the abatement was that the appellant did not know about the death of Som Dass at the time he died. The High Court found no substance in the plea that the appellant had no knowledge about the date of the death of Som Dass and held that the appeal had abated and that there was no ground for setting aside the abatement. The appellant had raised an alternative contention before the High Court that there was no abatement of the appeal even if Som Dass was not impleaded within the period prescribed as he claimed to represent the dera as its duly elected Chela. The High Court held that after the death of Som Dass, Shiam Dass, as his Chela "inherited the sum total of the rights which earlier vested in Som Dass and when a controversy is raised about such rights, then the appellant was bound to bring on record the legal representatives of the deceased within the time prescribed by law. " 489 We do not think that the view of the High Court was correct. The suit was filed on the basis that the appellant as the lawfully appointed mahant was entitled to manage the properties of the Dera at Landeke, that the defendant was unlawfully claiming to be the mahant of the Dera and entitled to manage the properties of the Dera, and that the appellant was entitled to be in possession of the properties. As already stated the contention of the defendant was that though the properties belonged to the Dera, he was its lawfully appointed mahant and that the appellant had no right to recover possession of the property of the Dera. When Som Dass died, the interest which was the subject matter of the suit, devolved upon Shiam Das as he was elected to be the Mahant of the Dera and the appeal could be continued under Q. 22, r. 10, of the Civil Procedure Code against the person upon whom the interest had devolved. Order 22, rule 10 reads: "R. 10(1) In other cases of an assignment, creation or devolution of any interest during the pendency of suit, the suit may, by leave of the Court, be continued by or against the person to or upon whom such interest has come or devolved. (2) The attachment of a decree pending an appeal there from shall be deemed to be an interest entitling the person who procured such attachment to the benefit of sub rule (1). " This rule is based on the principle that trial of a suit cannot be brought to an end merely because the interest of a party in the subject matter of the suit has devolved upon another during the pendency of the suit but that suit may be continued against the person acquiring the interest with the leave of the Court. When a suit is brought by or against a person in a representative capacity and there is a devolution of the interest of the representative, the rule that has to be applied is Order 22, rule 10 and not rule 3 or 4, whether the devolution takes place as a consequence of death or for any other reason. Order 22, rule 10, is not confined to devolution of interest of a party by death, it also applies if the head of the mutt or manager of the temple resigns his office or is removed from office. In such a case the successor to the head of the mutt or to the manager of the temple may be substituted as a party under this rule. The word 'interest ' which is mentioned in this rule means interest in the property i.e., the subject matter of the suit and the interest is the interest of the person who was the party to the suit. It was, however, contended on behalf of the respondent that there was no devolution of the interest in the subject matter of the suit on the death of Som Dass, since there was no certainty as to the person who would be elected as mahant to succeed him. The argument was that it was uncertain on the death of Som Dass as to who would become the mahant by election, that it was only when a person succeeded to the mahantship on the death of a previous mahant by virtue of law 490 or custom that there would be devolution of interest in the subject matter of the suit and, therefore, Order 22, rule 10, would not be attracted. We see no force in this argument. We are of the view that devolution of the interest in the subject matter of the suit took place when Shiam Dass was elected as mahant of the Dera after the death of Som Dass. Som Dass was sued in his capacity as a person who claimed (though illegally according to the appellant) as mahant of the Dera. Som Dass contended that he was lawfully appointed as mahant of the Dera. He never set up any claim which was adverse to the Dera or its properties. The suit against Som Dass was not in his personal capacity but in his capacity as de facto mahant. In other words, the suit was for possession and management of the Dera and the properties appertaining to it by the appellant purporting to be the de jure mahant against Som Dass as de facto mahant. The fact that it was after Som Dass died that Shiam Dass was elected to be the mahant of the Dera can make no difference when we are dealing with the question whether the interest in the subject matter of the suit devolved upon him. The subject matter of the suit was the interest of Som Dass in the Dera and its properties and it devolved upon shiam Dass by virtue of his election as mahant subsequent to the death of Som Dass. And, as it was in a representative capacity that Som Dass was sued and as it was in the same representative capacity that the appeal was sought to be continued against Shiam Dass, Order 22, rule 10 will apply(1). In Thirumalai vs Arunachella (2) the Court held that a succeeding trustee of a trustee who filed a suit and thereafter died during its pendency was not legal representative of the predecessor in office. The Court said that where some of the trustees die or retire during the pendency of a suit and new persons are elected to fill their place, it is a case of devolution of interest during the pendency of a suit and the elected persons can be added as parties under Order 22, rule 10 notwithstanding that the period of limitation for impleading them had expired. In Roshan Lal vs Kapur Chand the Court took the view that newly appointed trustees are not legal representatives of the trustees who had filed the suit and thereafter died during the pendency of the suit, that they can be added as parties under Order 22, rule 10 notwithstanding the fact that the period of limitation for an application to 491 impleaded them under Order 22, rule 3 had elapsed. The Court said (at p. 384): "Such an application is obviously not an application under O. 22, R. 3 Civil Procedure Code. " We also see no reason why the High Court should not have granted leave to the appellant to prosecute the appeal. In the result we reverse the decree of the court below and direct the High Court to dispose of the appeal on merits. We allow the appeal but, in the circumstances, make no order as to costs. V.P.S. Appeal allowed.

The appellant filed the suit on the basis that as the Mahant of a Dera he was entitled to possession and management of the properties of its branch Dera. The defendant contended that it was an independent Dera and that he was in possession of the properties as its lawfully appointed Mahant. The trial court decreed the suit but in appeal the decree was reversed. While the second appeal, preferred by the appellant, was pending in the High Court, the defendant died. As the application to implead the elected successor of the defendant was filed beyond the period prescribed for an application under O. 23, rr. 3 and 4, the High Court held that the appeal had abated and that there was no ground for setting aside the abatement. In appeal to this Court, the appellant contended that even if the Chela, who had been elected as the Mahant on the death of the defendant, was not impleaded within the period prescribed, there would be no abatement, because he represented the Dera. Allowing the appeal to this Court, ^ HELD: (1) When a suit is brought by or against a person in a representative capacity and there is a devolution of the interest of the representative, the rule that has to be applied is O. 22, r. 10 and not O. 22, rr. 3 or 4, whether the devolution takes place as a consequence of death or for any other reason. The word 'interest ' in the rule means interest in the property, i.e., the subject matter of the suit, and the interest is the interest of the person who was the party to the suit. This rule is based on the principle that the trial of a suit cannot be brought to an end merely because the interest of a party in the subject matter of the suit has devolved upon another during the pendency of the suit. The suit may be continued against the person acquiring the interest with the leave of the Court. [489F G] In the present case, when the defendant died, the interest which was the subject matter of the suit devolved upon his successor elected as the Mahant of the Dera, and therefore, the appeal could be continued under O. 22 r. 10, C.P.C. [489B C] (2) Though it was uncertain on the death of the defendant as to who would become the Mahant by election, it would not make any difference for the application of O. 22, r. 10. The devolution of the interest in the subject matter of the suit took place when the new Mahant was elected. The suit was for possession and management of the Dera and the properties appertaining to it by the appellant purporting to be the de jure Mahant against the defendant as a de facto Mahant. The subject matter of the suit was the interest of the defendant in the Dera and its properties and it devolved upon the new Mahant by virtue of his election subsequent to the death of the defendant. As it was in a representative capacity that he defendant was sued and that it was in the same representative capacity that the appeal was sought to be continued against the new Mahant, O. 23, r. 10 will apply. [490B E] Rajnam Pillai vs Natraja Desikar A.I.R. 1924 Madras 615, Thirumalai vs Arunachella, A.I.R. 1926 Madras 540 and Roshan Lal vs Kapur Chand, A.I.R. 1960 Punjab, 382, approved.

N: Criminal Appeal No. 425 1974. Appeal by Special Leave from the Judgment and order dated the 22nd July 1974 of the Madras High Court at Madras in Criminal Appeal No. 24 of 1974 and Referred Trial No. 3 of 1974. A. N. Mulla, K. Jayaram and P. Chandrasekhar for the Appellant. , A. V. Rangam and Miss A. Subhasini for the Respondent. The Judgment of the Court was delivered by GOSWAMI, J. This appeal by special leave is directed against the 4 judgment and order of the, High Court of Madras convicting the appellant (hereinafter to be described as the accused) under section 302 IPC and sentencing him to death. 709 The police had submitted charge sheet under section 302/34 IPC against the present accused and accused Jabamani Nadar alias Kanyakumari Comrade alias Ramu and Thamizharasan alias Ramaswami, who was shown as an absconder. On the prayer of the prosecution the case against the first two accused without the absconding accused, was taken up for trial. The two accused were charged under section 120B read with sections 302 and 109 IPC as well as under section 302/34 IPC. The case was referred to the High Court as usual and the accused also preferred appeals against their conviction and sentence. The High Court acquitted accused Jabamani Nadar alias Kanyakumari Comrade alias Ramu and accepted the reference in respect of the present accused. His appeal was also dismissed. Hence this appeal by special leave. The facts are in a brief compass. The deceased, Viswanatham Pillai, was the village Munsif (Headman). On April 26, 1971, at about 10.00 P.M. he was sleeping on a bench outside his cattle shed in the open space, which is shown in the site plan (exhibit P15) at No. 9. The younger brother of the deceased, Pandurangam (PW 4), who is a leper, was also sleeping on the eastern parapet of the sluice of the north Boothagudi channel, which is shown at No. 5 in the site plan (exhibit P15). Pandurangam woke up at about 11.15 P.M. On hearing the shout of his deceased brother crying "younger brother: Karunakaran is running after stabbing me with knife. 'Catch him ' ". He got up and saw the accused Karunakaran running on the eastern bank of the channel with a knife 8 inches long. The electric lights were burning in the vicinity He also saw two persons running ahead of accused Karunakaran. He further saw his two brothers, Gnanasakaran (PW 1) and Thiru gnanasambandam (PW 3) along with Ramasamy (PW 2) chasing them. He ran to his elder brother who came from the side of the bench where he was sleeping and who fell down on the southern side of the sluice. When he went near him he was already dead. He had bleeding injuries on several parts of his body. A crowd gathered and Pandurangam was asked to lodge information at the police station which he did. The doctor (PW 16) who held the postmortem examination found nine injuries two of which he described as incised and four as punctured incised, two more as punctured and the remaining one as a vertical incised wound. These were on the left upper arm, left fore arm, on the left side of the epigastrium, on the left side of the anterior axillary line, on the left mid axillary line, on the right side of the epigastrium and on the left side of the back. Injuries are very severe and according to the doctor death was due to shock and hemorrhage on account of the injuries. It is clear that whosoever had inflicted these injuries definitely had ? the intention to cause the death of the victim. In the first information report which PW 4 lodged at the Thana, which is very close to the place of occurrence, within about 15 minutes of the occurrence, inter alia, stated thus: 4 L159SCI/76 710 At about 11.15. P.M. I woke up on hearing a noise to the effect 'younger brother, Karunakaran is running after stabbing me with knife, 'catch him '. I stood up and saw Karunakaran, son of Orathur Ayyathurai Padayachi running eastwards from the place where I lay and my elder brother chasing him from behind. I too came running". It will be seen that at the time of lodging of the first information report only the present accused was implicated. Even so, later on four eye witnesses were produced implicating not only the present accused but also two other accused. The High Court after appreciating the entire evidence rejected the evidence of these eye witnesses, namely, PW 1, 2, 3 and 5 and described them as "a bunch of liars", "unashamed liars and perjurers". The High Court, therefore, acquitted the second accused, Jabamani Nadar alias Kanyakumari Comrade alias Ramu and also observed that necessarily no case would lie on this kind of testimony against even the absconding accused. It was also observed that the High Court "can place no reliance on the testimony of PW 4 in so far as he implicated the second accused and Tharnizharasan in the case of murder of Viswanatham". The High Court further observed: "Poor PW 4 was compelled to speak to a version which ought to accord and harmonise with the version given out by , PWs 1, 2 and 3". Even so the High Court thought that it was justified in convicting the present accused on the sole testimony of PW 4 "corroborated by the contents of exhibit P1 (FIR)". The High Court held that "PW 4 who was afflicted with the fell disease of leprosy. has absolutely no motive to implicate the first accused". The High Court further held that PW 4 gave a "candid, natural and truthful version. at the earliest opportunity". The High Court has taken note of the fact that "there has been a history of a bitter feud spanning over nearly a decade between the first accused and his father on the one hand and the deceased Viswanatham t on the other". This is, therefore, a case where conviction of the accused depends . on the sole testimony of a single witness. If the witness is absolutely reliable there can be no infirmity in convicting the accused. In that ' case even corroboration may not be sought for. ordinarily in an appeal under article 136 of the Constitution we would have hestitated to go into the facts to reappreciate the evidence. It is, however, not possible to adopt that course in this case where the testimony of the sole witness has been rejected with reference to the 1 second accused who was on the same boat with the appellant. The very fact that this eye witness could be persuaded to substitute PWs 1, 2 and 3 for his deceased brother as chasing the assailants, degrades him from the status of an absolutely reliable witness. He is definitely an obliging witness and cannot at all be trustworthy. This witness may not have a qualm of conscience in implicating the accused for the 711 mere asking by someone, if not by the inimical police officer (PW 23) against whom criminal cases were pending at the instance of the accused 's father. Apart from that we find that the High Court has not considered the intrinsic quality of the evidence of PW 4. It failed to notice certain broad facts which should definitely weigh with the court while appreciating ocular testimony. From the medical evidence it is clear that there were more than one assailant and yet for the FIR it appears that there was only one assailant. This may not, in a given case, be considered as a very serious infirmity since the witness may not have seen the other. assailants when he came running to the place of occurrence. But the fact that the witness has stated in the first information report that the deceased was only mentioning the name of accused Karunakaran as his assailant, this earlier version appears to be contradicted by the medical evidence. Besides, he has deliberately changed his own stand in court when he deposed that he saw two other persons running ahead of Karunakaran being chased by his two brothers and Ramaswamy. Another very serious departure from his earlier version is that while PW 4 had stated in the first information report that "my elder brother" (meaning the deceased) was "chasing him from behind" in court he has completely given a go by to this statement and stated that Karunakaran was being chased by PWs 1, 2, and 3. He did not at all refer to the deceased chasing him. If his statement in court that he saw PWs 1, 2 and 3 chasing Karunakaran while running away after the assault is true, it is difficult to appreciate that he would not mention about this fact in the first information report. He admitted in the course of cross examination that the Sub Inspector asked him whether he had any witnesses and that he "did not tell about them due to excitement". It is difficult to accept this explanation of this witness. Assuming that his earlier version in the first information report is true that the deceased chased the accused . as the latter was running away after the assault we would have expected some evidence of a trail of blood stains from the place where he was sleeping to the place where he fell dead. On the other hand we find that there is a mention about a pool of blood only where the dead body was found at No. 1 in the site plan. There were also no blood stains on the bench where he was said to be sleeping. We further find from the evidence of PW 4 in cross examination that when he went near his deceased elder brother about hundred persons were there and "none of them asked him as to how it had happened". We do not find in this case a single witness out of that crowd produced in court for the purpose of corroborating PW 4. If the statement of PW 4 is to be believed, the crowd had gathered at the place of occurrence already when he arrived. It is also conceivable that those persons, who arrived at the place of occurrence a little earlier than PW 4, did not see the assailants who might have already escaped. It also stands to reason that those persons who gathered would not ask PW 4, who arrived at the place a little later, for information with regard to the assailants. There is considerable doubt as to this testimony with regard to seeing the accused running away from the place of occurrence. When the accused is 712 going to lose his life in such a serious charge it is only necessary that the court should be circumspect and closely scrutinise the evidence to come to an unhesitating conclusion that he is absolutely reliable. We are unable to say that the High Court in this case has made a correct approach in assessing the quality of the testimony of this solitary eye witness. The High Court is not even right that PW 4 stands wholly corroborated by the contents of the FIR. On the other hand we have . r shown that his version in the FIR stands contradicted by the testimony in court on a very material point. For the reasons given above we are unable to place such reliance as is requisite on the testimony of this uncorroborated solitary witness for convicting the accused facing a murder charge. The conviction and sentence of death are, therefore, set aside. The appeal is allowed and the accused shall be released from detention forthwith. S.R. Appeal allowed.

The appellant along with "J" & '.T" was charged for offences u/s 120B/109/ 302 I.P.C. as well as 302/34 I.P.C. The trial which proceeded in the absence of absconding "T", resulted in the conviction and both the accused were sentenced to death sentence. On a reference and appeals by the accused the High Court acquitted "J" rejecting four out of five eye witnesses and disbelieving even the only other eye witness who lodged the First Information Report. The High Court however maintained the conviction and confirmed the death sentence on the appellant relying on the testimony of the very same single witness. on appeal by special leave, the Court ^ HELD: (i) Ordinarily in an appeal under article 136 of the Constitution the Court would hesitate to go into the facts to reappreciate the evidence. It is, however. not possible to adopt that course, where the testimony of the sole witness has been rejected with reference to the second accused was on the same boat with the appellant. When the accused is going to lose his life in such a serious charge u/s 302 I.P.C. it is only necessary that the Court should be circumspect and closely scrutinise the evidence to come to an unhesitating conclusion that the sole single witness is absolutely reliable. [710G, H, 711H, 712A] (ii) In the instant case, the High Court was not correct in appreciating the ocular testimony of a sole witness, because (a) the very fact that the eye witness could be persuaded to substitute PWs. 1, 2. and 3 for his deceased brother as chasing the assailants, contrary to the version of the F.I.R. degrades him from the status of an absolutely reliable witness, not having a qualm of conscience, but an obliging and untrustworthy witness. [710H] (b) 'The version in the F.I.R. stands contradicted by the testimony in court on a very material point and does not corroborate. [712 B] (c ) Placing such reliance. therefore. as is requisite on the testimony of the uncorroborated solitary witness for convicting the accused facing a murder charge is not possible in the case. [712 B]

ivil Appeal Nos. 630 631 of 1971. Appeals by Special Leave from the Judgment and order dated the 19 1 1970 of the Andhra Pradesh High Court in Tax Revision Cases Nos 46 and 47 of 1969. V. section Desai, Mrs. Vimla Markandeyulu and G. N. Rao for the Appellant. P. Ram Reddy and P. P. Rao for the Respondents. The Judgment of the Court was delivered by BEG, J. The short question before us in these appeals by special leave, is whether sales of Arc carbons, known as "Cinema Arc Carbons", manufactured by the appellant company, were rightly subjected to sales tax for two assessment years 1965 66 and 1966 77 on the ground that they fall under entry No. 4 of the 1st Schedule of the Andhra Pradesh General Sales Tax Act, 1957, (hereinafter referred to as 'the Act '). This entry reads as follows: "Cinematographic equipment, including cameras, projectors, and sound recording and reproducing equipment 562 lenses films and parts and accesories required for use their with As indicated above, the very name of the Arc Carbons, as commercial commodities, seems to attach the word "Cinema" to them because of the use to which they are generally put. The High Court referred to the fact that the appellants had not produced their account books to show that they had been purchased by persons other than those who ran cinemas or for any other use. Of course, it is very difficult to identify a taxable commodity merely by the use to which it may be put. Nevertheless, it appears that the entry under consideration links the taxable object with its general or ordinary use. The taxing authorities were, therefore, compelled to consider the use which is generally made of the arc carbons. They had concluded that the common or ordinary use of the arc carbons was that they exuded their power foul light cast, through the projectors, on cinema screens. It was pointed out that the Sales Tax Appellate Tribunal, the final departmental authority under the Act, had allowed an application for adducing expert evidence to determine the question whether arc carbons manufactured by the appellant company could be covered by the entry under consideration. It, however, appears that, before further evidence could be taken, at the appellate stage, on the subject, a decision of the Andhra Pradesh High Court, in the State of Andhra Pradesh vs Srimathi Nidmarthi Saraswathi Devi(1), was brought to the notice of the Tribunal. There, the High Court had held that such arc carbons are covered by the 4th entry in the 1st Schedule of the Act. Hence, the Tribunal dismissed the appeal without taking further evidence. In the High Court, two decisions cited on behalf of the appellants were: Deputy Commissioner of Commercial Taxes, Madhurai Division, Madhurai vs Ravi Auto Stores(2), and State of Madras vs Indian oxygen Ltd. (3). The High Court pointed out that in both these cases what was decided was whether "welding electrodes", considered by themselves, were "electrical goods" falling within entry 41 of Schedule 1 of the Madras General Sales Tax Act. It was held, in these cases, that they were only copper rods which were melted by electrical power in the process of welding. Neither the use of the term "electrode" to describe them, suggesting a connection with electricity, nor their utilisation in a process involving application of electrical power could convert them into "electrical goods" as contemplated by the entry in the Madras Act. The High Court rightly observed that these decisions had no bearing whatsoever upon the very different entry in a schedule of an entirely different Act of a different State. The same question has been argued before us with the help of some more cases to which the same criticism applies. The additional cases cited before us were: Pashabhai Patel & Co.(P) Ltd. vs Collector of Sales Tax, Maharashtra State(4), where it was held a "tractor" (1) T.R.C. No. 26 of 2962 (decided on 9th August, 1963) (2) (1968) 22 S.T.C. 172 (Madras) (3) (1968) 22 S.T.C. 476 (Madras) (4) (1964) 15 S.T.C.32. 563 is not "agricultural machinery", within the meaning of entry 9 in Schedule of the Bombay Sales Tax Act, 1953; Agrawal Brothers vs Commissioner of Sales Tax, Madhya Pradesh(1); where it was also held that a "tractor", which is "nothing but a self propelled vehicle capable of pulling a load", or "traction" does not acquire the character of "agricultural machinery or implement" merely because when used on agricultural land it is used also to draw certain agricultural implements like a plough; The State of Mysore vs Mores (India) Ltd.(2), where it was held that a typewriter ribbon is not an essential part of a type writer so as to attract the tax under entry 18 of the second schedule to the Mysore Sales Tax, Act, 1957, Commissioner, Sales Tax, U. P. v Free India Cycle Industries(3), where it was held that rexine saddle covers used also for bicycle seats are not covered by entry No. 34 introduced by Section 3A of the U.P. Sales Tax Act, 1948, as modified subsequently, which read: "bicycles, tricycles, cycle rickshaws and perambulators and parts and accessaries thereof other than tyres and tubes"; The Madhya Pradesh State Co operative Marketing Society, Jabalpur vs The Commissioner of Sales Tax, M.P. Indore(4), where it was held that oil engines and pumps", which are not known in the commercial world as "agricultural machinery" could not be covered by an entry meant for goods sold for agricultural purposes simply because some of them are also sold to agriculturists for agricultural purposes. We do not think that any useful purpose is served by multiplying cases relating to entries which are so very different and could have only a very remote hearing, if any, upon any reasoning which could be adopted to support the submission that the arc carbons, under consideration here, fall within the relevant entry 4 of Schedule 1 of the Act. The meaning of this entry can only be satisfactorily determined in the light of the language of the entry itself considered in the context in which it occurs. The entry No. 4 occurs in a schedule in which descriptions of goods to be taxed indicate that the expression "required for use there with" has been employed for equipment or accessories connected with the main purpose. For instance, in entry No. 5 the expression occurs at the end as follows: "Photographic and other cameras and enlargers, films and plates, paper and cloth and other parts and accessories required for use therewith". Apparently, the deciding factor is the predominant or ordinary purpose or use. It is not enough to show that the article can be put to other uses also. It is its general or predominant user which seems to determine the category in which an article will fall. The first entry in the schedule relates to "motor vehicles" and includes "component parts of motor vehicles" and "articles (including batteries) adapted for use as parts and accessories of motor vehicles." but excludes certain other articles by putting in the words "not being such articles as are ordinarily also used for other purposes than as (1) (1965) 16 S.T.C. 860. (2) (1970) 26 S.T.C. 87. (3) (1970) 26 S.T.C. 428. (4) (1971) 27 S.T.C. 45. 564 part and accessories of motor vehicles". Entry No. 2, relating to refrigerators, air conditioning plants covers also "component parts thereof". Again, entry No. 3, for "wireless reception instruments and apparatus" includes "electrical valves, accumulators, amplifiers and loud speakers and spare parts and accessories thereof ' '. The words "parts thereof" are used in several entries, such as entry No. 6 for clocks, time pieces and watches, entry No. 10 for dictaphones and other similar apparatus for recording sound, and entry No. 11 for sound transmitting equipment such as telephones and loud speakers. our object in indicating the nature of entries, amdist which entry No. 4 occurs, is to show that some precision has been attempted in making the entries. When it was intended to confine the entry to particular gadgets and "parts thereof" the entry said so. Of course, even where an entry relates to parts manufactured for use for a particular kind of instrument of gadget only, the article, manufactured to serve as a part of a particular kind of apparatus, would not cease to be covered by the intended entry simply because a purchaser makes some other use of it. We have to find the intention of the framers of the schedule in making the entry in each case. The best guide to their intentions is the language actually employed by them. We find that the term "accessories" is used in the schedule to describe goods which may have been manufactured for use as an aid or addition. A sense in which the word accessory is used is given in Webster 's Third New International Dictionary as follows: "all objects or device that is not essential in itself but that adds to the beauty, convenience, or effectiveness of something else". Other meanings given there are: "supplementary or secondary to something of greater or primary importance"; "additional"; "any of several mechanical devices that assist in operating or controlling the tone resources of an organ." "Accessories" are not necessarily confined to particular machines for which they; may serve as aids. The same item may be an accessory of more than one kind of instrument. It will be noticed that the entry we have to interpret includes parts" as well as "accessories" which are required for use in projectors or other cinematographic equipment. We think that the Andhra Pradesh High Court correctly held that the main use of the arc carbons under consideration was duly proved to be that of production of powerful light used in projectors in cinemas. The fact that they can also be used for search lights, signalling, stage lighting, or where powerful lighting for photography or other purposes may be required, could not detract from the classification to which the carbon arcs belong. That is determined by their ordinary or commonly known purpose or user. This, as already observed by us, is evident from the fact that they are known as "cinema arc carbons" in the market. This finding was enough, in our opinion, to justify the view taken by the Andhra Pradesh High Court that the goods under consideration are covered by the relevant entry No. 4. Consequently, we dismiss these appeals with costs. V.P.S. Appeals dismissed.

Entry 4 of the I Schedule of the Andhra Pradesh General Sales Tax Act, 1957, reads: Cinematographic equipment including. parts and accessories required for use therewith. on the question whether Arc Carbons, known as 'Cinama Arc Carbons ' manufactured by the appellant fall under the entry and their sales were, there fore, rightly subjected to sales tax. ^ HELD: The meaning of an entry can only be satisfactorily determined in the light of the language of the entry itself considered in the context in which it occurs. and cases relating to totally different entries will have only a very remote bearing. Entry 4 occurs in a Schedule of taxable goods. When it was intended to confine an entry to particular gadgets and 'parts thereof ' the entry said so. Entry 4, however, includes 'parts ' as well as 'accessories '. The term 'accessories ' is used to describe goods which may have been manufactured for use as an aid or addition to particular machines, though, they may serve as aids to other kinds of instruments also. But, this entry and other entries use the expression 'required for use therewith '. The description of the goods in these entries indicates that the expression has been employed for equipment or accessories connected with the main purpose. Therefore, it is its general of predominant use that determines the category in which an article will fall. [563D F, G; 564B C] In the present case, the main use of Arc Carbons was proved to be that of production of powerful light used in projectors in Cinemas. The fact that they can also be used for other purposes such as for search lights etc., will not detract from their classification under Entry 4. The classification is determined by their ordinary or common known purpose or user which is evident from he fact thy are known as 'cinema Arc Carbons ' in the market. [564 F H]

Civil Appeal No. 1231 of 1968. Appeal by special leave from the judgment and order dated the 20th December 1962 of the High Court of Judicature at Bombay in Civil Appeal No. 151 of 1960. B. D. Bal with A. G. Ratnaparkhi, for the appellant. V. section Desai with M. N. Shroff for section P. Nayar, for respondent. The Judgment of the Court was delivered by GOSWAMI, J. The question that arises in this appeal by special leave is whether Shri Vithal Sukhamai Sansthan at Amalner, (East Khandesh) was a private Devasthan or a public religious trust. There was a saint endowed with spiritual powers by the name of Sakharam Maharaj at Amalner. The deity of his worship was Shri Vithal Rukhamai. Although the origin of the Sansthan is dipped somewhat in antiquity and direct testimony was lacking, it has never been disputed that Sakharam Maharaj constructed a temple in the year 1817 at Amalner and installed the aforesaid deity according to religious rites. He also acquired certain properties and the said temple with the properties constituted Shri Vithal Rukhamai Sansthan of Amalner. The sansthan had movable property of the value of Rs. 19,164/ and immovable properties of the value of Rs. 1,06,000/ and the average gross annual income as well as the average annual expenditure was Rs. 11,000/ . After the passing of the Bombay Public Trusts Act, 1950 (No. 29 of 1950) (briefly the Act) an application under section 18 of that Act was filed by three persons Bhaskarrao Chimanrao Deshmukh, Ramrao Sahebrao Deshmukh and Ramkrishna Tryambak Deshpande, as constituted attorneys of Vasudeobuwa who was described in the application as the "owner" of the property. The word 'Buwa ' means saint. The application was made on May 29, 1952, to the Assistant Charity Commissioner, Poona, under protest and without prejudice 520 to the claim made therein that the Sansthan was not a public trust. In view of the penal provision under section 66 of the Act in the case of non compliance with section 18(1) of the Act the said application was made ex abundanti cautela. The Assistant Charity Commissioner after requisite notice made an enquiry into the matter in accordance with the provisions of the Act. On behalf of the applicants representing the Sansthan evidence of the attorney Ramkrishna Deshpande was recorded and he was cross examined by the assessors as well as by the Assistant Charity Commissioner. Some documents were also produced on behalf of the Sansthan. Three witnesses were examined on behalf of the Assistant Charity Commissioner and were afforded an opportunity to the applicants ' pleader for cross examination. At the close of the enquiry the Assistant Charity Commissioner by his order of August 25, 1956, held the Sansthan to be a public trust and ordered its registration as a public trust under the Act. The applicants thereupon filed an appeal under section 70 of the Act before the Charity Commissioner, Bombay, who by his order of August 31, 1957, affirmed the decision of the Assistant Charity Commissioner. That led to an application under section 72 of the Act to the District Judge of West Khandesh at Dhulia which was duly filed on behalf of Purshottambuwa who meanwhile succeeded Guru Vasudeobuwa as "owner" of the Sansthan. The learned District Judge reversed the decision of the Charity Commissioner by his order of October 16, 1959, and declared the Sansthan to be a private property and not a public trust. The Charity Commissioner then appealed under section 72(4) of the Act to the High Court of Bombay. The High Court by its order of 19/20th December, 1962, set aside the order of the District Judge and held the Sansthan to be a public trust under the Act and restored the order of the Charity Commissioner. Hence this appeal by special leave which was obtained on March 29, 1968, after condonation of delay, in the peculiar circumstances of the case arising out of revocation by the High Court of its earlier certificate in favour of the appellant on account of default of deposit of security. As noted earlier there was both oral and documentary evidence adduced in this case. The learned District Judge relied mostly on the documentary evidence for his conclusion in favour of the appellant. The High Court took note of both oral as well as documentary evidence. The High Court particularly relied upon an admission of the appellant 's witness, Ramkrishna Deshpande, when he stated that "we cannot prevent people from going to the temple as the temple is meant for the Darshan by the public". It is not disputed by Mr. Bal appearing on behalf of the appellant that the Sansthan in question is an endowment. His only contention is that it is a private religious endowment and not a public one. He submits that there is no evidence of long user of this temple by 521 the public as a matter of right. Mr. Bal further contends that the High Court failed to consider all the material documents filed on behalf of the appellant except only exhibit 35 and that the conclusion was highly erroneous being contrary to the one that had been reached by the District Judge on appraisal of the entire documentary evidence. Before we proceed further, it may be appropriate to note the definitions of 'public trust ' and 'temple ' in section 2(13) and section 2(17) respectively of the Act which read as follows: section 2(13): "Public trust ' means an express or constructive trust for either a public religious or charitable purpose, or both and includes a temple, a math, a wakf, church syna gogue, agiary or other place of public religious worship, a dharmada or any other religious or charitable endowment. " section 2(17): "Temple ' means a place by whatever designation known and used as a place of public religious worship and dedicated to or for the benefit of or used as of right by the Hindu community or any section thereof as a place of public religious worship". Relying upon the above definitions Mr. Bal submits that there is absolutely no evidence in this case about dedication to the public or public user of the temple as a matter of right. Since the grievance of the appellant is directed against the High Court 's absolute failure to consider all the documentary evidence, we may deal with that aspect first. The earliest document produced in this case is a 'Sanad ' (exhibit 42) of November 1, 1863. This Sanad was granted by the then British Government during the reign of Queen Victoria in favour of "Devasthan Shri Vithal Rukhamai '. The Sanad refers to the entry in the village accounts. The entry mentioned therein is in the village accounts in the Khandesh Collectorate for the year 1860 61, field Nos. 623 and 624 measuring 14.5 acres of land in the name of the holder as Devasthan Shri Vithal Rukhamai, Manager Balkrishnabuwa, Guru Govindbuwa, Amalnairker. There are significant recitals in the Sanad to the following effect: "It is hereby declared that the said land shall be continued for ever by the British Government as the endowment property of Shri Vithal Rukhamai of Kasabe Amalnair Talooka Amalnir on the following conditions, that is to say, that the managers thereof shall continue faithful subjects of the British Government, and . the said land shall be continued for ever as endowment Inam without increase of land tax over the said fixed amount". The amount fixed was Rs. 17/4/0 per annum. 522 It is true that the High Court has not referred to this Sanad but the District Judge did. The District Judge held that ". . the expression in the Sanad cannot be in any way determinative of the nature of the temple or religious endowment as a public trust". It is, however, difficult to accept the conclusion of the District Judge. The Sanad being an ancient Royal grant is a very important piece of evidence to show that although Sakharam Maharaj, the founder of the temple, had already been succeeded by Guru Govindbuwa and the latter by Balkrishnabuwa, the land had been held in the year 1860 61 in the name of the Devasthan. It is in the name of the Devasthan alone that the grant was continued by the Government. This would go to show that the Government recognised the Sansthan with the temple as a public religious endowment and only on that basis the grant was continued. Apart from that the temple was shown to have a Manager and not an owner as such. In the absence of anything to the contrary of a convincing nature, a grant by the Government in favour of the temple describing the property to be in charge of a manager leads to an unerring inference that the property is a public religious endowment. From the evidence of Ramkrishna Deshpande, one of the constituted attornies, we find the origin and the devolution as follows: "The originator of this Sansthan is Sakharambuwa. After Sakharam there came Gobindbuwa. He was followed by Balkrishnabuwa. Then came Prahladbuwa. Thereafter Tukarambuwa came to Gadi. After him there was Krishna buwa and after him there was Balkrishna. Then came Vasudeo. After him the present Buwa Purshottam came to Gadi. This Gadi goes to Shishya from the Guru". This evidence of Ramkrishna Deshpande stands corroborated by the Sanad which shows in the year 1860 61 the Manager of the Sansthan as Balkrishnabuwa Guru Govindbuwa. Guru Govindbuwa was the second in the line of succession after Sakharam, the founder, and Balkrishnabuwa being the third in the line. It is clear from the Sanad that the Government treated the temple as a public religious endowment. The next document in sequence is a Varaspatra of February 28, 1869 (exhibit 35) executed by Guru Govind Balkrishna buwa in favour of Prahladbuwa. This is a document which was relied upon both by the District Judge as well as by the High Court. Varaspatra is a deed of nomination by which an Adhikari for the Sansthan was nominated in order to take charge of the property, maintain and continue the religious worship of the deity as per tradition as well as of the celebration of the festivals in accordance with the customary practice of the Sansthan. The appellant draws our attention to the following recitals in the above deed: "I have been carrying on the Malaki of Shri Sansthan Amalner. " 523 According to the appellant this would go to show that the executant of the document Balkrishnabuwa described himself as 'Malak ' (owner) of the Sansthan. It is further pointed out that while nominating Prahlad as Adhikari, Balkrishnabuwa stated in the said document as follows: "You are entitled to the ownership of all the incomes that will come before the Deity, Shri Samarth and during the Swari (procession) as well as the income of Inam Najrana and the income of movable and immovable property". x x x x x "The entire ownership of the Sansthan and all the movable and immovable property etc. pertaining to the Sansthan is of yours. That ownership is of your own. Your Bhauband and others have no right whatsoever over the same. You are free to give and take as per the Shishya sampradaya as has been done previously". From the above, the appellant contends that the Sansthan was a private property and it was also transferred to the Shishya Adhikari to maintain it as his own property. We are unable to accept this submission as we find some other significant recitals in the documents itself warranting a contrary conclusion. Although it is stated in the document that Balkrishnabuwa was "carrying on the Malaki", he at the same time states with regard to the Sansthan thus: ". the same was entrusted to me by Shri Guru Maharaj". . x x x x x "I, therefore, thought that I should entrust the work of the Sansthan to you and have appointed you to the said Sansthan". The nature of devolution is explicit in the above extract. Although there is use of the words owner and 'Malaki ' in the above recitals, the entire tenor of the document read as a whole goes to show that the property has always been treated as trust property even by the Adhikari saints and the Adhikaris or the disciples who succeeded one after the other were not owners but trustees of the property. This ancient document read as a whole does not admit of any other interpretation consistent with the nature of the property and the avowed object and purpose of the founder clearly revealed therein which has been carried into effect by successive loyal and devoted disciples. The words 'Malaki ' and 'owner ' in the context, are not used in the broad sense to indicate an absolute character of personal ownership. The next document is Vyavasthapatra (exhibit 41) of April 25, 1897. We find from the evidence of Ramkrishna that the Shishya is appointed by the Maharaj who happens to be holding the Gadi at the relevant time. This fact is borne out by the recitals in exhibit 41. 524 This document may be described as a deed of nomination or will whereby it appears Krishnabuwa whose Guru was Tukaram Maharaj nominated Balkrishna Gangadhar Dhamurkar as the Devadhikari of the Gadi to succeed him. The appellant submits that Balkrishna was bestowed a 'Malaki ' as the term appears in this document. Although the High Court has not dealt with this document, there is a reference in its judgment to the contents of the same as being similar to exhibit 35. The principal emphasis on both these documents exhibit 35 and exhibit 41 is that the words 'owner ' and 'Malaki ' were used in the recitals. As stated above we are unable to hold that recitals in these documents taken as a whole can reasonably lead to the conclusion that the Sansthan is a private property. After the turn of the century, coming now to comparatively recent times, there are four documents exhibit 40,37,39 and 38 dated September 10, 1929, July 15, 1936, July 2, 1946 and January 28, 1949, respectively. In exhibit 40 the party taking the gift is described as Vahiwatdar Panch of Shri Sakharam Maharaj, Sansthan, Vithalwadi, Amalner. The donor, an old agriculturist of a different Taluka viz. Erandole, writes: "I give the gift deed in writing as follows: With the object of giving possible help through me to the above sansthan, I have given in gift my ancestral immovable property. x x x x x I have given in gift the above mentioned property as aforesaid of my free will for the purpose of religious work in order that my life may be of bliss as I have no male issue and wife. x x x x x The said field should be used for the sansthan from generation to generation. The above sansthan has become full owner thereof". In the gift deed exhibit 37 executed by three businessmen of Amalner there are recitals to the similar effect: "When we were joint, the said field was given as a gift to you for the service of the sansthan, viz., Shri Vithal Rukhmai Sansthan, Amalner and was given in your possession. Now all our movable and immovable estate is partitioned orally. Hence the gift deed of the said field, which had remained unexecuted, has been executed today. " The said gift deed was in favour of Archak (worshipper) Vasudeobuwa Guru Balkrishnabuwa. Again, in the gift deed exhibit 39 the donee is described as "Shri Rukhmini Pandurang Sansthan, Sansthan Amalner Sakharam Maharaj at present Vasudev Buwa Guru Bal 525 krishna Maharaj". The following recitals in the said document are eloquent: "This land is given to you in charity as per the order of (my) mother with a religious view and with an intention of benefitting others with the object of achieving happiness in this world and in the next world according to the shastras and the above land is given in your possession this day. Hence you are the full owner of the land and you are free as full owner thereof to manage and carry on the Vahiwat of the said land by right of ownership perpetually from generation to generation on the strength of this writing. x x x x x The Dindi of the said Sansthan from Amalner remains at Shivgaon on the 30th of Jeshta vadya or on the 1st of Ashad Shudha according to practice every year. You should spend the income of the said property for the purpose of Naivadya for the Deity Pandurang at night that day. " The beneficiaries of this gift are clearly the unascertained Hindu public and not ascertained individuals and the donee is a trustee accepting the gift on behalf of the Sansthan. The last deed of gift is exhibit 38 and the donee is "Shri Vasudev Buwa Guru Balkrishna Buwa" described as the worshipper carrying on the "Vahiwat of Shri Vithal Rekhmai Sansthan". The deed goes on to say: "I have full faith in Shri Sakharam Maharaj. Hence with the intention (object) that some service may be rendered by me for his Devasthan, I have given in gift out of love the below mentioned property valued at Rs. 600 (Six hundred) without taking any consideration from you, for the purpose of expenses of performing worship and offering Naivadya food". All the above gifts were donated to the Devasthan and for the maintenance of worship therein. These gifts were not made in favour of individuals as such in order that the beneficiaries of the gifts will be only those individuals. It is clear that the beneficiaries of the deeds are the deity and the Sansthan and the gifts were made with the object of maintenance of the worship of the deity for the benefit of the Hindu public as a whole. The expression in the recital that "you are free as the full owner thereof" does not convert the gift which is expressly in favour of the deity or Sansthan into that in favour of an individual as private property. The appellant relies on all these documents for the purpose of showing that the endowment is private only because ownership of the donor is transferred to the donee. We are, however, unable to accede to this submission. It is very significant that in the last gift deed exhibit 38 of January 28, 1949, there is a most reverential reference to Shri 526 Sakharam Maharaj and his Devasthan when Sakharam Maharaj had departed in the past century. Not much can be made therefore from the expression "His Devasthan" to convert the property into a private endowment. The reference to Sakharam Maharaj Sansthan, wherever it appears, is only for the purpose of identification and commemoration of the hallowed saint who had admittedly founded the same. The principles of law for determination of the question whether an endowment is public or private are fairly well settled. This Court observed in Deoki Nandan vs Murlidhar as follows: "The distinction between a private and a public trust is that whereas in the former the beneficiaries are specific individuals, in the latter, they are the general public or a class thereof. While in the former the beneficiaries are persons who are ascertained or capable of being ascertained, in the latter they constitute a body which is incapable of ascertainment". This Court further held: "When once it is understood that the true beneficiaries of religious endowments are not the idols but the worshippers, and that the purpose of the endowment is the maintenance of that worship for the benefit of worshippers, the question whether an endowment is private or public presents no difficulty. The cardinal point to be decided is whether it was the intention of the founder that specified individuals are to have the right of worship at the shrine, or the general public or any specified portion thereof. In accordance with this theory, it has been held that when property is dedicated for the worship of a family idol, it is a private and not a public endowment, as the persons who are entitled to worship at the shrine of the deity can only be the members of the family, and that is an ascertained group of individuals. But where the beneficiaries are not members of a family or a specified individual, then the endowment can only be regarded as public, intended to benefit the general body of worshippers". (See also the State of Bihar & ors. vs Sm. Charusila Dasi. Distinguishing the decision of the Privy Council in Bahu Bhagwan Din vs Gir Har Saroon on the ground that the properties in that case were granted not in favour of an idol or temple but in favour of one Daryao Gir who was maintaining a temple and to his heirs in perpetuity, this Court further held in the above decision: "But, in the present case, the endowment was in favour of the idol itself, and the point for decision is whether it 527 was private or public endowment. And in such circumstances, proof of user by the public without interference would be cogent evidence that the dedication was in favour of the public". This Court also distinguished the aforesaid Privy Council decision of Babu Bhagwan Din 's case (Supra) in Narayan Bhagwantrao Gosavi Balajiwale vs Gopal Vinayak Gosavi and others. This Court also observed in Narayan Bhagwantrao Gosavi Balaji wale 's case (supra) that it is also unusual for rules to make grant to a family idol. In Tilkayat Shri Govindlji Maharaj vs The State of Rajasthan and others this Court had to consider about a Hindu temple being private or public and observed as follows: "Where evidence in regard to the foundation of the temple is not clearly available sometimes, judicial decisions rely on certain other facts which are treated as relevant. Are the members of the public entitled to an entry in the temple ? Are they entitled to take part in offering service and taking Darshan in the temple ? Are the members of the public entitled to take part in the festivals and ceremonies arranged in the temple ? Are their offerings accepted as a matter of right. The participation of the members of the public in the Darshan in the temple and in the daily acts of worship or in the celebrations of festivals occasions may be a very important factor to consider in deter mining the character of the temple". In Goswami Shri Mahalaxmi Vahuji vs Rannchhodds Kalidas and an Ors., this Court observed as follows: "In brief the origin of the temple the manner in which its affairs are managed, the nature and extent of gifts received by it, rights exercised by the devotees in regard to worship therein, the consciousness of the manager and the consciousness of the devotees themselves as to the public character of the temple are factors that go to establish whether a temple is a public temple or a private temple". The learned counsel for the appellant relied upon the decision in Bihar State Board Religious Trust, Patna vs Mahant Sri Biseshwar Das and drew our attention to the following observations therein: "Thus, the mere fact of the public having been freely admitted to that temple cannot mean that courts should readily infer therefrom dedication to the public. The value of such public user as evidence of dedication depends on 528 the circumstances which give strength to the inference that the user was as of right". "Examples do occur where the founder may grant property to his spiritual preceptor and his disciples in succession with a view to maintain one particular spiritual family and for perpetuation of certain rights and ceremonies which are deemed to be conducive to the spiritual welfare of the founder and his family. In such cases it would be the grantor and his descendants who are the only persons interested in seeing that the institution is kept up for their benefit. Even if a few ascetics are fed and given shelter, such a purpose is not to be deemed an independent charity in which the public or a section of it has an interest. Such charities, as already stated earlier, appertain to a private debutter also". * * * * * We do not find that there is any difference in the ratio of the principles followed in the above decision. The case went against the Board in the above decision in the absence of "evidence of a reliable kind" of public user as "evidence of dedication". It is not always possible to have all the features of a public trust in a given case. Even some of the tests laid down by this Court may, in a given case, be sufficient to enable the court to come to a conclusion about the character of the trust. We cannot agree that the High Court was not right in giving due importance to the admission of the constituted attorney Ramkrishna Deshpande that they "cannot prevent people from going to the temple as the temple is meant for the Darshan by the public". The consciousness of the constituted attorney about the nature of the property, which has been held out for more than a century as a public religious endowment, adds to the effect of the documentary evidence produced by the appellant in this case in favour of the same conclusion. It has to be remembered that the founder Sakharam Maharaj was a celibate and the successive disciples who succeeded as Adhikaris of the Gadi were also celibates. From exhibit 35, the first Varaspatra of February 28, 1869, one gets a full picture of the working of the Sansthan: "The service and Bhajan etc. of the Deity have to be made as per the order of the Guru according to the Sampradaya". * * * * * * ". you should perform the Bhajan as was being done as per the Shishya Sampradaya and perform the Bhajan in Chaturmas at Shrikshetra Pandharpur regularly and there after you should come to Amalner and keep up the practice of celebrating the festivals etc. of Shri Sakharam Maharaj regularly as was being done. You should maintain the 529 Mandali (Committee) of the sansthan and continue the whole Mandali (Committee) with unanimous opinion. You know the Vahiwet of the Sansthan as is going on. You should continue the same accordingly in future". . * * * * * * "That ownership is of your own. Your bhauband and others have no right whatsoever over the same. You are free to give and take as per the Shishya sampradaya as has been done previously. The Deshmukhs and Deshpandes at Kashev Amalner have been rendering service to the said Sansthan faithfully. You should make arrangement to accept service from them as being done accordingly and go on rendering service and performing Bhajan etc. faithfully as mentioned herein as per the Vaishnava sampradaya as being done from before". x x x x x We have also seen from the evidence of Ramkrishna Deshpande: "All the Buwas are saints. People go for darshan because these people were saints. This Sansthan is based on the principles of Shishya parampara. This property goes from Guru to his Shishya. * * * * * "The residents of the place where the Bhajans are performed attend these Bhajans. In the days of Pandharpur fair the Maharaj remains present. He stays there for about 4 months. During his stay at Pandharpur Bhajans are performed daily. During the fair his Shishyas perform the Bhajans. While returning from the pilgrimage also he performs Bhajans. Maharaj also attends other fairs at Nasik etc. At that time also his Shishyas accompany him. By Shishyas I mean the disciples as well as followers. Shishyas are few but the followers are in large numbers. In the utsava at Amalner many saints of other places, Shishyas and followers take part. The persons who attend this year besides Shishyas and followers are about ten thousand. The followers and saints are paid their cost of journey. All their expenses of boarding and lodging are met by this Sansthan. The Bhajans at Pandharpur performed by Maharaj are attended by the public". Ramkrishna Deshpande concludes his evidence by stating: "I contend that this is a private temple because others cannot perform puja without permission of Maharaj". The oral and documentary evidence leave no room for doubt whatsoever that the Sansthan and the temple are public religious endowments. Even in acknowledged public temples any and everybody cannot perform puja in the sense in which the head pujari daily performs 530 at various stages. Public is not and may not be allowed to the inner most sanctum where the deity is installed except under special circumstances with special permission. That would, however, not lead to the conclusion that the temple is a private temple. Worshippers are not merely the accredited daily pujaris but also the multitude of the public who go to the temple for Darshan of the deity and for offerings. The contention of Ramkrishna Deshpande in his evidence, therefore, is without any force. When the origin of an endowment is obscure and no direct oral evidence is available, the Court will have to resolve the controversy about the character of the trust on documentary evidence, if any, the object and purpose for which the trust was created, the consistent manner in which the property has been dealt with or managed by those in charge, the manner in which the property has long been used by the public, the contribution of the public, to all intents and purposes, as a matter of right without the least interference or restriction from the temple authorities, to foster maintenance of the worship the accretion to the trust property by way of grants from the state of gifts from outsiders inconsistent with the private nature of the trust, the nature of devolution of the property, are all important elements in determination of the question whether a property is a private or a public religious endowment. We are satisfied that in this case all the above tests are fulfilled. To sum up from the documentary and oral evidence produced, the following features are present in the present case: (1) The deity installed in the temple was intended by the Founder to be continually worshipped by an indeterminate multitude of the Hindu public: (2) In order to facilitate worship by the public, the founder also intended that regular Bhajan, Kirtan and worship shall be maintained and annual ceremonies and processions for pilgrimage shall be conducted by the saints in succession nominated by the reigning saint. (3) There has been no evidence of any hindrance or restriction in the matter of continuous worship by the public extending over a long period. (4) More than a century ago the temple in its own name was recipient of land by Royal grant and the same has been managed by the saints in succession as Manager not as personal or private property. (5) Gifts of land by members of the public from the Taluka and outside it in favour of the temple or of the Sansthan for the purpose of maintenance of the worship. (6) Collection of subscriptions were made from house to house by taking Maharaj and also for 'Gulal ' ceremony. (7) Holding out of the Sansthan to all intents and purpose as a public temple. 531 (8) Treating of the Sansthan by those who are connected with the management as intended for user by the public without restriction. (9) Absence of any evidence in the long history of the Sansthan to warrant that it had any appearance of, or that it was ever treated as a private property. While each case of endowment as to its character depends on the particular history. tradition and facts, the presence of the above features in the instant case lead to the inescapable conclusion that Shri Vithal Rukhamai Sansthan at Amalner is a public trust within the meaning of section 2(13) of the Act. In the result the appeal fails and is dismissed. We will, however, make no order as to costs. P.B.R. Appeal dismissed.

The principles of law for determination of the question whether an endowment is public or private are: (1) In a private trust, the beneficiaries are specific individuals who are ascertained or capable of being ascertained; in a private trust, they are the general public or a class thereof which is incapable of being ascertained. [526C] (2) The intention of the founder as to whether specified individuals or the general public or any specified portion thereof could have the right of worship. [526E] (3) When property is dedicated for the worship of a family idol, it is a private and not a public endowment. Where the beneficiaries are not specified individuals, the endowment can only be regarded as public. [526 F] Devki Nandan vs Murlidhar. ; and State of Bihar & Ors. vs Smt. Charusila Dasi, [1959] Suppl. S.C.R. 601/613, referred to. (4) Proof of user by the public without interference would be cogent evidence that the dedication is in favour of the public. [527A] Narayan Bhagwantrao Gosavi Balajiwala vs Gopal Vinayak Gosavi and others; , , referred to. (5) It is unusual for rulers to make grants to a family idol. [527B] (6) Participation of the members of the public in the darshan in the temple and in the daily acts of worship or in the celebrations on festival occasions may be a very important factor to consider in determining the character of the temple. [527E] Tilkayat Shri Govindlalji Maharaj vs The State of Rajasthan and others, [1964] 1 S.C.R. 561. referred to. (7) The origin of the temple, the manner in which its affairs are managed, the nature and extent of the gifts received by it, rights exercised by the devotees in regard to worship, the consciousness of the manager and the consciousness of the devotees as to the public character of the temple establish whether a temple is a public or a private temple. [527F] Goswami Shri Mahalaxmi Vahuji vs Rannchhoddas Kalidas and ors. ; , referred to. (8) It is not always possible to have all the features of a public trust in a given case: even some of the tests may be sufficient to conclude about the character of the trust. [528E] Dismissing the appeal ^ HELD: In the instant case from the documentary and oral evidence the following features are present: (i) The deity installed in the temple was intended by the founder to be continually worshipped by an indeterminate multitude of the Hindu public. (ii) In order to facilitate worship by the public, the founder also intended that regular bhajan, kirtan and worship shall be maintained and annual ceremonies and processions for pilgrimage shall be conducted by the saints in succession nominated by the reigning saint. 519 (iii) There has been no evidence of any hindrance or restriction in the matter of continuous worship by the public extending over a long period. (iv) More than a century ago the temple, in its own name, was the recipient of land by Royal grant and the same has been managed by the saints in succession as manager, not as personal or private property. (v) Gifts of land by members of the public from the Taluka and outside it in favour of the temple or of the Sansthan were made for the purpose of worship. (vi) Collection of subscriptions were made from house to house by taking Maharaj and also for 'Gulal ' ceremony. (vii) Holding out of the Sansthan to all intents and purposes as a public temple. (viii) Treating of the Sansthan by those who are connected with the management as intended for user by the public without restrictions. (ix) Absence of any evidence in the long history of the Sansthan to warrant that it had any appearance of, or that it was ever treated as, a private property. [530E H; 531A B] The above features lead to the inescapable conclusion that Shri Vithal Rukhamai Sansthan is a public trust within the meaning of section 2(13) of the Bombay Public Trust Act.

Appeal No. 1951 of 1975. Appeal by Special Leave from the Award of the Industrial Tribunal, Gujarat in Reference (II) No. 30 of 1974, pub lished in the Gujarat Govt. Gazette dated 23 10 1975 and Civil Appeal No. 631 of 1976 Appeal by Special leave from the Award of the Industrial Tribunal, Gujarat in Ref. (II) No. 158 of 1974 published in the Gujarat Govt. Gazette Part I L dated 15 4 76. V.B. Patel, 1. N. Shroff and H.S. Parihar for the appel lants (In CA 1951/75). S.T. Desai, A. P. Hathi, Mrs. section Bhandare, M. section Narasimhan K.C. Sharma, A. K. Sharma and A. K. Mathur for the appellants in C.A. 631/76. V.M. Tarkunde, K.L. Hathi and P.C. Kapur for the Re spondent in C.A. 1951/75 and Res. 1(1) C.A. 631/76. S.S. Khanduja, S.K. Jain and Mrs. Laxmi Arvid for Re spondent Nos. 1(2) In C.A. 631/76. The Judgment of the Court was delivered by SHINGHAL, J. These two are companion appeals by special leave. They have been heard together at the in stance. of the learned counsel for the parties, and will be disposed by a common judgment. Appeal No. 1951 of 1975 is directed against the award of the Industrial Tribunal Gujarat, dated September 24, 1975, in the dispute between the Alembic Glass Industries Ltd., Baroda, and its workmen, while appeal No. 631 of 1976 arises out of the Tribunal 's award in the dispute between Jyoti Limited, Baroda, and its workmen. Speaking broadly, the dispute in both cases related to the workmen 's demand for 10 days sick leave, with retrospective effect, and ,its accumulation over a period of three years i.e. upto 30 days. The workmen particularly felt aggrieved because by virtue of the first proviso to section 49 of the , hereinafter referred to as the Act, they were not entitled to the sickness benefit for the first two days of sickness except in the case of a, spell of sickness following, at an interval of not more than 15 days, the spell of sickness for which sickness benefit was last paid. It was also a grievance that the benefit under the scheme of the Act was much less than the normal earnings of an employee and was not beneficial to the workmen. The demand was resisted by the Companies in both cases. In the case of the Alembic Glass Industries Ltd., it was contended that the Act provided more than adequate sickness benefits, and any additional 82 benefit would place unproductive financial burden on the industry and would have an all round adverse effect on other industries. It was also urged that section 99 of the Act gave wide powers to the Employees ' State Insurance Corpora tion to enhance the benefit and it was therefore the proper authority to examine the demand. The Company also contended that there was no practice of giving any such sick leave in the industries in Baroda or in the State of Gujarat. In the case of Jyoti Ltd. an objection was taken that the reference was incompetent and the Tribunal had no jurisdiction to entertain it. It was also pointed out that the benefit of sick.leave of 7 days per year was initially given to the workmen under an award dated August 29, 1958 which contained a specific direction that it would be automatically discon tinued when the benefits of the Employees ' State Insurance scheme would become available to the workmen, and also that the reasonableness of the demand could not be examined by the Tribunal. An objection was also taken that the workmen had benefited a lot under the entire scheme of the Act and it would not be reasonable and proper to confer any addi tional benefit as the demands would place a heavy financial burden on the Company which it Could not bear. The demand, according to the Company, would create an absurd position inasmuch as a worker would receive more wages by remaining absent than on duty. The Company also pleaded that the demand for sickness leave could not be granted retrospec tively or allowed to accumulate. While the reference in the case of Jyoti Ltd., Baroda, was still pending, the Tribunal gave its award dated Septem ber 24, 1975 in the case of the Alembic Glass Industries Ltd. The Tribunal, inter alia, awarded 7 days sick leave with full pay and dearness allowance to the workmen of that Company in a year, with the facility of accumulation upto 21 days. It was stated before the Tribunal, on behalf of the workmen of Jyoti Ltd., that the arguments advanced and the contentions made in the case of the Alembic Glass industries may be considered as those made in their case also. The reference in the case of Jyoti Ltd. proceeded accordingly and resulted in the award dated March 9, 1976 to which reference has been made above. The award was on the lines of the earlier award in the case of the Alembic Glass Indus tries case, except .that the direction regarding 7 days sick leave was given retrospective effect from January 1, 1975. The Company applied for and obtained special leave to appeal as aforesaid, with the further direction that the appeal may be heard along with the identical matter (in the Alembic Glass Industries case). This is why these two have become companion appeals and are being disposed of together. The controversy in these cases is whether the benefits admissible under the Act in the matter of the grant of sick leave are such as to justify the rejection of the workmen 's demand and the setting aside of the Tribunal 's awards in that respect. It has been argued by the learned counsel for the appel lants that as the benefits of sections 47 and 49 of the Act are already admissible to workmen in Baroda with effect from December 14, 1969, and they are quite adequate, the Tribunal committed an error 83 of law in granting the additional benefits mentioned above. Reference in this connection has been made to section 61 of the Act which provides that when a person is entitled to any of the benefits provided by the Act, he shall not be enti tled to receive any similar benefit admissible under the provisions of any other enactment. The argument was raised in the Tribunal, but was rejected. A similar question arose for consideration in The Hindustan Times Ltd., New Delhi vs Their Workmen(1) and was answered as follows by this Court, "Mr. Pathak has tried to convince us that in view of the provisions of the , no provision need be made about sickness leave at all. That this Act has been applied, to the Company and that the workmen of the Company get the benefit of this Act is not disputed. It is difficult to see however how the benefit that the workmen will get under this Act can affect the question of sickness leave being provided for the workmen. This Act it has to be noticed does not provide for any leave to the workmen on the ground of sickness. It provides in section 46(1)(a) for periodical treatment of any insured person in case of his sickness if certified by a duly appointed medical practitioner. It is unnec essary to mention here the several provisions in the Act; viz., Sections 47, 48 and 49 which deal 'with the eligibility of workmen for sickness .benefit and the extent of the benefit that may be granted. Section 56 of the Act pro vides for medical benefits to the insured workmen or in certain cases to the members of his family. It appears to us clear however that in providing for periodical payments to an insured worker in case of sickness (sickness benefit) or for medical treatment or attendance to him or the members of his family, the legislature did not intend to substitute any of these benefits for the workmen 's right to get leave on full pay on the ground of sickness. " The matter came up again for consideration by this Court in Technological Institute of Textiles vs Its Workmen and others(2) and it was held as follows with specific reference to the first proviso to section 49 of the Act according to which a person qualified to claim sickness benefit is not enti tled to it for the initial waiting period of two days except in the case of continuous illness of the nature mentioned therein, "With regard to sick leave, the argument on behalf of the appellant was that benefits were granted by the , but .that is not a bar to the demand of the workmen for sick leave. The reason is that the first proviso to section 49 of the Employees ' State (1) [1964] 1 S.C.R. 234. (2) [1965] 2 L L.3,149. 84 Insurance Act states that a person qualified to claim sickness benefit shall not be entitled to the benefit for an initial waiting period of two days except in the case of a spell of sickness following at an interval of not more than fifteen days, the spell of sickness for which benefit was last paid. It is apparent that the Employees ' State Insurance Scheme does not cover all contingencies of sickness and in any event the first two waiting days are not covered. In our opinion, the tribunal was, there fore, justified in its view that the workmen are entitled to 7 days ' sick leave with wages on pro duction of a medical certificate. " It would thus appear that the Scheme of the benefits admissible under the Act cannot be said to cover the work men 's demand for sick leave to the extent allowed by the Tribunal. Section 61 of the Act cannot thus be said to be applicable for the simple reason that the benefits granted by the Tribunal are not similar to those admissible under the Act. The Act does not in fact deal with the question of sickness leave. The other question regarding the adequacy of the sick ness benefit under the provisions of the Act has been exam ined by the Tribunal with reference to the reports of the National Commission of Labour, 1969, the Labour Laws Review Committee and the Norms Committee of Gujarat State, which go to show that the benefit cannot b.e said to be adequate for, it works out to about half the average wage of a workman, and even that amount is not admissible for the first two days of sickness except in the case of a spell of sickness following, at an interval of not more than 15 days, the spell of sickness for which the sickness benefit was last paid. It has to be appreciated that a workman is prevented from earning the normal daily wages during the period of his illness and there is no justification for the argument that the rate of benefit at about half his wage, under the Act, should be considered sufficient so as to deny him the bene fit of sick leave on full emoluments for a period of 7 days when he is certified by a competent medical officer to be ill for that or a longer period. Sickness is a serious misfortune to a workman for it not only prevents him from earning his normal wages, but is a drain on his meagre financial resources by way of additional expenditure on food, nursing and visits to the medical centre etc. It has not been disputed before us that the "region cure industry" basis is suitable in cases like the present for examining any controversy regarding the work man 's demand for additional benefits, but it has been argued by the learned counsel for the appellants that the award of the benefit of sick leave to the workers of the two Compa nies could not be justified on that basis. We find that the Tribunal has examined this aspect of the controversy also, and we have no reason to disagree with the view which it has taken. As has been stated, the Act came into force in the region concerned on December 14, 1969, and it has not been disputed before us that till then it was the practice in the glass industries to grant sick leave with wages for periods varying from 6 to 10 days. In fact in the 85 case of the Alembic Glass Industries Ltd., Baroda, the Tribunal made an award for 7 days sick leave on full pay and dearness allowance in 1958, subject to the condition that the benefit would cease to apply when the benefits of the Act became available to the workmen. The benefit of sick leave was therefore lost when the Act was made applicable to the region from December 14, 1969. That was obviously under a mistaken impression of the sickness benefit which the Act allowed for, as has been shown, it does not deal with all aspects of the demand for sickness benefit and does not, at any rate, provide for the grant of leave on full emoluments during the period of the workman 's physical incapacity to earn his normal wages because of his sickness. It there fore appears that the Tribunal could not be said to have erred in restoring the benefit which the workmen were re ceiving under the award of 1958, for it was taken away under the mistaken impression that it had been adequately replaced by the new provisions on the coming into force of the Act. The appellants have filed a statement (exhibit 7) containing information regarding the companies which have provided the benefit of sick leave to its workmen in the region. It shows that even though the Act was applicable to the workers of the Precision Bearings India Ltd., Baroda, Hindustan Brown Bovari Ltd., Baroda, the Associated Cement Companies Ltd., and M.S. University Press, Baroda, the benefit of sick leave has been allowed to the workmen of. those companies. It is therefore .futile to contend that the benefit should not be admissible on the ground that it had not been allowed by other companies in the region. We also find that such a benefit has been allowed in the case of glass industries by Shree Vallabha Glass Works Ltd., Vallabh Vidyanagar, Ogale Glass Works Ltd., Oglewadi and Vijay Glass Works, Bombay. Even the Alembic Glass Industries Ltd. has allowed 6 days sick leave in a year to its employ ees in Bangalore and it is permissible to accumulate it upto 12 days in addition to the current year 's leave, under a settlement dated July 17, 1969, which is being continued even after the coming into force of the Act. Learned coun sel for the appellants have invited our attention to the case between the Textile Labour Association and the Ahmeda bad Millowner 's Association where the demand for sick leave was refused but, as the Tribunal has pointed out, the demand there was for a month 's leave every year in addition to 15 days casual leave and pay in lieu of privilege leave. The Full Bench of the Industrial Court in that case considered the paying capacity of the mills also, and held that the additional leave demanded by the workmen would be very much beyond the paying capacity of the industry. As against this, the Tribunal has examined the financial capacity of the two companies in question, and has given adequate rea sons for holding that they are in good financial position and can bear the additional burden of sick leave. Learned counsel for the appellants have in fact not advanced any argument to the contrary. Mr. S.T. Desai has raised the argument, in the case of Jyoti Ltd., Baroda, that the Tribunal laboured under a misconception that 86 the sickness benefit would be lost for the first two days of sickness under the first proviso to section 49 of the Act, that the Tribunal should not, in any view of the matter, have given the benefit of 7 days sick leave, and that the workmen did not deserve anything more than sickness benefit for the first two days also. According to him, what has been awarded by the Tribunal is additional privilege leave for 7 days in the garb of sick leave. The argument is however futile because, as has been stated, the Tribunal has cor rectly examined the controversy and given adequate reasons for allowing the benefit of 7 days sick leave in the manner set out in the award. Such a leave could not be categorised as privilege leave as, by its very nature, it would be admissible only in the case of actual sickness certified by a registered medical practitioner. It would thus appear that the appellants have not been able to show that the awards in question are illegal or unjust; or would adversely affect the economy or the indus trial peace, or lead to imbalance in the conditions of service in other industrial establishments. It appears, however, that it was not necessary, in the circumstances of the case, to award the benefit of the sick leave with retro spective effect from January 1, 1975, in the case of Jyoti Ltd. Baroda. The appeals therefore fail and are dismissed except that the award in the case of Jyoti Ltd., Baroda, is made effective from the date of its commencement. The appellant companies shall pay to the workmen ' the costs of these appeals; one set of counsel 's fees. P.B.R. Appeals dismissed.

The workmen 's demand for grant of sick leave and its accumulation upto a period was rejected by the employers on the ground that the provided more than adequate sickness benefits, and that any additional benefits would place a financial burden on the industry and would adversely affect other industries in the region. The Tribunal, to which the dispute was referred, partly granted the workmen 's demand. On appeal to this Court it was contended that section 61 of the debarred a person enti tled to any of the benefits under that Act from receiving similar benefit under the provisions of any other Act and as such the workmen were not entitled to the benefit of sick leave. Dismissing the appeals, HELD: (1) The , does not deal with the question of sick leave. The scheme of the benefits admissible under the Act does not cover the work men 's demand for sick leave to the extent allowed by the Tribunal. Section 61 is not applicable because the benefits granted by the Tribunal are not similar to those admissible under the Act. [84 C] The Hindustan Times Ltd., New Delhi vs Their Workmen [1964] 1 SCR 234 and Technological Institute of Textiles vs Its Workmen and others applied. (2) Sickness benefit under the Act cannot be said to be adequate, for, it works out to about half the average wage of a workman which benefit is not admissible for the first two days of sickness except under the conditions provided in the Act. A workman is prevented from earning the normal daily wages during the period of his illness and there is no justification for the argument that the rate of benefit at about half his wage, under the Act, should be considered sufficient so as to deny him the benefit of sick leave on full emoluments for a period of 7 days when he is certi fied by a competent medical officer to be ill for that or a longer period. Sickness is a serious misfortune to a work man for it not only prevents him from earning his normal wages, but is a drain on his meagre financial resources by way of additional expenditure on food, nursing and visits to the medical centre etc. [84 E F] (3) The Tribunal could not be said to have erred in restoring the benefit which the workmen were receiving under an earlier award. The benefit of sick leave to the employ ees in the region was lost when the Act was made applicable to the region from December 14, 1969. This was obviously under a mistaken impression. The Act does not deal with all aspects of sickness benefit and does not provide for the grant of leave on full emoluments during the period of a workman 's physical incapacity to earn his normal wages because of his sickness. [85 B C] (4) There is no force in the argument that the Tribunal had granted additional privilege leave for 7 days under the garb of sick leave because by its very nature sick leave would be admissible only in the case of actual sickness certified by a registered medical practitioner. [86 B] (5) There is no evidence to show that the benefit had not been allowed by other companies in the region. The Tribunal had examined the financial 81 capacity of the companies and had given adequate reasons for holding that they were in good financial position and could bear the additional burden. [85 H] (6) It has not been shown that the awards are illegal or unjust, or would adversely affect the economy or the indus trial peace, or lead to imbalance in the conditions of service in other industrial establishments. [86 C]

N: Criminal Appeals Nos. 39 40 of 1976. (From the Judgment and Order dated 1 12 1975 of the Punjab and Haryana High Court in Criminal Original Nos. 13 Crl. of 1975 and 14 Crl. of 1975). D. Mookherjee and Harbans Singh and V.M. Jain, for the appellants. Deven Chetan Das, Advocate General, Haryana and R.N. Sachthey, for the respondent. The Judgment of the Court as delivered by RAY, C.J. These are appeals under section 19(1)(b) of the against the judgment and order dated 1 December, 1975 of the Full Bench of the High Court of Punjab and Haryana. 243 The appellants wrote a letter on 20 February 1975 to the President with copies to the Prime Minister, Chief Justice of India, the Chief Minister of Haryana and the Chief Jus tice of Punjab and Haryana High Court. The letter was signed by 15 members of the Bar belonging to the District Bar Association, Bhiwani. In that letter they brought to the notice of the President that Justice D.S. Tewatia of the Punjab and Haryana High Court visited the session division of Bhiwani and inspected the Courts from 14 February 1975 to 19 February 1975. In that letter they further stated as follows: "The learned Judge met the members of the Bar on 15 February, 1975 in the Bar Room, Bhiwani. During the course of the meeting, the learned Judge criticised the Government 's policy in regard to its attitude towards the judiciary. Besides the learned Judge was openly attacking the Govern ment in its political as well as administrative decision. On the ' whole, he gave an impression that he was not a Judge but a politician who had come to Bar Room. When the members of the Bar who had gone to meet the learned Judge in the P.W.D. Rest House, Bhiwani he discussed politics with them and criticised the present executive in general and the Congress Party in particular. He suggested the members of the Bar to revolt against the present Government as it has suppressed the civil liberation (sic) of the individuals and has also failed miserably in all fields. The Judge further said that the prevailing system of Government is not good in this country and we must adopt the communist form of Govern ment which can save the nation. Later on he had some pri vate political discussion with the local C.P.M. leaders. He also accepted the hospitality of the Technological Institute of Textiles (Mills) people who also took him for a sight seeing from Dadri to Pilani. The members of the District Bar Association highly regret the attitude of Justice D.S. Tewatia and urge the Government to take appropriate action in this regard". Five members of the Bar Association at Charkhi Dadri sent a letter addressed to the President. with copies to the Chief Justice of Punjab and Haryana High Court, the Chief Minister of Haryana, the Chief Justice of India and the Prime Minister. In that letter they said that Justice D.S. Tewatia visited the Bar and inspected the court at Charkhi Dadri on 17 February, 1975. Thereafter they stated as follows: "While talking with the members of the Bar, he pointed out that the library of this Bar seems to be very poor. Then Shri Virender Kumar Single, a member of the Bar requested the honourable Judge to help the Bar either by supplying books or by allocating the grant by the High Court so that the needy Bar may be able to purchase necessary books for the library. Then the Honourable Judge turned down the request and replied that it is never possible in the present system of Government of India. If you want this kind of help then you should prepare yourself for the commu nist Government in India by creating such atmosphere in the country. At another stage also during the course of his discussion with the members of the Bar over the matter of Rajasthan Law students demands in which they demanded a grant 244 of Rs. 5000/ from the Government for the library of each fresh law graduate and Rs. 200/ per month for a period of two years the initial stage of their legal practice he strongly emphasised the need for the communist system of Society and Government in India to fulfil these demands. The learned Judge also met Smt. Chandrawati separately and discussed with her the political affairs of the State. He also expressed his desire to see Comrade Dharam Singh a member of the Marxist Communist Party at his residence before Smt. Chandrawati. During his stay in the rest house he also discussed the teachers agitation and individual position of various political leaders in the State. He also enquired all about Shri Sohan Lal a leader of the teacher 's movement in the State". The letter concluded by saying that the Hon 'ble Judge during his entire stay in his tour deliberately showed the bent of his mind towards commu nism while exchanging view on various matters. The appellants took a copy of their letter to the Chief Justice of Punjab and Haryana. The appellants could not see the Chief Justice and left the letter with the Registrar in a closed cover. The Registrar told them that the closed cover could reach the Hon 'ble Chief Justice, A notice was issued by the High Court on 12 March 1975 as follows: "Letter dated 20th February, 1975 a copy of an application dated 20 February, 1975 signed by 15 members of the District Bar Association, Bhiwani, has been placed for the consideration of this Bench. On a perusal of the con tents thereof, a prima facie case of criminal contempt is made out. We therefore direct that the contempt of Court (Punjab 'and Haryana) Rules, 1974 be issued to each of the signatories of the above said application, returnable for the 1st of April, 1975". The High Court did not take any action against two persons on the letter written by five members of the Bar Association of Charkhi Dadri. Each of the appellants affirmed an affidavit in this pattern. "It is an article of faith with the deponent that dignity and respect of all Courts and of all Judges and particularly of the High Court must be maintained for, amongst other reasons, on that depends the orderly function ing of the society as also prestige of the profession to which the deponent has the honour to belong. The deponent has been taught to believe that a Judge ought always to steer clear of all avoidable controversial matters. The deponent most respectfully submits that the contents of the letter which he and others addressed to the President of India cannot be construed as scandalising the Hon 'ble Judge or the Court in any manner to weaken people 's faith in the administration of justice. The letter in question was addressed by the deponent to the President of India with copies to others with the sole object of conveying the opinion that the public expression by the Hon 'ble Judge of his personal views on controversial political matters con cerning the merits and demerits of the present system of the Government was not in keeping with the well accepted role of proverbial aloofness of a Judge. The letter was addressed ,bona fide, in good faith and without 245 any ill will and no publicity was given to it. It was intended to be a privileged communication made solely with a view to uphold the dignity of the Court. In order to prevent unwanted disclosure of its contents, the communica tion in question was brought personally by two members of the Bar Association, Bhiwani to Chandigarh in a closed cover addressed to the Chief Justice for being handed over to him for his personal attention. The deponent submits that the contents of the letter. have no relevance or relation to the functioning of the learned Judge of the High Court. The letter does not interfere much less substantial ly with due course of justice or proper administration of law by the courts. The deponent submits that there was no intention whatsoever on his part to scandalise the Hon 'ble Judge or this Hon 'ble Court or to lower the authority or undermine the prestige of the learned Judge or of the Hon ' ble Court or to weaken in any way the confidence of the people in the administration of justice. The deponent respectfully submits that the communication does not bear out any foundation for an action for criminal contempt. In any case, if in view of this Hon 'ble Court, the action of the deponent in addressing the letter in question constitut ed for any reason contempt of court, one would be more sorry than the deponent himself. Therefore, the deponent tenders his apology to this Hon 'ble Court, for the same, and prays for its acceptance. " The Full Bench of the High Court consisting of Justice Surjit Singh Sandhawalia, Justice Prem Chand Jain and Jus tice Bhupinder Singh Dhillon extracted portions from the affidavit of the appellants to which references has been made. The Full Bench thereafter referred to paragraph 9 of the affidavit where the deponents said that "if in view of this Hon 'ble Court the action of the deponent in addressing the letter in question constituted for any reason contempt of court, no one would be more sorry than the deponent himself. Therefore, the deponent tender his apology to this Hon 'ble Court for the same and prays for its acceptance". After the recital of paragraph 9 the judgment of the Full Bench said as follows: "In view of the averments made in the affidavit filed in rely and in particular in paragraph 9 thereof we accept the apology tendered on behalf of the respondents and discharge the rule issued against them". In our view the judgment is utterly unsound and unsus tainable. The elementary basis of acceptance of apology is that there is to be a finding of committal of contempt. The deponents stated that if the Court is of the view that the letter of the deponents constitute for any reason contempt of court, the deponents tender apology. It is a conditional apology. The condition is that if there is contempt the deponents tender apology. In the absence of any finding by the High Court that the appellants committed any contempt of court there was never any occasion for acceptance of apology. It appears before us that the allegations in the letter were not disputed and challenged. The High Court proceeded on the basis that the letters written by the appellants were correct. It is indeed curious 246 that the High Court in the notice referred to the letter of the appellant and said "on a perusal of the contents thereof a prima facie case contempt is made out". The High Court did not mention which particular portion of the letter constituted contempt of court. It is necessary to state here that if any Judge address es on political problems or controversies the Judge exposes himself to discussion by public. The reason is that the Judge travels from his judicial work and descends into the arena of politics and parties. The Judge cannot in such a case take shelter behind his office if the public discusses and criticises the views expressed by him. The reason is obvious. It is no part of the duty of a Judge nor is it a duty in discharge of office of a Judge to go and address a meeting on political matters to redress grievances of the people. However, if the speech of any Judge is criticised and if it becomes a disputed question of fact as to whether any Judge did speak or not as is alleged by the writer the matter would have to be ascertained by the court on facts whether the Judge concerned did speak on the matters ascribed to him before the court would take any action against the persons who would criticise the Judge 's speech. We wish to make it clear that if on facts it appears that the Judge did say things or matters about politics such utterances or views or observations will be the personal opinions expressed by the Judge, and, therefore, the protec tive umbrella of the court cannot be used by way of bringing the critics on the charge of contempt of court. It also appears in the letter that there is an allega tion that the Judge accepted hospitality of some organisa tion. To say that will not by itself be a contempt. All we need say is that it will not be correct and proper for any Judge to accept the invitation and hospitality of any busi ness or commercial organisation or of any political party or of any club or organisation run on sectarian, communal or parochial lines. Invitations by the Bar Associ ation or social invitations naturally Stand on a different footing and no one will find an exception to any Judge attending a social function. Judges are by reason of their office and nature of work expected not to get involved in controversial matters, or to concern themselves with political issues or policies under taken by political parties as a part of their political programme. We are of opinion that the Full Bench fell into the error of accepting the apology without finding that the appellants committed any contempt. In the absence of such a finding no question arises for acceptance of apology. In view of the fact that the High Court proceeded on the basis that the allegations in the letter were unchallenged we are of opinion that the matters did not constitute any contempt. The High. Court should have dropped the proceed ings and not pursued the matter. 247 The judgment is set aside. The contempt proceedings are dropped. We should state here that the Advocate General of Haryana quite fairly stated that the letter did not consti tute any contempt. M.R. Appeals allowed.

The appellants wrote a letter to the President of India, with copies to some others including the Chief Jus tice of Punjab and Haryana High Court, criticising, the behaviour of a High Court Judge, who, during his visit to the Sessions Division of Bhivani, spoke against the Govern ment 's policies and canvassed for a communist system. The High Court issued a notice against the appellants; making out a case of criminal contempt of court. The appellants tendered a conditional apology contingent on the courts finding their action to be contempt of court. The apology was accepted. Allowing the appeals and dropping the contempt proceedings, the Court. HELD: (1) The elementary basis of acceptance of apology is that there is to be a finding of committal of contempt. The Full Bench fell into the error of accepting the apology without finding that the appellants committed any contempt In the absence of such a finding, no question arises for acceptance of apology. F G] (2) Judges are, by reason of their office and nature of work, expected not to get involved in controversial matters, or to concern themselves with political issues or policies undertaken by political parties. If any Judge addresses on political problems or controversies, the Judge exposes himself to discussion by public. He cannot in such a case take shelter behind his office if the public discusses and criticises the views expressed by him, and the protective umbrella of the court cannot be used by way of bringing the critics on the charge of contempt of Court. [246 A D, F G]

Civil Appeal No. 1744 of 1968. (Appeal by Special Leave from the Judgment and Order dated 14 6 1967 of the Mysore High Court in Writ Petition No. 440/65). Mrs. Shyamala Pappu and Girish Chandra, for the Appellant. Narayana Nettar, for Respondents 4 and 5. 3 1338SCI/76 828 The Judgment of the Court was delivered by BEG, J. The judgment under appeal after certificate of fitness of the case under Article 133(1)(c) of the Constitu tion of India, is very short as it purports to follow the ratio decidendi of Union of India vs G.M. Shankariah & Ors. ,(1) where this Court had held upon a concession by the Attorney General, that a list prepared under Section 115 of the , (hereinafter referred to as 'the Act '), was provisional. Therefore, it was held that the writ petition was premature as the final list of officers on an integrated seniority list was still to be prepared after hearing objections. The High Court of Mysore seems to have been under the misapprehension that the case now before us is also governed by what was held by this Court in Shankariah 's case (supra) with reference to an entirely different and provisional list of Forest Officers. The case now before us pertains to Animal Husbandry and Veterinary Services of the Mysore State in which the petitioner, was given, in the final integration list, a position to which he objected. Apparently, the petitioner, whose date of birth is given as 28th June, 1915, has retired. He is a respondent who has not appeared before us, and, therefore, could not be heard by us. We have, however, gone through his petition and the affidavit filed in its support where, in paragraph 16, he states as fol lows: "The Mysore State Civil Service Integra tion Rules 1960 provide for filing objections only against the preliminary provisional Inter State Seniority List and do not provide any provision for filing objections or appeal ing against the final Inter State Seniority List as per Annexure 'B '. Thus we have no other legal remedies open to us for the re dressal of our grievances and the abridgement of our fundamental rights guaranteed under the Constitution of India, and, therefore, we are forced to approach this Honble Court to invoke the writ jurisdiction for the redressal. " It is apparent that the petitioner re spondent was claiming relief against the final Inter State seniority list although he was given due opportunity to object to the provi sional list. Mrs. Shyamala Pappu, who has looked up the departmental records, informs us that the petitioner was given ample opportu nity to file his objections to the preliminary list. Now, Shankariah 's case (supra) was con fined to an admission on behalf of the Central Government that the list before the Court was provisional so that the petitioners before the Court on that occasion were to get opportuni ties of puting forward their objections before the final list is prepared. In the case before us, the petitioner admits that the Mysore State Civil Services Integration Rules provided for filing of objections against the preliminary provisional Inter State Seniori ty list. Presumably, he had that opportunity. Otherwise, he would, no doubt have objected that the rules had not been complied (1) S.L.R. 1969 p.1 (C. As. 1439 & 1446 of 1967 decided on 16 10 1968). 829 with, which he did not do. His grievance seemed to be that he was not heard after the final list was prepared. We are unable to appreciate. this line of attack upon the final list. We think that the concession in Shankari ah 's case (supra) was confined to the facts of that particular ease. There the list was provisional. The most that could be urged, in the light of decisions of this Court, is that a person whose seniority is to be determined under Section 115 of the Act must be given. an opportunity to object to the proposed assign ment of a place to him in the seniority list. As already observed above, the petitioner had ample opportunity to do that. Hence, the principle recognised in Shankariah 's case (supra) was not applicable to such a case. The judgment of the Mysore High Court was, in our opinion, based on an apparent misun derstanding of Shankariah 's case (supra) and on a failure to appreciate the facts of the case of the petitioner respondent which is now before us. There was not reference whatsoever to any facts of the case in the order of a few lines by which the petitioner 's petition was disposed of by the High Court on the errone ous assumption that it was governed by Shan kariah 's case (supra). As the petitioner in the High Court, who is the, respondent before us, was unrepresented, Mrs. Shymala Pappu, appearing on behalf of Union of India, very Conscientiously, took us through Union of India & Anr. P.K. Roy & Ors. ( '1) from which, learned Counsel thought, the following observations could perhaps be cited on behalf of the petitioner respondent (at p. 202): "it was argued by Mr. Ashoke Sen that in regard to both these matters the respond ents have a right of representation and the final gradation list should have been pub lished after giving them further oppor tunity to make a representation. Normally speaking, we should have thought that one opportunity for making a representation against the preliminary list published would have been sufficient to satisfy the require ments of law. But the extent and applicationof the doctrine of natural justice cannot be imprisoned within the straight jacket of a rigid formula. The application of the doctrine depends upon the nature of the jurisdiction conferred on the administrative authority, upon the character of the rights of the per sons affected, the scheme and policy of the statute and other relevant circumstances disclosed in the particular case (See the decision of this Court in Shri Bhagwan and Anr. vs Ram Chand & Ant. ; , 222. In view of the special circumstances of the present Case we think that the respondents were entitled to an opportunity to make a representation with regard to the two points urged by Mr. Ashoke Sen before the final gradation list was published. As no such opportunity was furnished to the respondents with regard to these two matters (1) 202. 830 we hold that the combined final gradation list dated April 6, 1962, so far as category 6 is concerned, is ultra vires and illegal and that part of the notification alone must be quashed by grant of a writ in the nature of certiorari". We think that any claim to have a say against the final fist prepared, on an analogy with the second opportunity which is afforded to a person to be punished after arriving at a decision on the facts of a departmental trial and proposal to inflict a particular punishment upon him, is quite inap propriate. No element of punishment at all is involved in preparing either a provisional or a final seniority list. All that is done is that certain principles are applied in the preparation of the list. These principles are generally found in the rules or executive directions which are known to or are capable of being found out by the persons affect ed. When a provisional seniority fist is prepared, there is a possibility of some mistakes occurring about the facts of a case or in the application of those rules. It would, therefore, be quite fair to give a person affected an 'oppo rtunity to be heard against the proposed fist before it is finalised so that any possible mistakes, either on facts relating to his particular case or of law in applying the rules governing seniority to those facts, may be rectified. But, once he has had that opportunity, it cannot possibly be said that he should have a further opportunity against even a final seniority list. If he was to have that opportunity the list would not really be final but only provisional or preliminary. It will be obviously contradictory to hold it to be a final list and yet declare it Subject to modifica tions on further objections. We are unable to find any rule of natural justice having such a paralysing scope. In P.K. Roy 's case (supra), the opportunity afforded was to be given before the publication of the final list. It was an opportunity to be given before the final list was to be declared and published as a final list. A right to representation was recognised as existing at time when the list was still to be considered as not finalised presumably because some mistakes had crept in due to want of heating on two points. Evidently what was meant was that the publication gave the list finality. In that particular case, the fist had been prepared without due regard to the particular important points which had to be considered before finalisation. What we have observed does not mean that, if a final list is prepared contrary to the rules applicable or is vitiated on some ground showing that a condition precedent to the finalisation of the list is absent, it would still be inviolable ,Dr sacrosanct. Even a list purporting to be final can be vitiated by non observance of conditions prece dent. In order to establish the invalidity of the final list on some such grounds of invalidity, those grounds have to be shown to exist. We find no such grounds in the ease before us. Learned Counsel for the Central Government had cited before us Union of India vs G.R. Prabhavalkar & Ors. (1) where it was held by this Court (at p. 2106): (1) A.I.R. 1973 'S.c. 2102 at 2106. 831 "In our opinion the contentions of the learned Additional Solicitor General are well founded. The Central Government, under Sec. 115 of the Act, has to determine the princi ples governing equation of posts and prepare a common gradation list by integration of services. To assist it in the task of inte gration of services and for a proper consid eration of representations, the Central Gov ernment is empowered to establish Advisory Committees. The Central Government is bound to ensure a fair and equitable treatment to officers in the matter of integration of services and preparation of gradation lists. It has also to give a full and fair opportuni ty to the parties affected to make their representations; and the Central Government has also to ,give a proper consideration to those representations. So long as the Central Government has acted properly according to the provisions of the Act, we are of the view that a Court cannot go into the merits or otherwise of equation of posts which is a matter within the province of the Central Government". It was also held there (at p. 2106): "It is no doubt true that the Central Government must have due regard to the princi ples enunciated by it in consultation with the States for the purpose of equation Of posts. It must not only give an opportunity to the concerned officers to make representations, but it must also give those representations a proper consideration. It is not within the province of the Courts to lay down what are in the principles to be adopted for purposes of equation. That falls within the purview of the statute concerned and the authorities charged with such duty. The power of the Courts is only to see that an authority has acted properly in accordance with the statute. If that is established, the decision of the authorities concerned will have to stand. If a particular decision is mala fide or arrived at on totally irrelevant and extraneous consider ations, such a decision can be interfered with by Courts. In this case, no mala fides are alleged. " We find that, as was the case of the petitioner in Prabhavalkar 's case (supra), the petitioner respondent Dr. R.D. Nanjiah, and others similarly placed respondents before us have been unable to make out, in their petitions, any grounds for interference with the final list. We, therefore, allow this appeal, and set aside the judgment and order of the Mysore High Court. The parties will bear their own costs. V.P.S. Appeal allowed.

(1 ) When a provisional inter State seniority list is prepared for integrating services after States re organisa tion, there is a possibility of some mistakes occurring about the facts of a case or in the .application of the relevant statute or rules or executive directions governing seniority. It would, therefore, be quite fair to give the person affected an opportunity to be heard against the proposed list before it is made final under 8. 115. State Reorganisation Act, 1956, so that. any possible mistakes, either in the facts relating to his case or in the law or rule applied with regard to the proposed assignment of a place to him in the seniority list may be rectified. But, once he had that opportunity. it cannot be said that he should have a further opportunity against even a final seniority list, for then such a list would not really be final but will only he provisional or preliminary. [830 C D] (2) But, even a final list, if it is prepared contrary to the rules applicable or is vitiated on some ground show ing that a condition precedent to the finalisation of the list is absent, or a particular decision is malafide or arrived at on totally irrelevant or extraneous considera tions. such a final list could be declared invalid by the Court. G] In the present case. the officer was not satisfied with the position given to him the final seniority list. But, since he had an opportunity Under the integration rules of the State for filing objections against the preliminary provisional list, he cannot urge that he should he heard again alter the final list was prepared.[829 A] He cannot claim to have a say against the final list on the analogy of a second opportunity to show cause against a proposed punishment in a departmental enquiry, because. no element of punishment is involved in preparing either a provisional or a final seniority list. [830 B] He is not entitled to any relief because he had not made out in his petition to the Court any of the grounds on which a final list can be assailed. [831 G] Union of India vs G.M. Shankariah & Ors. etc. (S.L.R. 1969 p. 1 ) (C As. 1439 & 1446 of 1967 decided on 16 10 1968) explained. Union of India & Anr. v P.K. Roy & Ors. [1968] 2 S.C.R. 186 @ 202 and Union of India vs G.R. Prabhavalkar & Ors. ; at 2106, followed.

270 of 1955. Under Article 32 of the Constitution of India for a Writ in the nature of Habeas Corpus. Hemendra Shah, J. B. Dadachanji and Rajinder Narain, for the petitioner. M. C. Setalvad, Attorney General of India, C. K. Daphtary, Solicitor General of India, (B. Sen and R. H. Dhebar, with them) for the respondent No. 1. 890 1955 October 14. DAS ACTG. This rule was issued on a petition filed under article 32 of the Constitution by one Purshottam Govindji Halai, a citizen of India, calling upon the respondents to show cause why a writ in the nature of a writ of habeas corpus should not be issued by this Court directing the Superintendent, House of Correction, Byculla, being the second respondent herein., to produce before this Court one Govindji Deoji Halai, the father of the petitioner, who is also a citizen of India., for the purpose of being released forthwith. The facts which are not in dispute may be shortly stated as follows. The said Govindji Deoji Halai (hereinafter referred to as the "assessee") is the sole proprietor of a business carried on under the name and style of Indestro Sales and Service Co. at No. 50 52, Lohar Chawl Street in the City of Bombay. Two private limited companies, namely, Indestro India Ltd., and Indestro Eastern Ltd., also carry on business and have their respective offices in the same premises. The assessee is said to have some connection with the two companies the nature of which, however, is not quite clear on the record before us. In respect of his own business of Indestro Sales and Service Co., the assessee was assessed to income tax for the years 1943 44 to 1947 1948 and 1951 1952 by the Third Income tax Officer, C 1 Ward, Bombay, at and for Rs. 40,178 4 0. The assessee not having paid up the assessed amount of tax the Income tax Officer on the 10th April 1951 issued to the ' Additional Collector of Bombay, the first respondent herein, a recovery certificate ,under section 46(2) of the Income tax Act. It may here be mentioned that the Indestro Eastern, Ltd., was also assessed to income tax at and for Rs. 1,92,000 and a recovery certificate was also issued by the Income tax Officer to the Additional Collector of Bombay. On the 1st February, 1954 the Additional Collector issued a notice of demand on the assessee for payment of the assessed amount of tax. No payment 891 having been made, the Additional Collector attached the goodwill and tenancy rights in the said premises by a warrant of attachment issued on the 24th March 1954. The sale proclamation was issued on the 15th January 1955. The sale was held on the 25th February 1955 fetching a price of Rs. 33,000 and it was confirmed on the 30th March 1955. The sale proceeds not being sufficient to satisfy the assessed tax the Additional Collector on the 7th June 1955 issued a notice under section 13 of the Bombay City Land Revenue Act, 1876, requiring the assessee to appear before him in person on the 16th June 1955 and show cause why he, the assessee, should not be apprehended and confined to civil jail in satisfaction of the said certified demand. The assessee did not appear in person on the appointed day but on the next day, the 17th June 1955, an Advocate acting on behalf of the assessee wrote a letter to the Additional Collector purporting to show cause why the assessee should not be arrested and sent to the civil jail. The contentions put forward on behalf of the assessee not being considered satisfactory the Additional Collector on the 30th June 1955 issued a warrant for the arrest of the assessee under section 13 of the Bombay City Land Revenue Act, 1876. The assessee was actually arrested on the 1st July 1955. On the 8th July 1955 an application was made by the present petitioner to the Bombay High Court under article 226 complaining of the arrest of his father, the assessee, and praying for a writ in the nature of a writ of habeas corpus for the production and release of the assessee. A rule was issued by the High Court but eventually on the 24th August 1955 the High Court (Chagla, C.J. and Desai, J.) discharged the rule. No application was made to the High Court for leave to appeal to this Court from the decision of that High Court but on the 2nd September 1955 the present petition was filed in this Court under article 32 of the Constitution for the relief hereinbefore mentioned. On the 7th September 1955 a rule was issued by this Court on that petition subject to the question of its maintainability in view of the dismissal by the 113 892 High Court of the petition under article 226 from which no leave to appeal to this Court had been sought or obtained. The rule has now come up before us for hearing. In the view we have taken about the merits of the petition it is not necessary for us to consider the question of its maintainability after the dismissal of the petition under article 226 or to make any pronouncement, on this occasion, on the scope and ambit of article 32 of the Constitution in that situation. The principal contentions urged by the learned Advocate appearing for the petitioner are as follows, namely, (a) that section 46(2) of the Indian Income tax Act under which the Income tax Officer issued the recovery certificate to the Additional Collector of Bombay is void under article 13(1) of the Constitution in that the same offends article 22(1) and (2), article 21 and article 14 of the Constitution; (b) that section 13 of the Bombay City Land Revenue Act, 1876 under which the warrant of arrest was issued by the Additional Collector is void under article 13 (1) of the Constitution as the same is repugnant to article 14 of the Constitution. We proceed to deal with the objections seriatim. (a): Section 46(2) of the Indian Income tax Act which is impugned before us runs as follows: "46. (1). . . . . . . . (2) The Income tax Officer may forward to the Collector a certificate under his signature specifying the amount of arrears due from an assessee, and the Collector, on receipt of such certificate, shall proceed to recover from such assessee the amount specified therein as if it were an arrear of land revenue: Provided that without prejudice to any other powers of the Collector in this behalf, he shall for the purpose of recovering the said amount have the powers which under the Code of Civil Procedure, 1908 (Act V of 1908), a Civil Court has for the purpose of the recovery of an amount due under a decree. The first objection to the above sub section is that it 893 contravenes the fundamental rights guaranteed by clauses (1) and (2) of article 22. In view of the decision of this Court in the State of Punjab vs Ajaib Singh & Another(1) this objection has not been pressed before us and we need say no more about it. The second objection to section 46(2) of the Indian Income tax Act is that it is violative of article 21. Article 21 guarantees that no person shall be deprived of his personal liberty except in accordance with procedure established by law. In this case the assessee has been arrested and is being detained in jail in execution of a warrant of arrest issued under section 13 of the Bombay City Land Revenue Act, 1876 for the recovery of the demand certified under section 46(2) of the Indian Income tax Act. As long as those sec tions stand no complaint can be made of infringement of article 21, for those two sections constitute a procedure established by law. It is only if those sections are void that the question of violation of the fundamental right under article 21 can arise at all. We have, therefore, to pass on to the third objection to section 46(2) founded on article 14 of the Constitution which alone has been strenuously insisted on before us by learned counsel for the petitioner. Article 14 is invoked in two ways. It is pointed out that the first part of section 46(2) provides that the Collector, on receipt of a certificate from the Income tax Officer, shall proceed to recover from the defaulting assessee the amount specified therein as if it were an arrear of land revenue. It is next said that the proviso to the sub section invests the Collector with all the powers a Civil Court has under the Code of Civil Procedure for the purpose of the recovery of the amount due under a decree. It is submitted that section 46(2) provides for two different and alternative methods of recovery of the dues and clothes the Collector with the power to apply either of the two methods, that is to say, he may issue a warrant of arrest under section 13 of the Bombay City Land Revenue Act, 1876 against one defaulter and keep him in detention for a period which may (1) ; 894 work out to be much longer than six months and he may proceed against another defaulter under the Code of Civil Procedure and arrest and detain him for the maximum period of six months. The powers that are thus conferred on the Collector by section 46(2) are unfettered and unguided and enable the Collector, at his will, to discriminate between two defaulters who are similarly situated and thereby violate the behests of the equal protection clause of the Constitution. This argument appears to us to be founded on a misapprehension about the true meaning of section 46(2). On a proper reading, that subsection does not prescribe two alternative modes of procedure at all. All that the sub section directs the Collector to do is to proceed to recover the certified amount as if it were an arrear of land revenue, that is to say, he is to adopt the procedure prescribed by the appropriate law of his State for the recovery of land revenue and that in thus proceeding he is, under the proviso, to have all the powers a Civil Court has under the Code. The sub section does not prescribe two separate procedures. The statement to the contrary in the judgment of the Bombay High Court in Shaik Ali Ahmed vs Collector of Bombay(1) does not appear to us to be correct. In our opinion the proviso does not indicate a different and alternative mode of recovery of the certified amount of tax but only confers additional powers on the Collector for the better and more effective application of the only mode of recovery authorised by the body of sub section (2) of section 46. Viewed in this light, there is no question of the possibility of any discrimination at all. This part of the argument cannot, therefore, be accepted. The other way in which the protection of article 14 is invoked is founded on a comparison of the provisions of the different laws adopted by the different States for the recovery of land revenue. Section46(2) of the Indian Income tax Act requires the Collector, on receipt of the requisite certificate from the Incometax Officer, to proceed to recover from the assessee the amount specified in the certificate as if it were an (1) I.L.R. , 155. 895 arrear of land revenue. This means that the Collector must take such proceedings as he would have done if he were engaged in recovering land revenue. Thus a Collector in the City of Bombay in recovering the certified amount of income tax must proceed under Ejection 13 of the Bombay City Land Revenue Act, 1876 (Bombay Act II of 1876) and arrest and detain him far the period therein mentioned which, prior to the 8th October 1954, might have worked out to a period much longer than six months. On the other hand, the defaulting assessee in all other parts of the State of Bombay has to be proceeded against under section 157 of the Bombay Land Revenue Code, 1879 (Bombay Act V of 1879) under which he cannot be detained for more than the period limited by the Code of Civil Procedure for the detention of a judgment debtor in execution of a decree for an equal amount of money. So, even in one State there were two procedures to which defaulting assessees could be subjected according as they were in or outside the City of Bombay. A Collector in the State of Madras in recovering the certified amount of income tax has to proceed under section 48 of the Madras Revenue Recovery Act, 1864 (Madras Act II of 1864). When the Collector finds that the certified amount cannot be liquidated by the sale of the property of the defaulting assessee and the Collector has reason to believe that the defaulter is wilfully withholding payment or has been guilty of fraudulent conduct in order to evade payment, the Collector may, under section 48 of that Act, cause the arrest and imprisonment of the defaulter, not being a female. But that section goes on to say that no person shall be imprisoned for a longer period than two years or for a longer period than six months if the arrear does not exceed Rs. 500 or for a longer period than three months if the arrear does not exceed Rs. 50. A Collector in West Bengal proceeding to recover the certified amount under the Bengal Public Demands Recovery Act, 1913 (Bengal Act III of 1913) cannot, under section 31 of that Act, direct the detention of the defaulting assessee in prison for more than six months if the amount is more 896 than Rs. 50 or in other cases for more than six weeks. The defaulter in the Punjab cannot, under section 69 of the Punjab Land Revenue Act, 1887 (Punjab Act XXVII of 1887), be kept in civil jail for more than one month. Section 148 of the U. P. Land Revenue Act) 1901 (U.P. Act III of 1901) limits the period of detention to 15 days and also exempts many persons, e.g. Talukdars and women, from any imprisonment. The Assam Land and Revenue Regulation, 1886 (Reg. I of 1886) does not insist on imprisonment at all. A cursory perusal of the provisions of the different Acts referred to above will at once show that in the matter of recovery of arrears of land revenue the different States have prescribed different machinery, some obviously harsher than others. The argument is that income tax being a subject with respect to which the Union alone may make law and the recovery of it being the Union responsibility, the machinery for the recovery of income tax should be framed on a uniform all India basis, for to the Union all defaulters who may not pay up the Union demand are similarly situated; but the Indian Income tax Act by section 46(2) authorises the Collectors in different States to adopt machinery which differs from State to State, so that defaulters are treated differently in different States. The contention is that section 46(2) which sanctions such discrimination is clearly violative of the equal protection clause of the Constitution and has, therefore, become void under article 13 (1). The learned Attorney General appearing for the respondents seeks to meet the aforesaid argument in two ways. In the first place, he urges that the impugned sub section does not by itself make any discrimination. All that it says is that the certified amount of income tax is to be recovered as if it were an arrear of land revenue and there its operation ends. In recovering the certified demand the Collector has to have recourse to the machinery available to him for enforcing a demand for arrears of land revenue but the provisions of the State laws which prescribe that machinery are not incorporated in section 46(2). 897 If the State laws are discriminatory that vice cannot be imputed to section 46(2). There is good deal to be said on either side. The State laws prescribe the procedure for the recovery of arrears of land revenue only and they are not, in terms and by themselves, concerned at all with the recovery of income tax demand. That machinery is made available for the purpose of recovery of income tax by virtue only of section46(2) of the Indian Income tax Act. In the matter of recovery of income tax the Collectors adopt theprocedure laid down by the State laws, not because the State laws enjoin them to do so but because section 46(2) directs them to do so. In other words, it is section 46(2) which tells the Collectors of Madras to follow the procedure under section 48 of the Madras Revenue Recovery Act, 1864 as if those provisions are set out in the Indian Income tax Act in extenso and it tells the Collectors of all other States to adopt the procedure prescribed by their own State laws as if the provisions prescribing that procedure were set out in that section. In such a situation it is a plausible argument to say that all the provisions of all the State laws are, mutatis mutandis, to be read into section 46 (2) and that, therefore, if there be any vice of discrimination in the State laws that vice cannot but be regarded as having crept into section 46(2). On the other hand, to hold that all the provisions of all the State laws for recovery of arrears of land revenue have been referentially incorporated in section 46(2) of the Indian Income tax Act will lead us into difficulties. Will the subsequent amendments of the State laws be also incorporated in section 46(2)? Section 46(2) of the Indian Income tax Act having incorporated the State laws as they then stood, how can any State Legislature which has no power to make any law with respect to income tax alter or amend section 46(2)? Are the State laws as incorporated in section 46(2) at the time it was enacted to be treated as crystallised and to be applied by the Collectors, although the State laws for the recovery of arrears of land revenue may be materially altered by sub 898 sequent amendment? These are some of the questions which will have to be answered before we can come to a decision on this point. In the view we take of the second part of the learned AttorneyGeneral 's argument to which we shall presently refer it is not necessary for us to express any opinion on this part of his argument. The learned Attorney General then argues that assuming that section 46(2) by incorporating the different State laws which are not uniform has become discriminatory such discrimination is permissible and does not offend the fundamental right guaranteed by article 14. This argument appears to us to be well ,founded. The meaning, scope and effect of the article in question have been explained by this Court in a series of decisions beginning with that in Chiranjit Lal Chowdhury vs The Union of India(1) and ending with that in Budhan Chowdhury and others vs The State of Bihar(1). The following passage in the unanimous judgment of the Full Court in the last mentioned case at p. 1049 briefly summarises the true intendment of the constitutional provision: ". . . . . . . It is now well established that while article 14 forbids class legislation, it does not forbid reasonable classification for the purposes of legislation. In order, however, to pass the test of permissible classification two conditions must be fulfilled, namely, (i) that the classification must be founded on an intelligible differentia which distinguishes persons or things that are grouped together from others left out of the group and (ii) that that differentia must have a rational relation to the object sought to be achieved by the statute in question. The classification may be founded on different bases; namely, geographical, or according to objects or occupations or the like. What is necessary is that there must be a nexus between the basis of classification and the object of the Act under consideration. It is also well established by the decisions of this Court (1) [1950) S.C.R. 869. (2) ; 899 that article 14 condemns discrimination not only by a substantive law but also by a law of procedure". The respective contentions now put forward as to the validity or otherwise of section 46(2) of the Indian Income tax Act have to be judged in the light of the principles so laid down by the Full Court. The Indian Income tax Act imposes a liability on persons who are amenable to it to pay the tax assessed against them. The assessed amount is a public demand of the Union and has to be recovered, if not voluntarily paid up. The assessees are scattered all over the Union and machinery has to be devised for that purpose. On looking round the Union finds that there is machinery in every State for recovery of land revenues which are State demands. Each State in its wisdom has devised a machinery which it has considered appropriate and suitable for the recovery of its own public demand. As was said by the Supreme Court of America in Middleton vs Texas Power and Light Company(1) "There is a strong presumption that a legislature understands and correctly appreciates the needs of its own people, that its laws are directed to problems made manifest by experience and that its discriminations are based upon adequate grounds". It is conceded that each State is well within its rights to devise its own machinery for the recovery of its own public demand and that no person belonging to one State can complain that the law of his State is more rigorous than that of the neighbouring state. The reason is obvious, for the people of one State are not similarly situated as people of another State. Their needs, as understood by their own Legislature, are different from those of the people of other States. If in the matter of recovery of arrears of land revenue defaulters of one State cannot complain of denial of equal protection of the laws on the ground of the difference in the modes of recovery prevailing in other States, can it be said to be unreasonable for the Union to adopt, for the recovery of its public demand from defaulters of each State, the same mode of recovery (1) ; , 157. 114 900 of public demand prevailing in that State? Here the defaulters are classified on a territorial, or geographical basis and this basis of classification has precisely the same correlation to the object of the Indian Income tax Act as it has to the object of the different Public Demands Recovery Acts. The objects of the two Acts in this behalf are in pari materia and the same considerations must apply to both. People of each State are familiar with and used to the coercive processes which each State finds it necessary to impose on its own people for the recovery of public demand and there can be no hardship and consequently no objection to their being put to the same processes for the recovery of the public demand of the Union. The grouping of the income tax defaulters into separate categories or classes Statewise is certainly a territorial classification which is based on an intelligible differentia and the subjection, for the purposes of the recovery of the certified demand, of each of such classes of defaulters to the same coercive process devised by their own State, on a consideration of local needs, for the recovery of their own public demands, cannot be regarded as bereft of a reasonable nexus or correlation between the basis of classification and the object sought to be achieved by the Indian Income tax Act any more than it can be so regarded with respect to the respective State laws. The fact that the income tax demand is a Union public demand appears to us to make no difference in the legal position. The Indian Income tax Act classifies people into various groups for the purpose of imposing the tax and taxes them differently, e.g., insurance companies which are taxed differently from an ordinary business concern and in some cases exempts them altogether, e.g., agriculturists and persons with income below a certain level. There can, on the same principle, be no objection to people of a backward area who may be in need of aid in the shape of tax remission to be exempted from 'taxation either wholly or in part. If this is right when a question of imposition is concerned, it cannot be wrong when the matter is one of recovery. The two together make up the full measure of the 901 burden and if it is permissible to vary the burden at one end it must be equally valid to vary it at the other for the same or similar reasons. It is said that the income tax demand being a Union demand there should be uniformity in the punishment to be, meted out to defaulters and it can be done easily by suitably amending section 46(2) so as to provide for the detention of all defaulters for the same period in all cases in all States. In the first place, it is a fallacy to regard arrest and detention. of a defaulter who fails to pay income tax as a punishment or penalty for an offence. It is a coercive process for recovery of public demand by putting pressure on the defaulter. The defaulter can get himself released by paying up the dues. In the next place, the Court is only concerned to interpret the law and, if it is valid, to apply the law as it finds it and not to enter upon a discussion as to what the law should be. The whole problem before us is whether the apparent discrimination can be supported on the basis of a permissible classification. The case of Bowman vs Lewis(1) is in point. We do not, however, find it necessary to express any opinion on the extreme contention urged by the learned Attorney General, on the authority of that decision, that a mere territorial classification, by itself and without anything else, is enough to place the law beyond the operation of the equal protection clause. Indeed, in that very case it was recognised that it was not impossible that a distinct territorial establishment and jurisdiction might be intended as or might have the effect of discrimination against a particular race or class where such race or class should happen to be the principal occupants of the disfavoured area. For the purposes of this case it will suffice to say that the discrimination complained of is not unconstitutional for the simple reason that the impugned law is based on a territorial classification having a reasonable nexus or correlation between that basis of classification and the object sought to be achieved by the Act. Our decision in The State of Rajasthan vs Rao Manohar Singhji(2) which is relied on by learned counsel for the petitioner is easily (1) ; ; (2) ; 902 distinguishable on facts for, the law impugned in that case for the first time imposed certain disabilities on Jagirdars of a certain area of the State and there was no evidence that those Jagirdars were in any way different from the Jagirdars of the other areas of the State. In the present case the classification has been made Statewise and it is clear that in the matter of payment of public demands of the States the people of different States are not similarly situated and their own States have imposed on them such coercive processes as the circumstances and needs of each State require. The law impugned before us has only adopted, for its own purpose, the same coercive process which was devised by the States for their own purposes which are closely akin or similar to the purpose of the Union. The same or similar considerations apply to both cases. There is the same or similar correlation between the basis of classification and the object sought to be achieved by the Indian Incometax Act. To deny this power to the Union on constitutional grounds urged before us will lead us to hold that no new offence created by law can be made triable according to the procedure laid down in the Code of Criminal Procedure, for that Code sanctions different modes of trial in different areas, namely, by a Section 30 Magistrate in some areas, by the Sessions Judge with assessors in certain areas and by the Sessions Judge with jurors in other areas. Adoption of an existing machinery devised for a particular purpose cannot, if there be no vice of unconstitutionality in the machinery render it unconstitutional if it is made to subserve a purpose closely akin or similar to the purpose for which it bad been devised. The first objection formulated by learned counsel for the petitioner must, therefore, be rejected. As already stated under section 46 (2), the Collector, on receipt of the certificate from the Income tax Officer, has to proceed to recover the certified demand as if it were an arrear of land revenue. This means that the Collector of a particular place has to take steps as indicated in the State law relating to the recovery of arrears of land revenue. As already stated, in the State of Bombay there are two 903 statutes regulating the procedure for the recovery of arrears of land revenue according as the defaulter resides in the City of Bombay or in any other area within the State of Bombay. Section 13 of the Bombay City Land Revenue Act, 1876 applies to the City of Bombay and section 157 of the Bombay Land Revenue Code, 1879 applies to the rest of the State. Prior to the 8th October 1954 the portion of section 13 of the Bombay City Land Revenue Act, 1876 which is relevant for our present purpose was as follows: "If the sale of the defaulter 's property shall not produce satisfaction of the demand, it shall be lawful for the Collector to cause him to be apprehended and confined in the civil jail under the rules in force at the Presidency for the confinement of debtors, for which purpose a certificate of demand under the Collector 's signature sent with the defaulter shall be the sheriff 's sufficient warrant, equally with the usual legal process in ordinary cases of arrest in execution of judgment for debt: Provided, however, that such imprisonment shall cease at any time upon payment of the sum due, and that it shall in no case exceed one day for each rupee of the said sum". Section 157 of the Bombay Land Revenue Code, 1879 which provides for the arrest and detention of the defaulter residing outside the City of Bombay Contains the following proviso: "Provided that no defaulter shall be detained in imprisonment for a longer period than the time limited by law in the case of the execution of a decree of a Civil Court for a debt equal in amount to the arrear of revenue due by such defaulter". A cursory perusal of the two sections will show at once that the procedure prescribed by section 13 of the Bombay City Land Revenue Act, 1876 for the recovery of arrears of land revenue was harsher and more drastic than the procedure laid down in section 157 of the Bombay Land Revenue Code, 1879 in that a defaulter residing in the City of Bombay could be kept in detention for a day for every rupee of the arrears which might considerably exceed the maximum period of six months which is the period 904 limited by the Code of Civil Procedure for the detention of a judgment debtor in civil jail. The argument is that on the advent of the Constitution section 13 of the Bombay City Land Revenue Act, 1876 became void under article 13(1) in that it denied to the Bombay defaulter equality before the law in comparison with the defaulter outside the City of Bombay, for he could be detained for a longer period of time. In the view we have taken, it is not necessary to express any opinion whether the discrimination brought about by the two sections was supportable on the ground of a reasonable classification based on territorial considerations so as not to offend the constitutional inhibition. Assuming, then, but not deciding, that section 13 of the Bombay City Land Revenue Act, 1876 became inconsistent with the fundamental right guaranteed by article 14 and, therefore, became void to the extent of such inconsistency, it was not, as recently explained by this Court in Bhikaji Narayan Dhakras vs The State of Madhya Pradesh, Nagpur and Another(1), obliterated from the statute book for all times or for all purposes or for all people. The effect of article 13(1) is that the law could not stand in the way of the enjoyment of fundamental rights. The law was not dead. Further, the law was amended on the 8th October, 1954 when the proviso to section 13 quoted above was replaced by the following proviso: "Provided that such imprisonment shall cease at any time upon payment of the sum due and that it shall in no case exceed (i) A period of six months when the sum due is more than Rs. 50; and (ii)A period of six weeks in any other case. " This amendment is nothing less than an enactment of a new provision. It lays down a new law which is similar to the law laid down by section 157 of the Bombay Land Revenue Code, 1879. Therefore, the disparity that prevailed between the original proviso to section 13 of the Bombay City Land Revenue Act, 1876 and the proviso to section 157 of the Bombay Land Revenue Code,, 1879 is now removed, The (1) ; 905 disparity between the two provisions as they originally stood being thus eliminated, the vice of unconstitutionality is also removed and section 13 of the Bombay City Land Revenue Act, 1876, as it now stands, cannot be assailed as repugnant to article 14 of the Constitution. It was faintly suggested that as the assessment proceedings had been started and the certificate had been issued by the Income tax Officer to the Additional Collector of Bombay and the Additional Collector issued a notice of demand and actually attached the properties prior to the amendment, the assessee must be governed by section 13 as it originally stood and not by it as subsequently amended. We do not think there is any substance in this contention. It is true that the warrant of attachment of the property was issued on the 24th March 1954 but the sale proclamation was issued and the sale was actually held after the date of amendment. The defaulting assessee might have paid up the dues in which case there would have been no occasion for sale. It is, therefore, his default that occasioned the sale. Again, the sale proceeds might have been sufficient to cover the certified demand,, in which case there would have been no occasion for the issue of warrant for his arrest. It is only after the sale proceeds were found to be insufficient to satisfy the assessed amount and the assessee failed to pay up the balance that the question of the arrest of the defaulter arose. By that time section 13 had been amended and the warrant of arrest was issued on the 7th June 1955, that is to say, long after the amendment of the section. In our opinion, the second ground urged by the learned counsel must also be negatived. We may mention that our attention was drawn to the decision of the Madras High Court in Erimmal Ebrahim Hajee, vs The Collector of Malabar(1) but learned counsel could not rely upon it as an authority as it was itself under appeal before this Court. The result, therefore. , is that this application must be dismissed. (1) 906 CHANDRASEKHARA AIYAR J. I agree rather reluctantly. The reluctance is not because there is anything in the reasoning of the judgment pronounced just now by my Lord which does not appear to be sound but because I am not happy about the result. We have to face and accept wholly different consequences for non payment of income tax according as the assessee belongs to one State or another. The nature of the tax is one and the same, and it is levied under a single Central Act, and yet the ultimate coercive processes for recovery differ in nature and extent between State and State. We have to attribute to the legislature a rational classification based on geographical areas, the susceptibilities of people in those areas, and their reactions to the adoption of methods of recovery. For arrest and detention, wilful default or fraudulent conduct is required in Madras. In Assam, there can be no imprisonment at all. The periods of detention vary between Bengal, U.P. and the Punjab. Taluqdars in U.P. are completely exempt. Are we to assume that people in Madras are more amenable and generally ready and willing to pay as compared with those in Bombay who are a tenacious lot and must be subjected to a longer process of detentive coercion? Are the Talaqdars in U.P. exempt from arrest because of possible political repercussions if such influential persons are subjected to such treatment? What is the rationale in providing different periods of detention for Bengal and the Punjab? We must be in a position to postulate some reasonable basis for the differentiation and we cannot get away from this necessity by vague references ' to the wisdom of the legislature or by indulging in pure speculation as to what might have been at the back of its mind. Speaking broadly, for the enforcement of the levy of a central tax like the Income tax there should be uniformity of procedure and identity of consequences from non payment. The machinery for recovery might be different between the several States but the defaulting assessees must be put on the same footing as regards the penalties. But the law as it now stands can be supported on the grounds mentioned by my Lord and I do not propose to differ.

The assesses carrying on business in the City of Bombay was assessed to income tax for the years 1943 44 to 1947 48 and 1951 52 by the Income tax Officer C 1 Ward Bombay. As the assessee did not pay the income tax due the Income tax Officer issued in April 1951 to the Additional Collector of Bombay a recovery certificate under section 46(2) of the Indian Income tax Act, 1922. In February 1954 the Additional Collector issued a notice of demand and as no payment was made he attached the good will and tenancy rights of the assessee 's premises by a warrant of attachment dated 24th March 1954, 888 A sale was held in February 1955. The sale proceeds not being sufficient to satisfy the assessed tax the Additional Collector issued a notice under section 13 of the Bombay City Land Revenue Act, 1876 requiring the assessee to appear before him and show cause why he should not be apprehended and confined to civil prison in satisfaction of the said certified demand. In default of assessee 's appearance and showing cause a warrant for his arrest was issued under section 13 of the Bombay Act, II of 1876 and he was actually arrested on 1st July 1955. An application to the Bombay High Court under article 226 of the Constitution for a writ in the nature of a writ of habeas corpus having proved unsuccessful, an application under article 32 was filed in the Supreme Court for the same relief. Two main points urged on behalf of the assessee were: (a) that section 46(2) of the Indian Income tax Act under which the Income tax Officer issued the recovery certificate to the Additional Collector of Bombay was void, under article 13 (1) of the Constitution in that it offended article 21 and article 14 of the Constitution; (b)that section 13 of the Bombay Land Revenue Act, 1876 (Bombay Act II of 1876) under which the warrant of arrest was issued by the Additional Collector was void under article 13(1) of the Constitution as the same was repugnant to article 14 of the Constitution. Held (as regards a) (1) that there was no violation of fundamental rights under article 21 of the Constitution inasmuch as section 13 of the Bombay Act II of 1876 under which warrant of arrest was issued for the recovery of the demand certified under section 46(2) of the Indian Income tax Act constituted a procedure established by law. Both section 13 of Bombay Act II of 1876 and section 46 of the Indian Income tax Act under which action had been taken against the assessee were not void and therefore no question of violation of funda mental rights under article 21 could arise at all) (ii)the contention that section 46(2) of the Indian Income tax Act provides for two different and alternative methods of recovery of the dues and clothes the Collector with the unfettered and unguided power to apply either of the two methods inasmuch as it enables the Collector at his will to discriminate between two defaulters who are similarly situated and thus violates the equal protection clause of the Constitution was without force because sub section (2) of section 46 does not prescribe two different procedures. The proviso enacted therein does not indicate a different and alternative mode of recovery of the certified amount of tax but only confers additional powers on the Collector for the better and more effective application of the only mode of recovery authorised by the body of sub section (2) of section 46 and therefore there was no question of possibility of dis crimination at all; (iii)the further contention that section 46(2) of the Indian Incometax Act violates the equal protection clause of the Constitution and has thus become void under article 14 of the Constitution as section 46(2) required the Collector,on receipt of the requisite certificate from 889 the Income tax Officer, to recover the amount specified in the certificate as if it were an arrear of the land revenue and there are different laws adopted by different States for the recovery of land revenues and thus there is discrimination on the ground that defaulters are treated differently in different States is also without force be cause discrimination complained of is a permissible classification and does not offend the fundamental right guaranteed by article 14 as the grouping of the income tax defaulters in separate categories on classes State wise is a territorial classification which is based on an intelligible differentia and there is a reasonable nexus or co relation between the basis of classification and the object sought to be achieved by the Income tax Act. The fact that the income tax demand is a Union public demand makes no difference in the legal position. Held, (as regards b) that the contention that section 13 of the Bombay Act II of 1876 became unconstitutional under article 13(1) of the Constitution in that the procedure prescribed by section 13 of the Bombay Act II of 1876 in respect of a defaulter residing in the City of Bombay was harsher and more drastic than the procedure laid down in section 157 of the Bombay Act V of 1879 in respect of a defaulter residing outside the City of Bombay was without force because section 13 of the Bombay Act II of 1876 was amended on 8th October 1954 and a new law laid down a law similar to the law laid down by section 157 of the Bombay Act V of 1879 and thus the vice of unconstitutionality 'if any ' was removed. State of Punjab vs Ajaib Singh & Another ([1953] S.C.R. 254), Shaik Ali Ahmed vs Collector of Bombay (I.L.R. , Chiranjit Lal Chowdhury vs The Union of India ([1950] S.C.R. 869), Budhan Choudhry and others vs The State of Bihar ([1955] 1 S.C.R. 1045), Middleton vs Texas Power and Light Company ; , Bowman vs Lewis (101 U.S. 22; , The State of Rajasthan vs Rao Manohar Singhji ([1954] S.C.R. 996), Bhikaji Narayan Dhakras vs The State of Madhya Pradesh, Nagpur and Another ([1965] 2 S.C.R. 589) and Erimmal Ebrahim Hajee vs The Collector of Malabar ([1954] , referred to.

Appeal No. 205 of 1954. On appeal from the judgment and order dated the 978 13th April 1954 of the Bombay High Court in Appeal No. 49 of 1954 arising out of the order dated the 31st day of March 1954 of the said High Court exercising its Ordinary Original Jurisdiction in Misc. Petition No. 55 of 1954. K. T. Desai, P. N. Bhagwati, Rameshwar Nath and Rajinder Narain, for the appellants. C. K. Daphtary, Solicitor General of India, (Porus A. Mehta and B. H. Dhebar, with him), for the respondent. November 10. The Judgment of the Court was delivered by VENKATARAMA AYYAR J. This appeal raises a question as to the powers of a Custodian of Evacuee Property to cancel a lease granted by him under section 12 of the (XXXI of 1950), hereinafter referred to as the Act. Messrs Abdul Karim and Brothers owned, along with certain other properties which are not the subject matter of the present appeal, three mills with bungalows and chawls at Ambernath in Thana District and the Bobbin Factory at Tardeo in Bombay. They having migrated to Pakistan, these properties were declared by a notification dated 12 9 1951 issued under section 7 of the Act as evacuee property, and under section 8(1) of the Act, they became vested in the respondent as the Custodian for the State. The appellants are displaced persons, and on 30 8 1952 the respondent entered into an agreement with them, Exhibit A, which is, as aptly characterised by learned counsel for the appellants, of a composite character, consisting of three distinct matters. There was, firstly, a demise under which the mills and the factory in question were leased to the appellants for a period of five years on the terms and conditions set out therein. Secondly, there was a sale of the stock of raw materials, unsold finished goods, spare parts, cars, trucks and other movables which were in the mills and the factory, with elaborate provisions for the determination and payment of the price therefor in 979 due course. And thirdly, there was an agreement to sell the mills and the factory to the appellants in certain events and subject to certain conditions. There was also a clause for referring the disputes between the parties to arbitration. In pursuance of this agreement, the appellants were put in possession of the mills and the factory on 31 8 1952. On 12 2 1954 the respondent issued a notice to the appellants, Exhibit C, wherein be set out that the appellants had systematically committed breaches of the various terms on which the properties bad been leased to them, and called upon them to show cause why the lease should not be cancelled and why they should not be evicted. The notice then went on to state that the respondent considered it necessary to issue certain directions for the "preservation of the demised premises and the goods and stock in trade, etc., lying in the demised premises", and the appellants were accordingly required not to remove the stock or raise any money on the security thereof, and to send daily reports to the Custodian, of the transactions with reference thereto. Presumably, these directions were given under section 10 of the Act. On 13 2 1954 the appellants appeared before the respondent, and contended that he had no auth ority to issue the notice in question under section 12, and that it was therefore illegal. Apprehending that the lease might be cancelled, and that they might be evicted, the appellants filed on 16 2 1954 the application out of which the present appeal arises, for a writ of certiorari for quashing the notice, Exhibit C, and for a writ of prohibition restraining the respondent from taking any further action pursuant thereto. In support of the petition, the appellants urged that section 12 under which the respondent purported to act authorised the cancellation of only leases granted by the evacuee and not by the Custodian himself, and that no directions could be given under section 10 as it applied only to properties of the evacuee, and that by reason of the sale, the movables in question had become the property of the appel 124 980 lants. The petition was heard by Tendolkar, J., who stated the points for determination thus: (1) "Whether the Custodian has power under section 12 of the , to terminate a lease granted by himself, and (2) Whether the directions given by the Custodian are beyond the jurisdiction conferred upon him by section 10 of the said Act?" On the first question, he held that section 12 applied only to leases granted by the evacuee and not by the Custodian, and that therefore the notice, Exhibit C, was ultra vires the powers of the Custodian under that section. On the second question, he held that section 10 applied only to properties of the evacuee, and that the movables in respect of which directions were given, ceased to be the property of the evacuee by reason of the sale in favour of the appellants, and that in consequence, the directions with reference to them were unauthorised. In the result, the application was allowed. The respondent took the matter in appeal, and that was heard by Chagla, C.J. and Dixit, J. By their judgment dated 13 4 1954, they held that on the plain language of section 12 it would apply whenever there was a lease, and that lease was in respect of property belonging to the evacuee, that there was no warrant for imposing a further limitation on that section that that lease should also have been granted by the evacuee, and that accordingly the Custodian had power to issue the notice, Exhibit C, for cancelling the lease. As regards movables, however, they agreed with Tendolkar, J. that for the reasons given by him the Custodian had no authority under section 10 to issue any directions with reference thereto. The appeal was accordingly allowed in so far as it related to the lease but dismissed as regards movables. Against this judgment, the appellants have preferred this appeal on a certificate granted by the High Court under article 133(1) (b), and the only point that arises for determination therein is as to whether the Custodian has the power under section 12 to 981 cancel a lease granted by himself and not by the evacuee. But that question is no longer open to argument, as there has been subsequent to the decision of the court below legislation which concludes the matter. Section 5 of the Administration of Evacuee Property (Amendment) Act, 1954 (XLII of 1954) enacts the following Explanation to section 12 of Act XXXI of 1950: "In this sub section 'lease ' includes a lease granted by the Custodian and 'agreement ' includes an agreement entered into by the Custodian". And it provides that the Explanation "shall be inserted and shall be deemed always to have been inserted" in the section. Mr. Desai, learned counsel for the appellants, concedes that this amendment which is retrospective in operation would govern the rights of the parties in the present appeal, and that under the section as it now stands, the Custodian has the power and had always the power to cancel leases created not merely by the evacuees but also by himself. But he con tends that this power could be exercised only so as to override a bar imposed by any law but not the contract under which the lease is held, and this result flows according to him from the language of the non obstante clause, which is limited to anything contained in any other law for the time being in force", and does not include "or any contract between the parties". This was a contention which was open to the appellants on the terms of the section as it stood even before the amendment, but it was not put forward at any stage prior to the bearing of this appeal and that by itself would be sufficient ground for declining to entertain it which it may be noted is now sought to be raised by a supplemental proceeding under Order 16, rule 4 of the Supreme Court Rules. On the merits also it is without any substance. The section expressly authorises the custodian to vary the terms of the lease, and that cannot be reconciled with the contention of the appellants that it confers no authority on him to go back upon his own contracts. The operative portion of the section which confers power on 982 the Custodian to cancel a lease or vary the terms thereof is unqualified and absolute, and that power cannot be abridged by reference to the provision that it could be exercised "notwithstanding anything contained in any other law for the time being in force". This provision is obviously intended to repel a possible contention that section 12 does not by implication repeal statutes conferring rights on lessees, and cannot prevail as against them and has been inserted ex abundanti cautela. It cannot be construed as cutting down the plain meaning of the operative portion of the section. Vide the observations in Aswini Kumar Ghosh vs Arabinda Bose(1) and the Dominion of India vs Shrinbai A. Irani(1) on the scope. of a non obstante clause. We must accordingly bold that the respondent was acting within his authority in 'issuing Exhibit C in so far as it concerned the lease granted in favour of the appellants. It was next contended by Mr. Desai that even if the Custodian had the power under section 12 to cancel the lease in favour of the appellants, be bad no power under that section to cancel the agreement to sell the mills and the factory to them, which was one of the matters contained in Exhibit A, that the notice, Exhibit C, was to that extent without juris,diction, and that the respondent should accordingly be prohibited from cancelling that portion of Exhibit A in pursuance of Exhibit C. But the notice in terms refers firstly to the lease which it is proposed to cancel, and secondly to the movables in respect of which certain directions were given. In their petition under article 226, it was the validity of the notice. , Exhibit C, with reference to these two matters that the appellants challenged. Tendolkar, J. stated in his judgment and quite correctly that these were the two points that &rose for determination. The question of the rights of the appellants in so far as they related to the purchase by them of the mills and the factory was not raised in the petition, and no contentions were put forward in support thereof at any stage of the proceedings. It is for the first time in the argu (1) ; , 21, 24. (2) ; , 213. 983 ment before us that those rights are sought to be agitated. Under the circumstances, we must decline to consider them. It will be sufficient if we observe that the rights of the appellants, if any, other than those arising out of the lease, are left open to the determination of the appropriate authorities, and that nothing in our decision should be taken as a pronouncement on those rights. In the result, the appeal fails and is dismissed with costs.

By section ,12, sub section 1, of the (XXXI of 1950) as amended by Act XLII of 1954, notwithstanding anything contained in any other law for the time being in force, the Custodian may cancel any allotment or terminate any lease or amend the terms of any lease or agreement under which any evacuee property is held or occupied by a person, whether such allotment, lease or agreement was granted or entered into before or after the commencement of this Act". The respondent who was the Custodian of evacuee property granted a lease to the appellants and subsequently issued a notice to them, among other things, calling upon them to show cause why the lease should not be cancelled for committing breaches of the conditions on which the properties had been leased to them. The appellants contended that the respondent had no power to cancel the lease on the ground that under section 12(1) of the Act the power of the Custodian to cancel the lease could be exercised only so as to override a bar imposed by any law but not the contract under which the lease was held and relied on the language of the non obstante clause contained in the section. Held, that the operative portion of the section which confers power on the Custodian to cancel a lease is unqualified and absolute and could not be abridged by reference to the non obstante clause which was only inserted ex abundanti cautela with a view to repel a possible contention that the section does not by implication repeal statutes conferring rights on lessees. Observations in Aswini Kumar Ghose vs Arabinda Bose ([1963] S.C.R. 1, 21, 24) and Dominion of India vs Shrinbai A. Irani ([1955] 1 S.C.R. 206, 213), on the scope of a non obstante clause, relied on.

Appeal No. 182 828 of 1975. Appeal by Special Leave from the Judgment and Order dated the 19th March, 1975 of the Bombay High Court in First Appeal No. 524 of 1966 from original decree. R. B. Datar for the Appellant. V. N. Ganpule and (Mrs.) V. D. Khanna for the respondent. The Judgment of the Court was delivered by CHANDRACHUD, C.J. It will be easier, with the help of the following pedigree to understand the point involved in this appeal Khandappa Sangappa Magdum Hirabai (Plaintiff) Gurupad Biyawwa Bhagirathibai Dhundubai Shivapad (Deft. 1) (Deft. 3) (Deft. 4)1 (Deft. 5) (Deft. 2) Khandappa died on June 27, 1960 leaving him surviving his wife Hirabai who is the plaintiff, two sons Gurupad and Shivapad, who are defendants 1 and 2 respectively, and three daughters, defendants 3 to 5. On November 6 , 1962 Hirabai filed special civil suit No. 26 of 1963 in the court of the Joint Civil Judge, Senior Division, Sangli for partition and separate possession of a 7/24th share in two houses, a land, two shops avoid movables on the basis that these properties belonged to the joint family consisting of her husband, herself and their two sons. If a partition were to take place during Khandappa 's lifetime between himself and his two sons, the plaintiff would have got 1/4th share in the joint family properties, the other three getting 1/4th share each. Khandappa 's 1/4th share would devolve upon his death on six sharers, the plaintiff and her five children, each having a 1/24th share therein. Adding 1/4th and 1/24th, the plaintiff claims a 7/24th share in the joint family properties. That, in short, is the plaintiffs case. Defendants 2 to 5 admitted the plaintiff 's claim, the suit having H been contested by defendant 1, Gurupad, only. He contended that the suit properties did not belong to the joint family, that they were Khandappa 's self requisitions and that, on the date of Khandappa 's 764 death in 1960 there was no joint family in existence. He alleged that Khandappa had effected a partition of the suit properties between himself and his two sons in December 1952 and December 1954 and that, by a family arrangement dated March 31, 1955 he bad given directions for disposal of the share which was reserved by him for himself in the earlier partitions. There was, therefore, no question of a fresh partition. That, in short, is the case of defendant 1. The trial court by its judgment dated July 13, 1965 rejected defendant 1 's case that the properties were Khandappa 's self acquisitions and that he had partitioned them during his lifetime. Upon that finding the plaintiff. became indisputably entitled to a share in the joint family properties but, following the judgment of the Bombay High Court in Shiramabai Bhimgonda vs Kalgonda(1) the learned trial judge limited that share to 1/24th, refusing to add 1/4th and 1/24th together. As against that decree, defendant 1 filed first appeal No. 524 of 1966 in the Bombay High Court, while the plaintiff filed cross objections. By a judgment dated March 19, 1975 a Division Bench of the High Court dismissed defendant 1 's appeal and allowed the plaintiff 's cross objections by holding that the suit properties belonged to the joint family, that there was no prior partition and that the plaintiff is entitled to a 7/24th share. Defendant I has filed this appeal against the High Court 's judgment by special leave. Another Division Bench of the Bombay High Court in Rangubai Lalji vs Laxman Lalji(2) had already reconsidered and dissented from earlier Division Bench judgment in Shiramabai Bhimgonda(1) In these two cases, the judgment of the Bench was delivered by the same learned Judge, Patel J. On further consideration the learned Judge felt that Shiramabai(1) was not fully argued and was incorrectly decided and that on a true view of law, the widow 's share must be ascertained by adding the share to which she is entitled at a notional partition during her husband 's life time and the share which she would get in her husband 's interest upon his death. In the judgment under appeal, the High Court has based itself on the judgment in Rangubai Lalji(2) endorsing indirectly the view that Shiramabai(1) was incorrectly decided. Since the view of the High. Court that the suit properties belonged to the joint family and that there was no prior partition is well founded and is not seriously disputed, the decision of this appeal rests on the interpretation of Explanation 1 to section 6 of the Hindu Succession Act, (30 of 1956). That section reads thus "6. When a male Hindu dies after the commencement of this Act, having at the time of his death an interest in a Mitakshara coparcenary property, his interest in the property (1)(1963)66Bom. L.R.351. (2) 765 shall devolve by survivorship upon the surviving members of the coparcenary and not in accordance with this Act : Provided that, if the deceased had left him surviving a female relative specified in class I of the Schedule or a male relative specified in that class who claims through such a female relative, the interest of the deceased in the Mitakshara coparcenary property shall devolve by testamentary or intestate succession, as the case may be, under this Act and not by survivorship. Explanation I. For the purposes of this section, the interest of a Hindu Mitakshara coparcener shall be deemed to be the share in the property that would have been allotted to him if a partition of the property had taken place immediately before his death, irrespective of whether he was entitled to claim partition or not. Explanation 2. Nothing contained in the proviso to this section shall be construed as enabling a person who has separated himself from the coparcenary before the death of the deceased or any of his heirs to claim on intestacy a share in the interest referred to therein. " The Hindu Succession Act came into force on June 17, 1956, Khandappa having died after the commencement of that Act, to wit in 1960, and since he had at the time of his death an interest in Mitakshara coparcenary property, the pre conditions of section 6 are satisfied and that section is squarely attracted. By the application of the normal rule prescribed by that section, Khandappa 's interest in the coparcenary property would devolve by survivorship upon the surviving members of the coparcenary and not in accordance with the provisions of the Act. But, since the widow and daughter are amongst the female relatives specified in class I of the Schedule to the Act and Khandappa died leaving behind a widow and daughters, the proviso to section 6 comes into play and the normal rule is excluded. Khandappa 's interest in the coparcenary property would therefore devolve, according to the proviso, by intestate succession under the Act and not by survivorshop. Testamentary successive is out of question as the deceased had not made a testamentary disposition though under the explanation to section 30 of the Act, the interest of a male Hindu in Mitakshara coparcenary property is capable of being disposed of by a will or other testamentary disposition. There is thus no dispute that the normal rule provided for by section 6 does not apply, that the proviso to that section is attracted and that the decision of the appeal must turn on the meaning to be given to Explanation 1 of section 6. The interpretation of that Explanation is the subject matter of acute controversy between the parties. Before considering the implications of Explanation 1, it is necessary to remember that what section 6 deals with is devolution of the interest which a male Hindu has in a Mitakshare coparcenary property at 766 the time of his death. Since Explanation 1 is intended to be explanatory of the provisions contained in the section, what the Explanation provides has to be correlated to the subject matter which the section itself deals with. In the instant case the plaintiff 's suit, based as it is on the provisions of section 6, is essentially a claim to obtain a share in the interest which her husband had at the time of his death in the coparcenary property. Two things become necessary to determine for the purpose of giving relief to the plaintiff. One, her share in her husband 's share and two, her husband 's own share in the coparcenary property. The proviso to section 6 contains the formula for fixing the share of the claimant while Explanation 1 contains a formula for deducing the share of the deceased. The plaintiff 's share, by the application of the proviso, has to be determined according to the terms of the testamentary instrument, if any, made by the deceased and since there is none in the instant case, by the application of the rules of intestate succession contained in sections 8, 9 and 10 of the Hindu Succession Act. The deceased Khandappa died leaving behind him two sons, three daughters and a widow. The son, daughter and a widow are mentioned as heirs in class I of the Schedule and therefore, by reason of the provisions of section 8(a) read with the 1st clause of section 9, they take simultaneously and to the exclusion of other heirs. As between them the two sons, the three daughters and the widow will take equally, each having one share in the deceased 's property under section 10 read with Rules 1 and 2 of that section. Thus, whatever be the share of the deceased in the coparcenary property, since there are six sharers in that property each having an equal share, the plaintiff 's share therein will be 1/6th. The next step, equally important though not equally easy to work out, is to find out the share which the deceased had in the coparcenary property because after all, the plaintiff has a 1/6th interest in that share. Explanation 1 which contains the formula for determining the share of the deceased creates a fiction by providing that the interest of a Hindu Mistakshara coparcener shall be deemed to be the share in the property that would have been allotted to him if a partition of the property had taken place immediately before his death. One must, therefore, imagine a state of affairs in which a little prior to Khandappa 's death, a partition of the coparcenary property was effected between him and other members of the coparcenary. Though the plaintiff, not being a coparcener, was not entitled to demand partition yet, if a partition were to take place between her husband and his two sons, she would be entitled to receive a share equal to that of a son. (see Mulla 's Hindu Law, Fourteenth Edition, page 403, para 315). In a partition between Khandappa and his two sons, there would be four sharers in the coparcenary property, the fourth being Khandappa 's wife, the plaintiff. Khandappa would have therefore got a 1/4th share in the coparcenary property on the hypothesis of a partition between himself and, his sons Two things are thus clears : One, that in a partition of the coparcenary property Khandappa would have obtained a 1/4th share and 767 two, that the share of the plaintiff in the 1/4th share is 1/6th, that is to say, 1/24th. So far there is no difficulty. The question which poses a somewhat difficult problem is whether the plaintiff 's share in the coparcenary property is only 1/24th, or whether it is 1/4th plus 1/24th, that is to say, 7/24th. The learned trial Judge, relying upon the decision in Shiramabai which was later overruled by the Bombay High Court, accepted the former contention while the High Court accepted the latter. The question is which of these two views is to be preferred. We see no justification for limiting the plaintiff 's share to 1/24th by ignoring the 1/4th share which she would have obtained had there been a partition during her husband 's life time between him and his two sons. We think that in overlooking that 1/4th share, one unwittingly permits one 's imagination to boggle under the oppression of the reality that there was in fact no partition between the plaintiff 's husband and his sons. Whether a partition had actually taken place between the plaintiff 's husband and his sons is beside the point for the purposes of Explanation 1. That Explanation compels the assumption of a fiction that in fact "a partition of the 'property had taken place", the point of time of the partition being the one immediately before the death of the person in whose property the heirs claim a share. The fiction created by Explanation 1 has to be given its due and full effect as the fiction created by section 18A(9) (b) of the Indian Income tax Act, 1922, was given by this Court in Commissioner of Income tax, Delhi vs section Teja Singh(1). It was held in that case that the fiction that the failure to send an estimate of tax on income under section 18A(3) is to be deemed to be a failure to send a return, necessarily involves the fiction that a notice had been issued to the assessee under section 22 and that he had failed to comply with it. In an important aspect, the case before us is stronger in the matter of working out the fiction because in Teja Singh 's case, a missing step had to be supplied which was not provided for by section 18A(9) If b), namely, the issuance of a notice under section 22 and the failure to comply with that notice. Section 18A(9) (b) stopped at creating the fiction that when a person fails to send an estimate of tax on his income under section 18A(3) he shall be deemed to have failed to furnish a return of his income. The section did not provide further that in the circumstances therein stated, a notice under section 22 shall be deemed to have been issued and the notice shall be deemed not to have been complied with. These latter assumptions in regard to the issuance of the notice under section 22 and its non compliance bad to be, made for the purpose of giving due and full effect to the fiction created by section 18A(9) (b). In our case it is not necessary, for the purposes of working out the fiction, to assume and supply a missing link which is really what was meant by Lord Asquith in his famous passage in East End Dwellings Co. Ltd. vs Finsbury Borough Council.(1) He said if you are bidden to treat an imaginary state of affairs as real, you must also imagine as real the consequences and (1) [1959] Stipp. 1 S.C.R. 394 (2) 768 incidents which, if the putative state of affairs had in fact existed, must inevitably have flowed from or accompanied it; and if the statute says that you must imagine a certain state of affairs, it cannot be interpreted to mean that having done so, you must cause or permit your imagination to boggle when it comes to the inevitable corollaries of that state of affairs. In order to ascertain the share of heirs in the property of a deceased coparcener it is necessary in the very nature of things, and as the very first step, to ascertain the share, of the deceased in the coparcenary property. For, by doing that alone can one determine the extent of the claimant 's share. Explanation 1 to section 6 resorts to the simple expedient, undoubtedly fictional, that the interest of a Hindu Mitakshara coparcener "shall be deemed to be" the share in the property that would have been allotted to him if a partition of that property had taken place immediately before his death. What is therefore required to be assumed is that a partition had in fact taken place between the deceased and his coparceners immediately before his death. That assumption, once made, is irrevocable. In other words, the assumption having been made once for the purpose of ascertaining the share of the deceased in the coparcenary property, one cannot go back on that assumption and ascertain the share of the heirs without reference to it. The assumption which the statute requires to be made that a partition had in fact taken place must permeate the entire process of ascertainment of the ultimate share of the heirs, through all its stages. To make the assumption at the initial stage for the limited purpose of ascertaining the share of the deceased and then to ignore it for calculating the quantum of the share of the heirs is truly to permit one 's imagination to boggle. All the consequences which flow from a real partition have to be logically worked out, which means that the share of the heirs must be ascertained on the basis that they bad separated from one another and had received a share in the partition which had taken place during the life time of the deceased. The allotment of this share is not a processual step devised merely for the purpose of working out some other conclusion. It has to be treated and accepted as a concrete reality, something that cannot be recalled just as a share allotted to a coparcener in an actual partition cannot generally be recalled. The inevitable corollary of this position is that the heir will get his or her share in the interest which the deceased bad in the coparcenary property at the time of his death, in addition to the share which he or she received or must be deemed to have received in the notional partition. The interpretation which we are placing upon the provisions of section 6, its proviso and explanation I thereto will further the legislative intent in regard to the enlargement of the share of female heirs, qualitatively and quantitatively. The Hindu Law of Inheritance (Amendment) Act, 1929 conferred heirship rights on the son 's daughter, daughter 's daughter and sister in all areas where the Mitakshara law prevailed. Section 3 of the Hindu Women 's Rights to Property Act. 1937, speaking broadly, conferred upon the Hindu widow the right to a share in the joint family property as also a right to demand partition like any male member of the family. The Hindu Succession provides by section 14(1) that any property possessed by a female Hindu, whether acquired before or after the commencement of the Act, shall be held by her as a full owner thereof and not as a limited owner. By restricting the operation of the fiction created by Explanation I in the manner suggested by the appellant, we shall be taking a retrograde step, putting back as it were the clock of social reform which has enabled the Hindu Woman to acquire an equal status with males in matters of property. Even assuming that two interpretations of Explanation I are reasonably possible, we must prefer that interpretation which will further the intention of the legislature and remedy the injustice from which the Hindu women have suffered over the years. We are happy to find that the view which we have taken above has also been taken by the Bombay High Court in Rangubai Lalji vs Laxman Lalji (supra) in which Patel, J., very fairly, pronounced his own earlier judgment to the contrary in Shiramabai Bhimgonda vs Kalgonda (supra) as incorrect. Recently, a Full Bench of that High Court in Sushilabai Ramachandra Kulkarni vs Narayanrao Gopalrao Deshpande & Ors.,(1) the Gujarat High Court in Vidyaben vs Jagdishchandra N. Bhatt(2) and the High Court of Orissa in Ananda vs Haribandhu(3) have taken the same view. The Full Bench of the Bombay High ,Court in Sushilabai (supra) has considered exhaustively the various decisions bearing on the point and we endorse the analysis contained in the judgment of Kantawala C. J., who has spoken for the Bench. For these reasons we confirm the judgment of the High Court and ,dismiss the appeal with costs. S.R. Appeal dismissed. (1) A.I.R. 1975 (Bombay) 257. (2) A.I.R. 1974 Guj. (3) A.I.R. 1967 Orissa 194.

Khandappa Sangappa Magdum died on June 27, 1960 leaving behind, his widow Hirabai, two sons Gurupad and Shivapad and three daughters. On November, 6, 1952 Hirabai filed special civil suit No. 26/53 for partition and separate possession of a 7/24 share in two houses, a land, two shops and mov ables on the basis that these properties belonged to the joint family consisting of her husband, and their two sons. The case of the plaintiff was that if a partition were to take place during Khandappa 's life time between himself and his two sons the plaintiff would have got a 1/4th share each on the death of Khandappa, Her further case was that Khandappa 's 1/4th share could devolve upon his death on six sharers, entitling her to 1/24th share besides. The trial Court found that the suit properties belonged to the joint family and that there was no prior partition. Following the judgment of the Bombay High Court in Shiramabai Bhimgonda vs Kalgonda , limited her share to only 1/24th and refused to add 1/4th and 1/24th together. Dismissing the defendant 's appeal 524/66 and allowing the cross objections of the plaintiff, the Bombay High Court, by its judgment dated March 19, 1975 following 68 Rom. L.R. 74 which overruled , held that the plaintiff wag entitled to 7/24th share. Dismissing the appeal by special leave, the Court. HELD : 1. (a) What Section 6 of the Hindu Succession Act. 1956 deals with is the devolution of the interest which a male Hindu has in a Mitakshara property at the time of his death. The proviso to Section 6 contains a formula, for fixing the share of the claimants while Explanation I contains a formula for deducing the share of the deceased. [765 H, 766 A B] (b) Explanation I which contains the formula for determining the share of the deceased creates a fiction by providing that the interest of a Hindu Mitakshara coparcener shall be deemed to be, the share in the property that would have been allotted to him if a partition of the property had taken place immediately before his death. Whether a partition had actually taken place between the plaintiffs husband and his sons is beside the point for the purposes of Explanation 1. That Explanation compels the assumption of a fiction that in fact "a partition of the property had taken place", the point of time of the partition being the one immediately before the death of the person in whose property the heirs claim a share. The fiction created by Explanation I has to be given its due and full effect. [766 E F, 767 C D] Commissioner of Income Tax, Delhi vs section Teja Singh, ; applied. East End Dwellings Co. Ltd. vs Finsbury Borough Council, 132, quoted with approval 2. (a) In order to ascertain the share of heirs in the property of a deceased coparcener it is necessary in the very nature of things, and as they Very first step to ascertain the share of the deceased in the coparcenary property , by dong that alone can one determine the extent of the claimant 's share. Explanation 1 to section 6 resorts to the simple expedient, undoubtedly factional, that. 14 315SCI/78 762 the interest of a Hindu Mitakshara coparcener "shall be deemed to be the share in the property that would have been allotted to him if a partition of that property had taken place immediately before his death. What is therefore required to be assumed is that a partition had in fact taken place between the deemed and his coparceners immediately before his death. That assumption, once made, is irrevocable. In other words, the assumption having been made once for the purpose of ascertaining the share of the deceased in the coparcenary property, one cannot go back on that assumption and ascertain the share of the heirs without reference, to it. The assumption which the statute requires to be made that a partition had in fact taken place must permeate the entire process of ascertainment of the ultimate share of the heirs, through all its stages. To make the assumption at the initial stage for the limited purpose of ascertaining the share of the deceased and then to ignore it for calculating the quantum of the share of the heirs is truly to permit one 's imagination to boggle. All the consequences which flow from a real partition have to be logically worked out, which means that the share of the heirs must be ascertained on the basis that they had separated from one another and had received a share in the partition which had taken place during the life time of the deceased. The allotment of this share is not a processual step devised merely for the purpose of working out some other conclusion. it has to be treated and accepted as a concrete reality, something that cannot be recalled just as a share allotted to a coparcener in an actual partition cannot generally be recalled. The inevitable corollary of this position is that the heir will get his or her share in the interest which the deceased had in the coparcenary property at the time of his death, in addition to the share which he or she received or must be deemed to have received in the notional partition. [768 B G] (b) Ibis interpretation furthers the legislative intent in regard to the enlargement of the share of female heirs, qualitatively and quantatively. Even assuming that two interpretations of Explanation 1 are reasonably possible, Courts must prefer that interpretation which will further the intention of the legislature and remedy the injustice from which the Hindu women have suffered over the years. By restricting the operation of the fiction created by Explana tion I in the manner suggested by the appellant, Courts, shall be taking a retrograde step, putting back as it were the clock of social reform which has enabled the Hindu women to acquire an equal status with males in matters of pro perty. [768 G, 769 A B] Rangubhai Lalji vs Laxman Lalji, 68 (Bom) L.R. 74; Sushilabai Ramachandra Kulkarni v, Narayanarao Gopalrao Deshpande and Ors., A.I.R. (1975) Bom. 257; Vidyaben vs Jagadishchandra N. Bhatt, A.I.R. 1974 Guj. 23; Ananda vs Haribandu, A.I.R. 1967 Orissa 194; approved. In the instant case, (a) There is no justification for limiting the plaintiff 's share to 1/24th by ignoring the 1/4th share which she would have obtained had there been a partition during her husband 's life time between him and his two sons. In a partition between Khandappa and his two sons, there would be four sharers in the coparcenary property, the fourth being Khandappa 's wife, the plaintiff. Khandappa would have therefore got a 1/4th share in the coparcenary property on the hypothesis of a partition between himself and his sons. [766 G H, 767 B C] (b) By the application of the normal rule prescribed by Section 6 of the , Khandappa 's interest in the coparcenary property would devolve by survivorship upon the surviving members of the coparcenary and not in accordance with the provisions of the Act. But, since the widow and daughter are amongst the female relatives specified in class I of the Schedule to the Act and Khandappa died leaving behind a widow and daughters, ,he proviso to section 6 comes into play and the normal rule is excluded. Khandappa 's interest in the coparcenary property would therefore devolve, according to the proviso, by intestate succession under the Act and not by survivorship. Testamentary succession is out of question as the deceased had not made a testamentary disposition though, under the explanation to section 763 30 of the Act, the interest of a male Hindu in Mitakshara coparcenary. property is capable of being disposed of by a will or other testamentary disposition. [765 E G] (c) The plaintiff 's share as determined by the application of the rules of intestate succession contained in Sections 8, 9 and 10 of the Hindu Succession . Act will be 1/6th. The deceased Khandappa died leaving behind him two sons, three daughters and a widow. The son, daughter. and widow are mentioned as heirs in class I of the Schedule and therefore, by reason of the provisions of section 8(a) read with the 1st clause of section 9, they take simultaneously and to the exclusion of other heirs. As between them the two son 's, the three daughters and the widow will take equally. each having one share in the deceased 's property under section 10 read with Rules 1 and 2 of that section. [766 C D]

N: Criminal Appeal No. 332 of 1977. Appeal by Special Leave from the Judgment and order dated 20 10 75 of the Bombay High Court in Criminal Application No. 1 379/75. 77 M. C. Bhandare, A. N. Karkhanis, Miss Malini Panduval and Mrs. section Bhandare for the Appellant. G. L. Sanghi and A. K. Verma for Respondent No. 1. M. N. Shroff for Respondent No. 2. The Judgment of the Court was delivered by A Prefatory statement KRISHNA IYER, J. In this appeal, by special leave, we are called upon to interpret a benign provision enacted to ameliorate the economic condition of neglected wives and discarded divorcees, namely. s 125. P.C. Welfare laws must be so read as to be effective delivery systems of the salutary objects sought to be served by the Legislature and when the beneficiaries are the weaker sections, like destitute women, this spirit of article 15(3) of the Constitution must belight the meaning of the Section. The Constitution is a pervasive omnipresence brooding over the meaning and transforming the values of every measure. So, section 125 and sister clauses must receive a compassionate expansion of sense that the words used permit. The Brief Facts The respondent (husband) married the appellant (wife) as a second wife, way back in 1956, and a few years later had a son by her. 15 The initial warmth vanished and the jealousies of a triangular situation erupted, marring mutual affection. The respondent divorced the appellant around July 1962. A suit relating to a flat in which the husband had housed the wife resulted in a consent decree which also settled the marital disputes. For instance, it recited that this respondent had transferred the suit premises, namely, a flat in Bombay, to the appellant and also the shares of the Cooperative Housing Society which built the flat concerned. There was a reference to mehar money (Rs. 5,000/ and 'iddat ' money, Rs. 180/ ) which was also stated to have been adjusted by the compromise terms. There was a clause in the compromise: G "The plaintiff declares that she has now no claim or right whatsoever against the defendant or against the estate and the properties of the defendant. " And another term in the settlement was that the appellant had by virtue of the compromise become the absolute owner of the flat and various deposits in respect of the said flat made with the cooperative housing society. 78 For some time there was flickering improvement in the relations between the quondum husband and the quondum wife and they lived together. Thereafter, again they separated, became entranged. The appellant, finding herself in financial straits and unable to maintain herself, moved the magistrate under section 125 of the Criminal Procedure Code, 1973, for a monthly allowance for the maintenance of herself and her child. She proceeded on the footing that she was still a wife while the respondent rejected this status and asserted that she was a divorce and therefore ineligible for maintenance. The Magistrate who tried the petition for maintenance held that the appellant was a subsisting wife and awarded monthly maintenance of Rs. 300/ for the son and Rs. 400/ for the mother for their subsistence, taking due note of the fact that the cost of living in Bombay, where the parties lived, was high, and that the respondent had provided residential accommodation to the appellant. This order was challenged before the sessions Judge by the aggrieved husband, who on a strange view of the law that the court, under section 125, had no jurisdication to consider whether the applicant was a wife, dismissed the petition in allowance of the appeal. The High Court deigned to bestow little attention on the matter and summarily dismissed a revision petition. This protracted and fluctuating litigation misfortune has leu to the appeal, by special leave, before this Court. The Questions Mooted Shri Bhandare appearing for the appellant contended that the Courts below had surprisingly forgotten the plain provision in the Explanation (b) to section 125(1) of the Code, which reads: "wife ' includes a woman who has been divorced by. or has obtained a divorce from, her husband and has not remarried. On this foundation, he urged that accepting the contention of the respondent that the appellant was a divorcee? his client was still entitled to an allowance. This is obviously beyond dispute or. a simple reading of the sub section and it is curious how this innovative and sensitive provision with a benignant disposition towards destitute divorcees has been overlooked by all the courts below. We hold that every divorce otherwise eligible, is entitled to the benefit of maintenance allowance and the dissolution of the marriage makes no difference to this right under the current Code. In the normal course, an order for maintenance must follow, the quantum having been determined by the learned Magistrate at the trial level. 79 However, Shri Sanghi, appearing for the respondent, sought sustain the order in his favour on three grounds They arc of pubic importance since the affected party in such a fact situation is the neglected divorcee. He first argued that section 125(4) would apply in the absence of proof that the lady was not living separately by mutual consent. His next plea was that there must be proof of neglect to maintain to attract s.125 and his third contention was that there was a settlement by consent decree in 1962 whereby the mehar money had been paid and all claims adjusted, and so no claim for maintenance could survive. The third contention is apparently based upon contractual arrangement in the consent decree read with section 127(3) (b) which reads: C "(b) the woman has been divorced by her husband and that she has received, whether before or after the date of the said order, the whole of the sum which, under any customary or personal law applicable to the parties, was payable on such divorce cancel such order, (i) in the case where such sum was paid before such order, from the date on which such order was made. (ii) in any other case, from the date of expiry of the period, if any, for which maintenance has been actually paid by the husband to the woman; We must state, however, that there was no specific plea, based upon the latter provision, set up anywhere in the courts below or urged before us. But if one were to locate a legal ground to raise The contention That the liability to pay maintenance had ceased on account of the payment of mehar, it is section 127(3) of the Code. So we must deal with the dual sub heads of the third ground. The meaning of meanings is! derived from values in a given society and its legal system. Art.15(3) has compelling, compassionate relevance in the context of section 125 and the benefit of doubt. If any in statutory interpretation belongs to the ill used wife and the derelict divorcee. This social perspective granted, the resolution of all the disputes projected is easy. Surely, Parliament, in keeping with article 15(3) and deliberate by design, made a special provision to help women in distress cast away by divorce. Protection against moral and material abandonment manifest in article 39 is part of social and economic justice, specificated in article 38, fulfilment of which is fundamental to the governance of the country (Art.37). From this coign of vantage we must view the printed text of the particular Code. 80 section 125 requires, as a sine qua non for its application, neglect by husband or father. The magistrate 's order proceeds on neglect to maintain; the sessions judge has spoken nothing to the contrary; and The High Court has not spoken at all. Moreover, the husband has not examined himself to prove that he has been giving allowances to the divorced wife. His case, on the contrary, is that she has forfeited her claim because of divorce and the consent decree. Obviously, he has no case of non neglect. His plea is his right to ignore. So the basic condition of neglect to maintain is satisfied. In this generous jurisdiction, a broader perception and appreciation of the facts and their bearing must govern the verdict not chopping little logic or tinkering with burden of proof. The next submission is that the absence of mutual consent to live separately must be made out if the hurdle of section 125(4) is to be over come. We see hardly any force in this plea. The compulsive conclusion from a divorce by a husband and his provision of a separate residence as evidenced by the consent decree fills the bill. Do divorcees have to 1) prove mutual consent to live apart? Divorce painfully implies that the husband orders her out of the conjugal home. If law has nexus with life this argument is still born. The last defence, based on mehar payment, merits more serious attention. The contractual limb of the contention must easily fail. The consent decree of 1962 resolved all disputes and settled all claims then available But here is a new statutory right created as a projection of public policy by the Code of 1973, which could not have been in the contemplation of the parties when in 1962, they entered into a contract to adjust their then mutual rights. No settlement of claims which does not have the special statutory right of the divorcee under section 125 can operate to negate that claim. Nor can s.127 rescue the respondent from his obligation. Payment of mehar money, as a customary discharge, is within the cognisance of that provision. But what was the amount of mehar ? Rs. 5000/ , interest from which could not keep the woman 's body and soul together for a day, even in that city where 40% of the population are reported to live on pavements, unless she was ready to sell her body and give up her soul ? The point must be clearly under stood that the scheme of the complex of provisions in Chapter IX has a social purpose. Ill used wives and desparate divorcees shall not be driven to material and moral dereliction to seek sanctuary in the streets. This traumatic horror animates the amplitude of s.127. Where the husband, by customary payment at the time of divorce, has adequately provided for the divorce, a subsequent series of recurrent does is 81 contra indicated and the husband liberated. This is the teleological A interpretation, the sociological decoding of the text of s.127. The keynote thought is adequacy of payment which will take reasonable care of her maintenance. The payment of illusory amounts by way of customary or personal law requirement will be considered in the reduction of maintenance rate but cannot annihilate that rate unless it is a reasonable substitute. The legal sanctity of the payment is certified by the fulfilment of the social obligation, not by a ritual exercise rooted in custom. No construction which leads to frustration of the statutory project can secure validation if the court is to pay true homage to the Constitution. The only just construction of the section is that Parliament intended divorcees should not derive a double benefit. If the first payment by way of mehar or ordained by custom has a reasonable relation to the object and is a capitalised substitute for the order under section 125 not mathematically but fairly then section 127(3) (b) subserves the goal and relieves; the obligor, not pro tanto but wholly. The purpose of the payment 'under any customary or personal law ' must be to obviate destitution of the divorcee and to provide her with wherewithal to maintain herself. The whole scheme of section 127(3) (b) is manifestly to recognise the substitute maintenance arrangement by lump sum payment organised by the custom of the community or the personal law of the parties. There must be a rational relation between the sum so paid and its potential as provision for maintenance. To interpret otherwise is to stultify the project. Law is dynamic and its meaning cannot he pedantic but purposeful. The proposition, therefore, is that no husband can claim under section 127(3)(b) absolution from this obligation under section 125 towards a divorced wife except on proof of payment of a sum stipulated by customary or personal law whose quantum is more or less sufficient to do duty for maintenance allowance. The conclusion that we therefore reach is that the appeal should be allowed and it is hereby allowed, and the order of the trial court restored. P.B.R. Appeal allowed.

Explanation (b) to section 125(1) of the Code of Criminal Procedure, 1973 provides that "wife" includes a woman who has been divorced by or has obtained a divorce from her husband and has not re married. Section 127(3) (b) provides that where any order has been made under section 125 in favour of a woman who has been divorced by or has obtained a divorce from her husband, the Magistrate shall if he is satisfied that the woman has been divorced by her husband and has received, whether before or after the date of the said order, the whole of the sum which under any customary or personal law applicable to the parties, was payable on such divorce cancel such order in the circumstances stated therein. The respondent (husband) married the appellant (wife) and had a son by her. A few years later the respondent divorced his wife. By a consent decree, in the suit filed by the wife, he transferred to her the flat in which she was living and agreed to pay mehar money. The compromise stated that the "plaintiff declares that she has now no claim or right whatsoever against the defendant". For some time thereafter they lived together but again separated. The wife moved the magistrate under section 125 Cr.P. for grant of maintenance to her and her son. This was granted. On appeal the Sessions Judge held mat the Court had no jurisdiction under section 125. The High Court dismissed the wife 's appeal. On further appeal to this Court it was contended on behalf of the respondent that (i) section 125(4) would apply in the absence of proof that the wife was not living separately by mutual consent; (ii) to attract section 125 there must be proof of neglect to maintain the wife and (iii) no claim for maintenance in this case can survive in the face of the consent decree whereby mehar money had been paid and all claims adjusted. Allowing the appeal the Court, G ^ HELD: Every divorcee, otherwise eligible, is entitled to the benefit of maintenance allowance and the dissolution of the marriage makes no difference to this right under the current Code. [78H] 1. There is no force in the argument that the absence of mutual consent to live separately must be made out if the hurdle of section 125(4) is to be overcome. The compulsive conclusion from a divorce by a husband and his provision of a separate residence as evidenced by the consent decree fills the bill. Divorce plainfully implies that the husband orders. the wife out of the conjugal home. [80D] 76 2. The husband 's plea is his right to ignore. So the basic condition of neglect to maintain is satisfied. In this generous jurisdiction the broader perception and appreciation of the facts and their bearing must govern the verdict not chopping little logic or tinkering with burden of proof. [80C] 3. (a) The consent decree resolved all disputes and settled all claims then available. The new statutory right which could not have been in the contemplation of the parties when they entered into the consent decree in 1962 had been created by the Code of 1973. No settlement of claim which does not have the special statutory right of the divorcee under section 125 can operate to negate that claim. [80F] (b) No husband can claim under section 127(3)(b) absolution from his obligation under section 125 towards a divorced wife except on proof of payment of a sum stipulated by customary or personal law whose quantum is more or less sufficient to do duty for maintenance allowance. [81F] (c) Section 127 cannot rescue the husband from his obligation. The scheme of Chapter IX has a social purpose. Ill used wives and desperate divorcees shall not be driven to material and moral dereliction to seek sanctuary in the streets. Where the husband, by customary payment at the time of divorce, has adequately provided for the divorcee. a subsequent series of recurrent doles is contra indicated and the husband liberated. The key note thought is adequacy of payment which will take reasonable care of the wife 's maintenance. [80H] (d) The payment of illusory amounts by way of customary or personal law requirement will be considered in the reduction of maintenance rate but cannot annihilate that rate unless it is a reasonable substitute The legal sanctity of the payment is certified by the fulfilment of the social obligation, not by a ritual exercise rooted in custom. No construction which leads to frustration of the statutory project can secure validation if the Court is to pay true homage to the Constitution. The only just construction of the section is that Parliament intended divorcees should not derive a double benefit If the first payment by way of mehar or ordained by custom has a reasonable relation to the object and is a capitalised substitute for the order under section 125 then section 127(3) (b) subserves the goal and relieves the obligor. not pro tanto but wholly the purpose of the payment "under any customary or personal law" must be to obviate destitution of the divorcee and to provide her with wherewithal to maintain herself There must be a rational relation between the cum so paid and its potential as provision for maintenance. [81B C] 4. Welfare laws must be so read as to be effective delivery systems of the salutary objects sought to be served by the Legislature and when the beneficiaries are the weaker sections, like destitute women, the spirit of article 15(3) must belight the meaning of the section. The Constitution is a pervasive omnipresence brooding over the meaning and transforming the values of every measure.

: Criminal Appeal No 133 of 1975. Appeal from the Judgment and order dated 3 2 1978 of the Andhra Pradesh High Court in Crl. A. No. 628/73. R. Nagarathnam for the Appellant. P. Parmeswara Rao and G. N. Rao for the Respondent. The Judgment of the Court was delivered by CHINNAPPA REDDY, J. This appeal has been filed under Section 2(a) of the . The appellant was acquitted by the learned Additional Sessions judge, Chittoor of an offence under Section 302, Indian Penal Code. The acquittal was reversed by the High Court of Andhra Pradesh and the appellant was convicted under Section 302 Indian Penal Code and sentenced to suffer imprisonment for life. 365 The deceased Subhadramma was the wife of the appellant. They were married about one and a half years before the occurrence. About three months before the occurrence the deceased gave birth to a female child in the house of the accused at Cherlopalle. After the ninth day the mother and child, according to customary practice, were taken by the mother of the deceased to her house at Krishna Kalva. Cherlopalle is about 25 miles from Krishna Kalva. The accused used to visit his wife and often used to stay in the house of the deceased 's mother. After about one and a half months the, accused asked his mother in law and brother in law to send his wife to his place. They replied that she had only delivered a child recently and that she would be sent to her husband 's house in the fifth month. On 18th December, 1972, according to the case of the prosecution the accused once again requested his mother in law to send his wife to his house. This time he also brought with him P.W. 8, an elderly gentleman from his village. His mother in law P.W. 2 told him that she would send the girl in the fifth month as she had not yet regained her health after delivery. The accused and P. W. 8 went away. That evening the accused again came to the house of his mother in law. After dinner all of them went to sleep. The house consisted of only one room. The accused, the deceased, her brother P.W. 1, her mother P.W. 2 and her grand mother P.W. 3 were all sleeping in the room. In the middle of the night P.Ws. 1, 2 and 3 were awakened by the cry "Amma" raised by Subhadramma. On waking up they saw the accused sitting by the side of the deceased with a knife in his hand. They found the deceased bleeding profusely from the left side of her chest. P.W. 1 put his foot on the hand in which the accused was holding the knife. The accused dropped the knife which was then picked up by the grand mother P.W. 3. Attracted by the cries raised by the P.Ws. 1 to 3, the neighbourers P. Ws. 4, 5, 6 and others came there. They caught hold of the accused and tied him to a pole in front of the house by means of a rope. Some of the villagers who had gathered there also gave a beating to the accused P.W. proceeded to the house of P.W. 9 the Village Munsif and reported the occurrence to him. P. W. 1 affixed his thumb impression on the report exhibit P. 1 prepared by P. W. 9. P. W. 9 then proceeded to the house of P.W. 1 where the blood stained knife M.O. 1 was handed over to him. Thereafter, P. W. 9 prepared his own report exhibit P. 4 and sent it alongwith exhibit P. 1 and M.O. 1 to the Police Station at Renigunta. P. W. 14, the Sub Inspector of Police registered the First Information Report at 5 A. M. on 19th December, 1972 and went ahead with the further investigation which was later taken over by the Inspector of Police P.W. 15. When the Police officers went to the village, they 366 found the accused tied to a pole. They arrested him and found that he had injuries on his person. They got him examined by a Doctor. After holding the inquest the dead body was sent for postmortem examination. The Medical Officer, P. W. 12 who conducted the autopsy, found on the dead body a stab wound over the left axila 6 cms. below the arm pit 1.75 cms x 0.5 cm. nearly horizontal. The stab injury had gone through the third intercostal space and through the upper lobe of the left lung in an upward and medial direction. The upper lobe of the left lung had been cut through and through,, and had collapsed. P. W. 13 the Medical officer who examined the accused found several abrasions and contusions on the person of the accused. There was no fracture. After completing the investigation the Police laid a chargesheet against the accused and he was duly tried. The plea of the accused was one of denial. In the Committing Court the accused was content with a bare denial but in the Court of Sessions he stated that he went to the house of his mother in law at about 10 p.m. On 18th December, 1972. P. Ws. 1 and 2 taunted him saying "we are maintaining you and your wife, yet you come at any time you like` '. They insulted him. There was an altercation. P.W. 3 hit him with a stone near his left eye. P. W. 1 beat him with a stick two or three times. He felt giddy and was about to lose consciousness. P. W. 1 came upon him with a knife to stab him. The deceased intervened and interposed herself between P.W. 1 and the accused. She received a stab injury. Seeing his wife injured, he fell down unconscious. He regained consciousness next morning. The Learned Sessions Judge held that the prosecution had failed to establish any motive and that the evidence of the prosecution witnesses was 'discrepant, conflicting and improbable. ' He thought that the prosecution had made an attempt to improve its case which was originally based on circumstantial evidence to made it appear as if P.W. 3 had also seen the stabbing. He commented on the failure of the Police to seize the mat or bedding on which the deceased was sleeping. He referred to the evidence of me Doctor who stated that the injury found on the deceased could have been caused even if she was standing. The learned Sessions Judge thought that when there were two divergent versions given by the prosecution and the defence and when two views were possible, the benefit of doubt should be given to the accused. He, therefore, acquitted the accused. The High Court reversed the finding of acquittal. The learned Judges pointed out that there was no reason to doubt the testimony of P. Ws. 1 to 3 and that the discrepancies noticed by the learned Sessions 367 Judge were of a minor character. The High Court observed that the learned Sessions Judge had magnified the importance to be attached to minor discrepancies. The High Court also concluded from the medical evidence that it was more probable that the deceased was stabbed when she was lying down. Accepting the evidence of P. Ws. 1 to 3 which was corroborated by the evidence of P. Ws. 4 and 5 who came to the scene soon afterwards, the High Court convicted the accused under Section 302 and sentenced him as aforesaid. In this appeal the learned Counsel for the appellant argued that the accused had no motive to kill his wife and that his version was more probable than the version of the prosecution. He submitted that the version of the accused that the occurrence took place at about 10 p.m. was substantiated by what was mentioned in exhibit P. 15 the wound certificate given by P.W. 13 the Medical officer in respect of the injuries which he found on the person of the accused. He urged that the knife was not seized by the Police under any seizure Memo nor was the knife sent to any finger print expert. He urged that at the reasons given by the learned Sessions Judge had not been met by the High Court. He also contended that two views were possible on the evidence and the accused was entitled to the benefit of doubt. We have perused the relevant evidence as well as the judgments of the Sessions Judge and the High Court. We are unable to find any substance in the submissions made by the, learned Counsel for the appellant. The High Court was well justified in commenting that the discrepancies on the basis of which the Trial Court rejected the evidence of P. Ws. 1, 2 and 3 were of a minor character and that they have been unduly magnified by the learned Sessions Judge. The discrepancies were in regard to which of them woke up first, where was the lantern and which of the neighbours came first to the scene on hearing their cries. The High Court was also right in holding that the medical evidence supported the prosecution version and not the defence version. Merely because the Medical Officer stated that the victim could have received the injury if she was standing, it did not follow that the injury could have been received in the circumstances mentioned by the accused. The injury was inflicted with great force and its direction was upward. The location of the injury was 6 cms. below the arm pit on the left side. According to the accused the deceased received the injury when she placed herself between P. W. 1 and himself. We do not think that an injury of the nature received by the deceased could have been caused in the manner suggested by the accused. The injury must have been caused in the manner suggested by the prosecution that 368 is, when the deceased was lying on her right side. It is true that the accused did not have any deep motive to kill the deceased. It is obvious that he must have been upset by the persistent refusal of the brother and mother of the deceased to send her with him to his house. He probably attributed the refusal to reluctance on the part of his wife to accompany him straightaway. We may also refer here to the comment of the learned Counsel for the appellant that realizing that the motive would assume considerable importance if the case was one based on circumstantial evidence, the prosecution tried to make P. W. 3 depose as if she had witnessed occurrence. We do not think that the comment is justified. P.W. 3, an old woman of 69 years, stated in her evidence that she saw the accused who was sitting by the side of the deceased on the cot make a gesture as if he was stabbing the deceased and that the deceased cried out 'Amma. ' In cross examination she stated that she did not remember if she had told the Police that the accused made a gesture as if he was stabbing the deceased. The Inspector of Police P. W. 15, however, stated that P. W. 3 did not state before him that she saw the accused making a gesture as if he was stabbing the deceased. We do not think that we will be justified in rejecting the evidence of all the prosecution witnesses on the basis of this statement of P. W. 3. At the worst the so called improvement made by her may be rejected but no more. We are unable to discover any good reason to reject the evidence of P. Ws. 1 to 3 or the evidence of P. Ws. 4 and 5. We are afraid the learned Sessions Judge allowed himself to be assailed by airy and fanciful doubts. We are satisfied that the High Court was justified in interfering with the order of acquittal. The learned Counsel for the appellant advanced the usual argument submitted in all cases where an order of acquittal is reversed, namely, that where two views of the evidence are possible, the accused is entitled to the benefit of the doubt arising from the two views and that where the Trial Court has taken a possible view and acquitted the accused, the High Court should not interfere with the order of acquittal merely because another view is also possible. The principles are now well settled. At one time it was thou ht that an order of acquittal could be set aside for "substantial and compelling reasons" only and Courts used to launch on a search to discover those "substantial and compelling reasons". However, the 'formulae ' of "substantial and compelling reasons", "good and sufficiently cogent reasons" and "strong reasons" and the search for them were abandoned as a result of the pronouncement of this Court in Sanwat Singh & Ors. vs State of Rajasthan(1). In Sanwat Singh 's case, this Court harked (1) A.l. R. 369 back to the principles enunciated by the Privy Council in Sheo Swarup vs Emperor(1) and re affirmed those principles. After Sanwat Singh vs State of Rajasthan, this Court has consistently recognised the right of the Appellate Court to review the entire evidence and to come to its own conclusion, bearing in mind the considerations mentioned by the Privy Council in Sheo Swarup 's case. Occasionally phrases like 'manifestly illegal ', grossly unjust ', have been used to describe the orders of acquittal which warrant interference. But, such expressions have been used more, as flourishes of language, to emphasise the reluctance of the Appellate Court to interfere with an order of acquittal than to curtail the power of the Appellate Court to review the entire evidence and to come to its own conclusion. In some cases Ramabhupala Reddy & Ors. v The State of A.P.(2), Bhim Singh Rup Singh vs State of Maharashtra(3) it has been said that to the principles laid down in Sanwat Singh 's case may be added the further principle that "if two reasonable conclusions can be reached on the basis of the evidence on record, the Appellate Court should not disturb the finding of the Trial Court". This, of course, is not a new principle. It stems out of the fundamental principle, of our criminal jurisprudence that the accused is entitled to the benefit of any reasonable doubt. If two reasonably probable and evenly balanced views of the evidence are possible, one must necessarily concede the existence of a reasonable doubt. But, fanciful and remote possibilities must be left out of account. To entitle an accused person to the benefit of a doubt arising from the possibility of a duality of views, the possible view in favour of the accused must be as nearly reasonably probable as that against him. If the preponderance of probability is all one way, a bare possibility of another view will not entitle the accused to claim the benefit of any doubt. It is, therefore, essential that any view of the evidence in favour of the accused must be reasonable even as any doubt, the benefit of which an accused person may claim, must be reasonable. "A reasonable doubt", it has been remarked, "does not mean some light, airy, insubstantial doubt that may flit through the minds of any of us about almost anything at some time or other, it does not mean a doubt begotten by sympathy out of reluctance to convict; it means a real doubt, a doubt founded upon reason"(4). As observed by Lord Denning in Miller vs Minister of pensions(5) "Proof beyond a reasonable doubt does not mean proof beyond a shadow of a doubt. (1) 61 I.A. 389. (2) A.I.R. 1971 S.C. 460. (3) A.l. R. (4) Salmon J. in his charge to the jury in R. V. Fantle reported in (5) 370 The law would fail to protect the community if it admitted fanciful possibilities to deflect the course of justice. If the evidence is so strong against a man as to leave only a remote possibility in his favour, which can be dismissed with the sentence 'of course it is possible but not in the least probable ' the case is proved beyond reasonable doubt, but nothing short of that will suffice". In Khem Karan & Ors. vs State of U.P. & Anr.(1). , this Court observed: "Neither mere possibilities nor remote possibilities nor mere doubts which are not reasonable can, without danger to the administration of justice, be the foundation of the acquittal of an accused person, if there is otherwise fairly credible testimony". Where the Trial Court allows itself to be beset with fanciful doubts, rejects creditworthy evidence for slender reasons and takes a view of the evidence which is but barely possible, it is the obvious duty of the High Court to interfere in the interest of justice, lest the administration of justice be brought to ridicule. That is what the High Court has done in this case. The appeal is dismissed. P. B. R. Appeal dismissed.

The appellant was charged with the offence of committing the murder of his wife. The trial court acquitted him on the ground that the prosecution had failed to establish any motive for the offence, that the evidence of the prosecution witnesses was discrepant, conflicting and improbable and that when two views were possible on the basis of two divergent versions given by the prosecution and the defence, the benefit of doubt should be given to the accused. The High Court reversed the order of acquittal and convicted and sentenced the appellant to imprisonment for life on the view that the trial court had magnified the importance to be attached to the discrepancies which were of a minor nature In appeal to this Court it was contended on behalf of the appellant that in all cases where two views of the evidence were possible the accused was entitled to the benefit of doubt arising from the two views and that on this principle the High Court should not have interfered with the order of acquittal merely because another view was also possible. Dismissing the appeal: ^ HELD : (1) Where the trial court allows itself to be beset with fanciful doubts, rejects creditworthy evidence for slender reasons and takes a view of the evidence which is but barely possible, it is the obvious duty of the High Court to interfere in the interest of justice, lest the administration of justice be brought to ridicule. [370D] (2) After the decision of this Court in Sanwat Singh vs State of Rajasthan ; this Court has consistently recognised the right of the appellate court to review the entire evidence and to come to its own conclusion bearing in mind the considerations mentioned by the Privy Council in Sheo Swarup vs Emperor (61 T.A. 389). Occasionally phrases like "manifestly illegal", "grossly unjust have been used to describe the orders of acquittal which warrant interference. But such expressions have been used more as flourishes of language to emphasise the reluctance of the appellate court to interfere with an order of acquittal than to curtail the power of the appellate court to review the entire evidence and to come to its own conclusion. In two other cases it has been held that to the principles laid down in Sanwat Singh 's case may added the further principle that if two 364 reasonable conclusions could be reached on the basis of the evidence on record the appellate court should not disturb the finding of the trial court. This principle stems out of the fundamental principle of our criminal jurisprudence that the accused is entitled to the benefit of any reasonable doubt. If two reasonably probable and evenly balanced views of the evidence are possible one must necessarily concede the existence of a reasonable doubt. But fanciful and remote possibilities must be left out of account. To entitle an accused person to the benefit of a doubt arising from the possibility of duality of views, the possible view in favour of the accused must be as nearly reasonably probable as that against him. If the preponderance of probability is all one way, a bare possibility of another view will not entitle the accused to claim the benefit of any doubt. It is, therefore essential that, any view of the evidence in favour of the accused must be reasonable even as any doubt, the benefit of which an accused person may claim, must be reasonable. A reasonable doubt does not mean some light, airy, insubstantial doubt that may flit through the mind of a Judge about almost anything at any time or other, it does not mean a doubt begotten by sympathy out of reluctance to convict, it means a real doubt, a doubt founded upon reason. "Proof beyond a reasonable doubt" does not mean proof beyond a shadow of doubt The law would fail to protect the community if it admitted fanciful possibilities to deflect the course of justice. If the evidence is so strong against a man be to leave only a remote possibility in his favour which can be dismissed with the sentence, "of course it is possible but not in the least probable," the case is proved beyond reasonable doubt but nothing short of that will suffice. [369A G] Sanwat Singh vs State of Rajasthan, ; applied. Ramabhupala Reddy & Ors. vs The State of A.P., AIR 1971 SC 460, Bhim Singh Rup Singh vs State of Maharashtra, AIR 1974 SC 286, Miller vs Minister of Pensions, [1947] 2 All. E.R. 372; Khem Karam & Ors. vs State of U.P. & Anr., referred to.

Civil Appeal Nos. 1617 and 1640A of 1979. Appeals by Special Leave from the Judgment and order dated 20 1 1979 of the Madhya Pradesh High Court in Misc. Petition No 884 of 1978. R. P. Bhatt and Sri Narain for the Appellant (In CA 1617/79). G. L. Sahu and Miss Maya Ra for the Appellant (In CA 1640A/79) an R. 54 in CA 1617/79. Shiv Shankar Rao, H. K. Puri, V. K. Bahl and Miss Madhu Moolchandani For RR 7 10, 13, 14, 16, 18 25, 27 29, 33 36, 39 42, 45, 49 and 50 in CA 1617 and for RR 7, 10, 13 14, 16, 18 25, 27 29, 33 36, 39 42, 45, 49 & 50 in C.A. 1640A/79. section K. Gambhir for RR. 5 6 in CA 1617/79. The Judgment of the Court was delivered by VENKATARAMIAH, J. For the purpose of holding election to the . Municipal Corporation of Raipur in the month of December, 1978 under the provisions of the Madhya Pradesh Municipal Corporation Act, 1956 (No. 23 of 1956) (hereinafter referred to as 'the Act '), the Collector of Raipur published the preliminary electoral roll on September 30, 1978 under Rule 4(1) of the Madhya Pradesh Munici 493 pal Corporation (Preparation, Revision and Publication of Electoral Rolls and Selection of Councillors) Rules, 1963 (hereinafter referred to as 'the Rules ') promulgated under the Act by the Madhya Pradesh State Government and issued a public notice under Rule 4(1) of the Rules calling upon persons whose names had not been included in the electoral roll and who claimed to be included in i. and persons who had any objection to the inclusion of the name of any person in the said electoral roll to submit their claims and/or objections within 20 days from the date of the publication of the said notice before Shri K. P. Pande, Deputy Collector, Raipur who had been authorised to pass orders on such claims or objections. It was also notified that claims or objections which had not been preferred as required under the Rules within the prescribed period would be rejected. The final publication of the electoral roll under Rule 8 of the Rules was done on November 16, 1978. Thereafter the calendar of events was published on November 25, 1978 notifying that the poll, if necessary would take place on December 31, 1978 in all the 44 constituencies: Six petitioners including the appellants herein presented a petition under Article 226 of the Constitution before the High Court of Madhya Pradesh at Jabalpur on December 28, 1978 requesting the Court to make an order quashing the electoral roll and the calendar of events issued for the purpose of the said election and directing the respondents to refrain from conducting the poll on December 31, 1978. They prayed for a further direction to be issued to the respondents calling upon them to hold the election after preparing the electoral roll afresh in accordance with the provisions of the Act and the Rules. They also prayed for the issue of an interim order staying the poll which had been fixed to be held on December 31, 1978. On December 30, 1978, the learned Single Judge before whom the case came up for orders directed the issue of notice of the petition and the stay application to the respondents and issued an interim order directing the respondents not to notify the results of the election under Rule 46 of the Rules pending disposal of the petition. On December 31, 1978, the poll was held and 44 persons were declared elected. Their names were, however, not published under Rule 46 of the Rules in view of the interim order made by the Court. Thereafter the successful candidates were also impleaded as respondents and the petition was amended by the inclusion of an additional prayer that the declaration of the results of the election should also be quashed. After the respondents filed their counter affidavits, the petition was heard and it was dismissed by a Division Bench of the High Court on January 20, 1979. Aggrieved by the order passed by the High Court, Ashok Kumar Mishra and Bhagwat Singh Thakur (Petitioners No. 1 and 5 respectively in the 494 petition before the High Court) filed a petition for special leave to appeal to this Court and Purshottam Lal Sharma (petitioner No. 6 before the High Court) filed another petition. On special leave being granted, the above petitions were registered as appeals. One of the grounds on which the appellants challenged the validity of the electoral roll, the calendar of events and the declaration of results of election was that the entire election process had become vitiated on account of the defect in the notice issued under Rule (1) of the Rules notifying that claims and objections should be preferred within a period of 20 days from the date of the publication of that notice when sub rule (3) of Rule 4 of the Rules prescribed that such claims and objections could be preferred within 30 days from the date of publication of that notice. It was alleged that by reason of a shorter period being fixed for entertaining claims and objections, a large number or people who could have filed claims and objections were prevented from preferring them within 30 days from the date of publication or the notice which was the prescribed period. It was alleged that petitioner No. 5 had filed a claim to include his name in the electoral roll on October 19, 1978 and that was rejected by the Deputy Collector without following the procedure prescribed for the purpose. It was also alleged that on October 20, 1978, 34 persons mentioned in Annexure P 7 approached the Deputy Collector to entertain their claim for inclusion in the electoral roll and he refused to receive their applications. It was contended that on account of noncompliance with Rule 4(3) of the Rules, which was mandatory, the entire election process held on the basis of the defective electoral roll '. became a nullity and that therefore, the declaration of results of all the 44 successful candidates was liable to be quashed. On behalf of the respondents, it was pleaded that while it was true that the period of 20 days had been mentioned in the notice issued under Rule 4(1) of the Rules, it was open to all the persons who were interested in preferring claims or objections to file them within 30 days from the date of publication of the notice under Rule 4(1). It was pleaded that pursuant to the notice published under Rule 4(1) of the Rules only four claims including that of petitioner No. S were received by the Deputy Collector; that all the applicants were asked to appear on October 30, 1978 to substantiate their claim and that the applications were disposed of on October 30, 1978. The claim of petitioner No. 5 was rejected as no evidence in support of his claim was produced before the Deputy Collector. It was further pleaded that no other claims or objections were preferred either on October 20, 1978 or on any other sub sequent date. The allegation that 34 persons had approached the Deputy 495 Collector requesting him to receive their applications for inclusion of their names in the electoral roll on October 20, 1978 was denied. They further pleaded that the authorities would have taken action to correct the error in the notice issued under Rule 4(1) of the Rules granting 20 days ' time to prefer claims and objections if it had been brought to their notice by the petitioners immediately after it was noticed by them. The petitioners were not entitled to any relief under Article 226 of the Constitution on account of the inordinate delay involved in the presentation of the writ petition. The High Court after hearing the parties dismissed the petition holding (i) that respondent No. 2, the Deputy Collector had asked petitioner No. S to appear before him on October 30, 1978 and that as he did not produce any evidence in support of his claim, his application was dismissed, (ii) that none of the persons mentioned in Annexure P 7 preferred any claim before respondent No. 2 on October 20, 1978 and that he did not refuse to receive any such claim and that no person preferred any claim or objection after October 19, 1978 before respondent No. 2 and (iii) that the petitioners were not entitled to any relief as they had approached the Court after undue delay. Since one of the grounds on which the High Court dismissed the petition was that the petitioners were not prompt in moving the High Court, we shall first examine whether the High Court was right in doing so, since if we agree with the High Court on the above question, it would become unnecessary to go into the other questions raised before us. The Collector published the notice under Rule 4(1) of the Rules on September 30, 1978 and also called upon interested persons to prefer claims and/or objections thereto within a period of 20 days. In paragraph 7 of the notice, it was mentioned that claims and objections received beyond the prescribed period would not be considered. The period prescribed for preferring claims and objections under Rule 4(3) was 30 days. It is not the case of the petitioners that they did not know immediately after the publication of such notice that in the said notice a period of 20 days had been mentioned in its preamble as the period within which the claims and objections could be preferred and in paragraph 7 thereof it had been stated that any such claim or objection filed beyond the prescribed period was liable to be rejected. If they felt that the said notice suffered from any illegality, they could have brought it to the notice of the Collector immediately 496 thereafter. It was open to them to move the State Government under Rule 6 of the Rules to make an order directing the Collector to follow . the provisions governing the preparation of the electoral roll. It was also open to them to file a writ petition immediately after the publication of the said notice questioning its legality. None of the above courses was adopted by the petitioners. Persons whose claims were rejected could have filed an appeal under Rule S before the Collector. No such appeal was presented. The final electoral roll was published on November 16, 1978. It was notified that the nominations could be filed on and after November 25, 1978 and the poll, if necessary, would take place on December 31, 1978. After November 25, 1978, a large number of nominations were received by the Returning officer. It was only on December 5, 1978 for the first time that a letter was addressed by petitioner No. 6 to the Collector drawing his attention to the error that had crept into the notice published under Rule 4(1) of the Rules. By that time, the nominations had all been received. The final list of candidates for the election with their symbols was published on December 20, 1978. The writ petition itself was filed on December 28, 19?8 when the poll had to take place on December 31, 1978. When the petition came up for order on December 29, l 978, it had to be adjourned to December 30, 1978 at the request of the counsel for the petitioners. No satisfactory explanation was given in the course of the petition by the petitioners as to why they delayed the filing of the petition till December 28, 1978 even though they knew that there was an error in the notice issued under Rule 4(1) of the Rules in the month of October, 1978 more than two months before the date on which i, was filed. It was, however, argued before us relying upon a news item which had appeared in a daily called 'Nav Bharat ' dated October 21, 1978 in which there was a reference to a statement made by the Minister for Local Self Government of Madhya Pradesh regarding the irregularity in the division of Raipur town into different wards for purposes of election. It was also stated therein that in the course of the discussion with the press reporters on that day, the Minister had stated that he had directed the Commissioner, Raipur Division, Raipur that the date for inclusion of names in the electoral roll could be extended if the election date was not affected. There was a further reference to dates of election to Bilaspur Municipal Committee having been adjourned twice before. It is difficult to place any reliance on the above news item for the purpose of concluding that the Collector, Raipur had been informed about the defect in the notice issued under Rule 4(1) of the Rules by October 21, 1978. The other documents produced alongwith the writ petition referred to omissions of certain names from the electoral roll. They do not show that any 497 of the petitioners had raised any objection with regard to the date within which the claims and objections could be preferred to the electoral roll mentioned in the notice. We have, therefore, to proceed on the basis that it was only on December S, 1978 for the first time that the attention of the Collector was drawn to the said error and that the writ petition itself was presented on December 28, 1978. No satisfactory reason for the delay was set out in the petition. It is well settled that the power of the High Court under Article 226 of the Constitution to issue an appropriate writ is discretionary and if the High Court finds that there is not satisfactory explanation far the inordinate delay, it may reject the petition if it finds that the issue of Writ will lead to public inconvenience and interference with rights of others. This rule applies also to a case in which the validity of an election to a local authority is challenged. The question whether in a given case the delay involved is such that it dissentients a person to relief under Article 226 is a matter within the discretion of the High Court which as in all matters of discretion has to exercise it judiciously and reasonably having regard to the surrounding circumstances. We are not, therefore, impressed by the argument that the petitioners were entitled to the issue of the writ prayed for as of right and the delay in filing the petition should have been ignored. On the facts and in the circumstances of the case, we are of the view that the writ petition was rightly dismissed by the High Court as there was no satisfactory explanation for the delay in preferring it. We, therefore, find it unnecessary to deal with the other points urged before us. For the foregoing reasons, the appeals fail and arc dismissed. We make no order as to costs.

On September 30, 1978 the Collector published the preliminary electoral roll under Rule 4(1) of the Madhya Pradesh Municipal Corporation (Preparation, Revision and Publication of Electoral Rolls and Selection of Councillors) Rules, 1963 for the purpose of holding elections in December, 1978 to the Municipal Corporation, and also issued a notice under the said rule inviting claims or objections to be filed within twenty days from the date of publication of the notice. A period of 30 days was however actually provided in the rule. The final publication of the electoral roll was made on November 16, .1978. After November 25, 1978 a large number of nominations were received by the Returning officer arid the final list of candidates for the elections with their symbols was published on December 20, 1978 and the poll took place on December 31, 1978. The appellants (Petitioners 1, 5 and 6) along with some others in their writ petition filed on December 28, 1978 contended that the entire election process had become vitiated on account of the defect in the notice issued by the Collector under Rule 4 (1) providing 20 days for preferring claims and objections while the rule prescribed 30 days and that by non compliance with this mandatory requirement, the entire election process held on the basis of the defective electoral roll, became a nullity and therefore the declaration of results of the successful candidates was liable to be quashed. The High Court held that the appellants were not entitled to any relief as they had approached the Court after undue delay. Dismissing the appeals this Court, ^ HELD: 1. It is well settled that the power of the High Court under article 226 of the Constitution to issue an appropriate writ is discretionary and if the High Court finds that there is no satisfactory explanation for the inordinate delay, it may reject the petition if it finds that the issue of writ will lead to public inconvenience and interference with rights of others. This rule applies also to a case in which the validity of an election to a local authority is challenged. The question whether in a given case. the delay involved . is such that it dissentients a person to relief . under article 226 is a matter within the discretion of the High Court which as in all matters of 492 discretion has to exercise it judiciously and reasonably having regard to The surrounding circumstances. [497C D] 2. If the appellants felt that the notice under Rule 4(3) suffered from any illegality, they could have brought it to the notice of the Collector immediately Thereafter. It was open them to move the State Government under Rule 6 of the Rules to make an order directing the Collector to follow the provisions governing the preparation or the electoral roll. It was also open to them to file a writ petition immediately after the publication of the said notice questioning its legality. None of the above courses was adopted by the appellants. Persons whole claims were rejected could have filed an appeal under Rule 5 before the Collector. No such appeal was presented. [495H 496B] 3. It was only on December 5, 1978 for the first time a letter was addressed by one of the petitioners to the Collector drawing his attention to the error that had crept into the notice under Rule 4(1) of the Rules. By that time, the nominations had all been received. The final list of candidates for the election with their symbols was published on December 20, 1978. The writ petition itself was filed on December 28, 1978 when the poll had to take place on December 31, 1978. No satisfactory explanation was given in the course of the petition by the petitioners as to why they delayed the filing;, of the petition till December 28, 1978, even though they knew that there was an error in the notice issued under Rule 4(1). [496C E]

ON: Criminal Appeal No. 126 of 1955. Appeal by special leave from the judgment and order dated the 9th August 1955 of the Bombay High Court in Criminal Application No. 726 of 1955. M. R. Parpia, J. B. Dadachanji and section N. Andley, for the appellant. M. C. Setalvad, Attorney General for India, B. Sen and R. H. Dhebar, for the respondent. April 24. The Judgment of the Court was delivered by JAGANNADHADAS J. This is an appeal by special leave against the judgment of the High Court of Bombay dismissing an application made to it under article 226 of the Constitution. These proceedings relate to the validity of an order of detention passed by the Government of Bombay on the 8th June, 1955, against the appellant before us, who is an Advocate of the High Court of Bombay having a standing of about thirty years. He was in the Indian Air Force as an emergency Commissioned Officer between 1943 to 1948 and thereafter on extension for another four years until he attained the age of 55. It appears that he was also interested in journalism and in public affairs. On his own showing, he was concerned over the political future of Goa and "was opposed to any attempts at intimidation of Indian residents of Goan origin by other political groups and has freely expressed these views in his journalistic articles". He was arrested on the 9th June, 1955, and is in detention since then under the impugned order, which runs as follows: 384 "No. P. D. A. 1555A. Political and Services Department, Secretariat, Bombay, 8th June, 1955. O R D E R. Whereas the Government of Bombay is satisfied with respect to the person known as Shri Lawrence Joachim Joseph DeSouza of Bombay, that with a view to preventing him from acting in any manner prejudicial to the relations of India with the Portuguese Government and to the Security of India, it is necessary to make the following Order: Now, therefore, in exercise of the powers conferred by sub clause (1) of clause (a) of sub section (1) of section 3 of the (Act IV of 1950) the Government of Bombay is pleased to direct that Shri Lawrence Joachim Joseph DeSouza of Bombay, be detained. By Order and in the name of the Governor of Bombay. Under Secretary to the Government of Bombay. Political and Services Department". In pursuance of section 7 of the (Act IV of 1950) (hereinafter referred to as the Act) the grounds of detention, also dated the 8th June, 1955, was served on him along with the order of detention. The validity of the order is challenged on the following contentions. 1.The order of detention was mala fide. It was passed for the ulterior purpose of preventing his freedom of speech and freedom of professional activity in the sphere of Goan affairs by reason of his known views in this behalf. 2.The detaining authority,in exercising its power, failed to apply its mind to the existence or otherwise of the legitimate objects of detention. The grounds of detention are vague. 385 4.The claim of State that no particulars of the grounds could be furnished in public interest is unsustainable and in any case mala fide. The last two have been urged before us not only as independent points but as reinforcing the first two. The challenge to the validity of the order based on the attack of mala fides and non application of the, mind of the detaining authority, have been urged before us with great insistence. We have been taken elaborately into what is claimed to be the relevant previous background of events. This part of the argument raises, what ultimately are questions of fact which have been fully considered by the High Court. It is, therefore, enough to state, in its broad outlines, the background, which is alleged as follows: (1)(a) There was a sudden search by the police on the 24th August, 1954, at the appellant 's place for alleged possession of illicit liquor.which, in fact, was not found. But under the guise thereof the police seized and carried away a mass of documents, papers and printed material of the appellant as also a typewriter belonging to him. (b)On the same day, a search was carried out by the police also at his residence at Mahim but nothing was found. (c)Immediately following the searches, the appellant was taken into illegal police custody and interrogated, and physically assaulted, and threatened. The above high handed action of the police, by way of search and seizure, was the subject matter of challenge by the appellant by means of a writ application in the High Court in which the police officers concerned filed affidavits virtually admitting the appellant 's allegations relating to seizure of papers, etc. The State itself could not support the said highhandedness. As a result, the High Court directed on the 3rd November, 1954, the return forthwith of all the papers and articles seized. Notwithstanding that order, the materials so illegally seized were returned only on or about the 21st January, 1955. (2) When one Joaquim Carlos, a Portuguese soldier 386 attached to Goan forces, was arrested on a charge of entering Indian territory without the requisite authority, the appellant rendered professional assistance to him and obtained an order of release on bail from the Chief Presidency Magistrate, Bombay, which was foiled by the police by removing him away to Sawantwadi before the requisite sureties could be obtained at Bombay. The trial was hurried through and the said Carlos was convicted. But on appeal, filed by the appellant, before the Sessions Judge, the conviction was set aside and retrial ordered. These events happened between February to April, 1955. (3)Between April, 1955 to June, 1955, there occurred certain incidents which were inspired and instigated by the members of the Goan Action Committee who were agitating against Portuguese hold over Goa. There was a raid on certain pro Portuguese presses by some private persons, in the course of which heavy damage was caused. There was also an assault on himself (appellant) by a gang of persons of whom some were employees of the Goan Action Committee. In respect of these two incidents private complaints had been filed by or on behalf of the affected persons. The attitude and behaviour of the police in respect of these complaints were clearly indicative of their being in league with the Goan Action Committee. The appellant 's counsel strongly urged that the bona fides of the detaining authority is to be judged with reference to the above background of events and that viewed in that light the vagueness of the grounds and the belated claim of privilege under article 22(6) of the Constitution strengthen his contention. He also relied on what are urged as being certain discrepancies in the affidavits of the Under Secretary and the Chief Secretary filed in the High Court in these proceedings. It is strongly urged that the order of detention was made without any real application of mind by the detaining authority, that the authority acted merely at the instance of the police who were in league with the Goan Action Committee, and that the police procured the detention 387 order for the purpose of suppressing the freedom of the appellant, to ventilate his point of view on the Goan politics and to take up professionally the cause of persons in the position of Carlos. We have been taken through all the material relating to the above allegations and have given our consideration to the same. It is enough to say that we are unable to see any reason for disagreeing with the conclusion of the High Court to the effect that the material is not enough to make out that the detaining authority was acting otherwise than bona fide. We also agree with the view of the High Court that, what has got to be made out is not the want of bona fides on the part of the police, but want of bona fides, as well as the non application of mind, on the part of the detaining authority, viz. the Government, which for this purpose must be taken to be different from the police. It is also clear that the allegation of non application of mind by the detaining authority is without any basis, in view of the affidavit of the Chief Secretary. The further points that remain for consideration are those which relate to the complaint of vagueness of the grounds furnished and the alleged unsustainable claim for non disclosure under article 22(6) of the Constitution on behalf of the detaining authority, to get over the alleged vagueness. To appreciate the points thus raised, it is necessary to have an idea of the grounds of detention as furnished. They are to be found from the relevant communication to the detenue which is as follows: "In pursuance of section 7 of the (Act IV of 1950) you are hereby informed that the grounds on which a detention order has been made against you, by the Government of Bombay under sub clause (1) of clause (a) of subsection (1) of section 3 of the said Act are that: With the financial help given by the Portuguese authorities you are carrying on espionage on behalf of the Portuguese Government with the help of underground workers. You are also collecting intelligence about the security arrangements on the border area and you make such intelligence available to the Portu 388 guese authorities. These activities which are being carried on by you with the object of causing further deterioration in the relations between the Portuguese Government and the Indian Government over the question of Goan National Movement, are prejudicial to the security of India and to the relations of India with Portugal. 2.If you wish to make a representation against the order under which you are detained, you should address it to the Government of Bombay and forward it through the Superintendent, Arthur Road Prison, Bombay. 3.You are also informed that you have a right to claim a personal hearing before the Advisory Board and that you should communicate to Government of Bombay as soon as possible your intention of exercising or not exercising that right". The objection by the appellant relating to this is contained in paragraph 15(g) of his application before the High Court. It is as follows: "The grounds are not specific and no particulars of the activities alleged to have been carried on by the petitioner are given, viz. the particulars such as the length of period for which the petitioner is alleged to have carried on the so called espionage activities or the details of financial aid alleged to have been received by the petitioner from the Portuguese authorities or the names of any of the so called underground workers alleged to be aiding the petitioner or any details of intelligence alleged to have been collected by the petitioner or made available by him to the Portuguese Government". The answer thereto of the Under Secretary to the Government of Bombay is in paragraph 12 of his affidavit dated the 25th July, 1955, and is as follows: "With reference to paragraph 15, clause (g), I submit that it is not necessary to mention particulars of the espionage activities carried on by the petitioner or the details of the financial aid received by him or the names of the persons aiding the said petitioner. It is not in public interest to disclose these details; nor is it necessary to mention these matters to afford 389 the petitioner reasonable opportunity to make a representation" Now the question as to whether the grounds furnished are vague or not, is ultimately a question that has to be determined on a consideration of the circumstances of each case, as was pointed out by this court in the State of Bombay vs Atma Ram Sridhar Vaidya(1) in the following passage: "The contention that the grounds are vague requires some clarification. . . . If the ground which is supplied is incapable of being understood or defined with sufficient certainty it can be called vague. It is not possible to state affirmatively more on the question of what is vague. It must vary according to the circumstances of each case. . . . If on reading the ground furnished it is capable of being intelligently understood and is sufficiently definite to furnish materials to enable the detained person to make a representation against the order of detention it cannot be called vague". In the present case, the detenue has been intimated why, in the opinion of the Government the activities of the appellant are considered prejudicial to the security of India and to the relations of India with Portugal. They are the following: 1.With the financial help given by the Portuguese authorities, he is carrying on espionage on behalf of the Portuguese Government with the help of underground workers. 2.He is collecting intelligence about the security arrangements on the border area and making such intelligence available to the Portuguese authorities. 3.He is carrying on these activities with the object of causing further deterioration in the relations between the Portuguese Government and the Indian Government over the question of the Goan National Movement. It is true that these allegations are not as precise and specific as might have been desired. But having regard to the nature of the alleged activities of the appellant, it is not unlikely that no more could be gathered or furnished. In this context it is relevant (1) ; ,184. 51 390 to notice that the appellant himself does not appear to have felt that the grounds furnished were so vague as to hamper him in his right to make a representation under article 22(5) and section 7 of the Act. It does not appear that he applied to the Government to be supplied with particulars of the grounds furnished to him. Such a right to call for particulars has been recognised in the case in the State of Bombay vs Atma Ram Sridhar Vaidya(1) as flowing from his constitutional right to be afforded a reasonable opportunity to make a representation to the Board. In that case it has been stated that "if the grounds are not sufficient to enable the detenue to make a representation, the detenue. . if he likes, may ask for particulars which would enable him to make the representation". The fact that be bad made no such application for particulars is, therefore, a circumstance which may well be taken into consideration, in deciding whether the grounds can be considered to be vague. In the circumstances and having regard to thefact that what is alleged is espionage activity ata time when relations between the two Governments on the affairs of Goa were somewhat delicate, we are inclined to think, with the High Court, that the grounds cannot be considered to be vague. Assuming however that the grounds furnished in this case are open to the challenge of vagueness, the further question which arises is whether the validity of the order of detention can be sustained by reason of the claim, in public interest, of non disclosure of facts made by the Under Secretary to the Government of Bombay by means of his affidavit filed in the High Court. Now it has been held in Atma Ram Sridhar Vaidya 's case(1) by the majority of the Court, that the constitutional right of a detenue under article 22(5) comprises two distinct components. 1.The right to be furnished grounds of detention as soon as may be; and 2.The right to be afforded the earliest opportunity of making a representation against his detention (1) ; ,184. 391 which implies, the right to be furnished adequate particulars of the grounds of detention, to enable a proper representation being made. These rights involve corresponding obligations on the part of the detaining authority. It follows that the authority is under a constitutional obligation to furnish reasonably definite grounds, as well as adequate particulars then and there, or shortly thereafter. But the right of the detenue to be furnished particulars, is subject to the limitation under article 22(6) whereby disclosure of facts considered to be against public interest cannot be required. It is however to be observed that under article 22(6) the facts which cannot be required to be disclosed are those "which such authority considers to be against public interest to disclose". Hence it follows that both the obligation to furnish particulars and the duty to consider whether the disclosure of any facts involved therein is against public interest, are vested in the detaining authority, not in any other. It was accordingly attempted to be argued in the High Court that the claim of non disclosure made in the affidavit of the Under Secretary indicated a decision for nondisclosure, by the Under Secretary himself and that too at the time of filing the affidavit. On this assumption it was contended that the claim for non disclosure was invalid. The High Court, however, on a consideration of the material, felt satisfied that what was stated in the affidavit related to the decision of the detaining authority itself, taken at the time. The learned Judges expressed their conclusion as follows: "There is nothing in the affidavit of Mr. Bambawala to suggest that it is now that the detaining authority is claiming privilege or applying its mind to the question of privilege. . . . . The meaning is clear that at no time it was in public interest to disclose the details referred to in the particular paragraph of the affidavit and there is nothing to suggest that this question was not considered by the detaining authority at the time when the grounds were furnished". No argument has been addressed to us how this con 392 elusion is incorrect. But what has been urged before us is that the decision not to disclose the facts as well as the ambit of the non disclosure must be clearly communicated to the detenue at the time when the grounds are furnished. It is urged that if the detenue is furnished information, at least to that extent, it will enable him to present to the Advisory Board his difficulties in making a proper representation and to convey to it a request for obtaining the requisite particulars from the State under section 10 of the Act for their own information and consideration. We are unable to imply any such obligation under article 22(5) and (6). The necessity for such a communication would arise only if the detenue, feeling the grounds to be vague, asks for particulars. An obligation to communicate the decision not to disclose facts considered prejudicial to public interest may well be implied in such a situation. But in the absence of any such request by the detenue, the non communication of the decision cannot be held to have hampered his constitutional right of representation and an obligation to communicate cannot be implied in these circumstances. In the present case there is no merit in this contention. If the appellant bad exercised his right to ask for particulars, at the time, from the detaining authority, there can be no doubt that he would have been furnished then the very information which has been supplied in paragraph 12 of the Under Secretary 's affidavit in answer to para 15(g) of the appellant 's petition, both of which have been already set out above. A faint suggestion has been made in the course of the arguments before us that the decision not to disclose particulars is mala fide and that such mala fides has to be imputed in a case where no particulars are at all furnished. It is suggested that the power not to disclose facts considered against public interest cannot be so exercised as to nullify the constitutional right of the detenue for being afforded a proper opportunity of representation. Such a contention as to the mala fide exercise of the power is untenable in the present case having regard to the nature of the 393 grounds on which the detention is based and the nature of activities imputed therein to the appellant. It is unnecessary, therefore, to deal in this case with a theoretical contention as to whether or not article 22(6) of the Constitution overrides the constitutional right to be furnished particulars under article 22(5) to the extent of denying all particulars and leaving the grounds absolutely vague. All the contentions raised before us fail and this appeal is dismissed.

Appellant was detained under section 3(1)(a)(i) of the Preventive Detention Act, Act IV of 1950 on the grounds that with the financial help given by the Portuguese authorities he was carrying on espionage on their behalf with the help of underground workers and that he was also collecting intelligence about the security arrangements on the border area and was making such intelligence available to the Portuguese authorities. Appellant made no application to the Government for further particulars. Held, that in these circumstances and having regard to the fact that what is alleged is espionage activity, the grounds could not be considered to be vague. In answer to the objection in the writ application before the High Court that the grounds were not specific and that no particular of the alleged activities of the appellant were given the Under Secretary to the Government in his affidavit claimed privilege under article 22(6) of the Constitution. Held, that the right of the detenue to be furnished particulars is subject to the limitation under article 22(6). Hence even if the grounds are vague due to the reason that facts cannot be disclosed in the public interest, the order of detention cannot be challenged on the ground of such vagueness. The necessity of communicating the decision to claim privilege under article 22(6) would arise only when the detenue asks for parti 383 culars. In the absence of any such request by the detenue, the noncommunication of the decision cannot be hold to have hampered his constitutional right to make his representation. Mala fides must be made out against the detaining authority and not against the police. The contention of mala fides is untenable in the present case having regard to the nature of the grounds and to the nature of the activities imputed to the appellant.

Civil Appeals Nos. 2299 and 2300 of 1979. Appeal by Special Leave from the Award dated 20 12 1978 of the Industrial Tribunal Maharashtra in Reference (IT) No. 292 of 1975, published in Maharashtra Government Gazette dated 15th February, 1979. G. B. Pai, Manick K. Gagrat, J. B. Dadachanji, O. C. Mathur and K. J. John for the Appellants in CA No. 2299 and Respondents in CA 2300/79. V. M. Tarkunde, P. H. Parekh, section R. Deshpande and Miss Manik Tarkunde for the Respondents in CA 2299 and Appellants in CA No. 2300/79. The following Judgements were delivered: PATHAK, J. This appeal by special leave has been preferred by Tata Consultancy Engineers against an award dated 20th December, 1978 of the Industrial Tribunal, Maharashtra, Bombay revising the wage scales of certain categories of employees and granting various other benefits. Tata Consultant Engineers, at its inception, was a partnership firm but subsequently the partnership was dissolved and in 1974 the undertaking became one of the divisions of Tata Sons Limited. It functions as a consulting organisation and a service industry, and does not manufacture any product or carry on trade. Its work force consists of engineers and supervisors and different categories of workmen. Out of 665 employees at Bombay, the draftsmen and the administrative staff number 306. These workmen are members of the Tata Consultant Employees Union. They served a Charter of Demands in July, 1974, on the appellant, and as their demands were not accepted and conciliation proceedings proved fruitless, the State Government made a reference of the dispute under section 10(1) (d), Industrial Tribunal, Maharashtra for adjudication. The Reference was numbered I. T. No. 292 of 1975. 170 The Union filed a statement before the Tribunal claiming an upward revision of the wage scales and dearness allowance and an increase from fifteen years to twenty years in the span for earning annual increments. It was urged that the Efficiency Bar, as a feature of the wage scales, should be removed. The dearness allowance, it was claimed, should be granted on a slab system. The claim of the Union was resisted by the appellant, who maintained that the existing wage scales were fair and reasonable on a region cum industry basis and that it would not be possible for the appellant to bear the additional financial burden if the demands of the Union were accepted. Reference was made to the political uncertainty in Iran which had placed an appreciable part of the appellant 's business in jeopardy and to various other factors, peculiar to an engineering consultancy business, beyond the appellant 's control. There was fierce competition also, it was asserted, from other similar organisations. The appellant had introduced various pay scales in 1973 and some time later they were revised. There was no separate dearness allowance until January, 1977 when it was introduced for the first time. House rent allowance was also paid. Dearness allowance became payable at 10% of the basic wage subject to a minimum of Rs. 50/ and house rent allowance at 30% of the basic salary. Nothing those facts, the Tribunal observed that compared with the increased paying capacity of the appellant, an inference drawn from the prosperity enjoyed by the appellant over the years, there was definite need for revising the wage scales. It was pointed out that the dearness allowance and house rent allowance granted by the appellant made little impact in neutralising the cost of living. The need for revising the wage scales was not disputed by the appellant. In proceeding to revise the wage structure the Tribunal took into account the two principles involved in the process, the financial capacity of the industry to bear the burden of an increased wage bill, and the prevailing wage structure on an industry cum region basis. Wage scale statements were filed by the parties before the Tribunal pertaining to several engineering consultancy organisations but in the absence of pertinent information concerning the strength of their labour force, the extent of their business, the financial position for some years, the capital invested, the precise nature of the business, the position regarding reserves, dividends declared and future prospects of the company, the Tribunal found that it was unable to rely on them as comparable concerns. Holding it impossible in the circumstances to apply the principle of industry cum region basis, the Tribunal turned to a consideration of the financial capacity of the company to bear an additional burden. 171 in this connection, it proceeded on the footing that the appellant was a separate and independent division of Tata Sons Limited and had no "functional integrality" with the other divisions. Having regard to the net profits earned by the appellant from 1968 to 1977 it found that the acceptance of the demands of the Union would result in an increased burden of Rs. 7 crores, a burden which would dry up the appellant 's resources and would be impossible for it to bear. The Union modified its demands but even the modified terms, according to the Tribunal, appeared to be on the high side inasmuch as the resulting total burden of Rs. 1.70 crores was much higher than the average profits could sustain. The particular character of the appellant, that it was a service industry and not a manufacturing concern, was taken into account and it was observed that unlike a manufacturing business there was little scope for diversification in the case of an engineering consultancy. Nonetheless, the Tribunal observed, there was every reason to expect that the appellant would be able to earn sound profits in the future, and the instability in its business activities occasioned by the turbulent political situation in Iran, would be, it was expected, compensated by contracts secured in different developing countries. For the purpose of determining the financial capacity of the appellant, the Tribunal followed Unichem Laboratories vs Their Workmen(1) where it was held that the gross profits should be computed without making deductions on account of taxation, development rebate and depreciation. It decided also that there was no ground for deducting the notional value of gratuity. Revising the figures on that basis, it computed the annual gross profits for the years 1968 to 1977 and determined the annual average at Rs. 26.69 lakhs. The Tribunal took note of the elaborate scales of wages already existing in the wage structure of the appellant and decided "to modify the existing structure of the scales with flat increases in each category. " It also observed that the category of Draughtsmen needed a special increase. But it rejected the demand of the Union for dearness allowance on the basis of a slab system, because that would have imposed an unacceptable burden on the appellant 's financial capacity and there was no reason why the existing scheme of dearness allowance should be disturbed when a substantial increase was being made in the level of the basic wage. Taking into account the circumstance that besides the staff of 306 workmen represented by the Union there were several other employees who would also have to be paid, the Tribunal considered it fair, in paragraph 23 of the award, to give a flat increase of Rs. 150/ in the category of Draughtsmen and Rs. 100/ in the case of other categories. It rejected the demand of the Union 172 for abolishing the Efficiency Bar, but the span of 15 years for earning increment was expanded in some grades to 20 years and some adjustments were also made in specific grades. The Tribunal also noted that after the salaries of the employees had been fixed in the respective scales, senior employees would have to be given some more increments in the new scales according to their completed years of service. Taking all these factors into consideration, it made an award dated 20th December, 1978 prescribing the following revision in the existing scales of wages: Grade & Category Existing Grade/ Revised Grade/ Scale Scale I Peon/Helper/ Rs. 250 10 300 EB Rs. 350 10 450 15 Sweeper 10 400. II Driver/Asstt. Rs. 300 10 420 EB Rs. 400 15 520 20 House keeper/ 15 540. 660 EB 25 785. Caretaker. III Jr. Clerk cum Rs. 350 15 425 EB Rs. 450 20 550 25 Typist/Jr. Steno 20 625 EB 25 725. 800 EB 30 950. Optr./Recep tionist/Assist. Record Keeper/ Veh. Mechanic/ Jr. Librarian. IV Sr. Clerk/Steno/ Rs. 450 20 530 EB Rs. 550 25 675 30 Record Keeper/ 30 860 EB 35 1000. 975 EB 40 1175. Operator/ Xerox Operator V Office Asstt./ Rs. 590 30 740 EB Rs. 690 35 865 40 Lib. Asstt./ 35 1020 EB 40 1300 1265 EB 45 1490. Assist./ Administrative Assist./Personnel Asstt./Comm. Asstt./ Canteen Asstt. VI Draughtsman/Site Rs. 380 30 620 40 Rs. 530 40 730 50 Supervisor/ 1020 EB 50 1320. 1230 EB 60 1530. Surveyor/(Diploma Holder). VII Junior Architect Rs. 760 40 1000 50 Rs. 860 50 1160 (Engineering 1300. 60 1700. Graduate) VIII Sr. Draughtsman Rs. 1000 50 1300 Rs. 1100 60 1340 (Diploma Holder) 60 1600 75 1750. 70 1690 80 2010. The Tribunal maintained the existing schemes of dearness allowance and house rent allowance, and observed that in view of the revised basic wages there would be a resultant increase in the dearness allowance and house rent allowance. The revised wage scales, the Tribunal directed, should take effect retrospectively from 1st January, 1976. It also laid down the principle enabling the actual fitment of the workmen in their respective wage scales as on that date and also provided for the number of increments to which they would be entitled having regard to the period of completed service. 173 Two days after the award was made, an application was made by the Union stating: "In the said award, your Honour has observed, at the end of para 22, "In view of the increase that is being allowed in the basic pay, I do not propose to revise the existing scheme of Dearness Allowance. " Further, it appears that the Tribunal intended to grant the increase of Rs. 150/ to each draughtsman and Rs. 100/ to all other workmen in their basic pay. However, this is not clearly mentioned anywhere in the award due to accidental slip or omission. " The Union prayed that the position may be clarified and the award corrected accordingly. On the same date, the Tribunal disposed of the application by the following order: "There can be no doubt that a flat increase of Rs. 150/ to each of the employees in the category of Draftsmen and of Rs. 100/ to each employee in the other categories has been granted under my award. The same has been made clear in paragraph No. 23, but it appears that the words "to each employee" after the figure "Rs. 150/ " were omitted. Similarly, the same words "to each employee" after the figure "100" were omitted. When the award is sent for publication, a necessary corrigendum be made in the award and the aforesaid words after the figures Rs. 150/ and Rs. 100/ be added. It may be mentioned that only from that point of view viz. to grant flat increase of Rs. 150/ and of Rs. 100/ to the employees in the category of Draftsmen and the other categories respectively that a burden statement was called for from the company and the same was submitted (vide exhibit C 51). The fitment has also to be done only after the flat increase is added to the present basic salary of each employee. I do not think that any problem would arise for interpretation of the award. Since the award has been already signed, I do not think anything further can be added to this award. sd/ K. N. Wani INDUSTRIAL TRIBUNAL. " In this appeal, the learned counsel for the appellant had covered a wide field, but in the end he states that the appellant is aggrieved by two matters only. One is the retrospectivity attached to the revised wage scales, and the other is the flat increase given to each 174 employee of Rs. 150/ in the category of Draughtsmen and Rs. 100/ in other categories resulting from the order dated 22nd December, 1978. The workmen have filed an appeal by special leave, Civil Appeal No. 2300 of 1979, in which they have challenged the rejection by the Tribunal of their claim in respect of dearness allowance which, they contend, should be pegged to the cost of living index and should not be a fixed amount. Considering the appeal of Tata Consulting Engineers first, the contention of learned counsel for the appellant is that having regard to the financial capacity of the appellant the Tribunal erred in making the wage scales retrospective and, in any event, in ranging the retrospectivity back to 1st January, 1976. We have been taken through some of the material on the record in the attempt to support the contention, but after giving careful thought to the matter, I think there is ample justification for what the Tribunal did. It must be remembered that although the wage scales were introduced as long ago as 1973 they were maintained at that level except for a slight revision some time thereafter. No dearness allowance was paid until the beginning of 1977 and the house rent allowance also was introduced about that time. The cost of living had gone on increasing from 1972 onwards and, as the Tribunal has found, the dearness allowance and house rent allowance made no appreciable impact in neutralising the increasing cost. During all these years, the appellant had continued to enjoy increasing profits; nonetheless the emoluments received by the workmen did not receive the impress of the appellant 's growing prosperity. The Charter of Demands was presented by the Union in July, 1974 and when conciliation proceedings failed the State Government made the reference to the Industrial Tribunal in 1975. The Tribunal has referred to various considerations which prevailed with it in giving retrospectivity to the revised pay scales. They are considerations which cannot be ignored. Accordingly, the contention raised on behalf of the appellant against retrospectivity of the wage scales must be rejected. The challenge embodied in the second contention against the amendment of the award is more serious. It is urged that the amendment results in the inclusion of a flat increase of Rs. 150/ to each workman in the case of Draughtsman and Rs. 100/ to each workman in the case of other categories, a result wholly unwarranted, it is said, by the intent of the original award and, therefore, falling beyond the jurisdiction of the Tribunal. In making the application of 22nd December, 1978, the Union invoked the jurisdiction of the 175 Tribunal under rule 31 of the Industrial Disputes (Bombay) Rules, 1957. Rule 31 provides: "31. The Labour Court, Tribunal or Arbitrator may correct any clerical mistake or error arising from an accidental slip or omission in any award it or he issues. " The jurisdiction given to the Tribunal by rule 31 is closely circumscribed. It is only a clerical mistake or error which can be corrected, and the clerical mistake or error must arise from an accidental slip or omission in the award. An accidental slip or omission implies that something was intended and contrary to that intention what should not have been included has been included or what should have been included has been omitted. It must be a mistake or error amenable to clerical correction only. It must not be a mistake or error which calls for rectification by modification of the conscious adjudication on the issues involved. Is the instant case one where the amendment made by the Tribunal in the original award can be said to correct a mere clerical mistake or error arising from an accidental slip or omission? To answer the question, it is necessary to examine the basis of the award and the intent which flows from that basis. The terms of reference in the State Government 's order required the Tribunal to revise the scales of pay and dearness allowance, and there was no mention of giving any ad hoc increase in the basic pay of individual workman. It would do well to recall that the claim of the Union filed before the Tribunal also centered on the need to revise the wage scales. That was the main issue between the parties. It is to the task of revising the pay scales that the Tribunal addressed itself, and throughout the material part of the award it is that task which held its focussed attention. The financial capacity of the appellant, and the related study of its annual profits from 1968 to 1977, were examined from that view point. The sufficiency of the existing pay scales was considered in detail, and regard was had to their original structure and the accretions made subsequently by way of dearness allowance and house rent allowance. For the purpose of restructuring the pay scales the Tribunal ruled on the paying capacity of the appellant, both with reference to the profits of the preceding year as well as the prospects of the future. The financial capacity, as the Tribunal observed, constituted one of "the principles which are required to be followed in the fixation of the wage structure." A clear statement of its intention is found in paragraph 22 of the award, where the Tribunal stated: "I only propose to modify the existing structures of the scales with flat increases in each category." 176 No ad hoc increase to the pay of each individual workman was intended. And that is confirmed by what was stated in paragraph 23 of the award: "Considering this outgoing the flat increase of Rs. 150/ in the category of Draughtsman and Rs. 100/ in the case of the other categories would be fair. " It will be noted that the pay scales of different categories were being restructured, and the flat increase envisaged there related to an increase in the general pay scales of different categories. Individual workmen were not present to the mind of the Tribunal. That the increase was pertinent to the general pay scales in the revised wage structure is patently clear from a comparison of the existing pay scales and the revised pay scales. The comparative table of existing pay scales and the revised pay scales has been reproduced earlier. The revised pay scales of all categories, except the category of Draughtsmen, shows an increase of Rs. 100/ in the initial pay fixed in each scale, the increase in the case of the category of Draughtsmen being Rs. 150/ . There was only one increase contemplated in the award, in paragraph 23 of award, and it is more than plain that the increase was the one incorporated in the revised pay scales pertaining to different categories. No second flat increase was envisaged at all. The amendment made by the Tribunal has the effect of providing a second increase, this time to each individual workmen. If, as the Tribunal has stated in the amendment order, the increase in paragraph 23 was intended to apply to each individual workmen, there is nothing in the body of the award to form the foundation on which the actual figures in the restructured pay scales can be made to rest. There will be no explanation why the initial start of the revised pay scales has been increased by Rs. 150/ in the case of the category of Draughtsmen and Rs. 100/ in the case of other categories. Considering the fitment of the workman in the revised scales, it was stated in the award that a workman found drawing a salary less than the beginning of the grade would be stepped up to the beginning of the grade and if his pay fell between two steps in the reclassified pay scales the basic pay was to be fixed at the step higher in the revised scale. Conspicuous by its absence is any reference to a flat increase in the pay of an individual workmen. Even when considering the range of permissible retrospectivity the Tribunal stated in the award: "In view of the revision of the wage scales, there would be consequent increase in the dearness allowance and the house rent allowance. " 177 And the clinching circumstances of all is that the award was made on the basis that the overall financial load according to paragraph 33 of the award would be to the tune of about Rs. 5 lakhs. It was that figure which the Tribunal had in mind against the backdrop of the gross annual figures when it made the revised pay scales retrospective from 1st January, 1976. This liability taken with the liability accruing on the need to increase the salaries of the other staff determined the Tribunal 's deliberations in regard to the several features of the award, including the grant of increments related to completed periods of service, the expansion of the span from 15 years to 20 years for earning increments, and other benefits. It cannot be the case of the Union that the figure of Rs. 5 lakhs mentioned in paragraph 33 of the award represented the result of adding a flat increase to the pay of each workman in addition to the benefits conferred by the revised pay scales and other awarded reliefs. In its order of 22nd December, 1978, the Tribunal has referred to the statement (Exhibit C 51) filed by the appellant when called upon to indicate the increased financial burden apprehended by it. The Tribunal has relied on this statement as evidence showing that the appellant knew that a flat increase of Rs. 150/ and Rs. 100/ was intended to each of the employees in the category of Draughtsmen and the other categories. In so construing the statement, Exhibit C 51, the Tribunal has grievously erred. It seems from a perusal of the document, Exhibit C 51, that it is a statement giving trial figures of the increased financial load on different bases. On the basis that a sum of Rs. 150/ per month was added to the pay of each Draughtsman and a sum of Rs. 100/ was added to the pay of every other workman, who belonged to the Union staff, the financial load would increase to Rs. 9,22,032/ . Likewise, if a flat increase of Rs. 100/ was given to individual workmen of all categories, including Draughtsmen, the increased financial load would total Rs. 7,64,256/ . The statement then goes on to indicate that if a flat increase of Rs. 75/ per month were given to individual workmen of all categories the total increase would be Rs. 5,78,220/ . Again, if the flat increase is Rs. 65/ per month to the individual workmen of all categories, the additional load would total Rs. 4,97,772/ . Finally, on the basis that the individual Draughtsman would be given an increase of Rs. 75/ per month and the individual workmen of other categories Rs. 50/ per month, the additional load was calculated at Rs. 4,63,092/ . It will be noted that the statement, Exhibit C 51, was prepared on the basis of the employees ' strength as in December, 1971. A similar statement was prepared on the basis of the employees ' strength as in September, 1978. These statements cannot be regarded as evidence 178 that the appellant was cognizant of the intention of the Tribunal to provide a flat increase to the pay of each workman. The statement afforded an indication merely of what the additional financial load would be if a flat increase was given to the individual workman on the alternative basis set forth therein. None of the alternatives was actually adopted by the Tribunal, because when the award was made the Tribunal proceeded instead to restructure the wage scales by the addition of Rs. 150/ in the case of the category of Draughtsmen and Rs. 100/ in the case of other categories to the initial pay in the wage scales pertaining to those categories. The addition was integrated as a feature of the wage scales; it was not regarded as an addition to the pay of each individual workman. It seems that the Tribunal was betrayed by a curious confusion in accepting the plea of the Union that a flat increase to the pay of each workman was intended in the original wage and, consequently, it fell into the error of amending the award. The evidence contained in the award throughout provides incontrovertible proof that this flat increase was never originally intended in the award. The amendment has resulted in the Tribunal making, as it were, a supplementary award, whereby a further relief is being granted beyond that granted in the original award. The original award was completed and signed by the Tribunal, and it cannot be reopened now except for the limited purpose of Rule 31. In travelling outside and beyond the terms of the original award, the Tribunal has committed a jurisdictional error. Our attention has been drawn to what purports to be an endorsement by counsel for the appellant on the application dated 22nd December, 1978 filed by the Union before the Tribunal to the effect that the appellant would submit to whatever the Tribunal decided, and it is urged that the appellant is bound by the order made on the application. It is an accepted principle that consent by a party cannot confer jurisdiction on a court. What is without jurisdiction will remain so. In the circumstances the order of 22nd December, 1978 is invalid so far as it amends paragraph 23 of the original award. The corrigendum amending the award in consequence is liable to be quashed. The second contention of the appellant is entitled to succeed. I shall now consider Civil Appeal No. 2300 of 1979 filed by the workmen. The only contention of the workmen is that the Tribunal should have fixed the dearness allowance in communion with the cost of living index. It is wrong in principle, it is said, to provide a fixed dearness allowance. Reliance was placed on The Hindustan Times Ltd., New Delhi vs Their Workmen where it was observed by this Court that dearness allowance should not 179 remain fixed at any figure but should be on a sliding scale in order to neutralise a portion of the increase in the cost of living. Reference was also made to Bengal Chemical & Pharmaceutical Works Limited vs Its Workmen. Now, it is not a universal rule that the dearness allowance should in all cases be correlated with the cost of living index. The Tribunal, in the present case, considered the matter and found it sufficient and in accord with justice that the wage scales should be restructured with suitable increments provided therein. It noted that dearness allowance was being granted by the appellant at 10% of the salary subject to a minimum of Rs. 50/ and house rent allowance at 30% of the basic salary. Having regard to the not inconsiderable improvement in the level of the basic wage, it observed that there would be a consequent increase in the dearness allowance and house rent allowance. In view of the increase so secured, the Tribunal rejected the suggestion that a slab system should be introduced in the dearness allowance or that there should be any other modification of the principle on which dearness allowance was being presently granted. It declared that the cumulative effect of an improved wage structure together with dearness allowance operating on a slab system would throw an impossible burden of about Rs. 1 crore on the financial capacity of the appellant. It was open to the Tribunal to adopt the position which it did. If the dearness allowance is linked with the cost of living index the whole award will have to be reopened and the entire basis on which it has been made will have to be reconsidered. The award is a composite document in which the several elements of increased wage scales, larger increments, longer span of 20 years for earning increments, dearness allowance at 10% of the basic wage, besides several other benefits, have been integrated into a balanced arrangement in keeping with what the Tribunal has found to be the financial capacity of the appellant. It is not possible to maintain one part of the award and supersede another. Accordingly, the appeal filed by the workmen must fail. In the result, Civil Appeal No. 2299 of 1979 is allowed in part insofar that the order dated 22nd December, 1978 of the Industrial Tribunal, Maharashtra Bombay is quashed to the extent that it modifies the original award dated 20th December, 1978, and the corrigendum made consequent thereto is also quashed. Civil Appeal No. 2300 of 1979 is dismissed. There is no order as to costs. CHINNAPPA REDDY, J. We have had the advantage of perusing the judgment prepared by our learned brother Pathak, J. we agree with 180 him that Civil Appeal No. 2300 of 1979 should be dismissed. We also agree with him that Civil Appeal No. 2299 of 1979 should also be dismissed in so far as it relates to the award dated December 20, 1978. However, we do not agree with our learned brother that Civil Appeal No. 2299 of 1979 should be allowed in so far as it relates to the order dated December 22, 1978 of the Industrial Tribunal which purports to correct the award dated December 20, 1978. In our opinion Civil Appeal No. 2299 of 1979 should be dismissed in its entirety. We do not propose to give our reasons to the extent we are in agreement with Pathak, J. and we propose to state our reasons for the disagreement only. It is needless to recapitulate all the basic facts which have been set out in the judgment of Pathak, J. The Award of the Industrial Tribunal was made on December 20, 1978. On December 22, 1978 that is to say, two days after the Award was made and when everything must have been fresh to the minds of the Tribunal, the respective parties and their Advocates, the employees Union made an application under Rule 31 of the Industrial Disputes (Bombay) Rules, 1957 seeking a correction of an error, which it was claimed, had crept into the Award. The application was as follows: "In the above reference your honour was pleased to pass an award on 20th December, 1978. In the said award, Your Honour has observed, at the end of Para 22, 'In view of the increase that is being allowed in the basic pay, I do not propose to revise the existing scheme of Dearness Allowance '. Further, it appears that the Tribunal intended to grant the increase of Rs. 150/ to each draughtsman and Rs. 100/ to all other workmen in their basic pay. However, this is not clearly mentioned anywhere in the award due to accidental slip or omission. The Union therefore prays the honourable Tribunal to clarify the position and correct the award accordingly". On this application, the Advocate for the employer company made the following endorsement: "Submitted to whatever this Hon 'ble Tribunal desires to do". Thereafter the Tribunal made an order on the same day in the following terms: "There can be no doubt that a flat increase of Rs. 150/ to each of the employees in the category of Draftsmen and 181 of Rs. 100/ to each employee in the other categories has been granted under my award. The same has been made clear in paragraph No. 23, but it appears that the words "to each employee" after the figure "Rs. 150/ " were omitted. Similarly, the same words "to each employee" after the figure "100" were omitted. When the award is sent for publication, a necessary corrigendum be made in the award and the aforesaid words after the figures Rs. 150/ and Rs. 100/ be added. It may be mentioned that only from that point of view viz. to grant flat increase of Rs. 150/ and of Rs. 100/ to the employees in the category of Draftsmen and the other categories respectively that a burden statement was called for from the company and the same was submitted (vide exhibit C 51). The fitment has also to be done only after the flat increase is added to the present basic salary of each employee. I do not think that any problem would arise for interpretation of the award. Since the award has been already signed, I do not think anything further can be added to this award". This order was made in the presence of Shri Manak Gagrat, Advocate for the Company and Shri N. P. Mehta, Advocate for the workmen. The endorsement made on the application by the Advocate for the company does not indicate that the company had any objection to the award being corrected as sought by the employees union. On the other hand the endorsement reads as if there was tacit agreement on the part of the Company to the correction sought by the union. The order dated December 22, 1978 of the Tribunal also does not reveal that there was any opposition by the company to the application for correcting the award. Even so we propose to examine whether the correction sought by the employees union was within the bounds of the authority of the Tribunal or whether it was in effect a fresh award. The primary and basic question considered by the Industrial Tribunal, in making the award dated December 20, 1978 was the question of revision of the wage scales. Implicit and intrinsically connected with the question of revision of the wage scales were the questions of fitment of employees into the wage scales and flat or ad hoc increase of salaries of workmen wherever considered necessary. It cannot possibly be doubted that an Industrial Tribunal deciding upon the wage scales of the employees of an establishment would have full liberty to propose ad hoc increase of salaries as part of the revision of wages. Nor can it be doubted that fitment into the revised pay scales is certainly a part of the revision of pay scales. This in our opinion is 182 elementary and fundamental to the jurisdiction of the Industrial Tribunal in revising wage scales. In the present case the Industrial Tribunal on a consideration of the material placed before it came to the conclusion that the company was in an undoubted position to bear the additional financial burden. At the end of paragraph 15 of the Award, the Tribunal stated: "But there can be no doubt that the company can very well bear the additional burden. The question is what should be the extent of such burden?" At the end of paragraph 18 of the award the Tribunal said: A" mere reading of Exhibit U 15 will immediately dispel the misgivings about the future of the present company. For some years to come this is likely to be one of the few Consulting Engineers who will be securing major contracts". Again in Paragraph 19 it was said: "I have no doubt that the present Company would be able to bear the additional burden for the years to come. This is further borne out from the trading results of the Company for the year 1968 69 to 1977. The profits have increased all along. The copy of the letter dated July 23, 1973, alongwith the Annexures from the Company to the Director General, Posts & Telegraphs, Delhi (exhibit C 27) indicates the important projects the Company was handling in India and abroad, and the amount of foreign exchange earned and repatriated. I will; therefore, proceed on the ground that the present Company can bear the additional financial burden". Finally at the end of paragraph 21 the Tribunal said : In view of this position, the Company can easily bear some burden that might fall as a result of the upward revision of the wage scales. The question is to what extent the relief should be given to the employees ?" After expressing himself in categoric terms about the capacity of the company to bear the additional financial burden, the Tribunal went on to say: "I only propose to modify the existing structure of the scales with flat increases in each category". The Tribunal then considered the question whether Draftsmen should get a higher flat increase and the question whether the existing scheme of Dearness Allowance should be revised. The Tribunal then observed: ". the flat increase of Rs. 150/ in the category of Draftsmen and Rs. 100/ in the case of the other categories would be fair". Thereafter various other matters were considered and finally the Tribunal revised the wage scales in the manner already mentioned by my brother Pathak, J. The question of "Fitment" was then considered in the following manner: 183 "34. Fitment: If as on 1st January, 1976, an employee is drawing a salary less than the beginning of the respective grade, he should be first stepped up to the beginning of the grade. If the pay of an employee does not coincide with any step in the revised pay scale, and falls between two steps in the reclassified pay scales, the basic pay of that employee shall be fixed at the step higher in the revised scale. After fixing the salary of the employees in the scales as above, the employees should be given increments in the new scales as noted below: (i) Employees who have completed 5 years or more as on 1st January, 1976, 3 increments. (ii) Employees who have completed 4 years of service as on 1st January, 1976, 2 increments. (iii) All other employees with more than one year 's service shall be given one increment". Now, if, without any flat or ad hoc increase of salary, the workmen were to be fitted into the revised scales of pay, it would obviously result in serious anomalous situations. In the case of several senior employees, the revised scale would yield but a very small and almost a token increase in the size of the pay packet whereas the junior employees would get a large benefit. While workmen raising industrial disputes for revision of wage scales are certainly minded about their future prospects in the matter of wages, they, surely would be more concerned with the immediate benefits according to them That was why the Industrial Tribunal thought that an all round flat increase of Rs. 150/ in the case of Draftsmen and Rs. 100/ in the case of other workmen was called for. It was clearly so intended by the Tribunal as is evident from the reference to "flat increase of Rs. 150/ in the category of Draftsmen and Rs. 100/ in the case of the other categories". Since there was to be a flat increase of Rs. 150/ and Rs. 100/ in the case of draftsmen and other workmen respectively, the revised wage scale had necessarily to commence with figures Rs. 150/ and Rs. 100/ above the existing wage scales. Immediately after the award was pronounced, while the iron was still hot as it were, the employees apparently realised that the employer might take advantage of the circumstance that it was not clearly mentioned in the award that all the employees were to get additional pay of Rs. 150/ and Rs. 100/ respectively and might contend that the Tribunal had only revised the wage scales by increasing the salary on entry into the service and res 184 tructuring the scale of pay and never granted any ad hoc increase of salary to all employees. Therefore, they filed an application before the Tribunal for correcting the award so as to bring out what was intended. As it has now turned out what the employees apparently suspected the employer might contend, is precisely what the employer is not contending, though the employer did not choose to so contend before the Industrial Tribunal itself when the employees filed the application for rectification. The application before the Tribunal was filed under Rule 31 of the Bombay Industrial Disputes Rules 1957, which is as follows: "A Board, Court, Labour Court, Tribunal or Arbitrator may, at any time, suo moto or on an application made by any of the parties concerned, may correct any clerical mistake or error arising from an accidental slip or omission in any proceedings, report, award or as the case may be, decision". The omission of the words to each employee first after the figure Rs. 150/ and again after the figure Rs. 100/ was clearly an accidental slip or omission which the Tribunal was entitled to correct. We are unable to see how it can be held to be otherwise. We are not impressed with the submission of the learned counsel for the Company that the corrigendum was in effect a fresh award. We, therefore, see no ground for quashing the order dated December 22, 1978 of the Tribunal. The result of the foregoing discussion is that Civil Appeal No. 2299 of 1979 has to be dismissed in its entirety. We have already indicated that we agree with our brother Pathak, J., that the appeal (Civil Appeal No. 2300 of 1979) filed by the workmen should also be dismissed. While we find lot of force in the submission of Shri V. M. Tarkunde, learned counsel for the workmen that Dearness Allowance linked to cost of living index is ordinarily the best and the most scientific method of computing dearness allowance, it cannot always be said that an illegality warranting interference under Article 136 is committed if some other method is adopted. The Tribunal has given satisfactory reason for adopting a different mode and we are not disposed to interfere with the award of the Tribunal. In the result both the appeals are dismissed without any order as to costs. ORDER In view of the opinion of the majority both the appeals are dismissed and there is no order as to costs. S.R. Appeals dismissed.

Dismissing the appeals by special leave, the Court. ^ HELD: Per Pathak, J. (Krishna Iyer and Chinnappa Reddy, JJ. concurring) (1) Having regard to the financial capacity of M/s. Tata Consulting Engineers, the appellant, and the material on the record and the various other considerations which prevailed with the Tribunal, the granting of revised wage scales is in order. Although the wage scales were introduced as long ago as 1973 they were maintained at that level except for a slight revision some time thereafter. No dearness allowance was paid until the beginning of 1977 and the house rent allowance also was introduced about that time. The cost of living had gone on increasing from 1972 onwards and the dearness allowance and house rent allowances made no appreciable impact in neutralising the increasing cost. During all these years, the appellant had continued to enjoy increasing profits; nonetheless the emoluments received by the workmen did not receive the impress of the appellant 's growing prosperity. The Charter of Demands was presented by the Union in July, 1974 and when conciliation proceedings failed the State Government made a reference to the Industrial Tribunal in 1975. The several considerations which prevailed with the Tribunal giving retrospectivity to the revised pay scales and referred to by it cannot be ignored. [174C G] (2) It is not a universal rule that the dearness allowance should in all cases be correlated with the cost of living index. The Tribunal, in the present case, considered the matter and found it sufficient and in accord with justice that the wage scales should be restructured with suitable increments provided therein. It noted that dearness allowance was being granted by the appellant at 10% of the salary subject to a minimum of Rs. 50/ and house rent allowance at 30% of the basic salary. Having regard to the not inconsiderable improvement in the level of the basic wage, it observed that there would be a consequent increase in the dearness allowance and house rent allowance. In view of the increase so secured, the Tribunal rejected the suggestion that a slab system should be introduced in the dearness allowance or that there should be any other modification of the principle on which dearness allowance was being presently granted. It declared that the cumulative effect of an im 167 proved wage structure together with dearness allowance operating on a slab system would throw an impossible burden of about Rs. 1 crore on the financial capacity of the appellant. It was open to the Tribunal to adopt the position which it did. If the dearness allowance is linked with the cost of living index the whole award will have to be reopened and the entire basis on which it has been made will have to be reconsidered. The award is a composite document in which the several elements of increased wage scales, larger increments longer span of 20 years for earning increments, dearness allowance at 10% of the basic wage, besides several other benefits, have been integrated into a balanced arrangement in keeping with what the Tribunal has found to be the financial capacity of the appellant. It is not possible to maintain one part of the award and supersede another. [179 E F] The Hindustan Times Ltd, New Delhi vs Their Workmen, [1964] 1 SCR 234, 247 and Bengal Chemical & Pharmaceutical Works Limited vs its Workmen; , , distinguished. (3) The jurisdiction given to the Tribunal by rule 31 of the Industrial Disputes (Bombay) Rules, 1957, is closely circumscribed. It is only a clerical mistake or error which can be corrected and the clerical mistake or error must arise from an accidental slip or omission in the award. An accidental slip or omission implies that something was intended and contrary to that intention what should not have been included has been included or what should have been included has been omitted. It must be a mistake or error amenable to clerical correction only. It must not be a mistake or error which calls for rectification by modification of the conscious adjudication on the issues involved. [175 A C] Per contra The order of 22nd December, 1978 is invalid so far as it amends paragraph 23 of the original award. The amendment has resulted in the Tribunal making, as it were, a supplementary award, whereby a further relief is being granted beyond that granted in the original award. The original award was completed and signed by the Tribunal, and it cannot be reopened now except for the limited purpose of Rule 31. In travelling outside and beyond the terms of the original award, the Tribunal has committed a jurisdictional error. The evidence contained in the award throughout provides incontrovertible proof that this flat increase (ad hoc) was never originally intended in the award. There was only one increase contemplated in the award, in paragraph 23 of the award and it is more than plain that the increase was the one incorporated in the revised pay scales pertaining to different categories. No second flat increase was envisaged at all. The amendment made by the Tribunal has the effect of providing a second increase, this time to each individual workmen. If, as the Tribunal has stated in the amendment order. the increase in paragraph 23 was intended to apply to each individual workmen, there is nothing in the body of the award to form the foundation on which the actual figures in the restructured pay scales can be made to rest. There will be no explanation why the initial start of the revised pay scales has been increased by Rs. 150/ in the case of the category of Draughtsmen and Rs. 100/ in the case of other categories. Considering the fitment of the workmen in the revised scales, it was stated in the award that workman found drawing a salary less than the beginning of the grade would be stepped up to the beginning of the grade and if his pay fell between two steps in the reclassified pay scales the 168 basic pay was to be fixed at the step higher in the revised scale. Further the award was made on the basis that the overall financial load according to paragraph 33 of the award would be to the tune of about Rs. 5 lakhs. It was that figure which the Tribunal had in mind against the backdrop of the gross annual figures when it made the revised pay scales retrospective from 1st January, 1976. [176 D G, 177A, 178 D F] The statement, Exhibit C 51 afforded an indication merely of what the additional financial load would be if a flat increase was given to the individual workmen on the alternative basis set forth therein. None of the alternatives actually adopted by the Tribunal, because when the award was made the Tribunal proceeded instead to restructure the wage scales by the addition of Rs. 150/ in the case of the category of Draughtsmen and of Rs. 100/ in the case of other categories to the initial pay in the wage scales pertaining to these categories. The addition was integrated as a feature of the wage scales, it was not regarded as an addition to the pay of each individual workmen. [178A C] It is an accepted principle that consent by a party cannot confer jurisdiction on a court. What is without jurisdiction will remain so. [178 E F] Per O. C. Reddy, J. (Majority view, Iyer and Reddy, JJ.) The order dated December 22, 1978 of the Industrial Tribunal which purports to correct the award dated December 20, 1978 cannot be considered in effect to be a fresh award and it is in order. The omission of the words "to each employee" after the figure Rs. 150/ and again after the figure Rs. 100/ was clearly an accidental slip or omission which the Tribunal was entitled to correct. The application for the correction was made immediately, that is to say, two days after the Award, while iron was still hot or when everything must have been fresh to the minds of the Tribunal. Even the endorsement made on the application by the Advocate for the Company to the effect "submitted to whatever this honourable Tribunal desires to do, does not indicate that the Company had any objection to the award being corrected as sought by the employees union. On the other hand the endorsement reads as if there was tacit agreement on the part of the Company to the correction sought by the union; it cannot possibly be doubted that an Industrial Tribunal deciding upon the wage scales of the employees of an establishment would have full liberty to propose ad hoc increase of salaries as part of the revision of pay scales, not can it be doubted that fitment into the revised pay scales is certainly a part of the revision of pay scales. This is elementary and fundamental to the jurisdiction of the Industrial Tribunal in revising wage scales. If without any flat or ad hoc increase of salary the workmen were to be fitted into revised scales of pay, it would, obviously, result in serious anomalous situations. In the case of several senior employees, the revised scale would yield but a very small and almost a token increase in the size of the pay packet whereas the junior employees would get a large benefit. While workmen raising industrial disputes for revision of wage scales are certainly minded about their future prospects in the matter of wages, they, surely would be more concerned with the immediate benefit accruing to them. That was why the Industrial Tribunal thought that all round flat increase of Rs. 150/ in the case of Draughtsmen and Rs. 100/ in the case of other workmen to each employee was called for. [180C, 181D E, G H, 182A, 183D E, G H, 184A B] 169 (4) While it is true that Dearness Allowance linked to cost of living index is ordinarily the best and the most scientific method of computing dearness allowance, it cannot always be said that an illegality warranting interference under Article 136 is committed if some other method is adopted. In the instant case, the Tribunal has given satisfactory reasons for adopting a different mode. [184 F G]

ivil Appeal No. 196 of 1 970. From the judgment and decree dated April 21, 1969 of the Allahabad High Court in First Appeal No. 80 of 1964. S.T. Desai, A.T.M. Sampath, Mukul Mudgal and Raju Ramachandran for the Appellants. R.K. Garg, Mrs. Urmila Sirur and Shiv Pujan Singh, for the Respondents. (b) of clause (I) of Article 133 of the Constitution granted by the Allahabad High Court against its judgment and decree dated April 21, 1969 disposing of appeals out of a suit for declaration and possession. The plaintiffs filed a suit claiming that the property in dispute belonged to the Math Sauna or the deity Sri Thakur Gokarneshwar 661 Mahadeo Ji installed in the Math Sauna temple, and that Mahant Sadashiva Yati was in possession as Mahant and Sarbarakar. It was claimed that in the event of Mahant Sadashiva Yati being found out of possession a decree for possession should be made. Sadashiva Yati pleaded that on the death of Mahant Shivshanker Yati he was elected Mahant of Math Sauna and was, therefore, entitled as Sarbarakar to all the properties recorded in the deity Mahadeo Ji or in the name of Mahant Shivshanker Yati. These properties included properties in village Amauli. He asserted that Shivshanker Yati possessed no personal property. The suit was contested by the first defendant, Kedar Nath Chaubey, also referred to as Uma Shanker Yati. He alleged that Mahant Shivshanker Yati owned personal properties which included the properties in village Amauli, that he was the chela of Mahant Shivshanker Yati and the Amauli properties had passed to him under a will executed by the Mahant. We are concerned in this appeal solely with the Amauli properties. Math Sauna is an old Math situated in the village of that name in Tehsil Saidpur in the district of Ghazipur. One of the earliest Mahants of the Math Mahant Gokaran Yati, raised a temple in the premises of the Math and installed a deity acclaimed by the name of "Gokarneshwar Mahadeo". On his death he was succeeded by Mahant Shivbaran Yati, who executed a waqf deed on November 12, 1892 dedicating various properties to the deity with the intent that arrangements for bhog, deepdan and other expenses be met from them. The surplus, the deed directed was to be employed for acquiring further property in the name of the deity and was not to be applied by the Sarbarakar to his personal use. The learned Civil Judge decreed the suit but included a finding in his judgment that Sadashiv Yati was not a regularly constituted Mahant of Math Sauna and Sarbarakar of the deity. Two appeals were filed in the High Court. First Appeal No. 80 of 1964 was filed by Kedar Nath Chaubey @ Uma Shanker Yati against the declaration that the Amauli properties were owned by Math Sauna or the deity and that Sadashiv Yati was in possession thereof as Mahant and Sarbarakar. The other appeal, First Appeal No. 270 of 1965 was filed by the plaintiffs for the relief that Sadashiv Yati was a properly constituted Mahant of Math Sauna and Sarbarakar of the deity. The High Court allowed both the appeals by its judgment and decree dated April 21, 1969. It held that the Amauli properties had been purchased by Shivshanker Yati in 1921 from 662 the personal and separate funds inherited by him from his predecessor Shivpher Yati, and that the Amauli properties must, therefore, be regarded as his personal and separate properties and they did not belong to the Math or the deity. The present appeal is directed against that part of the judgment and decree of the High Court. It is admitted between the parties that the Amauli properties were purchased by Mahant Shivshankar Yati for Rs. 40,000 forming part of a fund left behind by his predecessor Mahant Shivpher Yati. The point for decision is whether the fund was the personal property of Mahant Shivpher Yati, and if so, whether it devolved on Mahant Shivshankar Yati. The Mahants and members of Math Sauna belonged to the Dashnami Sanyasi sect. The material on the record establishes that they could own and possess personal property. They included sanyasis who had formerly been married men and householders, men who had passed through the grihastha ashram. Some of them continued to possess and even to acquire personal property after taking sanyas. It was observed in Sushil Chandra Sen vs Gobind Chandra Das(l) that Dashnami sanyasis mixed freely in the business world and carried on trade and often accumulated property. This Court in Gurcharan Prasad vs Krishnanand (2) affirmed that Nihang Dashnami Sanyasis could pursue money lending business and could own property as absolute owners, and enjoy them as their personal property. That certain sects of sanyasis could acquire personal property was accepted by that eminent Judge, Dr. B.K. Mukherjee, in his "Hindu Law of Religious and Charitable Trusts",(a) where he says: "A Mohunt, and for the matter of that, any other Sanyasi can acquire personal property of his own. The Pronamis given to a Mohunt are generally his personal property. The mere fact that a Mohunt is an ascetic does not raise any presumption that a property in his possession is not his personal property. Strictly speaking, there is no presumption either one way or the other, and in each case the burden is upon the plaintiff to establish that the properties in respect of which he is asking for possession are properties to the possession of which he is entitled in the right in which he sues". 663 There is reason to believe that Mohant Shivbaran Yati, Mohant Shivpher Yati and Mahant Shivshankar Yati were not celibates and had been grihasthas, and were entitled to possess, enjoy and acquire personal property. The evidence discloses that Mahant Shivpher Yati was held in high regard on account of his personal learning and attainments, and has a large number of chelas including many affluent persons from whom he received personal bhents or pranamis of large amounts of money. His personal property, on his death, included cash, sovereigns and gold besides two fixed deposits with the Bank of Bengal of Rs. 45,000. He had also inherited the personal property of Mahant Shivbaran Yati, who owned three private properties in village Shiv Dass in the district of Banaras. On his death in 1917, all those properties and wealth devolved on Mahant Shivshankar Yati. He was granted a succession certificate by the District Judge, Ghazipur in respect of the two fixed deposits made by Mahant Shivpher Yati in the Bank of Bengal. Mahant Shivshankar Yati employed the inherited money in the purchase of two properties in village Amauli in 1921 paying Rs 30,000 for a full interest in one property and Rs. 10,000 for a moiety share in the other. In respect of both properties, the revenue records mentioned the name of Mahant Shivshankar Yati and not that of the Math or the deity. Small parcels of these properties were transferred by Mahant Shivshankar Yati from time to time, and none of those transfers was challenged by the plaintiffs in the present suit. It is urged for the appellants that where a nucleus of dedicated property exists, the acquisition of additional property should be attributed to the application of the nucleus and must, therefore, be regarded as property belonging to the Math or the deity. As has been observed, there can be no presumption either way. All the facts and circumstances must be taken into consideration and on a balancing of the entire evidence it has to be determined whether the property can be said to belong to the Math or deity or is the personal property of the Mahant, the burden of proof resting on the party who makes the claim. In the present case, it is difficult to conclude from the material before us that the total income from the properties belonging to the Math and the deity left any appreciable surplus after meeting the expenditure on account of bhog, arpan, deepdan, daily and annual puja and the other obligations specified in the waqf deed. We are in agreement with the High Court that the fund from which the Amauli properties were acquired constituted the personal property of Mahant Shivpher Yati. On his 664 death in 1917, the fund passed to Mahant Shivshankar Yati, who in 1921 employed it for the purchase of the Amauli properties. Mahant Shivshankar Yati executed a will in 1956, and it appears beyond dispute that by virtue of this will the Amauli properties devolved on Uma Shankar Yati. It is pointed out before us that in assessment proceedings under the U. P. Agriculture Income Tax Act 1948, the Amauli properties were described by Mahant Shivshankar Yati as properties of the Math and therefore a claim to exemption from the levy was made. The High Court has found that the claim was not accepted by the assessing authority, and that the position in regard to those properties taken in the assessment proceedings was adopted by the Mahant only for the purpose of escaping personal liability to tax. We concur with that finding. In our judgment, the High Court is right in the view that the Amauli properties constitute the personal property of Uma Shankar Yati and do not form part of the properties of the Math Sauna or of the deity, Sri Thakur, Gokarneshwar Mahadeoji. In the result, the appeal is dismissed with costs. P.B.R. Appeal dismissed.

The plaintiffs in their suit claimed that the properties in dispute belonged to the Math Sauna temple and that one of the plaintiffs Mahant Sadashiva Yati on the death of his predecessor was elected as Mahant of the temple and that therefore as Sarbarakar he was entitled to all the properties recorded in the name of the deity or his predecessor. The defendant claimed that by virtue of a will executed by Mahant Shivshankar Yati, the predecessor Mahant, the properties in dispute which were his personal properties devolved on him. The Civil Judge decreed the plaintiffs ' suit with a finding that Mahant Sadashiv Yati was not the Sarbarakar. Upholding the respondent 's claim, the High Court in appeal, held that the properties did not belong either to the Math or the deity but were the personal and separate properties of Mahant Shivshankar Yati. In appeal to this Court the appellants impugned the correctness of the High Court 's view. Dismissing the appeal, ^ HELD: The properties in dispute did not form part of the properties of Math Sauna or of the deity but were the personal properties of the respondent. [664 D E] It is well accepted that certain sects of Sanyasis (such as Dashnami Sanyasis in this case) could acquire personal property of their own and that the pronamis given to a Mahant are generally his personal property. The mere fact that a Mahant is an ascetic does not raise any presumption that the property in his possession is not his personal property. There is no presumption either way. In each case the burden is upon the plaintiff to establish that the properties in respect of which he is asking for possession are properties to which he is entitled. [662 F G] 660 In the instant case the three earlier Mahants before they took to sanyasa had been grahasthas. They were entitled to possess, enjoy and acquire personal property. Mahant Shivpher Yati, one of the predecessor Mahants, whose reputation as a man of learning and personal attainments was high, received personal bhents from many of his affluent chelas. In addition, on the death of his predecessor Mahant Shivbaran Yati. Mahant Shivpher Yati inherited his personal property, all of which devolved on Shivshankar Yati. A succession certificate in respect of these properties was granted in the name of Shivshankar Yati. The revenue records also showed him as the owner of the properties and not the Math or the deity. None of the transfers of small parcels of these properties made by Mahant Shivshankar Yati from time to time was challenged by the plaintiffs at any time. [663 A l] Whether a property was acquired by the application of the nucleus could only be determined after taking into consideration all the facts and circumstances of a case and on a balancing of the entire evidence. The burden of proof rests on the party making the claim. [663 F G] In the present case there is no material on record to how whether the total income from the properties belonging to the Math and the deity, left any appreciable surplus after meeting the expenditure on bhog and other ceremonies. The High Court rightly held that the fund from which the properties were acquired constituted the personal property of Mahant Shivpher Yati on whose death Shivshankar Yati employed it for the purchase of the properties and by virtue of his will the properties devolved on the respondent. [663 H]

ivil Appeal Nos. 1025 26 of 1978. Appeals by special leave from the judgment order dated the 15th April, 1978 of the Madhya Pradesh High Court in Misc. Petition Nos. 61 and 62/78 respectively. With Civil Appeal No. 213 of 1979 6 Appeal by special leave from the judgment and order dated the 15th April, 1978 of the Madhya Pradesh High Court in Misc. Petition o.555 of 1977. L.N. Sinha, Attorney General, R. B. Datar and Miss A. Subhashini for the Appellants. Y.S. Dharamadhikari, N. M. Ghatate and section V. Deshpande for the Respondent. Y.S. Chitale, Suresh Sethi and section K. Bhattacharya for the applicant intervener Municipal Corpn. of Delhi. Altaf Ahmed for the applicant intervener J & K State Agro. Industrial Corpn. Ltd. section K. Gambhir for the applicant intervener State of M.P. The Judgment of the Court was delivered by CHANDRACHUD, C.J. These appeals by special leave involve the question of the legality of the demand for Property tax made by respondent 1 on the appellant Companies. Civil Appeal No. 213 of 1979 filed by the Bharat Aluminium Company Ltd. arises out of Misc. Petition No. 555 of 1977 filed by it in the High Court of Madhya Pradesh under Article 226 of the Constitution. Respondent 1 is the Special Area Development Authority, Korba, District Bilaspur, M.P., respondent 2 is its Chairman and respondent 3 is the State of Madhya Pradesh. Since the three appeals raise similar questions, we will refer to the facts of Civil Appeal No. 213 of 1979 only. Civil Appeals Nos. 1025 and 1026 of 1978 are by Western Coalfields Ltd. The appellant, Bharat Aluminium Company Ltd., is a Government Company incorporated under the , the entire share capital being owned by the Government of India. Respondent 1, the Special Area Development Authority for the Korba Special Area, is constituted under section 65 of the Madhya Pradesh Nagar Tatha Gram Nivesh Adhiniyam (23 of 1973), referred to hereinafter as 'the Act of 1973 '. That Act was passed by the Madhya Pradesh Legislature in order "to make provision for planning and development and use of land; to make better provision for the preparation of development plans and zoning plans with a view to ensuring that town planning schemes are made in a proper manner and their execution is made effective; to constitute Town 7 and Country Planning Authority for proper implementation of town and country development plan; to provide for the development and administration of special areas through Special Area Development Authority; to make provision for the compulsory acquisition of land required for the purpose of the development plans and for purposes connected with the matters aforesaid". Chapter VIII of the Act, consisting of sections 64 to 71, is entitled "Special Areas". Section 64 empowers the State Government to declare any area as a special area by issuing a notification. Section 55 provides that for every Special Area there shall be a Special Area Development Authority consisting of a Chairman and such other members as the Government may determine from time to time. The Chairman and the members of the Development Authority are appointed by the Government. Section 68, which prescribes the functions of the Development Authority, lays down by clauses (v) and (vi) that the Development Authority shall make provision for the municipal services and municipal management of the Special Area. Section 69, by clauses (c) and (d), confers upon the Development Authority powers for the purpose of municipal administration and for the purpose of taxation. These two clauses of section 69 and clauses (v) and (vi) of section 68 were inserted in their present shape by Ordinance 26 of 1975 which came into force on February 27, 1976. The Ordinance was replaced by the Madhya Pradesh Nagar Tatha Gram Nivesh (Sanshodhan) Adhiniyam, 1976 (6 of 1976). Section 69(d) of the Act of 1973 reads thus: "69. Powers: The Special Area Development Authority shall (d) for the purpose of taxation have the powers which is municipal corporation or a municipal council has, as the case may be, under the Madhya Pradesh Municipal Corporation Act, 1956 (No. 23 of 1956) or the Madhya Pradesh Municipalities Act, 1961 (No. 37 of 1961), (a) where the municipal corporation of municipal council existed in such area prior to its designation as special area under section 64, according to the municipal law by which such special area was governed, and (b) where no municipal corporation or municipal council existed in such area prior to its designation as special area under section 64, according to such of the aforesaid Acts as the State Government may direct." 8 Clauses (a) and (b) above are sub clauses of clause (d). (They should better have not been so numbered alphabetically since the main clauses themselves are similarly numbered). Since there was no Municipal Corporation or Municipal Council in the Korba Special Area prior to the constitution of the Development Authority, the Government was required under sub clause (b) above to direct whether the Madhya Pradesh Municipal Corporation Act, 1956, or the Madhya Pradesh Municipalities Act, 1961, shall apply to the Korba Special Area for the purposes of clauses (v) and (vi) of section 68 and clauses (c) and (d) of section 69. Such a direction was first issued by Notification dated January 28, 1976 published in the Government Gazette, dated February 27, 1976 by which the Development Authority, Korba, was directed to exercise the powers and perform the functions of a Class I Municipality constituted under the Madhya Pradesh Municipality Act, 1961. This Notification became effective from February 27,1976 from which date Ordinance No. 26 of 1975 was made effective. By another Notification, dated March 15, 1977, published in Government Gazette, dated July 15, 1977, the Development Authority, Korba, was directed under the aforesaid clauses of sections 68 and 69 to exercise the powers and perform the functions under the Madhya Pradesh Municipal Corporation Act, 1956. Section 127(1)(i) of the Madhya Pradesh Municipalities Act, 1961 empowers a municipal council to impose, in the whole or any part of the municipality, "a tax payable by the owners of houses, buildings or lands situated within the limits of Municipality with reference to annual letting value of the house, building or land called property tax". The corresponding provision in the Madhya Pradesh Municipal Corporation Act, 1956 is section 132 (1)(a). It says that "the Corporation shall impose a tax payable by the owners of buildings or lands situated within the city with reference to the gross annual letting value of the building or land called the property tax". The procedure for imposition of taxes is contained in section 129 of the Municipalities Act and section 133 of the Municipal Corporation Act. In 1964, the Madhya Pradesh State Legislature had enacted the Madhya Pradesh Nagariya Sthawar Sampatti Kar Adhiniyam, which was made applicable to the whole State, including the urban areas. By section 36 of the aforesaid Adhiniyam, local authorities were prohibited from recovering the property tax from November 24, 1970. 9 Towards the beginning of 1976, the Government decided to abolish octroi tax and to impose in its place a 'tax on the entry of goods '. To compensate the municipal councils and the municipal corporations for the loss arising from the abolition of the octroi tax, the Government decided to confer powers on these bodies for levying property tax. For conferring powers to levy tax on the entry of goods in place of octroi tax, the Madhya Pradesh Sthaniya Kshetra Me Mal Ke Pravesh Par Kar Adhyadesh, 1976 (6 of 1976) was promulgated. For conferring powers to levy property tax, Ordinance No. 4 of 1976 was promulgated. Both of these Ordinances were published in the Madhya Pradesh Gazette, dated April 30, 1976 from which date they came into force. Ordinance No. 4 of 1976 inserted certain provisions in the Municipalities Act and the Municipal Corporation Act. This ordinance was replaced by Act No. 50 of 1976. By section 1(2) of that Act, the provisions inserted in the Municipalities Act and the Municipal Corporation Act, with which we are concerned, were deemed to have come into force with effect from April 1, 1976. Section 127A which was inserted in the Municipalities Act for imposition of property tax reads as follows, in so far as relevant: "127A. (1) Notwithstanding anything contained in this chapter, as and from the financial year 1976 77, there shall be charged, levied and paid for each financial year a tax on the lands or buildings or both situate in a municipality other than class IV municipality at the rate specified in the table below: (i) where the annual letting 6 per centum value exceeds Rs. 1,800 of the annual but does not exceed letting value. Rs. 6,000. (ii) X X X X X X (iii)X X X X X X (iv) X X X X X X (v) where the annual letting 20 per centum value exceeds of the annual Rs. 24,000 letting value (2) The property tax levied under sub section (1) shall not be leviable in respect of the following properties, namely: 10 (a) building and lands owned by or vesting in (i) the Union Government; (ii) the State Government; (iii)the Council. " Similar provisions were inserted in sections 135 and 136 of the Municipal Corporation Act. On June 24, 1976, respondent 1 (the Special Area Development Authority, Korba) entered into an agreement with the appellant Company under which the Company agreed to contribute a sum of Rupees three lakhs annually to the "seed capital" of the Authority in consideration of the Authority agreeing not to exercise its power of taxation or of levying any other charges on the assets and activities of the Company under the Act of 1973 as amended from time to time or under any other Act or notification. The agreement was to remain in force for a period of ten years beginning from the calendar year 1976 and the annual payments due from 1977 were to be made in January every year. The appellant Company paid the contribution for the year 1976 as agreed. In the same year, the Company was called upon by the Sales Tax authorities to pay the tax on entry of goods which was introduced in substitution of the octroi tax. While the Company was pursuing that matter with the State Government, contending that it was not liable to pay the entry tax by reason of the aforesaid agreement, on January 4, 1977 respondent 1 made a further demand of Rs. 3 lakhs on the Company for contribution for the year 1977. That amount not having been paid as provided in the agreement, respondent 1 terminated the agreement by its letter dated February 4, 1977. The Company sent a cheque for Rs. 3 lakhs to respondent 1 on April, 28, 1977. By a notice issued under section 65 of the Act of 1973 on February 21,1977 and by another notice issued under section 164(3) of the Madhya Pradesh Municipalities Act 1961 on April 15, 1977, the Chief Executive Officer of respondent 1 called upon the Company to pay a sum of Rs. 13,22,160 by way of property tax for the year 1976 77. By a letter dated May 21, 1977 respondent 1 reduced the demand by Rs. 3 lakhs being the amount paid by the Company by way of contribution for the year 1977, under the agreement of 1976. On July 16, 1977 the Company was called upon to pay a further sum of Rs. 13,65,673.50 as property tax for the year 1977 78. 11 The appellant Company disputed its liability to pay the aforesaid amounts on the grounds, principally, that no tax was leviable on its property since the Company was owned wholly by the Government of India and that respondent 1 was estopped from levying the property tax by reason of the agreement of 1976. Having failed to persuade respondent 1 to accept its point of view, the Company filed o Writ Petition in the Madhya Pradesh High Court asking that the demands be quashed. Civil Appeal No. 213 of 1979 by special leave is directed against the dismissal of the Writ Petition. In the other two appeals (Nos. 1025 and 1026 of 1978), the appellant, Western Coalfields Ltd., is also a hundred per cent undertaking of the Government of India. That Company has been called upon by respondent 1 to pay property tax for the years 1976 77 and 1977 78 in the sum of Rs. 3,71,461 for each year. The Writ Petitions (61 and 62 of 1978) filed by it were dismissed by the High Court, following the judgment delivered in the Writ Petition filed by the Bharat Aluminium Company Ltd. Civil Misc. Petitions Nos. 13211 of 1979 and 3767 of 1980 are for intervention by the Jammu and Kashmir State Agro Industries Corporation Ltd. and the Delhi Municipal Corporation respectively. The Delhi High Court has held in L.P.A. 105 of 1979 that the Delhi Municipal Corporation has the power to levy property tax on the property of the Jammu and Kashmir State Agro Industries Corporation Ltd., whose share capital is owned by the State of Jammu and Kashmir and the Union of India in the proportion of 51% and 49% respectively. In Special Leave Petition No. 10688 of 1979 filed against the judgment, the question raised is whether the property of a public corporation owned wholly by the State Government and the Union Government is exempt from taxes by reason of articles 285 and 289 of the Constitution. We have allowed both the parties to intervene in these appeals. The learned Attorney General, who appears on behalf of the appellants, has raised four or five principal points, any one of which, if accepted, will result in the success of these appeals. However, we are unable to accept any of these. The first contention of the learned Attorney General is that respondent I can exercise only such powers to levy property tax as the Municipal Corporation or the Municipal Council had under the Madhya Pradesh Municipalities Corporation Act, 1956, or the Madhya Pradesh Municipalities Act, 1961, as these Acts stood on 12 February 27, 1976, when clause (d) was inserted in its present form in section 69 of the Act of 1973. It is urged that the provisions conferring powers of taxation under the aforesaid two Acts must be taken to have been incorporated in section 69(d) of the Act of 1973 and any subsequent change in those provisions by amendment of the two Acts cannot be availed of by respondent 1. Section 127A and section 135 which, by their own force, create and levy the charge of property tax were inserted in the Municipalities Act and the Municipal Corporation Act respectively with effect from April 1, 1976, that is, subsequent to the insertion of clause (d) in section 69 of the Act of 1973. Relying on this, it is argued that respondent 1 was incompetent to exercise the powers of the Municipality or the Municipal Corporation under section 127A of the Municipalities Act or section 135 of the Municipal Corporation Act. The answer to this contention will depend mainly upon whether the provisions of the Municipalities Act and the Municipal Corporation Act were incorporated into the Act of 1973 by its section 69(d). It is well settled that if an earlier legislation is incorporated into a later legislation, the provisions of earlier law which are incorporated into the later law become a part and parcel of the later law. Therefore, amendments made in the earlier law after the date of incorporation cannot, by their own force, be read into the later law. That is because the legislature, which adopts by incorporation the existing provisions of another law, cannot be assumed to intend to bind itself to all future amendments or modifications which may be made in the earlier law. In other words, the incorporating Act does nothing more than borrow certain provisions of an existing Act and instead of setting out, verbatim, those provisions in its own creation, refers to them as a matter of convenience in the mode of drafting. (See Secretary of State for India in Council vs Hindustan Co operative Insurance Society Limited; Craies on Statute Law, 7th Edition, pages 360 361.) The principle, broadly, is that where a statute is incorporated by reference into a second statute, the repeal of the first statute by a third does not affect the second (see Clarke vs Bradlaugh). Likewise, logically, where certain provisions from an existing Act have been incorporated into a subsequent Act, no addition to the former Act, which is not expressly made applicable to the subsequent Act, 13 can be deemed to be incorporated in it. (see Secretary of State for India in Council vs Hindusthan Cooperative Insurance Society Ltd). (supra) But these rules are not absolute and inflexible. In the case last cited, the Privy Council qualified its statement of the law by saying that the principle, that an amendment of the first law which is not expressly made applicable to the subsequent incorporating Act cannot be deemed to be incorporated into the second Act, applies "if it is possible for the subsequent Act to function effectually without the addition" (page 267). Besides, as held by a Constitution Bench of this Court in the Collector of Customs, Madras vs Nathella Samathu Chetty & Anr. the decision of the Privy Council could not be extended too far so as to cover every case in which the provisions of another statute are adopted by absorption (see page 837). Finally, in State of Madhya Pradesh vs M. V. Narasimhan this Court held, after an examination of the relevant decisions, that the broad principle that where a subsequent Act incorporates provisions of a previous Act then the borrowed provisions become an integral and independent part of the subsequent Act and are totally unaffected by any repeal or amendment in the previous Act, is subject to four exceptions, one of which is that the principle will not apply to cases "where the subsequent Act and the previous Act are supplemental to each other". Applying these principles, we are of the opinion that in the instant case, subsequent amendments made to the Municipal Corporation Act and the Municipalities Act will also apply to the power of taxation provided for in section 69(d) of the Act of 1973. The Act of 1973 did not, by section 69(d), incorporate in its true signification any particular provision of the two earlier Acts. It provides that, for the purpose of taxation, the Special Area Development Authority shall have the powers which a Municipal Corporation or a Municipal Council has under the Madhya Pradesh Municipal Corporation Act, 1956 or the Madhya Pradesh Municipalities Act, 1961. The case therefore is not one of incorporation but of mere reference to the powers conferred by the earlier Acts. As observed in Nathella Sampathu Chetty, there is a distinction between a mere reference to or a citation of one statute in another and an incorporation which in effect means the bodily lifting of the provisions of one enactment and making them part of another, so much so that the repeal of the former leaves the latter wholly untouched. 14 Section 69(d) of the Act of 1973 must accordingly be read to mean that respondent 1 shall have all the powers of taxation which a Municipal Corporation or a Municipal Council has for the time being, that is to say, at the time when respondent 1 seeks to exercise those powers. The Act of 1973 does not provide for any independent power of taxation or any machinery of its own for exercising the power of taxation. It rests content by pointing its finger to the provisions contained in the two Municipal Acts. The three Acts are therefore supplemental, from which it must follow that amendments made to the earlier Acts after the enactment of section 69(d) shall have to be read into that section. Without recourse to such a construction, the power of taxation conferred by that section will become ineffectual. A reading of the reference to the two earlier Municipal Acts as a reference to those Acts as they stand at the time when the power of taxation is sought to be exercised by respondent 1, will not, possibly, cause repugnancy between the two earlier Acts on one hand and the Act of 1973 on the other, nor indeed will it cause any confusion in the practical application of the earlier Acts, because the Act of 1973 does not contain any independent provision or machinery for exercising the power of taxation. The first contention of the Attorney General must therefore fail. The second contention is that assuming that section 127A of the Municipalities Act or section 135 of the Municipal Corporation Act, which were introduced by an amendment made after the enactment of section 69(d), can be invoked for levying the property tax, respondent 1 cannot impose that tax without following the procedure prescribed by sections 129 and 133 of the aforesaid Acts, respectively. This contention is devoid of substance. Sections 127A and 135 create, by their own force, the liability to be brought to property tax and the right to levy that tax. They provide: Notwithstanding anything contained in this chapter, as and from the financial year 1976 77, there shall be charged, levied and paid for each financial year a tax on the lands or buildings or both. .at the rate specified in the table below:" Nothing further is required to be done by the Municipality or the Municipal Corporation in order to impose the property tax and therefore the procedure preliminary to the imposition of other taxes which is prescribed by sections 129 and 133 of the two Acts, can 15 have no application to the imposition of the property tax. Apart from this the position is put beyond doubt by the language of sections 129 and 133 of two Acts. Section 129 of the Madhya Pradesh Municipalities Act prescribes the procedure for "the imposition of any tax under section 127". Similarly section 133 of the Madhya Pradesh Municipal Corporation Act prescribes the procedure for "the imposition of any tax under section 132". The property tax is imposed by respondent 1 under section 127A of the Municipalities Act and section 135 of the Municipal Corporation Act. It is not imposed under section 127 of the former Act or section 132 of the latter Act. It is therefore not necessary to follow the procedure prescribed by sections 129 and 133 of the respective Acts. This position is made clear, out of abundant caution, by clause (4) of section 133 of the Municipal Corporation Act, which provides that nothing contained in section 133 shall apply to the tax mentioned in clause (a) of sub section (1) of section 132, which shall be charged and levied in accordance with section 135. Section 132(1)(a) refers to property tax. The learned Attorney General contends that the taxing authority must all the same apply its mind to the question whether it wants to bring to tax the land or the building or both. It is not possible to accept this submission because sections 127A and 135 of the two Acts in question leave no such choice open to the taxing authority. The obligation which the statute places upon it is to impose tax on lands where there are lands only and they can be taxed, on buildings where buildings alone can be brought to tax and on both lands and buildings where lands are built upon and both can be brought to tax. This is not, as said by the Attorney General rationalising the taxing power. What we have said is the plain meaning of the taxing provision. The third contention of the Attorney General flows from the provisions of article 285(1) of the Constitution which says that the property of the Union shall, save in so far as Parliament may by law otherwise provide, be exempt from all taxes imposed by a State or by any authority within a State. Section 127A(2) of the Madhya Pradesh Municipalities Act and section 136 of the Madhya Pradesh Municipal Corporation Act also provide that the property tax shall not be leviable, inter alia, on "buildings and lands owned by or vesting in the Union Government". Relying on these provisions, it is contended by the Attorney General that since the appellant companies are wholly owned by the Government of India, the lands 16 and buildings owned by the companies cannot be subjected to property tax. The short answer to this contention is that even though the entire share capital of the appellant companies has been subscribed by the Government of India, it cannot be predicated that the companies themselves are owned by the Government of India. The companies, which are incorporated under the , have a corporate personality of their own, distinct from that of the Government of India. The lands and buildings are vested in and owned by the companies: the Government of India only owns the share capital. In Rustom Cavasjee Cooper vs Union of India (The Banks Nationalisation case) it was held: "A company registered under the is a legal person, separate and distinct from its individual members. Property of the Company is not the property of the shareholders. A shareholder has merely an interest in the Company arising under its Articles of Association, measured by a sum of money for the purpose of liability, and by a share in the profit. " In Heavy Engineering Mazdoor Union vs The State of Bihar & Ors., the Heavy Engineering Corporation Limited was incorporated under the and its entire share capital was contributed by the Central Government. It was therefore a Government Company under section 617 of the . On the question as to whether the Corporation carried on an industry under the authority of the Central Government within the meaning of section 2(a) of the , it was held by this Court that an incorporated company has a separate existence and the law recognises it as a juristic person, separate and distinct from its members. The mere fact that the entire share capital of the respondent company was contributed by the Central Government and the fact that all its shares were held by the President and certain officers of the Central Government did not make any difference to that position. The decision of this Court in the Andhra Pradesh State Road Transport Corporation vs The Income tax Officer & Anr. puts the matter beyond all doubt. In that case, the Andhra Pradesh Road 17 Transport Corporation claimed exemption from taxation under article 289 of the Constitution by which, the property and income of a State is exempt from union taxation. This Court, while rejecting the Corporation 's claim, held that though it was wholly controlled by the State Government it had a separate entity and its income was not the income of the State Government. Gajendragadkar, C. J., while speaking for the Court, referred to the judgment of Lord Denning in Tamlin vs Hansaford in which the learned Judge observed: "In the eye of the law, the corporation is its own master and is answerable as fully as any other person or corporation. It is not the Crown and has none of the immunities or privileges of the Crown. Its servants are not civil servants, and its property is not Crown property. It is as much bound by Acts of Parliament as any other subject of the King. It is, of course, a public authority and its purposes, no doubt, are public purposes, but it is not a government department nor do its powers fall within the province of government". In Pennington 's Company Law, 4th Edition, pages 50 51, it is stated that there are only two decided cases where the court has disregarded the separate legal entity of a company and that was done because the company was formed or used to facilitate the evasion of legal obligations. The learned author, after referring to English and American decisions, has summed up the position in the words of an American Judge, Sanborn, J. to the effect that as a general rule, a corporation will be looked upon as a legal entity and an exception can be made "when the notion of legal entity is used to defeat public convenience, justify wrong, protect fraud, or defend crime", in which case, "the law will regard the corporation as an association of persons". In cases such as those before us, there is no scope for applying the doctrine of lifting the veil in order to have regard to the realities of the situation. The appellant companies were incorporated under the for a lawful purpose. Their property is their own and it vests in them. Under section 5(1) of the Coal Mines (Nationalisation) Act, 26 of 1973, which applies in the instant case, the right title and interest of a nationalised coal mine vest, by direction of the Central Government, in the Government company. If the lands and building on which respondent 1 has imposed the 18 property tax cannot be regarded as the property of the Central Government for several other purposes like attachment and sale, there is no reason why, for taxing purposes, the property can be treated as belonging to that Government as distinct from the company which has a juristic personality. The learned Attorney General resisted the taxation on the lands by contending that they belong to the Madhya Pradesh State Government and were taken on lease for a period of 30 years by the appellant companies. It is urged that if at all the lands can be subjected to property tax, it is the State Government and not the appellant companies who can be called upon to pay that tax. This contention does not appear to have been taken before the assessing authority. No documents seem to have been filed before it to bear out facts which are sought to be placed before us nor indeed have we evidence before us to show that the lands belong to the State Government. The appellants may, if so advised, raise this particular point in future assessments. We would, however, like to draw attention to the Explanation to section 147 of the Madhya Pradesh Municipalities Act which says that though the property tax has to be paid by the owner of the land or building, as the case may be, for the purposes of that section a tenant of land or building or both, who holds the same under a lease for an agreed period with a convenant for its renewal thereafter, shall be deemed to be the owner thereof. Section 141(1) of the Madhya Pradesh Municipal Corporation Act provides that the property tax shall be paid primarily by the owner. By sub section (2) of section 141, the property tax levied on the owner can also be recovered from the occupier of the land or the building. These provisions shall have to be borne in mind by the appellants before any attempt is made before the assessing authority to transfer or avoid the impost of the property tax. Finally, the learned Attorney General raised a contention of fundamental importance which was not raised in the High Court. The lands and buildings on which respondent 1 has imposed the property tax are used for the purposes of and are covered by coal mines. Basing himself on that consideration the Attorney General argues: (1) By virtue of the declaration contained in section 2 of Mines and Minerals (Development and Regulation) Act, 1957, the legislative field covered by Entry 23, 19 List II passed on the Parliament by virtue of Entry 54, List I. (2) The Parliament enacted the Coal Mines Nationalisation Act, 1973 for acquisition of coal mines with a view to reorganising and reconstructing such coal mines so as to ensure the rational, coordinated and scientific development and utilisation of coal resources as best to subserve the common good. (3) Under section 5 of the Nationalisation Act, the acquired properties were vested in a Government Company in order to carry out more conveniently the object of that Act, and for that purpose, the properties were freed from all encumbrances by section 6 of the Act. (4) The taxing power of the State legislature must be construed as limited in its scope so as not to come in conflict with the power and function of the Union to regulate and develop the mines as envisaged by the Nationalisation Act. (5) The impugned tax is manifestly an impediment in the discharge of the aforesaid function since it substantially increases the cost of the developmental activities. The tax is not in the nature of a fee. Apart from the fact that there is no data before us showing that the property tax constitutes an impediment in the achievement of the goals of the Coal Mines Nationalisation Act, the provisions of the M.P. Act of 1973, under which Special Areas and Special Area Development Authorities are constituted afford an effective answer to the Attorney General 's contention. Entry 23 of List II relates to "Regulation of mines and mineral development subject to the provisions of List I with respect to regulation and development under the control of the Union". Entry 54 of List I relates to "Regulation of mines and mineral development to the extent to which such regulation and development under the control of the Union is declared by Parliament by law to be expedient in the public interest". It is true that on account of the declaration contained in section 2 of the Mines and Minerals (Development and Regulation) Act, 1957, the legislative field covered by Entry 23 of List II will pass on to Parliament by virtue of Entry 54, List I. But in order to 20 judge whether, on that account, the State legislature loses its competence to pass the Act of 1973, it is necessary to have regard to the object and purpose of that Act and to the relevant provisions thereof, under which Special Area Development Authorities are given the power to tax lands and buildings within their jurisdiction. We have set out the objects of the Act at the commencement of this judgment. one of which is to provide for the development and administration of Special Areas through Special Area Development Authorities, Section 64 of the Act of 1973, which provides for the constitution of the special areas, lays down by sub section (4) that: Notwithstanding anything contained in the Madhya Pradesh Municipal Corporation Act, 1956, the Madhya Pradesh Municipalities Act, 1961, or the Madhya Pradesh Panchayats Act, 1962, the Municipal Corporation, Municipal Council, Notified Area Committee or a Panchayat, as the case may be, shall, in relation to the special area and as from the date the Special Area Development Authority undertakes the functions under clause (v) or clause (vi) of section 68 cease to exercise the powers and perform the function and duties which the Special Area Development Authority is competent to exercise and perform under the Act of 1973. Section 68 defines the functions of the Special Area Development Authority, one of which, as prescribed by clause (v), is to provide the municipal services as specified in sections 123 and 124 of the Madhya Pradesh Municipalities Act, 1961. Section 69, which defines the powers of the Authority, shows that those powers are conferred, inter alia, for the purpose of municipal administration. Surely, the functions, powers and duties of Municipalities do not become an occupied field by reason of the declaration contained in section 2 of the Mines and Minerals (Development and Regulation) Act, 1957. Though, therefore, on account of that declaration, the legislative field covered by Entry 23, List II may pass on to the Parliament by virtue of Entry 54, List I, the competence of the State Government to enact laws for municipal administration will remain unaffected by that declaration. Entry 5 of List II relates to "Local Government, that is to say, the constitution and powers of municipal corporations and other local authorities for the purpose of local self Government". It is in pursuance of this power that the State Legislature enacted the Act of 1973. The power to impose tax on lands and buildings is derived by the State Legislature from Entry 49 of List II: "Taxes on lands and buildings". The power of the municipalities to levy tax on lands and buildings has been conferred by the State Legis 21 lature on the Special Area Development Authorities. Those authorities have the power to levy that tax in order effectively to discharge the municipal functions which are passed on to them. Entry 54 of List I does not contemplate the taking over of municipal functions. Shri Dharmadhikari, who appears on behalf of the respondents, has drawn our attention to the judgment of a Constitution Bench of this Court in H.R.S. Murthy vs Collector of Chittoor and Another, which provides a complete answer to the Attorney General 's contention. In that case, under the terms of a mining lease, the lessee worked the mines and bound himself to pay a dead rent if he used the leased land for the extraction of iron ore and to pay surface rent in respect of the surface area occupied or used by him. Demands were made upon the lessee for successive years for the payment of land cess under sections 78 and 79 of the Madras District Boards Act, 1920. Those demands were challenged by the lessee on the ground, inter alia, that the provision imposing the land cess quoad royalty under the mining leases must be held to have been repealed by the Central Act viz. the Mines and Minerals (Regulation and Development) Act, 1958, and the . This contention was repelled by this Court by holding that sections 78 and 79 of the Madras District Boards Act had nothing to do with the development of mines and minerals or their regulation. The proceeds of the land cess were required to be credited to the District fund which had to be used for everything necessary for or conducive to the safety, health, convenience or education of the inhabitants or the amenities of local area concerned. It was further held by the Court that the land cess was not a tax on mineral rights but was in truth and substance a "tax on lands" within the meaning of Entry 49 of the State List. The reasoning adopted in this decision shows that it is not correct to say that the property tax provided for in the Act of 1973 is beyond the legislative competence of the State Legislature; that tax has nothing to do with the development of mines. The power conferred by the State Legislature on Special Area Development Authorities to impose the property tax on lands and buildings is therefore not in conflict with the power conferred by the Coal Mines Nationalisation Act on the Union Government to regulate and develop the Coal mines so as to ensure rational and scientific utilisation of coal resources. The paramount purpose behind the declaration contained in section 2 of the Mines and Minerals (Regulation and Develop 22 ment) Act, 1957 is not in any manner defeated by the legitimate exercise of taxing power under section 69(d) of the Act of 1973. The decision of this Court in Baijnath Kedia vs State of Bihar & Ors., on which the learned Attorney General relies, is distinguishable. In that case, the Bihar Government demanded dead rent, royalty and surface rent from the appellant contrary to the terms of his lease on the strength of the amended section 10(2) of the Bihar Land Reforms Act, 1950, and the amended Rule 20 of the Bihar Rules. This Court held that the pith and substance of the amended section 10(2) fell within Entry 23 although it incidentally touched land and that, therefore, the amendment was subject to the overriding power of Parliament as declared in section 15 of the . By the aforesaid declaration and the enactment of section 15, the whole of the field relating to minor minerals had come within the jurisdiction of Parliament and no scope was left for the enactment of the second proviso to section 10 of the Bihar Land Reforms Act. The second sub rule added to Rule 20 was held to be without jurisdiction for the same reason. That the declaration in section 2 of the does not result in invalidation of every State legislation relating to mines and minerals is demonstrated effectively by the decision in State of Haryana & Anr. vs Chanan Mal. The Haryana State Legislature passed the Haryana Minerals (Vesting of Rights) Act, 1973, under which two notifications were issued for acquisition of right to saltpeter, a minor mineral, and for auctioning certain saltpeter bearing areas. It was held by this Court that the Haryana Act was not in any way repugnant to the provisions of the Act of 1957 made by Parliament and that the ownership rights could be validly acquired by the State Government under the State Act. The decision of a Constitution Bench of this Court in The Ishwari Khetan Sugar Mills (P) Ltd. vs The State of Uttar Pradesh & Ors., is even more to the point. In that case, 12 sugar undertakings stood transferred to and were vested in a Government undertaking under the U.P. Sugar Undertakings (Acquisition) Ordinance, 1971, which later became an Act. It was contended on behalf of 23 the sugar undertakings that since sugar is a declared industry under the Industries (Development and Regulation) Act, 1951, Parliament alone was competent to pass a law on the subject and the State Legislature had no competence to pass the impugned Act by reason of Entry 52, List I read with Entry 24, List II. The majority, speaking through one of us, Desai J., held that the legislative power of the State under Entry 24, List II, was eroded only to the extent to which control was assumed by the Union Government pursuant to the declaration made by the Parliament in respect of a declared industry and that the field occupied by such enactment was the measure of the erosion of the legislative competence of the State legislature. Since the Central Act was primarily concerned with the development and regulation of declared industries and not with the ownership of industrial undertakings, it was held that the State legislature had the competence to enact the impugned law. Justice Pathak and Justice Koshal, who gave a separate judgment concurring with the conclusion of the majority, preferred to rest their decision on the circumstance that the impugned legislation fell within Entry 42, List III 'Acquisition and requisition of property ' and was therefore within the competence of the State Legislature. These are the main points argued by the learned Attorney General on behalf of the appellant Companies. In the High Court, an additional point was taken, based upon the agreement dated June 24, 1976, which was entered into between the appellant Companies and respondent 1. It was contended in the High Court that respondent 1 had waived its power of taxation by that agreement and, therefore, the imposition of property tax was invalid. The High Court has given weighty reasons for rejecting that argument and we endorse those reasons. We adopt, particularly, the reasoning of the High Court that in the meeting of January 29, 1976, respondent 1 had decided to give up its right to impose the Octroi tax only. The Chairman of respondent 1, therefore, acted beyond the scope of his authority in entering into the agreement with the appellant Companies, under which respondent 1 bound itself not to impose any tax whatsoever. For these reasons the appeals fail and are dismissed with costs. N.V.K. Appeals dismissed.

The Madhya Pradesh Municipalities Act, 1961 by section 127 (1) (i) empowered a municipal council to impose, in the whole or any part of the municipality, "a tax payable by the owners of houses, buildings or lands situated within the limits of Municipality with reference to annual letting value of the house, building or land called property tax". The corresponding provision in the Madhya Pradesh Municipal Corporation Act, 1956 was section 132(1)(a), and it provided that "the Corporation shall impose a tax payable by the owners of buildings or lands situated within the city with reference to the gross annual letting value of the building or land called the property tax". The procedure for imposition of taxes was spelt out in section 129 of the Municipalities Act and section 133 of the Municipal Corporation Act. Section 127A was inserted in the Municipalities Act for imposition of property tax and provided by sub clause (1) that as and from the financial year 1976 77 there shall be charged, levied and paid for each financial year a tax on the lands or buildings or both situated in a municipality at specified rates. Sub clause (2) exempted properties owned by or vesting in the Union Government, State Government or the Council from the levy. Similar 2 provisions were inserted in sections 135 and 136 of the Municipal Corporation Act. Respondent No. 1 was constituted the Special Area Development Authority under section 65 of the Madhya Pradesh Nagar Tatha Gram Nivesh Adhiniyam (23 of 1973). Clauses (c) and (d) of section 69 of the Act conferred upon the Development Authority powers for the purpose of municipal administration and for the purpose of taxation. These clauses were inserted by Ordinance 26 of 1975 which came into force on February 27, 1976. The Ordinance was replaced by the Madhya Pradesh Nagar Tatha Gram Nivesh (Sanshodhan) Adhiniyam 1976 (6 of 1976). On June 24, 1976 respondent 1 entered into an agreement with the appellant company under which the company agreed to contribute a sum of rupees 3 lakhs annually to the "seed capital" of the Authority in consideration of the Authority agreeing not to exercise its power of taxation or of levying any other charges on the assets and activities of the company. The agreement was to remain in force for a period of ten years beginning from the calendar year 1976 and the annual payments due from 1977 were to be made in January every year. The appellant company paid the contribution for the year 1976. In the same year the company was called upon by the Sales Tax authorities to pay "the tax on the entry of goods" which was introduced by the Madhya Pradesh Sthaniya Kshetra Me Mal Ke Pravesh Par Kar Adhyadesh 1976 in substitution of octroi tax. While the company was pursuing that matter with the State Government, contending that it was not liable to pay the entry tax by reason of the agreement, on January 4, 1977 respondent 1 made a further demand of Rs. 3 lakhs on the company for contribution for the year 1977. That amount not having been paid as provided in the agreement, respondent 1 terminated the agreement by its letter dated February 4, 1977. By a notice issued under section 65 of the Madhya Pradesh Nagar Tatha Gram Nivesh Adhiniyam 'Act of 1973 ' on February 21, 1977 and by another notice issued under section 164(3) of the Madhya Pradesh Municipalities Act 1961 on April 15, 1977, the Chief Executive Officer of respondent 1 called upon the company to pay a sum of about Rs. 13 lakhs by way of property tax for the year 1976 77. On July 16, 1977 the company was called upon to pay a further sum of about Rs. 13 lakhs as property tax for the year 1977 78. The company disputed its liability to pay on the ground that no tax was leviable on its property since the company was owned wholly by the Government of India and that respondent 1 was estopped from levying the property tax by reason of the agreement of 1976. Having failed to pursuade respondent 1 to accept its point of view, and also having failed in the High Court the appellant company came to this Court in appeal. In the appeals to this Court it was contended: (1) that respondent 1 can exercise only such powers to levy property tax as the Municipal Corporation or the Municipal Council had under the Madhya Pradesh Municipal Corporation Act, 1956 or the Madhya Pradesh Municipalities Act, 1961 as these Acts stood on February 27, 1976, when clause (d) was inserted in section 69 of the Act of 1973. Section 127A and section 135 which create and levy the charge of property 3 tax having been inserted in the Municipalities Act and the Municipal Corporation Act respectively with effect from April 1, 1976 i.e. subsequent to the insertion of clause (d) in section 69 of the Act of 1973, Respondent 1 was incompetent to exercise the powers of the Municipality or the Municipal Corporation under section 127A of the Municipal Corporation Act or section 136 of the Municipal Corporation Act; (2) that respondent 1 cannot impose the property tax without following the procedure prescribed by section 129 of the Municipalities Act and section 133 of the Municipal Corporation Act; (3) that Article 285(1) of the Constitution envisages that the property of the Union shall save in so far as Parliament may by law otherwise provide be exempt from all taxes imposed by a State or by any authority within a State. Section 127A(2) of the Madhya Pradesh Municipalities Act and section 136 of the Madhya Pradesh Municipal Corporation Act also provide that the property tax shall not be leviable, on "buildings and lands owned by or vesting in the Union Government". The appellant companies being wholly owned by the Government of India, the lands and buildings owned by the companies cannot be subjected to property tax; (4) that the lands having been taken on lease for a period of 30 years by the appellant companies, it is the State Government and not the appellant companies who can be called upon to pay the tax; and (5) that Parliament enacted the Coal Mines Nationalisation Act, 1973 for acquisition of coal mines and utilisation of coal resources to subserve the common good. The lands and buildings on which respondent 1 had imposed the property tax are used for the purposes of and are covered by coal mines. The taxing power of the State legislature comes in conflict with the power and function of the Union to regulate and develop the mines as envisaged by the Nationalisation Act, and is an impediment since it substantially increased the cost of the developmental activities. Dismissing the appeals, ^ HELD: (i) Section 69(d) of the Act of 1973 must be read to mean that respondent 1 shall have all the powers of taxation which a Municipal Corporation or a Municipal Council has at the time when respondent 1 seeks to exercise those powers. [14 A] (ii) The Act of 1973 does not provide for any independent power of taxation or any machinery of its own for exercising the power of taxation. It rests content by referring to the provisions contained in the two Municipal Acts. The three Acts are supplemental, from which it must follow that amendments made to the earlier Acts after the enactment of section 69(d) shall have to be read into that section. Without recourse to such a construction the power of taxation conferred by that section will become ineffectual. [14 B C] (iii) A reading of the reference to the two earlier Municipal Acts as a reference to those Acts as they stand at the time when the power of taxation is sought to be exercised by respondent 1 will not cause repugnancy between the two earlier Acts on one hand and the Act of 1973 on the other, nor will it cause any confusion in the practical application of the earlier Acts, because the Act of 1973 does not contain any independent provision or machinery for exercising the power of taxation. [14 D] 4 (iv) If an earlier legislation is incorporated into a later legislation, the provisions of earlier law which are incorporated into the later law become a part and parcel of the later law. Therefore, amendments made in the earlier law after the date of incorporation cannot by their own force, be read into the later law. That is because the legislature, cannot be assumed to intend to bind itself to all future amendments or modifications which may be made in the earlier law. [12 D E] (v) Where a statute is incorporated by reference into a second statute, the repeal of the first statute by a third does not affect the second. Likewise, where certain provisions from an existing Act have been incorporated into a subsequent Act, no addition to the former Act, which is not expressly made applicable to the subsequent Act, can be deemed to be incorporated in it. [12G 13A] (vi) The broad principle that where a subsequent Act incorporates provisions of a previous Act then the borrowed provisions become an integral and independent part of the subsequent Act and are totally unaffected by any repeal or amendment in the previous Act, is subject to four exceptions, one of which is that the principle will not apply to cases "where the subsequent Act and the previous Act are supplemental to each other". [13 D] Secretary of State for India in Council vs Hindustan Co operative Insurance Society, Limited, 58 Indian Appeals, 259, Clarke vs Bradlaugh, 69; Collector of Customs, Madras vs Nathella Samathu Chetty & Anr., ; and State of Madhya Pradesh vs M.V. Narasimhan, ; , referred to. In the instant case, subsequent amendments made to the Municipal Corporation Act and the Municipalities Act will also apply to the power of taxation provided for in section 69(d) of the Act of 1973. The Act of 1973 did not by section 69(d), incorporate in its true signification any particular provision of the two earlier Acts. It provided that, for the purpose of taxation, the Special Area Development Authority shall have the powers which a Municipal Corporation or a Municipal Council has under the Madhya Pradesh Municipal Corporation Act, 1956 or the Madhya Pradesh Municipalities Act, 1961. The case, therefore, is not one of incorporation but of mere reference to the powers conferred by the earlier Acts. [13 E F] 2(i) Section 127A of the Municipalities Act and section 135 of the Municipal Corporation Act create by their own force, the liability to be brought to property tax and the right to levy that tax. Nothing further is required to be done by the Municipality or the Municipal Corporation in order to impose the property tax. The procedure preliminary to the imposition of other taxes which is prescribed by sections 129 and 133 of the two Acts, can have no application to the imposition of the property tax. [14 F 15 A] (ii) The property tax is imposed by respondent 1 under section 127A of the Municipalities Act and section 135 of the Municipal Corporation Act. It is not imposed under section 127 of the former Act or section 132 of the latter Act. It is, therefore, not necessary to follow the procedure prescribed by sections 129 and 133 of the respective Acts. [15 B C] 5 3. Even though the entire share capital of the appellant companies has been subscribed by the Government of India, it cannot be predicated that the companies themselves are owned by the Government of India. The companies, which are incorporated under the Companies Act, have a corporate personality of their own, distinct from that of the Government of India. The lands and buildings, are vested in and owned by the companies; the Government of India only owns the share capital. [16 A B] Rustom Cavasjee Cooper vs Union of India, ; , 555, Heavy Engineering Mazdoor Union vs The State of Bihar, , Andhra Pradesh State Road Transport Corporation vs The Income tax Officer & Anr. ; & Tamlin vs Hansaford referred to. 4. The Explanation to section 147 of the Municipalities Act says that the property tax has to be paid by the owner of the land or building and that a tenant of land or building or both, who holds the same under a lease for an agreed period, shall be deemed to be the owner thereof. Section 141(1) of the Municipal Corporation Act provides that the property tax shall be paid primarily by the owner. By sub section (2) of section 141, the property tax levied on the owner can also be recovered from the occupier of the land or the building.[18D E] 5(i) The power conferred by the State Legislature on Special Area Development Authorities to impose the property tax on lands and buildings is not in conflict with the power conferred by the Coal Mines Nationalisation Act on the Union Government to regulate and develop coal mines so as to ensure rational and scientific utilisation of coal resources. [21 G] (ii) The paramount purpose behind the declaration contained in section 2 of the is not in any manner defeated by the legitimate exercise of taxing power under section 69(d) of the Act of 1973. [21 H 22A] H.R.S. Murthy vs Collector of Chitoor and Another, ; , State of Haryana & Anr. vs Chanan Mal ; and The Ishwari Khetan Sugar Mills (P) Ltd. vs The State of Uttar Pradesh & Ors. ; referred to. Baijnath Kedia vs State of Bihar & Ors. [1970] 2 S.C.R. 100, distinguished.

Civil Appeal No. 598 of 1980. Appeal by Special leave from the judgment and order dated the 9th November, 1979 of the Delhi High Court in CWP No.885 of 1974. N.C. Sikri for the Appellant. Hardayal Hardy, Girish Chandra and R.N. Poddar for the Respondents. The Judgment of the Court was delivered by SEN, J. This appeal by special leave from a judgment and order of the Delhi High Court dated January 9, 1979 raises a question of some complexity. The question is whether a Specialist Grade II in a teaching hospital belonging to the Central Health Service is eligible for appointment or promotion as a Professor or Associate Professor of the concerned speciality. The appeal turns on a construction of sub rs. (2) and (2A) of r.8 and paragraphs 2(b) and 3 of Annexure I to the Second Schedule of the Central Health Service (Amendment) Rules, 1966. The Central Health Service was formed more than two decades ago and was intended to replace the Indian Medical Service, but the recruitment rules were not framed till the year 1963. The Service was constituted for providing doctors for manning the medical, public health and medical research and teaching posts in the Central Government hospitals, dispensaries scientific research institutions and institutions of higher education. The members of this Service are also meant to man posts in the Union Territories and the various autonomous bodies. In exercise of the powers conferred by the proviso to Art.309 of the Constitution, the President on May 1, 1963 made the Central Health Service Rules, 1963 which came into force 18 on May 5, 1963. R.3 provided for the constitution of the Central Health Service. Under r.4 the Service was divided into two classes viz. Class I and Class II. The rules envisaged categorization of personnel manning the service into five different categories viz. Categories 'A ' to 'E '. Rule 5 provided for the authorized permanent and temporary strength of the Service. Under r.5 (3), the controlling authority had the power to interchange any post included in the junior scale with any post included in the senior scale without altering the authorized strength in each category. R.8 provided for the future maintenance of the Service. 80% of the vacancies in Category 'B ' of the supertime scale were to be filled by promotion through Departmental Promotion Committee of officers holding the post in the senior scale who had rendered not less than six years of service in that scale and 20% of the vacancies thereof were to be filled by direct recruitment in the manner prescribed in the Second Schedule. By a notification dated January 1, 1965 the initial appointments were notified. The essential pre condition for the inclusion of a post in the Central Health Service was that a medical qualification recognized under the Indian Medical Council should be prescribed for it. By the Central Heath Service (Amendment) Rules, 1966, the Central Health Service was reorganized with effect from September 9, 1966 and the concept of General Duty officers and Specialist Grade Officers was introduced for the first time. R.3 provides that there shall be a Service constituted to be known as the "Central Health Service" consisting of (a) persons appointed to the Service under r.7 or r.7A, and (b) persons appointed to the Service under r.8. R.4 classifies the Service into four categories viz. Category (1) Supertime Grade, apart from the post of (i) Director General of Health Services on a fixed pay scale of Rs.2750/ and (ii) Additional Director General of Health Services on a fixed pay of Rs. 2250/ ; a Supertime Grade I carrying a pay scale of Rs. 1800 2250; Supertime Grade II with a pay scale of Rs. 1300 1800; Category (2) Specialists ' Grade with a pay scale of Rs. 600 1300; Category (3) General Duty Officers Grade I with a pay scale of Rs. 450 1250; and Category (4) General Duty Officers Grade II on a scale of Rs. 350 900. Under r.5 the authorized strength of the various categories was to be as specified in the First Schedule. R.7 provides for the initial appointment to the Service. R.7A provides for the appointment of departmental candidates. R.7A is in two 20 parts. Part A deals with the departmental candidates who were initially appointed in Categories 'A ' and 'B ' of the Service prior to the 1966 Rules. All of them are to be appointed to the corresponding Supertime Grade I and Supertime Grade II of the new Categories. Part B provides that every departmental candidate who was initially appointed to a category "other than Categories 'A ' and 'B ' shall be appointed to the newly formed appropriate Category "After selection". That had to be so because the new Categories were different and the conditions of eligibility had also been revised. Accordingly, officers from Category 'C ', Category 'D ' and Category 'E ' and were selected by the Departmental Promotion Committee for appointment to the Specialists ' Grade General Duty Officers Grade I and General Duty officers Grade I and General Duty Officers Grade II after taking into account the qualification, experience and conditions of eligibility. Several Officers who were in former Category 'C ' were placed in General Duty Officers Grade I. R.8. provides for the future maintenance of the Service. After appointments have been made to the Service under rs. 7 and 7A, future vacancies have to be filled in the manner provided therein. R.8 (2) provides that every vacancy in the Specialists ' Grade shall be filled by direct recruitment in the manner provided by the Second Schedule through the Union Public Service Commission, subject to the exception made in r.8(2A) with regard to Associate Professors and Assistant Professors. R.8(3) provides for 50% of the vacancies in Supertime Grade II to be filled by promotion of General Duty Officers Grade I and Specialists ' Grade Officers in the ratio of 2 : 3 on the basis of merit and seniority and the remaining 50% of the vacancies are to be filled by direct recruitment in the manner specified in the Second Schedule. It would therefore appear that there is 50% direct recruitment in Supertime Grade II which practice is in the public interest and is essential for the maintenance of efficiency. Further, Supertime Grade II serves as a promotion avenue to GDOS Grade I also. In view of this, the Third Pay Commission found it difficult to recommend the merger of the Specialists ' Grade with the Supertime Grade II, but at the same time it appreciated present difficulties in promotion of Specialists to Supertime Grade II. It accordingly recommended a structural reorganization of the cadre of Specialists to get over these difficulties and to ensure that the GDOS Grade I, Hospital Specialists and Teaching Specialists have reasonable 21 promotional opportunities in their respective fields. It therefore directed taking of the following steps; "The administrative posts in Supertime Grade II should be reserved for GDOS Grade I except where GDOS Grade I with the required specialists qualifications are not available. The posts which cannot be filled by direct recruitment through the Union Public Service Commission and it would be open to the Specialists ' grade officers to compete for such posts. These posts should not be filled by hospital specialists or teaching specialists by promotion in the normal course. The Supertime Grade II will thus consist only of administrative posts in future for which the revised scale will be Rs. 1500 2000. The teaching posts (Professors) and hospital specialist ' posts (comprising other than administrative and teaching posts) at present included in Supertime Grade II should be placed in the revised scale of Rs. 1800 2250. This new grade may be called Specialists ' Grade I and the existing Specialists ' Grade may be called Specialists ' Grade II. 50% of the vacancies in the new grade (i.e., Specialists Grade I) should be filled by direct recruitment as at present, the remaining 50% being filled by promotion from the new Specialists ' Grade II. There could be interchange between hospital specialists and Professors in the higher grade subject to the candidates satisfying the prescribed qualifications. We notice that at present out of 27 clinical specialities only a few have posts in Supertime Grade II. We would suggest that there should be at least one post in the higher grade of Rs. 1800 2250 for every speciality. The proportion of hospital specialists ' posts in the new grade should not exceed 20% of the number of hospital specialists ' posts in the lower grade (Specialists Grade II) and additional number of posts as may be necessary to make up the 20% may be created." (Emphasis supplied) As a result of the recommendation of the Third Pay Commission, the Specialists ' Grade is now bifurcated into specialists 22 Grade I or Supertime Grade II carrying a pay scale of Rs. 1800 2250 and Specialists Grade II carrying a pay scale of Rs. 1100 1800. As at present constituted, the Central Health Service has the following grade structure as per the recommendations of the Third Pay Commission : ____________________________________________________________ section No. Grade Pay (Rs.) ____________________________________________________________ 1. (a) Supertime Grade I (i) Director General Health Services 3500 (ii) Commissioner of Rural Health 3000 (iii) Additional Director General Health Services 3000 (iv) Other post (a) Level I 2500 2750 (b) Level II 2250 2500 (b) Supertime Grade II & Specialists Grade I 1800 2250 2. Specialist Grade II 1100 1800 3. General Duty Officers Grade I 1100 1600 General Duty Officers Selection Grade 1500 2000 General Duty Officers Grade II 700 1300 ____________________________________________________________ The Commission also recommended a scheme of special merit promotion for the medical services on the following lines: "Doctors in Specialists ' Grade I in the revised grade of Rs. 1800 2250 and Supertime Grade II (Rs. 1500 2000) who have outstanding performance to their credit, deserving the recognition, may be promoted to Supertime Grade I scale, while continuing in their original posts, without 23 having to wait until a vacancy arises in the Supertime Grade I. Such upgradations of the post consequent upon merit promotions will be personal to the individuals concerned. Eminent specialists and doctors in Supertime Grade I should be considered for merit promotion to the grade Rs. 3000 3500. There will be no non practical allowance in addition. " Such being the infra structure of the Central Health Service, the question is as to the promotional prospect of a Specialist Grade II in a teaching hospital to Specialists Grade I. The whole controversy turns on the question whether such a person is eligible for appointment as a Professor or Associate Professor of the concerned speciality, and that depends on whether for purposes of sub rs. (2) and (2A) of r. 8 and paragraphs 2 (b) and 3 of Annexure I to the Second Schedule, the condition prerequisite is actual teaching experience of the Specialist or the capacity in which such teaching experience is gained. It is common ground that the appellant has the requisite essential qualifications for appointment as a Professor or an Associate Professor of Radiology. After obtaining his M.B.B.S. degree from Calcutta University in the year 1955, the appellant went for further studies to the United Kingdom. There he studied Radiotherapy for two years at the Liverpool Radium Institute and obtained the Diploma in Medical Radiology & Therapy (D.M.R.T.) from the University of Liverpool in 1958. During the course of his studies there, he held the appointment of Registrar in Radiotherapy at the Liverpool Radium Institute from August 1957 to December 1958. Besides gaining teaching experience in that post which under Indian Medical Council Rules is a teaching post, he also had the privilege of visiting some important London hospitals like Mt. Verman and Hammersmith which institutions have a unique and distinguished position in the area of Cancer therapy by irradiation. On his return to India, the appellant worked as Junior Lecturer and Clinical Assistant in the Department of Radiology at the Christian Medical College & Hospital, Vellore from February 6, 1959 to December 26, 1960. This post required the appellant to take up 24 teaching classes in Radiotherapy for the Master of Surgery (M.S.), Diploma in Gynaecology & Obstetrics (D.G.O.) and M.B.B.S. courses. During his stay there he was placed in charge of the Department of Radiotherapy during the absence of Professor Scudder, and as he had considerable experience in the United Kingdom in the practical aspect of handling such cases, he proved to be extremely useful to the institution. The certificate of the renowned Neuro Surgeon Dr. Jacob Chandy, Medical College & Hospital, Vellore pays high encomiums to the services rendered by the appellant and records that his work there was well appreciated by colleagues and teachers both as a surgeon and as a teacher. As a consequence of a successful academic career as a teacher of post graduate courses in the Christian Medical College & Hospital, Vellore, the appellant was appointed as a Lecturer in Radiology under the West Bengal Health Scheme and held that post from January 2, 1961 to January 12, 1963. During this period as a Lecturer in the Medical College, Calcutta, he had the privilege of teaching post graduate classes in Diploma in Medical Radiology & Electrology (D.M.R.E.). While he was employed in that capacity, he was asked by the authorities of the Christian Medical College, Vellore, his erstwhile employers, to assist them in organizing the newly installed Tele Cobalt Therapy Unit under the Colombo Plan Aid from Canada in that institution. The State Government of West Bengal were pleased to depute him for the task and he apparently performed and fulfilled his duties to the entire satisfaction of the authorities. On January 14, 1963 the appellant was appointed as a Lecturer in Radiology in Maulana Azad Medical College, New Delhi, a post placed in Category `E ' of the Central Health Service and continued to work in that capacity till October 8, 1964. He was also employed as a part time Lecturer in Delhi University with effect from 1963 and even now continues to be employed as such. On October 9, 1964 he was appointed as a Radiologist in the Irwin Hospital which was a post in Category `C ' of the Central Health Service. By Letter dated April 6, 1965, the Delhi Administration informed the Principal, Maulana Azad Medical College in answer to a communication made by him, that consequent upon the appointment of the appellant in Category `C ' of the Central Health Service, the Administration had no objection to designating him as Associate Professor of Radiology (ex officio) in the Maulana Azad Medical 25 College provided it was not detrimental to his normal duties as a Radiologist and no financial implications were involved. In pursuance of r. 7A (1) (b) of the Central Health Service Rules, 1963, as amended by the Central Health Service (Amendment) Rules, 1966 and all other powers enabling him in that behalf, the President of India issued a notification dated June 8, 1967 making substantive appointments of 80 officers to the Specialists ' Grade with effect from September 9, 1966. The appellant was listed at Sr. No. 80 and the entry giving his name and designation reads: "80. Dr. Asim Kumar Bose Radiologist, Irwin Hospital, New Delhi. " As a result of this, the appellant has continued to hold the post of Radiologist in the Irwin Hospital which is attached to the Maulana Azad Medical College and treated as an Associate Professor of Radiology (ex officio) both by the University of Delhi as well as by the Maulana Azad Medical College. By the early 70s, the appellant had acquired the requisite teaching experience of an Associate Professor of Radiology as well as acquired higher academic qualification. On August 19/20, 1968 the Principal, Maulana Azad Medical College addressed a letter to the appellant conveying that the Vice Chancellor of the Delhi University in exercise of his emergency powers, had granted him recognition as an Associate Professor of Radiology for teaching the post graduate and under graduate students for the D.M.R.T. and M.B.B.S. courses of studies. In 1970, the appellant was conferred the degree of Doctor of Philosophy (Medicine) in Radiotherapy by the Calcutta University. The Faculty of Medical Sciences, University of Delhi by its letter dated July 10, 1972 informed the appellant that the Board of Research Studies for Medical Sciences had at its meeting held on January 15, 1972 appointed him as a Supervisor for the post graduate students for the M.D. (Radiotherapy) course of study. It would therefore appear that the appellant was not only holding the post of Radiologist in the Irwin Hospital, but was also actively associated with teaching the under graduate and post graduate students as an Associate Professor of Radiology of the Maulana Azad Medical College for the M.D., D.M.R.T. and M.B.B.S. courses of studies of the Delhi University. 26 It appears that subsequent to his substantive appointment by the President to Specialists ' Grade with effect from September 9, 1966, the appellant was called by the Banaras Hindu University for an interview on August 7, 1972 for the post of Professor of Radiotherapy but since the post of Associate Professor of Radiotherapy in Maulana Azad Medical College was falling vacant in 1973, he did not appear for the interview. In 1973, the Government of India promoted and appointed Dr. K.P. Mittal, Lecturer in Radiology in the Maulana Azad Medical College as Associate Professor of Radiotherapy ignoring the claim of the appellant. The appellant accordingly made a representation to the Government of India but the same was rejected. The Government of India, Ministry of Health & Family Planning, Department of Health by its letter dated February 23, 1974 informed the Delhi Administration that the appellant could not be considered for appointment to the post of Associate Professor of Radiotherapy in the Maulana Azad Medical College inasmuch as he did not possess at least five years ' teaching experience as Reader/Assistant Professor in the concerned speciality as required under the Central Health Service (Amendment) Rules, 1966. The Ministry of Health was of the view that although the appellant had the essential qualification prescribed for teaching post the teaching experience gained by him while holding the post of Radiologist cum Associate Professor of Radiology (ex officio) in the Irwin Hospital since October 9, 1964 cannot be taken into consideration. The appellant assailed the impugned order by filing a writ petition in the Delhi High Court on July 24, 1974 complaining that the action of the Government of India in the Ministry of Health disregarding his claim for appointment to the post of Associate Professor of Radiotherapy was in denial of equal opportunity in matters of employment and thus violative of articles 14 and 16 of the Constitution. The contention upon which the writ petition was based was that on a true construction of r. 8 (2A) and paragraph 3 of Annexure I to the Second Schedule, he was clearly eligible for appointment to the post of Associate Professor as he had the essential educational qualification and had also the requisite teaching experience while holding the post of Radiologist cum Associate Professor of Radiology (ex officio) in the Irwin Hospital which is a teaching hospital attached to the Maulana Azad Medical College. The respondents Nos. 1 and 2 filed a return reiterating the stand 27 taken by the Government of India in the Health Ministry that the experience gained by the appellant as an Associate Professor of Radiology (ex officio) by virtue of his holding the post of Radiologist in the Irwin Hospital cannot be taken into consideration for the purpose of determining the question of his eligibility for appointment as Associate Professor. It was pleaded that the impugned order was thus perfectly legal and valid and had been issued on a correct interpretation of the Central Health Service Rules, 1963 as amended by the Central Health Service (Amendment) Rules, 1966. In support of the plea, it was averred: "The teaching experience gained by the petitioner while holding the post of Radiologist in the Irwin Hospital, New Delhi by virtue of his having ex officio status of Associate Professor of Radiotherapy from the 9th of October, 1964 cannot be counted as requisite teaching experience under the Central Health Service Rules. " It appears that while the writ petition was pending in the High Court, the appellant was in 1976 selected by the Haryana Public Service Commission for the post of Professor of Radiology (Radiotherapy) in the Medical College, Rohtak, but was not relieved of his duties by the Government of India in the Ministry of Health & Family Planning. A letter of the Registrar of the Rohtak University dated December 9, 1976 requesting the Central Government to place his services on deputation with the Rohtak University for a period of three years in the first instance as the appellant, having put in 17 years ' service, was not inclined to resign his post as Radiologist in the Irwin Hospital. The Ministry of Health by its letter dated January 17, 1976 however informed the Secretary (Medical), Delhi Administration that it was not possible to relieve the appellant of his duties or place his services on deputation with a lien on his post as Radiologist in the Irwin Hospital, and if he wanted to join as Professor of Radiology (Radiotherapy) in the Medical College, Rohtak, he should "give up all connections with the Central Health Service". By the judgment under appeal, the High Court, while observing that the appellant admittedly holds high academic and professional qualifications and has also good teaching experience to his credit, 28 rejected his writ petition on its construction of the Rules. It observed that the recruitment rules required that the requisite experience must be the experience gained while working in a medical college or in a teaching institution i.e. as a teacher in a teaching department. It also observed that "it is a well known fact that after acquiring the requisite medical qualifications there are different careers open to a medical graduate, and in fact it is so in all professional careers." According to the High Court, "some people opt for a teaching career while others opt for a regular professional career as Doctors. The medical graduates who opt for a teaching career, join a cadre different from that of the career of Doctors. " In the words of the High Court, "they tie down their fate to the teaching career and expect promotions to various posts in their channel of promotion i.e. in the cadre of teachers. " While rejecting the claim of the appellant, the High Court observed : "It is a fortuitous circumstance that a medical graduate regularly working as a doctor is also permitted by the authorities to take up a teaching assignment. The normal duty of such a doctor is in the hospital and in the cadre of doctors in hospital. If the person who is working as a doctor is allowed to compete, with teachers in the teaching cadre, such teachers are at a disadvantage. Their chances of promotions are adversely affected by recruitment of people who do not initially opt for a teaching career. This being the rationale behind the respondents ' decision, we do not find that there is any illegality or arbitrariness in the decision of the respondent. " It is difficult to support the reasoning or the conclusion reached by the High Court on a construction of the Rules. The appellant has placed on record a number of documents emanating from the University of Delhi as well as from the Dean, Maulana Azad Medical College showing that his services were utilized as an Associate Professor of Radiology (ex officio) for delivering lectures to the post graduate and undergraduate students for the M.D., M.S., D.M.R.T. and M.B.B.S. courses during the last 17 years. In response to a query from the Court, the Ministry of Health prepared a note on the structure of the Central Health Service 29 drawing our particular attention to r. 8 (2A) and paragraph 3 of Annexure I to the Second Schedule and Sr. No. 4 of Annexure II to the Second Schedule and on the basis of these provisions it is asserted that for promotion to the post of Associate Professor at least five years ' experience as Reader/Associate Professor in the concerned speciality in a medical college/teaching institution after the requisite post graduate qualification is absolutely essential. It is said that in response to an advertisement of the Union Public Service Commission for the non teaching post of Radiologist in the former Category 'C ' the appellant who had joined the Central Health Service in Category 'E ' as Lecturer in Maulana Azad Medical College with effect from January 14, 1963 on selection to that post, switched over from teaching to non teaching post of Radiologist. After setting out his teaching experience as a Lecturer of Radiology in Maulana Azad Medical College from January 14, 1963 to October 8, 1964 and elsewhere, it is said that the appellant was not eligible for appointment as Associate Professor as he was not holding the post of Reader/Assistant Professor. In trying to refute the appellant 's allegation that there was denial of equal opportunity, it is asserted : "In the absence of the particular advertisement for the post of Associate Professor, it is not possible to indicate as to when the applications were first called for the appointment to the post of Associate Professor of Radiology in a teaching institution participating in the CHS. According to the provisions of the CHS Rules, all posts of Lecturers, Assistant Professors and Associate Professors were required to be filled through the UPSC before the rules came to be amended w.e.f. 18.09.1971. After the amendment of the CHS Rules, only Assistant Professors possessing five years experience were eligible for appointment as Associate Professor. Since Dr. Bose was holding the clinical post of Radiologist, he was not in direct line of and eligible for promotion to the post of Associate Professor. " It is somewhat strange that alongwith the aforesaid note, the Ministry had produced a letter of the Dean, Maulana Azad Medical College dated January 25, 1982 addressed to the Secretary, Ministry of Health & Family Welfare which tends to show that 30 the appellant as Radiologist cum Associate Professor of Radiology (ex officio) was not actually teaching the post graduate and undergraduate students of the Maulana Azad Medical College. The letter is self explanatory and reads : "With reference to the telephonic conversation with Sri R. N. Tewari with respect to the question received from the Supreme Court regarding Dr. A. K. Bose I have to state that Dr. Bose while performing his duties as Radiologist was not lecturing to the students as an Associate Professor is required to do. " It is rather difficult to act on the letter of the Dean particulary when it runs counter to his own affidavit sworn in February, 1982 the relevant extracts of which are given below : "That since 1964 the Appellant continues to be a Radiologist and is not holding any teaching designation assigned by the Central Health Service and is not is receipt of the teaching allowance of Rs. 200.00 which is admissible in the case of an Associate Professor. Dr. Bose has never worked as Assistant Professor/Reader to become eligible for promotion as Associate Professor. He is working in the Radiology Department. The Head of the Radiology Department, uses the services of some of the Radiologists who do not have any teaching designation to take lectures. Over the years as an internal arrangement the non teaching Radiologists such as Dr. I. Sahai, Dr. D.P. Garg, Dr. A.R. Dar, Dr. B.L. Jain, Dr. S.C. Gupta etc., in addition to Dr. A.K. Bose, have been assigned lectures to under graduate students. Dr. A.K. Bose has been delivering lectures to post graduates of Delhi University and has guided some thesis. Delhi University has recognised him as a Supervisor of Thesis and a teacher. However in the matter of post graduate teaching the Delhi University also recognises and utilises the services of Specialists of non teaching hospitals like Safdarjang Hospital, Army Hospital and Dr. R.M.L. Hospital (Willingdon). The Specialist in Safdarjang Hospital and Dr. R.M.L. Hospital do not have teaching designation assigned by 31 the Central Health Service. The Army Hospital is not under the Central Health Service. " As regards the documents placed on record by the appellant, the Dean goes on to aver in the affidavit : "That the Appellant has produced the Under graduate lecture programme, the post graduate lecture programme, prospectus of Maulana Azad Medical College for the year 1966 67 and Annual Report of Maulana Azad Medical College for the year 1980. The Under graduate teaching programme is only an internal arrangement of the Radiology Department. The post graduate programmes have been drawn up by the Delhi University. The prospectus and the Annual Report are informative bulletins only. All that they state is that Dr. A.K. Bose is an ex officio Associate Professor. " The Ministry has also filed the affidavit of Shri N.S. Bakshi, Deputy Secretary to the Government of India, Ministry of Health & Family Welfare to the effect : "That according to the Central Health Service (Amendment) Rules, 1966, atleast 5 years experience as Reader/Assistant Professor in the concerned speciality in a medical college/teaching institution is after the requisite post graduate qualification is absolutely essential for promotion to the post of Associate Professor. That the appellant does not fulfil the above mentioned requirement and thus cannot be considered for promotion to the post of Associate Professor as per CHS Rules. That according to the provisions of the CHS Rules, all posts of Lecturers, Assistant Professors and Associated Professors were required to be filled through the UPSC before the Rules came to be amended with effect from 18 9 1971. After the amendment of the CHS Rules, only Assistant Professors possessing five years experience were eligible for appointment as Associate Professor. Since Dr. Bose was holding the Clinical post of Radiologist, he was not in direct line of and eligible for promotion to the 32 post of Associate Professor. As such the question of the Appellant becoming due for promotion to the post of Associate Professor does not arise." After the conclusion of the hearing, the Health Ministry at our behest prepared a note on the pattern of teaching and non teaching staff as laid down in the Central Health Service Rules, 1963 amended from time to time. It would be convenient to re produce the note in its entirety and it reads : TEACHING POSTS Specialists ' Grade (new Specialist Grade II) Lecturers All vacancies in this Grade are filled by direct recruitment through the UPSC at the level of Lecturers in the scale of pay of Rs. 1100 1800 plus NPA at graded rates. Assistant/Associate Professors All vacancies in the posts of Assistant Professor and Associate Professor are filled by promotion through the Departmental Promotion Committee from amongst officers holding the posts of Lecturers and Assistant Professor respectively. The officers are required to possess the qualification and experience prescribed for the post in question. The officers promoted to the posts of Assistant Professor and Associate Professor are allowed a special pay of Rs. 100/ p.m. and Rs. 200/ p.m. respectively In case no departmental officer is available for promotion to the posts of Assistant/Associate Professor, such vacancy is filled by direct recruitment through the U.P.S.C. Composite Supertime Grade II (Revised Specialist Grade I) Professor On the recommendation of the Third Pay Commission, the Composite Supertime Grade II has been bifurcated into Specialist Grade I (Rs. 1800 2250) and Supertime Grade II revised (Rs. 1500 2000). Vacancies in the Specialist Grade I posts of Professor are filled by direct recruitment and promotion in the ratio of 1 : 1. 33 For promotion to the posts of Professor, Associate Professor/Assistant Professor with 8 years service are eligible. Supertime Grade I (Level II) Rs. 2250 2500 All the vacancies in the posts of Principals of Medical College, Heads of teaching institution, Deans are filled by promotions of Professors. NON TEACHING POSTS Specialists ' Grade (now Specialist Grade II) All vacancies in this Grade (Rs. 1100 1800) are filled by direct recruit through the UPSC. Composite Supertime Grade II (now Specialist Grade I Rs.1800 2250) Vacancies in the Specialist Grade I posts of Senior Specialists are filled by direct recruitment and by promotion to the ratio of 1 : 1. For promotion in the posts of Senior Specialists, Specialist Grade II officers with eight years of regular service and considered. Supertime Grade I (Level II) Rs. 2250 2500 Vacancies in Supertime Grade I posts of Consultants etc. are filled by promotion of officers of composite Supertime Grade II. The officers must, however, possess the requisite qualifications and experience for appointment to a particular post in this grade. " The aforesaid note is in consonance with the view that there is no inflexible rule that Specialists in a teaching hospital cannot be promoted as Associate Professor or Professors of their concerned speciality. On the contrary, the note clearly brings out that vacancies in Specialists Grade I posts of Professors are filled by direct recruitment and by promotion in the ratio of 1 : 1. The Health Ministry has also submitted a separate note regarding persons imparting teaching in various disciplines who are neither Professor, Associate Professor, Assistant Professor or Lecturer. The note runs as under: 34 "There is no provision in the C.H.S. Rules, whereby the officers who do not possess the requisite teaching experience is appointed to a post of Professor in CHS. However, the University College of Medical Sciences which is under the administrative control of the University of Delhi has been utilising the services of the Medical officers of the CHS working in the Safdarjang Hospital, New Delhi, for clinical teaching of the students of the University College of Medical Sciences. These persons who are participating in the teaching programme have been recognised by the University of Delhi as Professors/Readers/Lecturers/Teachers without specific teaching designation on the condition that such designations will be valid "for the period till such time the Safdarjang Hospital continues to impart instructions in clinical subjects to the under graduate students of University College of Medical Sciences and the persons continue to take part in the said teaching". The conferment of teaching designations by the University of Delhi does not mean that these officers are recognised as teachers for the purposes of their service conditions in the Central Health Service. " Instances are not uncommon where Specialists have been promoted as Professors of their concerned speciality. One instance of this as given by the appellant is of his immediate predecessor Dr. O. P. Bhardwaj, Radiologist cum Reader in Radiology ex officio) in the Irwin Hospital who was appointed as Professor of Radiology in the Maulana Azad Medical College; and presently is Dean, Jawaharlal Institute of Post Graduate Medical Education & Research, (JIPMER), Pondicherry. The other instances that we could gather with difficulty are these. One is that of Dr. (Kum.) P. Nirupma Nayak, Specialist in Gynaecology, Central Hospital, Dhanbad, promoted as Professor of Obstetrics & Gynaecology, JIPMER, Pondicherry; later promoted to Supertime Grade I as Medical Superintendent at JIPMER, Pondicherry. Another is that of Dr. Prakash Chand Sikand, Specialist Physician, Safdarjang Hospital, promoted as Professor of Medicine, Medical College, Simla; later transferred as Professor of Medicine to Lady Hardinge Medical College, New Delhi. The other is that of Dr. Harinandan Prasad Verma, Specialist in Anaesthesia, promoted as Professor of Anesthesiology, Maulana Azad Medical College, New Delhi. A 35 further instance is furnished by the case of Dr. N. C. Shinghal vs Union of India.(1) On the recommendation of the Medical Superintendent, Willingdon Hospital, the post of Specialist in Ophthalmology which was an unspecified Specialist Grade post was upgraded by the Central Government as a specified post in Supertime Grade II, and Dr. B. section Jain, Chief Ophthalmologist cum Associate Professor of Ophthalmology, Medical College, Simla was transferred to that post. In the vacancy caused thereby, Dr. Shinghal who was Specialist in Ophthalmology attached to the Willindon Hospital, was offered the post of Chief Opthalmologist cum Associate Professor of Ophthalmology, Medical College, Simla. There may be other instances as well. It is necessary to emphasise that the recruitment rules nowhere provide that the teaching experience gained by a Specialist in a teaching hospital in the capacity of an Associate Professor (ex officio) shall not count towards the requisite teaching experience. There is no provision made in the Rules that the teaching experience must be gained on a regular appointment. There is hardly any difference so for as teaching experience is concerned whether it is acquired on regular appointment or as Specialist in a teaching hospital with the ex officio designation. As the statutory rules do not provide that the teaching experience gained in an ex officio capacity shall not count towards the requisite teaching experience, the teaching experience gained by the appellant while holding the post of Radiologist cum Associate Professor of Radiology (ex officio) in the Irwin Hospital cannot be ignored in determining his eligibility for appointment as Professor or Radiology in Maulana Azad Medical College. There is a failure on the part of the Ministry of Health to draw a distinction between teaching and non teaching hospitals under the Central Health Service. The two general hospitals under the Central Health Service are the Willingdon Hospital & Nursing Home, New Delhi and the Safdarjang Hospital, New Delhi. The Service also runs Central Hospital, Asansol, Central Hospital, Dhanbad, Goa Medical College & Hospital, Panaji, G.B. Pant Hospital, Port Blair, and Government Hospital, Lakshadweep. In contradistinction, the teaching hospitals under the Central Health 36 Service are : (1) Irwin Hospital, New Delhi and (2) G. B. Pant Hospital, New Delhi which are both associate hospitals of Maulana Azad Medical College. The Lady Hardinge Medical College also has a separate hospital attached to it. The medical colleges run by the Central Health Service are : (1) Maulana Azad Medical College, New Delhi; (2) Lady Hardinge Medical College, New Delhi; and (3) Jawaharlal Institute of Post Graduate Medical Education & Research (JIPMER), Pondichery. Besides the medical colleges, the Central Health Service also runs several medical institutions, viz. Hospital for Mental Diseases, Ranchi, Patel Chest Institute. Delhi etc. The teaching in these medical colleges is undertaken by Professors and Associate Professors as well as by Specialists attached to the hospitals affiliated to the respective colleges. The modern pattern in medical education during recent years is the organization of clinical units. As medical education has developed, the distinctive feature is the thoroughness with which theoretical and scientific knowledge are fused with what experience teaches in the practical responsibility of taking care of human beings. The clinical teacher has an immediate and absolute responsibility, Physicians and surgeons still go round their wards at stated hours, followed by groups of students to whom they point out the features of each case, expound the nature of the malady and explain the reasons for the treatment adopted. But no longer, as formerly, is the student dependent upon "walking the wards", attending lectures and reading about the illness of which the cases he has seen are illustrations. The clinical unit is a far more efficient training centre. The importance of the clinical years is brought out in the Encyclopaedia Britannica Macropaedia, 15th edn. p. 810 : "The two or more clinical years of un effective curriculum are characterized by active student participation in small group conferences and discussions, a decrease in the number of formal lectures, and an increase in the amount of contact with patients in teaching hospitals and clinics. Through work with patients, under the supervision and guidance of experienced teachers, students learn methods of obtaining comprehensive, accurate and meaningful accounts 37 of illness, how to conduct physical examinations and how to develop judgments in the selection and utilization of laboratory diagnostic aids. During this period, they learn to apply the knowledge gained in their pursuit of the basic medical sciences to the study of general medicine and the medical and surgical specialities. " We must first deal with certain amendments in the Rules prescribing the mode in which the posts of Professors and Associate Professor can be filled in. By amendments dated February 21, 1968 and September 18, 1971, paragraphs 2 (b) and 3 of Annexure I to the Second Schedule and sub r. (2A) of r. 8 were inserted respectively. These amendments have brought about a change inasmuch as there is now a vertical channel of promotion to the teaching posts upto the post of Associate Professor. The Third Pay Commission in its Report at p. 173 observes : "While the Specialists on the teaching side can hold posts of hospital specialists, the latter cannot be promoted to teaching posts because of lack of teaching experience. " On a literal construction of these Rules, the effect of these amendments appears to be this. Normally, a Professor or an Additional Professor in a medical college or teaching institution can be appointed by direct recruitment from amongst persons holding the post of Associate Professor or Assistant Professor in the concerned speciality in a medical college or a teaching institution having at least six years ' teaching experience out of 12 years ' standing in the Grade through the Union Public Service Commission. An Associate Professor in the medical college or a teaching institution can only be promoted from amongst persons holding the post of Assistant Professor having at least five year 's teaching experience in the concerned speciality by the Departmental Promotion Committee. We are inclined to the view that the word "as" in the collocation of the words used "at least six years" experience as Associate Professor/Assistant Professor/Reader" in paragraph 2 (b) and of the words "at least five years ' experience as Reader/Assistant Professor" in paragraph 3 and sub r. (2A) of r. 8 must be interpreted in its ordinary sense as meaning teaching experience gained "in the capacity of". In Black 's Legal Dictionary, 5th edn. , p. 104 the meaning of the word "as" as given is : "Used as an adverb, etc. means like, similar to of the same kind, in the same manner, in the 38 manner in which". In Shorter Oxford Dictionary 3rd edn. p. 111, the word "as" is stated to mean : "The same as, in the character capacity, role of". In our view, the Ministry of Health is apparently wrong in assuming that the word "as" in paragraphs 2 (b) and 3 of Annexure I the Second Schedule and sub r. (2A) of r. 8 makes holding of a post in the cadre a condition precedent to the appointment of a Professor or an Associate Professor. The question that falls for consideration is whether the appellant possessed the qualification and experience requisite for appointment to the post of Associate Professor of Radiotherapy in Maulana Azad Medical College, New Delhi, and if not, whether the appellant is eligible for appointment to the post of Professor of Radiotherapy in that College. That depends on whether he fulfilled the conditions laid down in r. 8 (2) and 2 (A) and paragraphs 2 (b) and 3 of Annexure I to the Second Schedule. R. 8 provides that after appointments have been made to the Service under rs. 7 and 7A, future vacancies shall be filed in the manner provided there under. R. 8 (2) provides that every vacancy in the Specialists ' Grade shall be filled by direct recruitment in the manner specified in the Second Schedule. That is to say, 100% of vacancies in the Specialists ' Grade have to be filled by direct recruitment through the Union Public Service Commission. The post of Professor of Radiotherapy in the Maulana Azad Medical College is a post belonging to Specialist Grade I which is equivalent to Supertime Grade II carrying a pay scale of Rs. 1800 2250. Annexure I to the Second Schedule prescribes the age limit, educational qualifications and experience for direct recruitment to the various categories of the Service. Paragraph 2 (b) thereof reads : "Supertime Grade II 50 years For Professors/Additional Rs. 1300 1800 and be Professors low re in medical colleges laxable /teaching institu for Govt. tions. servant. A post graduate degree in the concerned speciality mentioned Govt. in Part A of Annexure II or equiva lent servant. * * * * * * * * For Professors/Additional Professor, in medical colleges or tea 39 ching institutions, at least 6 years experience as Associate Professor/ Assistant Professor/Reader in a medical college or teaching institution after the requisite post graduate degree qualifica tion out of the aforesaid 12 years ' standing. (Qualifications relaxable at Commission 's discretion in the case of candidates otherwise well qualified). " R. 8 (3) provides that 50% of the vacancies in Supertime Grade II to be filled in by promotion of General Duty officers Grade I and Specialists Grade II officers in the ratio of 2:3 and the remaining 50% of the vacancies to be filled by direct recruitment in the manner specified in the Second Schedule. That is to say, there is certain amount of flexibility and it cannot be that the appellant who is a Radiologist in the Maulana Azad Medical College which is a post belonging to Specialists Grade II, cannot be appointed by direct recruitment as Professor of Radiotherapy under r. 8 (2). The Ministry of Health seems to quite oblivious of the fact that during the pendency of appeal, the post of Professor of Radiotherapy in Maulana Azad Medical College having fallen be vacant, the vacancy in the post has to be filled up in the manner provided by r. 8 (2) i. e. by direct recruitment through the Union Public Service Commission. It is not disputed before us that the Union Public Service Commission has the power to relax the qualifications prescribed in the case of candidates otherwise well qualified. That being so, the appellant who admittedly is a highly qualified person and has the requisite teaching experience as Radiologist cum Associate Professor of Radiologist (ex officio) is clearly eligible for appointment as Professor of Radiotherapy under r. 8 (2). The Union Public Service Commission while advertising the post of Professor Radiotherapy which has fallen vacant, must, as it rightly did, invite the appellant for an interview for being considered for appointment to that post. That conclusion however does not relieve us from dealing 40 with the main question viz. whether the appellant possessed the qualifications and experience requisite for appointment to the post of Associate Professor of Radiotherapy. The question must turn on a construction of r. 8 (2 A) and paragraph 3 of Annexure I to the Second Schedule of the Rules. As stated above, r. 8 (2) provides that every vacancy in the Specialists ' Grade shall be filled by direct recruitment in the manner specified in the Second Schedule. R. 8 (2A) however makes an exception in the case of Associate Professors and Assistant Professors Sub r. (2A) of r. 8 contains a non obstante clause and it reads : "Notwithstanding anything contained in sub r. (2) the vacancies in the post of Associate Professor and Assistant Professor in the medical colleges and teaching institutions shall be filled by the appointment of Assistant Professors and Lecturer respectively in the Specialists ' Grade, possessing the qualifications and experience prescribed in Annexure I to the Second Schedule for the respective post, on the recommendation of a Departmental Promotion Committee. Provided that if no suitable officer is available for appointment to the post of Associate Professor or Assistant Professor in any medical college or teaching institution from the Grades of Assistant Professor or Lecturer, as the case may be, such vacancy shall be filled by direct recruitment in the manner specified in the Second Schedule. " Paragraph 3 of Annexure I to the Second Schedule reads as follows : "Specialists ' Grade 45 years For Associate (Rs. 600 1300) and below Professers/Readers (relaxable Assistant Profe for Govt. ssors/Lecturers. servants) A post graduate degree in the concerned specially mentioned in Part A of Annexure II or equivalent. For Associate Professors : At least 5 years ' experience as Reader /Assistant Professor in 41 the concerned speciality in a medical college /teaching institution after the requisite post graduate qualifications. (Qualifications relaxable at Commissions 's discretion in the case of candidates otherwise well qualified.)" The contention on behalf of the respondents is that the appellant could not be considered for appointment to the post of Associate Professor of Radiotherapy in Maulana Azad Medical College because the teaching experience gained by him while holding the post of Radiologist cum Associate Professor of Radiology (ex officio) in the Irwin Hospital since October 9, 1964 cannot be taken into consideration. It is urged that there is a distinction between the two posts of Radiologist and Associate Professor of Radiology as the post of Radiologist is a clinical post while that of Associate Professor of Radiology is a teaching post. That being so, it was urged that the channels of promotion to the two posts are different and the appellant who had been substantively appointed to the post of Radiologist in the Irwin Hospital must seek his own channel of promotion in Supertime Grade II for a non teaching job. It is further urged that since the appellant was not holding the post of an Associate Professor, he was not drawing the teaching allowance of Rs. 200/ p.m. to which he would otherwise be entitled. It is also urged that the status of Associate Professor of Radiology (ex officio) which the appellant holds in the Irwin Hospital is akin to that of honorary Professor or Associate Professor in the Willing don Hospital or the Safdarjang Hospital and the mere designation of the appellant as Associate Professor of Radiology (ex officio) by the University of Delhi does not give him a right to hold the post of Professor of Radiology in Maulana Azad Medical College. It is pointed out that a similar question arose in connection with the conferral of honorary teaching designations on certain medical officers in the Willingdon Hospital and Safdarjang Hospital, New Delhi in the year 1973. It is said that the President of India was pleased to direct that the conferral of such teaching designations would not entitle the Specialists to claim seniority or eligibility for promotion merely by virtue of these honorary designations, nor would it entitle the incumbent any special benefit with regard to any teaching 42 allowance which may be given to the teachers in a medical college. By parity of reasoning, it is urged that the designation of the appellant as a Radiologist cum Associate Professor of Radiology (ex officio) did not make him eligible for appointment to the post of Associate Professor of Radiotherapy in Maulana Azad Medical College. We are afraid, we cannot subscribe to this line of argument. We find it rather difficult to support the impugned action of the Government of India in the Health Ministry in holding that the teaching experience gained by the appellant as Radiologist cum Associate Professor or Radiology (ex officio) with effect from October 9, 1964 cannot be taken into consideration. The view taken by the Health Ministry appears to proceed, on a misconstruction of r. 8 (2A) and paragraph 3 of Annexure I to the Second Schedule. As already stated, the word "as" in these provisions must, in the context in which it appears, be interpreted to mean "in the capacity of". The Ministry of Health cannot be heard to say that the appellant has not acquired the status of an Associate Professor of Radiology with effect from October, 9, 1964, particularly when the Central Government have been utilizing his services as such for teaching the post graduate and under graduate students of the Maulana Azad Medical College for the M.D., M.S., D.M.R.T. and M.B.B.S. courses of studies for the last 17 years. The arrangement has continued for all these years with the approval of the Delhi University and presumably with the tacit sanction of the Medical Council of India. In our opinion, the provisions contained in r. 8 (2A) and paragraph 3 of Annexure I to the Second Schedule must be interpreted in a broad and liberal sense as it would otherwise work great injustice to persons in Specialists Grade II like the appellant who, while holding a non clinical post in a teaching hospital like the Irwin Hospital, has been actually teaching the students of the Maulana Azad Medical College to which it is affiliated. The contention that the position which the appellant enjoys as Radiologist cum Associate Professor of Radiology (ex officio) in the Irwin Hospital is similar to that of honorary Professor or Associate Professor in the Willingdon Hospital or the Safdarjang Hospital and the mere designation of the appellant as such does not give him a right to hold the post of Associate Professor of Radiology, cannot prevail. There is no order placed before us of the President of India directing that conferral of honorary teaching designations on Specialists in the Willingdon 43 Hospital and the Safdarjang Hospital would not entitle such Specialists to claim seniority or eligibility for promotion. Even if it were so, that would hardly make any difference. The submission overlooks the distinction between a teaching and a non teaching hospital. There cannot be a medical college without a teaching hospital as its integral and inseparable part. The mere fact that the appellant was not drawing a teaching allowance of Rs. 200/ p.m. is of no legal consequence because the allowance is attached to the post of Associate Professor. We wish to make it clear that it is not for the Court to give the appellant promotion or make his appointment to the post of Professor of Radiotherapy. The Court can only on a true construction of r. 8 (2A) and paragraph 3 of Annexure I to the Second Schedule determine the question of his eligibility for such promotion or appointment. If the appellant is eligible to hold the post of Professor of Radiotherapy, he can always apply irrespective of the fact whether or not he is in the line of promotion. It is for the Union Public Service Commission to advertise the post of Professor of Radiotherapy and everyone who satisfies the required qualifications can make an application. That is because the Commission undoubtedly has the power to relax any of the qualifications. The result therefore is that the appeal must succeed and is allowed with costs. The judgment and order of the High Court is set aside and the impugned order passed by the Government of India, Ministry of Health & Family Planning, Department of Health New Delhi dated February 23, 1974 is quashed. It is declared that the appellant had acquired the requisite teaching experience as envisaged by r. 8 (2A) and paragraph 3 of Annexure I to the Second Schedule of the Central Health Service Rules, 1963, as amended by the Central Health Service (Amendment) Rules, 1966, and was therefore eligible to be considered for appointment to the post of Associate Professor of Radiotherapy in Maulana Azad Medical College which had fallen vacant in 1973. The second respondent shall give effect to the declaration. As a necessary consequence, we direct the Union Public Service Commission to re advertize the post of Professor of Radiology in Malulana Azad Medical College, New Delhi which had fallen vacant during the pendency of the appeal and call the appellant for an interview for being considered appointment to that post. 44 We wish to clarify that the declaration shall not adversely affect or act to the detriment of any person who was and is senior to the appellant in the Central Health Service or had already been appointed as Associate Professor in the concerned speciality. S.R. Appeal allowed.

In pursuance of r. 7A(1)(b) of the Central Health Service Rules, 1963 as amended by the Central Health Service (Amendment) Rules. 1966 and all other powers enabling in that behalf, the President of India issued a notification dated. June 8,1967 making the substantive appointment of the appellant Dr. Asim Kumar Bose as Radiologist, Irwin Hospital, New Delhi. By virtue of his post as Radiologist cum Associate Professor of Radiology, the appellant was teaching the under graduate and post graduate students as an Associate Professor of Radiology of the Maulana Azad Medical College for the M.D., M.S., D.M.R.T. And M B.B.S. courses of studies of the Delhi University. In 1973 the Central Government promoted Dr. K.P. Mittal, Lecturer in Radiology in the Maulana Azad Medical College as Associate Professor of Radiotherapy ignoring the claim of the appellant who thereupon made a representation. The Government of India, Ministry of Health & family Planning Department of Health by its letter dated February 23, 1974 rejected the representation holding that the appellant could not be considered for appointment to the post of Associate Professor of Radiotherapy in the Maulana Azad Medical College inasmuch as he did not possess at least five years ' teaching experience as Reader/Assistant Professor in the concerned speciality as required under r. 8(2A) and paragraph 3 of Annexure I to the Second Schedule of the 1966 Rules. The appellant filed a writ petition in the Delhi High Court challenging the impugned order, but the High Court rejected the writ petition holding that the requirement rules required that the requisite teaching experience must be the experience gained while working in a medical college or in a teaching institution i.e. as a Teacher in a teaching department. Allowing the appeal. ^ HELD: (1) There was a failure on the part of the Government of India in the Ministry of Health to draw a distinction between teaching and non 17 teaching hospitals under the Central Health Service. The Irwin Hospital and the G.B. Pant Hospital are the two associate hospitals of the Maulana Azad Medical College and the teaching in the medical college is undertaken by Professors and Associate Professors as well as by the Specialists attached to the two hospitals affiliated to the College. Thus the teaching experience gained by the appellant while holding the post of Radiologist cum Associate Professor of Radiology (ex officio) had to be taken into consideration to determine his eligibility for appointment as Professor or Associate Professor of the concerned speciality. [35 G H, 36 A C, 43 F G] (2) On a construction of r. 8(2) and paragraph 2(b) of Annexure 1 to the Second Schedule of the 1966 Rules, it was held that the appellant possessed the qualifications and experience requisite for appointment to the post of Professor of Radiotherapy in the Maulana Azad Medical College which is a post belonging to Specialist Grade I equivalent to Supertime Grade II carrying a pay scale of Rs. 1800 2250, which had fallen vacant during the pendency of the appeal. The Union Public Service Commission must therefore re advertise the post of Professor and call the appellant for an interview for being considered for appointment to the post. [38 C D, F H] (3) The action of the Central Government in the Ministry of Health ignoring the claim of the appellant for appointment to the post of Associate Professor of Radiotherapy in the Maulana Azad Medical College in 1973 was based on a misconstruction of r. B(2A) and paragraph 3 of Annexure I to the Second Schedule. The word "as" in these provisions must, in the context in which it appears, be interpreted to mean "in the capacity of". These provisions must be interpreted in a broad and liberal sense as it would otherwise work great injustice of persons in Specialists Grade II like the appellant who, while holding a non clinical post in a teaching hospital like the Irwin Hospital, has actually been teaching the students of the Maulana Azad Medical College to which it is affiliated. The Ministry of Health cannot be heard to say that the appellant had not acquired the status of an Associate Professor of Radiology with effect from October 9, 1964, particularly when the Central Government have been utilizing his services as such for teaching the post graduate and under graduate students of the Maulana Azad Medical College for the M.D., M.S., D.M.R.T. and M.B.B.S. courses of studies for the last 17 years. The arrangement has continued for all these years with the approval of the Delhi University which has conferred the designation of Associate Professor of Radiology on the appellant presumably with the tacit sanction of the Medical Council of India. [37 F G, 38 A B, 42 D F] (4) The recruitment rules nowhere provide that the teaching experience gained by a Specialist in a teaching hospital in the capacity of an Associate Professor (ex officio) shall not count towards the requisite teaching experience for purposes of sub rs. (2) and (2A) of r. 8 and paragraph 2 (b) and 3 of Annexure I to the Second Schedule of the 1966 Rules. There is no provision made in the Rules that the teaching experience must be gained on a regular appointment. There is hardly any difference so far as teaching experience is concerned whether it is acquired on regular appointment or as a Specialist in a teaching hospital with the ex officio designation. As the statutory rules do not 18 provide that the teaching experience gained in an ex officio capacity shall not count towards the requisite teaching experience, the teaching experience gained by the appellant while holding the post of Radiologist cum Associate Professor of Radiology (ex officio) in the Irwin Hospital can not be ignored in determining his eligibility for appointment as Professor or Associate Professor of the concerned speciality. [35 C E]

Civil Appeals No. 2611 and 2611 A of 1981. From the Judgment and order dated the 1st July, 1981 of the High Court of Jammu and Kashmir in L.P.A. No. 1 of 1981 and C.M.P. No. 454 of 1981. A. K Sen and G. L. Sanghi, Vineet Kumar and Devinder Gupta for the Appellant. 578 D.D. Thakur, S.N. Kacker and R.P. Bhatt, for respondent in 2611/81. J. Sorabjee, K. K. Venugopal and R. P. Bhatt, for respondent in 2611 A/81. E. C. Agarwala, section P. Gupta, R. Satish, V.K. Pandita and R.P. Sethi for respondent in 2611 2611 A. L. N. Sinha, Attn. Altaf Ahmad and Irfan Ahmad for respondent No. 2. section Ghosh and A. K. Nag for the intervener. The Judgment of the Court was delivered by BALAKRISHNA ERADI, J. When the hearing of these appeals was concluded on November 11, 1982, after elaborate arguments had been addressed by learned counsel appearing on both sides, we announced our decision allowing the appeal (C.A.No 2611 of 1981) by passing the following order: "The appeal is allowed. The Judgment and order of the Division Bench of the High Court presided over by learned Acting Chief Justice is set aside and one by learned Single Judge, Dr. A. section Anand, is restored and consequently the Writ Petition No. 436 of 1980 filed by Respondents in the High Court of Jammu and Kashmir stands dismissed. No order as to costs of hearing in this Court. The legal consequence of this order will take effect from November 16, 1982. ALL interim orders passed by this Court shall stand vacated from the midnight between 15th and 16th November, 1982. Reasons will follow. " We now proceed to state in this judgment the reasons in support of our aforesaid conclusion 579 In July, 1966, the appellant Ved Gupta decided to embark upon a venture to construct and operate an air conditioned Cinema in a plot of land which he proposed to take on lease in Gandhi Nagar, Jammu, in Collaboration with two osher persons, namely, Todar Mal and Kishan Kumar. Accordingly, on July 22, 1966, Ved Gupta purporting to act on behalf of a partnership consisting of himself and the two persons aforementioned (as a matter of fact, no partnership had been constituted at all by that date), applied to the District Magistrate, Jammu, under section 3 of the Jammu and Kashmir (Cinematograph) Act, 1989 (1933 A.D.) (herein after referred to as the Act) for permission to construct a modern Cinema Hall at the proposed site, a detailed description of which was furnished in the plan annexed to the application. Shri Ved Gupta was informed by the District Magistrate, Jammu by his Memo (Annexure B) that the Government had approved the construction of a Cinema Hall at the proposed site and had granted the requisite permission in his favour as per letter dated September 11, 1967, issued by the Secretary to Government, General Department. From Annexure B, it would appear that the permission so granted was in favour of Ved Ved Gupta in his individual capacity and not as the representative of any firm. In the meantime, by a deed dated December 7, 1966, which was registered on December 24, 1966, the plot in question was taken on lease jointly by Ved Gupta, Todar Mal and Krishan Kumar for a period of 40 years on the terms and conditions set out therein. Thereafter, under a deed dated July 15, 1969, the aforesaid three persons entered into a partnership along with 11 others under the name and style "Metro Theatres" for carrying on the business of constructing and running a modern air conditioned Cinema in the site covered by the permission granted by the Government. Clause 15 of the said deed provided that the site for construction of a Cinema which had been obtained on lease by Ved Gupta, Todar Mal and Krishan Kumar in their own names shall not be their personal property, but shall be the property of the partnership, and that the permission which Ved Gupta had obtained from the Government for construction of the Theatre in the said plot shall be treated as the property of the partnership. By a subsequent agreement executed by the 14 partners on February 22, 1969, the name of the Cinema business was changed from 'Metro Theatre ' to 'Apsara Theatre. " The construction of the Cinema Theatre appears to have been, completed by the middle of June 1969. On June 17, 1969, Ved Gupta submitted an application to the District Magistrate, Jammu, reporting that the construction of the theatre and the installation of the cinema 580 tograph machinery and equipment had all been completed pursuant to the permission granted by the Government and requesting that the requisite licence for running the Cinema Theatre may be issued to him under the Act and the Rules. Annexure C is a copy of the said application and it shows that it was filed by Ved Gupta in his personal capacity without any mention whatever therein of the partnership. On July 22, 1969, a licence was issued by the District Magistrate to Ved Gupta under Section 3 of the Act to give public exhibition of cinematograph films at the Apsara Theatre situated at Gandhi Nagar, Jammu. Annexure D is a copy of the said licence and it is expressly stated therein that the said licence has been granted to Shri Ved Gupta and that it shall remain in force until March 31, 1970, provided that Shri Ved Gupta or any person to whom, with the consent of the licensing authority, the licence is transferred, continues to own or manage the cinematographs used ill the said Apsara Theatre. A Schedule of conditions imposing various duties and obligations on the licensee is also appended to the said licence. On March 31, 1970, two partners Todar Mal and Sham Kumar retired from the partnership. Consequent thereon, the firm was reconstituted and a new partnership deed was executed by the remaining partners on April 11, 1970, Clause 18 of the said document contained the following recital: "The licence for running the Cinema, by which Apsara Theatre is being run stands in the name of Shri Ved Gupta s/o Shakur Dass, the 9th party. The right to operate the Cinema licence shall be the property of this partnership and changes in the constitution shall make no difference in this respect. " Soon thereafter, on December 3, 1975, Todar Mall who had retired from the firm and Krishan Kumar who continued to be a partner jointly issued a notice to the District Magistrate, Jammu, claiming that their names should also be included in the licence issued to Ved Gupta in respect of the Apsara Theatre. Subsequently, on January 26, 1976, Krishan Kumar addressed a communication to the District Magistrate stating that he had not actually signed the notice sent on December 3, 1975, that Todar Mal had unauthorisedly purported to send the notice on his behalf also without his knowledge or consent and the said notice may, therefore, be treated as fictitious. A copy 581 of the said letter was sent by Krishan Kumar to Ved Gupta also. Strangely, after the expiry of nearly two years thereafter, Krishan Kumar submitted an application to the District Magistrate requesting that the names of himself and of Todar Mal should also be included as licensees in the licence for Apsara Theatre, issued to Ved Gupta. Notice of the said application was issued by the District Magistrate to Shri Ved Gupta and the District Magistrate conducted an enquiry at which both sides were heard through their advocates. After considering the arguments advanced before him by the counsel appearing for the contending parties, the District Magistrate passed a detailed order dated December 29, 1977, rejecting the request of Todar Mal and Krishan Kumar and declaring Shri Ved Gupta to be the sole licensee authorized to run the Apsara Theatre. Thereupon, Todar Mal preferred an appeal against the said order passed by the District Magistrate. Krishan Kumar was impleaded as a second respondent in that appeal. The Minister of State for Revenue and Law, Government of Jammu and Kashmir, heard counsel on both sides and ultimately dismissed Todar Mal 's appeal by a detailed order, of which Annexure G is a copy. Todar Mal did not leave the matter there. He filed a writ petition in the High Court of Jammu and Kashmir, challenging the legality and validity of the orders passed by the District Magistrate and the appellate authority, namely, the State Government. Krishan Kumar was made a party respondent in the said petition. That writ petition was dismissed in limine by the High Court by an order dated April 29, 1978. Thereafter, Todar Mal came up to this Court, praying for the grant of special leave to appeal (S.L.P. Civil No. 3490 of 1978) against the said decision of the High Court. This Court rejected that Special Leave Petition by order dated November 13, 1978. Krishan Kumar was a party respondent in the Special Leave Petition also. On April 19, 1979. Krishan Kumar addressed a letter to the District Magistrate, Jammu, requesting that the renewal of the licence may be granted "in the name of the "premises of Apsara Theatre" The District Magistrate rejected the said request by a detailed order dated April 21, 1979. (Annexure I) Before the said order was passed by the District Magistrate, an elaborate hearing appears to have been given by him to Krishan Kumar and Ved Gupta represented by their Advocates. It is seen from Annexure I that the contentions advanced before the District Magistrate on behalf of Krishan Kumar were that even though the licence had originally been issued in the name of Ved Gupta, the right of operation of the licence had become the 582 property of the firm by virtue of clauses 13 and 18 of the partnership deed and since Ved Gupta had been expelled from the partnership and had thereby ceased to be connected with the firm, he did not have the possession of the premises and he was not entitled to claim a renewal of the licence. These contentions were repelled by the District Magistrate who held that the renewal of the licence could not be made in the name of any party other than the original licensee, namely, Shri Ved Gupta, who had been declared to be the sole licensee in respect of the Apsara Theatre by the proceedings of his predecessor dated December 29, 1977, which was confirmed in appeal by the State Government and which had acquired finality between the parties by reason of the dismissal of the writ petition and the Special Leave Petition by the High Court and Supreme Court, respectively. In March, 1980 the licence for the Theatre was renewed by the District Magistrate in the name of Ved Gupta. On April 27, 1979, a suit was instituted against Ved Gupta and seven others by seven of the partners including Krishan Kumar for a declaration that the Cinema licence dated July 22, 1969, issued by the District Magistrate, Jammu (8th defendant) for exhibition of cinematographs in the building known as Apsara Theatre, Gandhi Nagar, Jammu, is the property of the firm Apsara Theatre and for a prohibitory injunction restraining defendants 1 to 7, namely, Shri Ved Gupta and six of the partners who were residing with him from interfering with the running of the Cinema by the plaintiffs and also for a prohibitory injunction against the District Magistrate (defendant 8) restraining him from interfering in any manner with the exhibition by the plaintiffs of cinematographs in the premises of Apsara Theatre. On the date of the institution itself, the District Judge, Jammu, issued an order of temporary injunction restraining defendants 1 to 7 from interfering with the possession and the running of the Theatre Apsara by the plaintiffs. In being served with the order of injunction, Ved Gupta wrote to the District Magistrate on September 24, 1980 that it had become impossible for him to operate the Cinema licence in view of the temporary injunction issued by the District Court and since it is only the licensee who is held responsible under the Act and the Rules for due compliance with all the terms and conditions of the licence and answerable to the licensing authority for all commissions and omissions in the Cinema premises, he may be saved from any prosecution or other action under law in the capacity of licensee of the Apsara Theatre in respect of any illegal acts or offences committed by others in the said premises. On 583 September 26, 1980, the Superintendent of Police, Jammu City, reported to District Magistrate that on verification by the Sub Inspector deputed for the purpose, it had been found that the cinematographs were being conducted in the Apsara Theatre by persons other than the licensee and the Police had challaned the licensee under Section 6 of the Act. The District Magistrate was requested by the said letter that exhibition of cinematographs in the Theatre may be suspended till the final decision was rendered by the Court in favour of either of the parties. Acting on the aforesaid material brought to his notice, the District Magistrate passed the order (Annexure J) dated September 26, 1980, directing that exhibition of cinematographic films in Apsara Theatre will remain suspended until further orders. The sole question arising for determination in these appeals concerns the validity of the said order passed by the District Magistrate and hence, it will be convenient at this stage to reproduce the full text of the order. It reads: "Whereas it has been brought to my notice by Shri Ved Gupta, sole licensee, Apsara Theatre that the District and Sessions Judge, Jammu, has issued a temporary injunction against the exhibition of films by him in the above said Theatre; And whereas the S.P. City by his letter No. 1/Conf. 16.9.80 has intimated that there was exhibition of films on 25th September, 1980, in Apsara Theatre by persons other than the licensee; And whereas under the provisions of the Cinematograph Act, read with rules, none other than licensee is permitted to exhibit films during the currency of the licence without permission of the licensing authority; Now, therefore, I, A. Sahasranaman, District Magistrate, Jammu, hereby order that exhibition of films in Apsara Theatre will remain suspended till further orders. This order shall come into force with immediate effect. " On Septembers 29, 1980, a writ petition Writ Petition No. 436 of 1980 was filed in the High Court of Jammu and Kashmir by 584 M/g Apsara Theatre, seeking to quash the aforsaid order passed by the District Magistrate as being illegal, ultra vires and void. It was contended inter alia by the petitioner that there had been a gross violation of the principles of natural justice inasmuch as the petitioner firm and its partners had not been given any notice or afforded hearing before the impugned order was passed. Another ground put forward by the petitioner was that the District Magistrate had no power to suspend the licence under any of the provisions of the Actor the Rules and that the only power vested in the licensing authority was to revoke the licence under Section 6.F of the Act and that too only if the conditions precedent mentioned in the said Section were found to exist. The learned Single Judge of the High Court Dr. Anand, J), by a well considered judgment rejected the contentions of the petitioners and dismissed the writ petition. M/s Apsara Theatre represented by Krishan Kumar preferred a Letters Patent Appeal L.P.A No. l of 1981 against the judgment of the learned Single Judge. That appeal was heard by a Division 19 Bench consisting of Mufti Baha ud din Farooqi, Acting Chief Justice and Mir, J. The two learned Judges comprising the Division Bench, however, came to divergent conclusions. Mir, J. agreed with the view expressed by the learned Single Judge that the District Magistrate had acted strictly in accordance with law in passing the impugned order and that the writ petition was devoid of merit. But, the Acting Chief Justice was of the view that where the licensed premises including the cinematographs used therein belonged to a partnership and one of the partners had obtained a licence in his separate name, the other partners automatically acquired an interest in the licence. It was further held by The Acting Chief Justice that the effect of the licence was that "it renders privilege the building of the cinematographs used therein and the privilege must necessarily follow the title in such building and the cinematograph. " on this reasoning, it was held by him that the plaintiff firm had a legal right in the licence which entitled it to notice and hearing under the Act before the licence was suspended, and inasmuch as the said procedure has not been followed by the District Magistrate, the impugned order was void and in violation of the principles of natural justice. The learned Acting Chief Justice has further expressed the view that except only the power of revocation, embodied in Section 6 F of the Act and an implied power to suspend a licence pending the proceed ings for such revocation, the District Magistrate had no jurisdiction or power to suspend the licence of the Theatre under any other circumstances. Hence quite apart from the question of natural 585 justice, the impugned order was also held by the Acting Chief Justice to be one passed without jurisdiction on this ground also. In view of the difference of opinion between the two learned Judges, the Letters Patent Appeal was referred to Kotwal, J. under Rule 23 (2) of the Jammu and Kashmir High Court Rules, 1975. It may be mentioned at this stage that at that time, the High Court was functioning with a srength of only four Judges, and excluding the learned Single Judge who heard the writ petition and the two members of the Division Bench the Acting Chief Justice and Justice who comprised the Division Bench which heard the Letters Patent Appeal, Kotwal, J. was the only other Judge available in the High Court. Unfortunately, Kotwal, J expressed his inability to hear the Appeal on the ground that at one stage, he had appeared as an Advocate for M/s Apsara Theatres in the course of the earlier litigations between the parties concerning substantially the same matter. Consequently, it became impossible for the Letters Patent Appeal being heard by a third Judge designated by the Chief Justice, as contemplated by Rule 23 (2). The matter was, therefore, placed before the Division Bench consisting of the Acting Chief Justice and Justice Mir as M.P. No. 454 of 1981 for consideration of the question as to what rule of procedure was applicable. The learned Judges took the view that Rule 23 of the Jammu and Kashmir High Court Rules, 1975, squarely covered the situation that had arisen before them. Rule 23 is in the following terms: "23 (1) In the event of a difference of opinion among the judges composing any bench of the court, the decision shall be in accordance with the opinion of the majority of the Judges. (2) If the judges composing the bench are equally divided on any point, they shall state the point upon which they differ and the case shall then be heard upon that point by one or more of the other Judges designated for the purpose by the Chief Justice and such point shall be decided according to the opinion of the majority (if any) of the judges who have heard the case (including those who first heard it). (3) If there is no such majority, then the decision shall be in accordance with the decision of the senior Judge except in the case of an appeal from a decree where such decree shall be confirmed" 586 In the opinion of the Division Bench, the present case was governed by sub rule (3) of Rule 23, and, consequently, the decision in the case had to be in accordance with the opinion of the senior Judge. Accordingly the Division Bench passed orders in C.M.P. No. 454 of 1981 that the Letters Patent Appeal will stand allowed in conformity with the view taken by the Acting Chief Justice in his judgment. This has resulted in the highly anomalous situation that as against the view concurrently taken by the two Judges of the High Court, viz. Anand, J. and Mir, J. the opinion of the Acting Chief Justice which was really the minority view has been allowed to prevail on the basis of the reasoning that the case was governed by sub rule (3) of Rule 23. Aggrieved by the decision of the High Court, Ved Gupta has filed these appeals after obtaining special leave from this Court. Civil Appeal No. 2611 of 1981 is directed against the judgment of the learned Acting Chief Justice which has been treated as the final judgment in the Letters Patent Appeal and Civil Appeal No. 2611 A of 1981 has been preferred against the order passed by the Division Bench C.M.P. No. 454 of 1981. The sole question raised in C.M.P. No. 454 of 1981 relates to the legality and correctness of the procedure adopted by the High Court in allowing the Letter Patent Appeal in the manner indicated above. Although we entertain very serious doubts about the correctness of the view taken by the Division Bench of the High Court regarding the applicability of Rule 23 (3) to the instant case, we do not feel called upon to examine the said question in depth or to pronounce upon it in this case in view of the conclusion arrived at by us on the merits of the case that the conclusions recorded by the Acting Chief Justice on the points that arose for decision in the Letters Patent Appeal cannot be legally sustained and that there was no justification for interference by the Division Bench with the judgment of the learned Single Judge, dismissing the writ petition. In the, judgment of the learned Acting Chief Justice, he has opened the discussion of the merits of the case by an elaborate consideration of the question as to whether the licence in respect of the Apsara Theatre had been granted to Shri Ved Gupta in his individual capacity or as representing the partnership. In making this approach to the case, the learned Acting Chief Justice has 587 wrongly lost sight of certain crucial facts which clinch the issue. Admittedly, the licence in respect of the Apsara Theatre was granted by the District Magistrate in the sole name of Ved Gupta and in all the relevant columns of the document of licence, Ved Gupta has been shown as the licensee and there is no mention at all of the firm or its partners. An application filed by Shri Krishan Kumar for a declaration that the licence was the property of the firm and for inclusion of his name and that of Todar Mal in the said licence as joint licensees, was rejected by the District Magistrate by his order dated December 29, 1977. It was expressly declared in the said order that Ved Gupta was the sole licensee and that the mere fact that a partnership had been entered into for running the cinema business did not mean that the firm was the licensee. The Appeal preferred by Todar Mal against the order of the District Magistrate was dismissed by the concerned Minister of the State Government on April 26, 1978. Krishan Kumar had been joined as a party respondent in that appeal. The legality of the aforesaid orders was challenged before the High Court of Jammu and Kashmir in Writ Petition No. 74 of 1978 filed by Todar Mal. The District Magistrate and the State Government, whose orders were sought to be quashed, were the main respondents in this writ petition. That writ petition was dismissed by the High Court on May 9, 1978, S.L.P. Civil No. 3490 of 1978 filed by Todar Mal against the High Court 's order dismissing his writ petition was rejected by this Court on November 13, 1978. Krishan Kumar was a party to the writ petition in the High Court as well as to the Special Leave Petition in this Court: The declaration made by the District Magistrate that Ved Gupta was the sole licensee and that Krishan Kumar or the film could not be treated as licensees of the Theatre had thus become final. Subsequent to the dismissal of the Special Leave Petition by this Court, Krishan Kumar made an application to the District Magistrate on April 19, 1979 for renewal of the licence in the name of the firm Apsara Theatre. That application was dismissed by the District Magistrate as per his order dated April 21, 1979 that the G renewal could not be made in the name of any party other than the original licensee, so long as there had not been any transfer of the licence by the original licensee in favour of another with the sanction of the licensing authority. No steps were taken by Krishan Kumar to challenge the said order passed by the District Magistrate. From the facts set out above, it becomes manifest that rightly or wrongly, the licensing authority had granted the licence in respect 588 of the Apsara Theatre to Ved Gupta treating him as the sole licensee. The order of the licensing authority was confirmed on appeal by the State Government. The challenge raised by Todar Mal against the refusal by the District Magistrate to include the names of himself and Krishan Kumar in the licence was rejected by the High Court as well as by this Court. The renewal of the licence was subsequently given to Ved Gupta after rejecting the prayer of Krishan Kumar as representative of the firm for the grant of the renewal in the name of the firm. Hence the factual situation was that the licence granted by the District Magistrate in favour the Apsara Theatre was in favour of Ved Gupta in his individual capacity and he alone was the licensee. Such being the case, we are, unable to appreciate why the learned Acting Chief Justice has devoted a considerable part of his judgment to a discussion of the aforesaid question as to whether the licence belonged to Ved Gupta alone or whether it was the property of the firm. In the view of the preceding factual history of the case, there was no scope in law for countenancing any contention being advanced on behalf of the firm that Ved Gupta had obtained the licence and had been holding the same for and on behalf of the partnership. In proceedings to which the licensing authority was a party the High Court as well as this Court had upheld its order holding Ved Gupta to be the sole licensee rejecting the case put forward on behalf of the firm and the firm and its partners are bound by the said decision. In this view, we consider it wholly unnecessary to deal with the reasons stated by the learned Acting Chief Justice in support of his conclusion that the licence was granted to Ved Gupta in his individual capacity as representing the partnership. It is sufficient to state that these reasons do not appeal to us as correct or tenable. We are also unable to accept as correct the view expressed by the learned Acting Chief Justice that under the Act the licence is granted for premises permanently equipped for cinematograph exhibition in the name of the owner/ Manager of the Cinematographs used in the premises and hence it necessarily follows that where the licensed premises including the cinematograph used therein belongs to a partnership and one of the partners obtains a licence in his separate name, the other partners automatically acquire interests in the licence and that the privilege granted by the licensing authority "must necessarily follow the title in such building and the cinematograph". An examination of the relevant provisions of the Act and the Rules shows beyond doubt that they contemplate the grant of a licence to a person in respect of a "place" where cinematographic apparatus have been 589 installed. Under the Rules and the terms and conditions of the licence, the grantee thereof is the person answerable to the licensing authority for breach of the obligations and conditions and he is also punishable for contravention of the provisions of the Act and the Rules. We are of the opinion that on a reading of the provisions contained in the Act and the Rules and the explicit terms of the licence itself, it is impossible to sustain the view expressed in the judgment under appeal that the licence is a grant for the premises and constitutes an interest attached to the premises. The analogy drawn by The learned Acting Chief Justice with licence in the realm of real property law is a meaningless exercise for the licence granted under the Act is almost in all respects a completely different concept. It is, therefore, not possible to uphold the view expressed in the impugned judgment that "the effect of the licence is that it renders privileged the building and the cinematograph used therein" and that "the privilege must necessarily follow the title in such building and the cinematograph". Section 6 F has been relied on by the learned Acting Chief Justice as lending support to the aforesaid view expressed by him. That Section is in the following terms: "6 F. Power to revoke licence Where the holder of a licence or a person in charge of a cinematography, or management thereof or an owner or partner thereof or an employee thereof, has been convicted of an offence under Section 6 or Section 6 E of this Act, or under Section 15 of the Jammu and Kashmir Entertainments Duty Act, 1959, the licence may be revoked by the licensing authority. " On a careful reading of this Section, it will be seen that far from supporting the view taken by the learned Acting Chief Justice, this provision goes to show that the holder of a licence may be a person different from the owner of the cinematograph or a partner of the cinematography. The object and purpose of this Section obviously is to empower the licensing authority to revoke the licence in the event of the commission of an offence under Section 6 or Section 6 E of the Act, not merely by the licensee but also by any person who may be in actual charge of a cinematography or management of the cinematograph. In other words, a licence is liable to be revoked not merely when the licensee is convicted of an offence under Section 6 or Section 6 E of the Act but also in the event of conviction of such offence of any person belonging to the class of persons other 590 than the licensee enumerated therein. The provisions of the Section contain a clear indication that the holder of the licence (licensee) may be a person different from the owner or manager or partner of the cinematograph. In the light of the foregoing discussion, we have no hesitation to hold that the view expressed by the learned Single Judge that Ved Gupta was a sole licensee and that the firm had no interest in the licence was perfectly correct and sound and the contrary view taken by the learned Chief Justice is erroneous. The next ground stated in the impugned judgment for quashing the order passed by the District Magistrate is that the said order was violative of the principles of natural justice in as much as no notice or hearing had been given to the partnership firm before the order was passed. This finding is based largely, if not wholly, on the premise that the firm of partners had derived a "right and interest in the licence" and that "the revocation or suspension of the licence has the potential of seriously affecting the proprietary and business interests of the partnership". We have already recorded our conclusion that Ved Gupta was the sole licensee in respect of the Theatre and that the firm of partnership could not be regarded either as licensees or persons having an interest in the licence. Hence, it becomes obvious that the basic premise on which the learned Acting Chief Justice has founded his reasoning cannot be accepted as correct or sound. While the firm and the partners may have a right to share in the profits of the business which may be conducted in the Theatre on the strength of licence issued to Ved Gupta, they have no right or interest in the licence which was granted to Ved Gupta in his personal and individual capacity. In this connection, it is relevant to refer to Rule 88(v). That Rule reads: "88(v). The licensee shall not, without the permission of the licensing authority, assign, sublet or otherwise transfer the licence or the licensed place or the cinematograph nor shall the licensee, without permission as aforesaid, allow any other person during the period of currency of the licence to exhibit the films in the licensed place. ': Clause 11 of the licence issued to Ved Gupta (in Form A prescribed under the Rules) incorporates in identical language the provision aforementioned contained in Rule 88(v) as one of the conditions subject to which the licence was granted. There was, thus, a clear 591 prohibition against the licensee from transferring, assigning, subletting or otherwise transferring the licence without the permission of the licensing authority and also against his allowing any other person to exhibit films in the licensed place without obtaining such permission. Thus, the right to conduct the exhibition of the cinematograph films in the Theatre was vested solely in Ved Gupta, Gupta, the licensee. It is now relevant to recall that what has happened in this case is that in a suit filed by Krishan Kumar along with 11 other partners, an order of temporary injunction was issued on September 23, 1980, restraining Ved Gupta from interfering in any manner with the running of the Theatre by the plaintiffs. The effect of the order was that Ved Gupta had no longer possession or control over the Theatre premises or the cinematograph apparatus installed therein despite the fact that the was the licensee responsible to the authorities under the statute for the due discharge of the obligations contained in the Rules and in the conditions appended to the licence. Quite understandably, Ved Gupta, on receipt of the order of temporary injunction, informed the District Magistrate by his letter dated September 24, 1980, that as a result of the order of temporary injunction, it had become impossible for him, for the time being, to operate the cinema licence with effect from the date of the said letter and that he may be absolved from any liability for prosecution or any other action in law in the capacity of the licensee of the Theatre in the event of any illegal act or offence being committed by others in the Cinema premises. On September 26, 1980, the Superintendent of Police, Jammu, reported to the District District Magistrate that cinema exhibition in Apsara Theatre was being conducted by some persons other than the licensee, and, hence the licensee had been challenged by him under Section 6 of the Act. The District Magistrate was requested by the said letter that orders may be passed suspending the exhibition of films in the Cinema till the final decision of the court is made in favour of either of the parties. It was in the context of these developments that the District Magistrate passed the impugned order dated September, 26, 1980. A mere reading of the District Magistrate 's order is sufficient to show that what was done thereudder was not to suspend or revoke even temporarily the licence granted in respect of the Theatre. What was done by the District Magistrate was only to suspend the exhibition of cinematograph films in Apsara Theatre by persons who are not licensees and who had no authority in law to conduct such exhibition of films. There was no suspension of the licence issued to Ved Gupta in respect of the Theatre. Hence, the assumption made by the learned Acting Chief that this was a case of temporary sus 592 pension of the licence issued for the Theatre is manifestly erroneous. The firm of partners had no right whatever to exhibit cinematograph films in the Theatre without a licence. If Ved Gupta, the licensee, bad been expelled from the partnership, the proper course to be adopted by the firm and its partners was to move the authorities for the grant of a licence and to run the Theatre only after obtaining such licence. So long as they did not have a licence we have already found that the licence had been granted to Ved Gupta only in his individual and personal capacity and not as a representative of the firm the firm and the partners had no legal right whatever to operate the cinema. Any such operation by them would have been in clear and gross contravention of the law embodied if the relevant provisions of the Act and the Rules. It was the plain duty of the District Magistrate as the statutory authority charged with the enforcement of the provisions of the Act to ensure that exhibition of films was not conducted in the 'Theatre by unauthorized persons in violation of the law. The impugned order is obviously one passed by him in the discharge of the said function. No legal right or legitimate expectation of the firm or its partners can be said to have been affected by the said order passed by the District Magistrate, for the simple reason that no person can be recognised as having a right to contravene the provisions of the statute prohibiting exhibition of cinematograph films in public by any one other than the licensee or his authorised representative. The principles of natural justice are not attracted to such a situation and there was no obligation on the part of the District Magistrate to give a notice or hearing to the firm or its partners before he passed the impugned order. The position would, of course, have been different if it was a case of even temporary suspension of the licence without notice to the licensee However, as we have explained, this is not a case of suspension of the licence and the complainant before the court is not the licensee. The writ petitioners before the High Court were some of the partners of the firm who wanted to run the Theatre without a licence in contravention of the provisions of the Act and the Rules The impugned order passed by the District Magistrate directing the suspension of cinema shows in the Theatre cannot be said to have visited the writ petitioners with any adverse civil consequences. They had no legal right whatever to conduct the cinema shows in the Theatre without a licence in contravention of the law. The writ petitioners could not also have any legitimate expectation that they will be allowed to run the Theatre without a licence in violation of the law. In the absence of any legal right or legitimate expectation being 593 available to the petitioners, there was no obligation on the part of the District Magistrate to afford them a hearing before passing the impugned order. We are, therefore, unable to uphold the view taken by the High Court that the impugned order was violative of principles of natural justice. The only other reason stated by the High Court for quashing the District Magistrate 's order is that the District Magistrate had no power under the Act or the Rules to make such an order. This conclusion is again based on the fallacious assumption that what was done by the District Magistrate under the impugned order was to suspend the licence. Proceeding on that premise, the learned Acting Chief Justice has said that under the provisions of the Act the power to suspend a licence is conferred only by Section 6 F of the Act as one implicit in the larger power of revocation and unless the conditions precedent mentioned in the said Section are present, the licensing authority had no jurisdiction to suspend the licence. As already observed by us, the impugned order is not one suspending the licence issued in respect of the Theatre. What was done thereunder is to suspend the exhibition cinematograph films in the Theatre by persons other than the licensee. The power to control the exhibition of cinematography by grant of licence and the power to administer and enforce the provisions of the Act and the Rules clearly include the power to take all steps necessary to ensure the due observance of the terms of the statute, the rules and the conditions of the licence as otherwise the competent authority under the Act would have to be a helpless spectator when cinematograph films are publicly exhibited by persons other than the licensee. The impugned order is one obviously passed by the District Magistrate in the exercise of his function of administering the provision of the Act and the Rules and the aforesaid implied power to take all incidental steps necessary for effective enforcement of the statute. We fail to see how it can be said on the facts and circumstances of the case that the District Magistrate had no jurisdiction to pass the impugned order. It this becomes manifest that all the grounds stated by the Division Bench of the High Court for upsetting the judgment of the learned Single Judge, dismissing the writ petition, are incorrect an unsustainable in law. Hence it was that we passed the order dated November 11, 1982, allowing Civil Appeal No. 2611 of 1981 and setting aside the judgment of the Division Bench. Civil Appeal No. 261 l A of 1981, which is directed against the order passed in C.M.P. No. 454 of 1981? is disposed of as infructuous 594 in view of our having set aside the judgment of the Division Bench on the merits. We make it clear that the inter se rights and claims of Shri Ved Gupta on the one hand and the firm and its partners on the other in respect of the Apsara Theatre are left open to be decided in the civil suit that is said to be pending. H.L.C. Appeal allowed.

The appellant, purporting to Act on behalf of a partnership consisting of himself, Todar Mal and Krishan Kumar, applied for and obtained permission in his individual capacity to construct a cinema theatre on a plot of land which was taken on lease jointly by all the three of them after the application for the permission was made but before the same was granted. They entered into a partnership along with 11 others for carrying on the business of constructing and running a cinema theatre and the deed of partnership contained a clause that the plot of land as well as the permission obtained for constructing the theatre shall be the property of the firm. On completion of the construction the appellant applied for, in his own name, and obtained in his personal capacity, a licence to exhibit cinematograph films at the Theatre. The partnership was re constituted on retirement of two partners and the new deed executed by the remaining partners also contained a clause that the firm shall have the right to operate the licence. An application for inclusion of the names of Todar Mal and Krishan Kumar in the licence was rejected by an order of the Licensing Authority who held that the appellant was the sole licensee and the said order became final. Another application for renewal of the licence in the name of the Theatre on the ground that the appellant had been expelled from the partnership was also rejected by an order of the Licensing Authority which was not challenged. Thereafter when, in a suit instituted for a declaration that the licence was the property of the firm, the trial court issued an injunction restraining the appellant from interfering with the possession and running of the Theatre by some of the partners of the firm, the appellant wrote to the Licensing Authority disclaiming responsibility for any acts of commission or omission committed by others in the premises of the Theatre. The Licensing Authority, acting on a report from the police that films were being exhibited in the Theatre by persons other than the licensee, ordered suspension of exhibition of films at the Theatre. A writ petition challenging the validity of this order filed in the name of the Theatre was dismissed by a Single Judge of the High Court. In tho Letters Patent Appeal heard by a Division Bench consisting of the Acting Chief Justice another Judge of the High Court the Acting Chief Justice held that the impugned order was void but the other Judge agreed with the view of the Single Judge who had dismissed the petition earlier. In view of 576 the divergence of opinion, the matter was referred to the only other Judge available in the High Court, but he having declined to hear the same for good reason, the Division Bench decided under sub r. (3) of r. 23 of the Jammu and Kashmir High Court Rules, 1975 that the view of the Senior Judge should pre vail and accordingly the Letters Patent Appeal was allowed in conformity with the view taken by the Acting Chief Justice. This resulted in the anomalous situation that as against the view concurrently taken by two Judges of the High Court, the opinion of the Acting Chief Justice which was really the minority view was allowed to prevail. The reasons given by the Acting Chief Justice for the view he took were: (i) that a licence under the provisions of the Jammu and Kashmir (Cinematograph) Act is granted for premises permanently equipped for cinematograph exhibition in the name of the owner/manager of the cinematographs used in the premises and hence, where the licensed premises including the cinematograph used therein belongs to a partnership and one of the partners obtains a licence in his separate name, the other partners automatically acquire an interest in the licence and that the privilege granted by the licensing authority "must necessarily follow the title in such building and the cinematograph" and that the provision contained in section 6F lends support to this conclusion; (ii) that the partnership firm had a legal right in the licence which entitled it to notice and hearing under the Act before the licence was suspended; (iii) that inasmuch as the said procedure was not followed by the Licensing Authority the impugned order was void and in violation of principles of natural justice and (iv) that except for the power of revocation of licence embodied in section 6F and an implied power to suspend a licence pending proceedings for revocation, the Licensing Authority had no power to suspend the licence of the Theatre under any other circumstances. Allowing the appeal, ^ HELD: The provisions of the Act and the Rules contemplate the grant of a licence to a person in respect of a `place ' where cinematographic apparatus have been installed. Under the Rules and the terms and conditions of the licence, the grantee thereof is the person answerable to the Licensing Authority for breach of the obligations and conditions. A licence granted under the Act is not analogous to a licence in the realm of real property law. It is, therefore, not possible to accept the view that the licence is a grant for the premises and constitutes an interest attached to the premises. The provision contained in section 6F, far from supporting such a view, goes to show that the holder of a licence may be a person different from the owner or partner of a cinematograph. The object of that section is to empower the Licensing Authority to revoke the licence in the event of commission of an offence under s: 6 or 6E not merely by the licensee but also by any person who may be in actual charge of the cinematograph. [588 H, 589 A B, G H, 590 A] 2. (a) In proceedings to which the Licensing Authority was a party, the High Court as well this Court had upheld the order of the Licensing Authority holding the appellant to be the sole licensee and rejecting the case Put forward 577 on behalf of the firm. The firm and its partners are bound by the said decision. It is, therefore, unnecessary to deal with the reasons stated by the Acting Chief Justice of the High Court in support or his concussion that the licence was granted to the appellant in his individual capacity as representing the partnership. [588 D F] (b) The appellant was the sole licence in respect of the Theatre. By virtue of r. 88 (v) as well as cl. 11 of the licence issued, there was a clear prohibition against the licensee from transferring, assigning, sub letting or otherwise transferring the licence without the permission of the Licensing Authority and also against his allowing any other person to exhibit films at the licensed place without obtaining such permission. The firm of partners had no right whatever to exhibit cinematograph films at the theatre without a licence. It was the plain duty of the Licensing Authority to ensure that exhibition of films was not conducted in the Theatre by unautuorised persons and the impugned order is obviously one passed by him in the discharge of the said function. The principles of natural justice are not attracted to such a situation. The position would have been different if it was a case of even temporary suspension of the licence without notice to the licensee. A, 592 A, C F] (c) The Licensing Authority had the power to make tho impugned order suspending the exhibition of films in the Theatre by persons other than the licensee. The power to control the exhibition of cinematography by grant of licence and the power to administer and enforce the provisions of the Act and the rules included the implied power to take all steps necessary to ensure the due observance of the terms of the statute. the rules and the conditions of licence. The view expressed in the impugned judgment of the High Court that the Licensing Authority had no power to make the impugned order was based on the fallacious assumption that what was done under the impugned order was to suspend the licence while, in fact, what was done was only to suspend the exhibition of films in the Theatre by persons other than the licensee. [593 D F, B] 3. Although there are very serious doubts about the correctness of the view taken by the Division Bench of the High Court regarding the applicability of r. 23 (3) of the Jammu and Kashmir High Court Rules, 1975 to the instant case, it is not necessary to consider that question in view of the conclusion arrived at on the merits on the case. [586 F G]

ivil appeal No. 2197 From the Judgment and order dated 16.4.70 of Andhra Pradesh High Court in appeal No. 431 of 1965. Dr. YS Chitale, V. G. Shanker, KL Hathi, Ms. Sadhana, DK Chhaya, MK Arora and Mrs. H. Wahi for the appellant. 352 T. section Krishnamoorthi Iyer, KR. Choudhry and KS. Choudhary for the respondents. The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J. This appeal is by a certificate granted on 18th September, 1970 by the High Court of Andhra Pradesh under Article 133(1) (a) of the Constitution as it stood at the relevant time against the Judgment and decree of the High Court dated 16th April, 1970. By the said Judgment and decree, the High Court of Andhra Pradesh had reversed the Judgment of the learned Subordinate Judge, Masulipatam dated 19th November, 1964 dismissing the suit of the plaintiffs respondents against the appellant. Late Shri Raja Vasireddi Chandra Dhara Prashad was the husband of respondent No. 1 and father of the respondents No. 2 to 5 herein. The respondents filed a suit in the Subordinate Court of Sub Judge being original suit No. 2 of 1964 on 10th January, 1964. The short facts leading to this case are: One Late Raja Vasireddi Chandra Dhara Prasad (hereinafter referred to as a 'deceased ') died intestate on 12th January, 1961. He had filled a proposal for insurance for Rs, 50,000 on 27th December, 1960. There was medical examination by the doctor on the life of the deceased on 27th December, 1960. The deceased had issued two cheques for Rs. 300 and Rs. 220 respectively in favour of the appellant as first premium. Cheque for Rs. 300 was encashed by the appellant on 29th December, 1960. Cheque for Rs. 220 was dishonoured three times and finally encashed on 11th January, 1961. As mentioned hereinbefore, the deceased died on the day following i.e. on 12th January, 1961. On 16th January, 1961, the widow of the deceased, respondent No. 1 herein, wrote to the appellant intimating the death of the deceased and demanded payment of Rs. 50,000. The Divisional Manager, Masulipatam Branch, denied liability on behalf of the appellant Corporation on 28th January, 1961. Thereafter there was correspondence between the parties between 1st February, 1961 to 23rd December, 1963 wherein the respondents plaintiffs had claimed the payment and the appellant had denied liability for the same. 353 On the 10th January, 1964, the plaintiffs filed the suit in the court of Subordinate Judge, Masulipatam. It was alleged in the plaint after setting out the facts which have been set out hereinbefore, that the medical examination report was submitted to the appellant corporation by Dr. Sri C. Sambasiva Rao, Approved Medical practitioner of the appellant in regard to the medical examination of the deceased. A report described as "All the Friend 's report" was duly sent to the appellant with regard to that proposal; and all the preliminaries were completed and it was further alleged that the deceased was assured and told by the local agent and the Field officer of the Corporation that the payment of the first premium would amount to the acceptance of the proposal and advised the deceased to pay the first premium in full. It was, further, stated that the said two cheques were encashed and the appellant had duly appropriated the amount and credited in the accounts towards the premium payable by the deceased. Therefore, it was stated that the deceased had fulfilled his part of the insurance contract and the appellant Corporation by its overt acts of encashing the cheques and crediting the amounts in its accounts accepted the proposal of the deceased. In the premises it was said in the plaint that there was a concluded and valid insurance contract between the deceased and the appellant Corporation and that the insurance contracted commenced on 11th January, 1961 being the date of the receipt of the balance towards premium by the Corporation. It was further stated in the plaint that the office of the Divisional Manager of Masulipatam was the concerned authority to settle the claim of the plaintiffs respondents and to pay the amount. The contention of the Corporation that the proposal was not accepted and as such there was no concluded insurance contract between the deceased and the Corporation, was untenable, according to the plaintiffs. It was alleged that with full knowledge of the completion of all the preliminaries, the Corporation had encashed the cheques issued towards the first premium and therefore it was the case of the plaintiffs respondents that the encashment of the cheques amounted in those circumstances in law to an acceptance of the proposal of the deceased. It was further alleged that the appropriation of the amounts by the Corporation towards the first premium by the deceased was only consistent with the acceptance of the proposal. The case of the plaintiffs further was that in this case the first premium was not only received by the Corporation completely on 11th January, 1961 but it was also appropriated by it in its accounts and the said premium amount 354 was received by the Corporation without any demur or qualification and that in any event the Corporation must be deemed to have waived by its conduct the formality, if any, of sending communication of its acceptance of the proposal. In the premises, the plaintiffs claimed the said amount along with interest at six per cent per annum from the date of refusal of payment till the date of payment of the demand. Written statement was filed on behalf of the appellant. In the said written statement, after setting out the facts, it was denied that the payment of the first premium amounted to acceptance of the proposal and the allegation about the assurance given to the deceased as alleged in the plaint was not true nor the alleged assurance if any, valid under law. It was, further stated that the two cheques were not encashed and credited towards the premium account of the proposal but these were kept only in deposit in suspense account without any liability of the appellant. It was further stated that the averments in the plaint that the defendant Corporation cashed the above two cheques and appropriated the amounts and credited these in the account towards premium payable for the proposal were false. It was stated that on the death of the deceased, the amount covering two cheques were lying in the deposit and in the suspense account of the Corporation and was not adjusted towards the premium since the proposal was not considered, the terms of acceptance was not fixed and the premium amount required for the proposal was not calculated. In these circumstances, the appellant Corporation claimed that there was no liability for the risk and as such the plaintiffs had no right to claim and there was no cause of action. It was categorically stated that the cheques were not credited and adjusted towards the premium accounts. During the trial before the learned Subordinate Judge, five different issues were raised. It is not necessary to set out in detail those issues but the important and main issue was whether there was a concluded valid insurance contract between the deceased and the Life Insurance Corporation of India. Both documentary and oral evidence were adduced at the Trial. The respondents plaintiffs examined Shri R.V. Bhupala Prasad, son of the deceased and the Corporation on its behalf examined Shri Jagannadhachari, the Superintendent of the Corpo 355 ration branch at Guntur. He also produced ex. B 4, the review slip, prepared by the Branch office, Guntur and sent to the Divisional officer, Masulipatam. In his deposition, he had stated that the Divisional Manager was the competent authority for accepting the proposal for Rs. 50,000. Normally it took some time for the Divisional Manager to accept. There was no communication from the Divisional office to the Branch officer accepting the proposal. He, further, stated that the amount would be transferred into the first premium register after the proposal was accepted and the risk covered. He had produced the account books, namely; deposit account book and the first premium account book of the Branch office at Guntur. Shri Brahmandrao Ramiah Assistant Divisional Manager of the Life Insurance Corporation office at Madras was also examined as the second witness of the defendants. He had further stated that the proposal form was sent from the office at Guntur to the Divisional office at Masulipatam, and exhibit B 1 to B 4 and B 8 were sent in this connection. He further stated that according to the financial powers Standing order, it was the Divisional Manager who was competent to accept a proposal for Rs. 50,000 exhibit B 13 is the copy of the Standing order. The purpose of review slip exhibit B 4 was to enable the Divisional officer to assess the risk and take a decision according to the deponent. In this connection we may refer exhibit B 14 which is the Life Insurance Corporation of India 's Proposal Review Slip regarding proposal in the case of the deceased. The endorsement therein of the assistant Divisional Manager read as follows: "NOTES AND DECISION : may be accepted at O.R." WITH E.D.B. Shri Brahmandrao Ramiah had further stated that the papers were scrutinised by him in addition to the scrutiny by the concerned clerks. He stated that the endorsement marked as exhibit B 14 was initialled by him. He further stated that the letters 'DM ' were also written by him indicating that the papers should go to the Divisional Manager on exhibit B 4. He reiterated that the order of acceptance would not be communicated to the party if all the formalities were not complied with; this policy, he stated, was not accepted. When the acceptance was complete and when there was no requirement necessary and if the full first instalment was 356 in deposit, it would be adjusted towards premium amount, he stated. In this connection before the learned Trial Judge, reliance was placed on the Life Insurance Corporation of India Standing order, 1960 (Financial Powers). Chapter III of the Standing order dealt with the powers of the different authorities for, inter alia, 'Underwriting and Revivals of Policy '. The relevant portion of the said Standing order read as follows: "Nature of Power Authority Extent of Finan cial power (up to and Including) Rs. 1. Underwriting and Revivals: (a) Standard Section Head 2,000 (Sum Proposed) lives and Supdt or J.O. 5,000 ( do ) revival on A.S.O. 10,000 ( do ) original A.D.M. 25,000 ( do ) terms D.M. 1,00,000 ( do ) Note: Proposals on standard lives for more than Rs. 1,00,000 should be referred to the Central Underwriting Section." Learned Subordinate Judge by his judgment dated 19th November, 1964 held that there was no concluded contract. He held that as per the prospectus of Life Insurance Corporation of India the risk under the Corporation policy commenced on the date of receipt of the first premium in full or the date of acceptance whichever was later and the second instalment of the premium falls due on a date calculated from such date of commencement of risk. Learned Trial Judge was of the opinion that the documents in this case coupled with evidence on behalf of the Appellant Corporation established that the proposal sent by the deceased was for some reason 357 or other not accepted by the Divisional office by the time the deceased had died. The Trial Court therefore held that there was no concluded valid insurance contract between the deceased and the Corporation. The Trial Court further noted that it was significant that the case set out in the plaint and the basis of the claim made in the notices sent to the Corporation was not that the proposal was as a matter of fact accepted by the Divisional Manager, on the other hand, claim was that it should be deemed to have been accepted. Considering the evidence and the averments, the Learned Subordinate Judge came to the conclusion that the accounts do not show the position alleged by the plaintiffs respondents that the amounts paid were appropriated towards the premium and the Trial Court was of the opinion that encashing of the cheques and the want of any further action to be done by the deceased did not themselves create a contract of insurance between the deceased and the Corporation. The Trial Court was of the opinion that the proposal must be accepted by the Divisional Manager and that alone could give rise to a valid contract of insurance which never happened in this case. The Trial Court further expressed the view that the other averments in the claim that the deceased was assured and told by the local agent and the field officer of the Corporation that the payment of the first premium would amount to the acceptance of the proposal were not established and even if such a representation was made, that did not alter the position as under the rules the payment of the premium could never amount to the acceptance of the proposal if the proposal was not otherwise accepted. In the result, the suit filed by the respondents plaintiffs was dismissed with costs. Being aggrieved by the said decision, the plaintiffs respondents field appeal in the High Court. The appellants before the High Court also filed civil miscellaneous petition praying that in the circumstances stated in the affidavit filed therewith the High Court might be pleased to direct the Life Insurance Corporation to produce certain documents viz., proposals, review slips and proposal dockets and the connected papers of the present case and statements furnished by the Divisional office to the Zonal office showing the new business in the year 1960 and proposal register work of Divisional office for the year 1960. The High Court directed the Life Insurance Corporation to produce the documents referred to above. The High Court by its judgment dated 14th April, 1970 held after considering the standing order exhibit B 13 and the various documents produced for the first time on record that there was acceptance of proposal and like 358 other contracts, the contract of insurance was complete by offer and acceptance. In coming to this conclusion the High Court relied on the alleged adjustment and the endorsement of the review slip recommending that the proposal "may be accepted" made on the relevant file by the Assistant Divisional Manager. Relying on certain other documents which were called for, for the first time by the High Court relating to certain other cases where only the Assistant Divisional Manager made similar endorsement, the High Court came to the conclusion that there was a valid contract. The High Court was of the view that the plea that Divisional Manager was the only authority to accept had not been categorically taken in the written statement filed on behalf of the Corporation. On the other hand, there was a general statement that there was no concussed contract. The High Court was of the view that having regard to the conduct of the parties, there was a concluded contract. The High Court took the view that exhibit B 13 dealing with Chapter III of the Financial Powers did not categorically deal with the acceptance of proposals. The High Court was of the view that the Corporation had not filed any evidence of any order prohibiting other officers one step below in rank, in this case the Assistant Divisional Manager, to exercise the power of Divisional Manager. In our opinion, the High Court was in error in appreciating the facts and the evidence in this case. We cannot accept the High Court 's criticism with the averment in the written statement that there was not sufficient pleading that there was no concluded contract and non acceptance of the proposal was not sufficient averment that the Divisional Manager was the only competent authority to accept the proposal. The High Court, in our opinions was also wrong in its view about the powers of the different authorities under Chapter III of the Standing order, 1960 dealing with the financial powers. Indeed there was no evidence that the Assistant Divisional Manager had accepted the proposal on the contrary he his deposition as we have indicated before had stated otherwise. He had stated that the purpose of review slip was to enable the Divisional Manager to asses the risk and take a decision. He had never stated that he had taken a decision to accept the proposal. The allegation that there was assurance on behalf of the field officer and local agent to the deceased that the payment of first premium would amount to the acceptance of the proposal cannot also be accepted firstly because factually it was not proved and secondly because 359 there was no evidence that such could have been the deposition in law. When an insurance policy becomes effective is well settled by the authorities but before we note the said authorities, it may be stated that it is clear that the expression "underwrite" signifies accept liability under '. The dictionary meaning also indicates that. (See in this connection The Concise oxford Dictionary Sixth Edition p. 1267.) It is true that normally the expression "underwrite" is used in Marine insurance but the expression used in Chapter III of the Financial powers of the Standing order in this case specifically used the expression "underwriting and revivals" of policies in case of Life Insurance Corporation and stated that it was the Divisional Manager who was competent to underwrite policy for Rs 50,000 and above. The mere receipt and retention of premium until after the death of the applicant or the mere preparation of the policy document is not acceptance. Acceptance must be signified by some act or acts agreed on by the parties or from which the law raises a presumption of acceptance. See in this connection the statement of law in Corpus Juris Secundum, Vol. XLV page 986 wherein it has been stated as: "The mere receipt and retention of premiums until after the death of applicant does not give rise to a contract, although the circumstances may be such that approval could be inferred from retention of the premium. The mere execution of the policy is not an acceptance; an acceptance, to be complete, must be communicated to the offeror, either directly, or by some definite act, such as placing the contract in the mail. The test is not intention alone. When the application so requires, the acceptance must be evidenced by the signature of one of the company 's executive officers. " Though in certain human relationships silence to a proposal might convey acceptance but in the case of insurance proposal silence does not denote consent and no binding contract arises until 360 the person to whom an offer is made says or does something to signify his acceptance. Mere delay in giving an answer cannot be construed as an acceptance, as, prima facie, acceptance must be communicated to the offeror. The general rule is that the contract of insurance will be concluded only when the party to whom an offer has been made accepts it unconditionally and communicates his acceptance to the person making the offer. Whether the final acceptance is that of the assured or insurers, however, depends simply on the way in which negotiations for an insurance have progressed. See in this connection statement of law in MacGillivray & Parkington on Insurance Law, Seventh Edition page 94 paragraph 215. Reference in this connection may be made to the Statement of law in Halsbury 's Laws of England 4th Edition in paragraph 399 at page 222. Having regard to the clear position in law about acceptance of insurance proposal and the evidence on record in this case, we are, therefore, of the opinion that the High Court was in error in coming to the conclusion that there was a concluded contract of insurance between the deceased and the Life Insurance Corporation and on that basis reversing the judgment and the decision of the learned Subordinate Judge. The appeal must, therefore, be allowed. We however record that in view of the fact that such a long time has elapsed and further in view of the fact that principal amount together with interest amounting to about Rs. 85,000/ have already been paid to the wife of the deceased and his children, the Life insurance Corporation in this case does not insist on the full repayment of the sum paid and counsel on behalf of the Life Insurance Corporation has stated that they would accept if half of what has been received by the respondents, namely principal together with interest is paid back to the Corporation. We order accordingly that the respondents will therefore pay back half of the actual amount received both of the principal together with interest within three months from this date. In the facts and circumstances of the case there will be no order as to costs in this Court. With the above observations, the appeal is allowed. S.R. Appeal allowed.

One Late Raja Vasireddi Chandra Dhara Prasad died intestate on 12th January, 1961. He had filled a proposal for insurance for Rs. 50,000 on 27th December 1960. There was medical examination by the doctor on the life of the deceased on 27th, December, 1960. The deceased issued two cheques being the consideration towards the first premium for Rs 300 and Rs. 220 respectively which were encashed by the appellant on 29th December 1960 and 11th January 1961. On 16th January 1961, the widow of the deceased wrote to the appellant intimating the death of the deceased and demanded payment of Rs. 50,000 The Divisional Manager, Masulipatam Branch denied liability on behalf of the appellant on 28th January, 1961. Thereafter there was correspondence between the parties between Ist February 1961 and 23rd December 1963. On 10th January 1964, the respondents filed a suit in the Court of Subordinate Judge, Masulipatam. The trial court dismissed the suit holding, inter alia, that there was no concluded contract, that the proposal was not accepted by the Divisional Manager for some reason or the other by the time the deceased had died, that neither the encashment of the two cheques created a contract of insurance. In appeal, the High Court after ordering certain other additional documents set aside the Trial Court Judgment. Hence the appeal by the Corporation after obtaining the special leave. Allowing the appeal, the Court ^ HELD; 1. Having regard to the clear position in law about acceptance of insurance proposal and the evidence of record in this case, it is clear that the, High Court was in error. in coming to the conclusion that there was a concluded contract of insurance between the deceased and the Life Insurance Corporation. [360D E] 2. Though in certain human relationship silence to a proposal might 351 convey acceptance but in the case of insurance proposal, silence does not denote consent and no binding contract arises until the person to whom an offer is made says or does something to signify his acceptance. Mere delay in giving an answer cannot be construed as an acceptance, as, prima facie, acceptance must be communicated to the offer or The general rule is that the contract of insurance will be concluded only when the party to whom an offer has been made accepts it unconditionally and communicates his acceptance to the person making the offer. Whether the final acceptance is that of the assured or insurers, however, depend simply on the way in which negotiations for an insurance have progressed. [359H, 360A B] 3: 1. When an insurance policy becomes effective is well settled by the authorities but it is clear that the expression "underwrite" signifies accept liability under that. The dictionary meaning also indicates that. It is true that normally the expression "underwrite" is used in Marine insurance but the expression used in Chapter III of the Financial Powers of the Standing order in this case specifically used the expression 'funderwriting and revivals" of policies in case of Life Insurance Corporation and stated that it was the Divisional Manager who was competent to underwrite policy for Rs, 50,000 and above. [359 B D] 3: 2. The mere receipt and retention of premium until after the death of the applicant or the mere preparation of the policy document is not acceptance. Acceptance must be signified by some acts or acts agreed on by the parties or from which the law raised a presumption of acceptance. [359D E] 3: 3 In the instant case, the High Court was in error in coming to the following conclusions; (i) that there was not sufficient pleading that there was no concluded contract, and non acceptance of the proposal was not sufficient averment that the Divisional Manager was the only competent authority to accept the proposal; (ii) in its view about the powers of the different authorities under Chapter III of the Standing order 1960, dealing with the financial powers; (iii) about the view that the Assistant Divisional Manager having accepted the proposal and (iv) about the assurance given by the Field officers that the acceptance of the first premium would automatically create a concluded contract of insurance ' [358E H] The Court however directed half the amount of the insurance amount of Rs. 85,000 paid to the Respondents to be refunded to the Corporation. [360F G]

Civil Appeal No. 1433 of 1977 Appeal by Special leave from the Judgment and Order dated the 16th February, 1.977 of the Punjab and Haryana High Court in Civil Writ Petition No. 752 of 1977. J.D. Jain & Mrs. Kawaljit Kocher for the Appellant. Harbans Lal, I.S. Goel & R.N. Poddar for the Respondent. The Judgment of the Court was delivered by CHANDRACHUD, CJ. Section 33 of the Punjab Panchayat Samitis and Zilla Parishads Act; 1961 ("The Act") provided in so far as relevant, that subject to rules made by the Government, a Panchayat Samiti may employ such servants as it may consider necessary for the efficient performance of the duties imposed upon it by the Act, rules or bye laws made thereunder or by. any other law for the time being in force. In pursuance of this power, the appellant was appointed as a clerk on June 1, 1963 by the Panchayat Samiti, Loharu, which is respondent 3 in this appeal. He was confirmed in that post in course of time. On January 21, 1974 he was promoted as a Head Clerk on an ad hoc basis. On March 14, 1975 a resolution was passed by respondent 3 regularising the post of Head Clerk. On April 1, 1975, the appellant was appointed as a Head Clerk. The Punjab Panchayat Samitis, Zilla Parishads (Haryana Amendment) Act, 1973 introduced extensive amendments in the Act of 1961. Section 13 of the Amending Act deleted section 33 of the Act. A plain consequence of this deletion was that the Panchayat Samitis were divested of their power to make appointments to the Panchayats. The Amending Act received the assent of the Governor 736 on April 25, 1973 and was published in the Haryana Gazette on June 13, 1973. Sections 35(1) of the Act empowers the State Government to place at the disposal of a Panchayat Samiti such of its servants as are required for the implementation of the schemes connected therewith and for such other duties and functions as may be assigned to them by the Panchayat Samiti from time to time. Section 35(3) which dealt with the conditions of service of the Government servants allotted to the Panchayat Samitis, was amended by section 14 of the Amending Act of 1973. Sub section (4) of section 14 of the Amending Act provides that persons employed by a Panchayat Samiti before April 1, 1973 and who were in service at the commencement of the Amending Act shall continue to service on the same terms and conditions on which they were employed by the Panchayat Samiti", until they are absorbed in the Government service or retire in such manner as may be prescribed. Acting in pursuance of the provision of section 14(4) of the Amending Act, the Government of Haryana notified the absorption of the appellant as a clerk though, as stated earlier he was working as a head Clerk in the Loharu Panchayat Samiti. Being aggrieved by his absorption on a lower post, he filed a writ petition in the High Court of Punjab and Haryana, asking that he should be absorbed as a Head Clerk. The writ petition having been dismissed by the High Court, the appellant has filed this appeal by special leave. The appellant was appointed as a clerk by the Loharu Panchayat Samiti in 1963, long before the Amending Act came into force on June 13, 1973. He was, therefore, entitled to be absorbed in Government service as a clerk in any event. But, as a result of the deletion of section 33 of the Act by the Amending Act of 1973, the Panchayat Samiti lost its power to make appointments to the Panchayat. The fact that the appellant was promoted as a Head Clerk on an ad hoc basis in January 1974, or the further fact that he was appointed as a Head Clerk on April 1, 1975, cannot improve his position for the simple reason that these appointments were made after June 13, 1973, being the date on which the Panchayat Samiti lost its power to make appointments to. the Panchayat. 737 It is urged by Shri Jain who appears on behalf of the appellant that by reason of section 14(4) of the Amending Act, the appellant was entitled to continue in the service of the Panchayat on the same terms and conditions on which he was employed by the Panchayat Samiti until he was absorbed in Government service. Since the appellant, according to the terms and conditions of his service with the Panchayat, was entitled to be considered for promotion to the post of a Head Clerk, his appointment as a Head Clerk prior to his absorption in Government service had to be recognised and protected, despite the fact that such appointment was made after June 13, 1973 when the Amending Act came into force. There is no substance in this contention. Even assuming for the purposes of argument that the right to be considered for promotion is a term and condition of service, what is relevant for our purpose is not whether the appellant was entitled to be considered for promotion but, whether the Panchayat Samiti had the right to appoint him to the post of Head Clerk on the date on which it purported to do so. Clearly, it had fortified that right on June 13, 1973. It could not, therefore, have appointed the appellant as a Head Clerk, as it purported to do, in January 1974 on an ad hoc basis or in April 1975 on a regular basis. The appointment of the appellant to the post of a Head Clerk being without the authority of law, the Government was not bound to absorb him in the post of a Head Clerk. He was appointed lawfully to the post of a Clerk and that is the post in which the Government has absorbed him. For these reasons, the appeal fails and is dismissed. There will be no order as to costs. S.R. Appeal dismissed.

Section 33 of the Punjab Panchayat Samitis and Zilla Parishads Act, 1961 provided that subject to rules made by the Government, a Panchayat Samiti may employ such servants as it may consider necessary for the efficient performance of the duties imposed upon it by the Act, rules or bye laws made thereunder or by any other law for the time being in force. The Punjab Panchayat Samitis and Zilla Parishads (Haryana Amendment Act, 1973 which came into force from June, 13, 1973, introduced extensive amendments. Section 33 of the Act was deleted by Section 13 of the Amending Act, Sub section (4) of Section 14 the Amending Act, provided that persons employed by a Panchayat Samiti before April 4, 1973 and who were in service at the commencement of the Amending Act, "shall continue to serve on the same terms and conditions on which they were employed by the Panchayat Samiti" until they are absorbed in the Government Service or retire in such manner as may be prescribed. Section 35(1) of the Act empowers the State Government to place at the disposal of a Panchayat Samiti such of its servants as are required for the implementation of the schemes annexed therewith, and for such other duties and functions as may be assigned to them by the Panchayat Samitis from time to time. The appellant was appointed as a clerk on June 1, 1963 by the Panchayat Samiti, Loharu. He was confirmed in that post ill course of time. On January 21, 1974, he was promoted as a Head Clerk on an ad hoc basis. On March, 14 1975 a resolution was passed by the Samiti regularising the post of Head Clerk. On April 1, 1975, the appellant was appointed as a Head Clerk. Acting in pursuance of the provision of Section 14(1) of the. the Amending Act, The Government of Haryana notified the absorption of the appellant as a clerk, though he was working as a Head Clerk since January 21, 1974. Being aggrieved the appellant filed a Writ Petition and prayed for a direction to absorb him as a Head Clerk. The Writ Petition having been dismissed by the High Court, the appellant has filed this appeal by special leave. Dismissing the appeal, the Court, ^ HELD: 1.1. The Panchayat Samiti had no right to appoint the appellant to the post of Head Clerk on the date on which it purported to do so. As a result of the deletion of Section 33 of the Act by the Amending Act of 1973, the 735 Panchayat Samiti lost its power to make appointment to the Panchayat. It could not therefore have appointed the appellant as a Head Clerk, as it purported to do so, in January, 1974 on an adhoc basis or in April 1965 on a regular basis. [737D] 1.2. Though the right to be considered for promotion is a term and condition of service, in the instant case, the appointment of the appellant to the post of a Head Clerk being without the authority of law, the Government was not bound to absorb him in the post of a Head Clerk. He was appointed lawfully to the post of a clerk and that is the post in which the Government has absorbed him. [737C; E]

N: Criminal Appeal Nos. 287 & 288 of 1980 Appeals by Special leave from the judgment and Order dated the 27th July & 8th August, 1979 of the Bombay High Court in Crl. Appeal Nos. 7 of 1977 and 605 of 1978. 781 V.S. Desai, Mrs. J. Wad and Miss Aruna Mathur for the Appellants. O.P. Rana, K. V. Sree Kumar and M.N, Shroff, for the Respondent. The Judgment of the Court was delivered by VARADARAJAN, J. These appeals of Vinayak and Prakash, accused 6 and 5 respectively in Sessions Case 26 of 1976 on the file of the Sessions Judge, Prabhani by special leave, are directed against the judgment of the Bombay High Court in Criminal Appeals 7 of 1977 and 605 of 1978. Criminal Appeal 7 of 1977 was filed by Sitaram @ Sitya and Vinayak, accused 1 and 6 respectively, against their conviction under section 302 read with section 34 I.P.C. in respect of the murder of one Malan, daughter of Kishan and the sentence of imprisonment for life awarded to them. Criminal Appeal 605 of 1978 was filed by the State of Maharashtra against the acquittal of Sundar @ Sundarayya, Kishan @ Kishanayya, Gangaram @ Gangayya, Prakash and Shrirang, accused 2, 3, 4, 5 and 7 respectively of the charge under section 302 read with section 34 I.P.C. in respect of the murder of Malan and against their acquittal of the charge framed under section 302 read with section 120B I.P.C. The State of Maharashtra filed Criminal Appeal 38 of 1977 for enhancement of the sentence of imprisonment for life awarded to accused 1 and 6 by the trial court. After hearing the learned counsel for the parties we allowed the appeal of Prakash, accused 5 and acquitted him and set aside his conviction and the sentence awarded to him. So far as Vinayak, accused 6 is concerned, we dismissed his appeal on 13.9.1984 for reason to follow. Now proceed to record our reasons. Sessions Case 26 of 1977 is stated to be an off shoot of what is known as the 'Manwath murders case ' in which Prakash 's father Uttamrao Barhate and his permanently kept concubine Rukmanibai and 13 others were tried for the murders of 10 girls and women during the period from 14.11.1972 to 4 11.1974 in Manwath village, Prabhani district, Maharashtra State. In the case the above seven accused were tried for three murders of two young girls and a women alleged to have been committed them and the approver Sheshrao (P.W. 1) during the period from 782 10.11.1975 to 1.1.1976 in Babultara village, Prabhani district. Charge No. 1 framed in this case was for criminal conspiracy under section 302 read with section 120B I.P.C. on the allegation that between the first week of October 1975 and 2.1.1976 at Babultara and Waghala villages, all the seven accused and the approver P.W. 1. entered into a criminal conspiracy to commit murders of young girls and women in the vicinity of Babultara village by inflicting injuries on the private parts of the victims or disfiguring their faces in order to make it appear that the accused in the Manwath murders case are not the real culprits and that in pursuance of that conspiracy these seven accused and the approver P.W. 1 committed three murders of Ashamati, aged 9 years, Parubai, aged 40 years and Malan, aged 12 years in Babultara village. Charge No. 2 framed against accused 1 to 3 was under section 302 read with section 34 I.P.C. On the allegation that in pursuance of the conspiracy and in furtherance of their common intention they committed the murder of Ashamati on or about 10.11.1975. Charge No. 3 framed against accused 1 to 4 was under section 302 read with section 34 I.P.C. on the allegation that in pursuance of the conspiracy and in furtherance of their common intention they committed the murder of Parubai on or about 29.11.1975. The last charge No. 4 framed against accused 1, 6 and 7 was under section 302 read with section 34 I.P.C. on the allegation that in pursuance of the conspiracy and in furtherance of their common intention they committed the murder of Malan on or about 1.1.1976. The accused pleaded not guilty to the charges framed against them. The Sessions Judge found, on a consideration of the evidence, all the seven accused not guilty of the charge of conspiracy framed under section 302 read with section 120B I.P.C. and acquitted them. He found accused 1 to 3 not guilty of charge No. 2 framed against them in respect of the murder of Ashamati and accused 1 to 4 not guilty of charge No, 3 framed against them in respect of the murder of Parubai and acquitted them. He found accused No. 7 not guilty but accused 1 and 6 guilty of charge No. 4 framed against them in respect of the murder of Malan and acquitted accused 7 and convicted accused 1 and 6 and sentenced them to undergo imprisonment for life under section 302 read with section 34 I.P.C. The State did not file any appeal against the acquittal of accused 1 and 6 of charge No. 1 framed against them under section 302 read with section 120B I.P.C. As state earlier, Criminal Appeal 38 of 783 of 1977 was filed by the State for enhancement of the sentence of imprisonment for life awarded to accused 1 and 6 in respect of the murder of Malan and Criminal Appeal 605 of 1978 against the acquittal of accused 2, 3, 4, 5 and 7 of charge No. 1 framed under section 302 read with section 120B I.P.C. Thus the acquittal of accused 1 and 6 of charge No. 1 framed against them under section 302 read with section 120B I.P.C. and of accused 1 to 3 of charge No. 2 in respect of the murder of Ashamati and of accused 1 to 4 of charge No. 3 in respect of the murder of Parubai became final. The High Court considered the evidence and dismissed Criminal Appeal 38 of 1977 filed by the State for enhancement of the sentence of imprisonment for life awarded to accused 1 and 6 for the murder of Malan as also Criminal Appeal 7 of 1977 filed by accused 1 and 6 against their conviction and the sentence awarded to them. The first accused Sitaram @ Sitya has not filed any appeal in this Court against the High Court 's judgment confirming his conviction and sentence awarded to him by the trial court under section 302 read with section 34 I.P.C. for the murder of Malan. Therefore, his conviction and sentence awarded to him have become final. Accused 5 and 6 only have filed Criminal Appeal 288 of 1980 and Criminal Appeal 287 of 1980 respectively against the conviction of accused 5 and the sentence of imprisonment for life awarded by the High Court under section 302 read with section 120B I.P.C. and the confirmation of the conviction and sentence awarded to accused 6 by the trial court under section 302 read with section 34 I.P.C. respectively. In view of the acquittal of all the seven accused by the trial court of charge No. 1 framed under section 302 read with section 120B I.P.C. and the High Court 's dismissal of Criminal Appeal No. 605 of 1978 filed against that acquittal which, as stated earlier, was filed only against accused 2,3,4 and 7 not against accused 1 and 6, in so far as it related to accused 2, 3, 4 and 7, Mr. V. section Desai, learned senior counsel appearing for Prakash, accused 5, contended in his arguments that the conviction of that accused alone for conspiracy under section 302 read with section 120B I.P.C. is unsustainable in law as at least two persons are required for an offence of conspiracy under section 120A I.P.C. and he relied upon a decision of this Court in Topandas vs State of Bombay(1) in support of his contention. In 784 that case the charge under section 120B I.P.C. was framed against four named persons who had been arrayed as accused 1 to 4. The High Court acquitted accused 2 to 4 and convicted accused 1 alone of that charge and sentenced him, holding that he and some others had conspired together and fabricated the deed of assignment put forward by accused 1 and that accused 1 alone could not have fabricated that document. This Court allowed the appeal of accused 1 and set aside his conviction under 120B I.P.C. holding that the conviction of one of the accused alone was unsustainable in law having regard to the requirement of s.120A I.P.C. Mr. O.P. Rana learned senior counsel appearing for the state of Maharashtra sought to support the judgment of the High Court in this case against accused 5 in view of the conviction of accused 1 and 6 for the murder of Malan under s, 302 read with section 34 I.P.C. We repelled that submission of Mr. Rana, in view of the fact that those two accused 1 and 6 had been acquitted by the trial court of charge No. 1 farmed against them under section 302 read with section 120B I.P.C. and no appeal against their acquittal had been filed in the High Court and also the fact that accused 5 was not a party to charge No.4 which was framed only against accused 1, 6 and 7. It was in view of this technical flaw that we allowed the appeal of accused 5 without going into the evidence regarding the merits of the case against him. Mr. Rana did not draw our attention in the course of his arguments to the fact that in charge No. 1 even the approver P.W. 1 is alleged to have conspired with the seven accused to commit these three murders or contend that in view of that circumstance and the finding of the High Court that the approver P.W. 1 also was a party to the conspiracy the conviction of accused 5 alone of the charge of conspiracy under section 302 read with section 120B I.P.C. could be sustained. We were, therefore, not called upon to consider any such question. As regards accused 6 in the High Court reliance was placed by the prosecution on four pieces of evidence besides the evidence of the approver P.W. 1 and the retracted confession of accused 5. Those four pieces of evidence are: (1) recovery of the razor blade, article 54, persuant to the confessional statement of accused 6, admitted under section 27, Evidence Act. The blade was found by the Serologist to be stained with human blood of group B like that of Malan; (2) recovery of the blood stained shirt, article 55, of accused 6 from his house; (3) evidence regarding the presence of accused 785 6 along with accused 7 and P,W. 1 near about the scene of offence before and after the commission of the murder of Malan. It is the case of the prosecution that Shivram, P.W. 45 saw accused 6 under a vad tree and Abasaheb, P.W. 44, saw him in the rivulet; and (4) retracted judicial confession, Exh. 138 of accused 6. The High Court found on the evidence of Munjebi, P.W. 50 and Hanumant Salunke, Sub Inspector of Police P.W. 53, that the blood stained shirt, article 54 was recovered from the house of accused 6. But the Serologist was unable to determine the origin of the blood found on article 55 due to its disintegration. Therefore, the High Court did not place any reliance on this circumstance, namely, recovery of the blood stained shirt, article 55 from the house of accused 6. The High Court found that the evidence of P.W. 44 and 45 does not establish beyond reasonable doubt that accused 6 was found in the company of accused 7 and the approver P.W. 1 near about the place of occurrence as alleged by the prosecution before and after the murder of Malan. But the High Court accepted the evidence of the approver P.W. 1 against accused 6 as reliable and the judicial confession, Exh. 138 of accused 6 as being voluntary and reliable and (both) corroborated by other evidence and it acted also upon the retracted judicial confession of accused 5 in holding that the guilt of accused 6 for the murder of Malan had been proved beyond all reasonable doubt. We are of the opinion that the retracted judicial confession of accused 5 could not be relied upon against accused 6 in this case in view of the fact that accused 6 who had been tried alongwith accused 5 had been acquitted by the High Court of the charge of conspiracy under section 302 read with section 120B I.P.C. and accused 5 was not charged for the offence of murder of Malan for which only accused 1, 6 and 7 were tried. The evidence of the approver P.W. 1 and the retracted confession of accused 5, Exh. 138 are amply corroborated by other evidence, namely, recovery of the blood stained razor, article 54 and the medical evidence of Dr. Suresh (P.W. 31) who had conducted autopsy on the body of Malan at 4.15 p.m. on 2.1.1976. The Doctor found 9 incised wounds on various parts of the body of Malan besides a small incised injury on the right wall of the vagina outside in the middle and a small incised injury on the lower end of the vagina just at the mouth and he is of the opinion that all the 11 injuries were antemortem injuries which might have been caused by sharp cutting weapons, that it is possible that injuries 5 to 7 found on the forehead and right and left side of the parietal eminance were 786 caused by hard and blunt objects, that death must have been instantaneous and that injuries 1 to 7 collectively were sufficient in the ordinary course of nature to cause death. In these circumstances we found that there is sufficient evidence against accused 6 proving his guilt in respect of charge No. 4 framed regarding the murder of Malan beyond all reasonable doubt and that he had been rightly convicted and sentenced to imprisonment for life under section 302 read with section 34 I. P. C. Accordingly, we allowed the Criminal Appeal 288 of 1980 and acquitted Prakash, accused 5 and directed him to be set at liberty forthwith and dismissed Criminal Appeal 287 of 1980 filed by accused 6 and confirmed the conviction of accused 6 and the sentence awarded to him by the courts below.

In Sessions Case No. 26 of 1976, seven accused namely Sitarama @ Sitya, Sundera @ Sundarayya, Kishana @ Kishanayya, Gangarama @ Gangayya, Prakash, Vinayak and Shrirang were charged and tried together for offences under section 302 read with section 120B and also under section 302 read with section 34 I.P.C. Charge No. 1 was for criminal conspiracy under section 302 read with section 120B I.P.C. on the allegation that between first week of October, 1975 and 2nd January, 1976 at Babultara and Waghala villages all the seven accused and the approver P.W. 1 entered into a criminal conspiracy to commit murders of young girls and women in the vicinity of Babultara village by injuring the victims or disfiguring their faces in order to make it appear that the accused in an earlier case called the Manwath murders case where 10 girls and women were murdered during the period from 14.11.1972 to 4.11.1974 in Manwath village were not the real culprits. Charges 2 to 4 were framed under section 302 read with section 34 I.P.C. alleging that in furtherance of their common intention, accused 1 to 3 committed the murder of Ashamati on or about 10th November, 1975, accused 1 to 4 committed the murder of Parubai on or about 29th November, 1975 and accused 1, 6 and 7 committed the murder of Malan on or about 1st January, 1976. The Sessions Judge on a consideration of the evidence acquitted all the seven accused under charge No. 1; all the accused under charges 2 and 3 and accused 7 under charge No. 4, but convicted accused 1 and 6 under charge No. 4 and sentenced them to undergo imprisonment for life under section 302 read with section 34 I.P.C. Aggrieved by the conviction and sentence accused 1 and 6 filed Criminal Appeal No. 7 of 1977 in the High Court of Bombay, while the State preferred Criminal Appeal No. 38 of 1977 for enhancement of the sentence awarded to them under section 377 Cr. The State also preferred under section 378 Cr. P.C. Criminal Appeal No. 605 of 1978 against the acquittal of accused 2, 34, 5 and 7 of charge No. 1 framed under section 302 read with section 120B. There 780 being no further appeal by the State against acquittal; the acquittal of accused 1 and 6 of charge No. 1 and of accused 1 to 3 of charge No. 2 and of accused 1 to 4 of charge No. 3 became final. The High Court considered the evidence, in the case, and dismissed Criminal Appeals Nos. 7 of 1977 and the connected Criminal State Appeal No. 38 of 1977 and thereby confirmed the conviction and the sentence awarded to accused Nos. 1 and 6. The High Court, however accepted the State Appeal No. 605 of 1978 in part and convicted accused 5 and sentenced him to imprisonment for life under section 302 I.P.C. read with section 120B. Hence the present appeals by accused 5 and 6 only, accused No. 1 not preferring an appeal. Allowing the appeal No. 288 of 1980 of accused No. 5 and dismissing appeal No. 287 of 1980, the Court. ^ HELD: 1. In view of the fact (a) that accused 1 and 6 had been acquitted by the trial court of charge No. 1, that is, criminal conspiracy under section 120B read with section 302 I.P.C. (b) that no State Appeal against their acquittal had been preferred and (c) that accused 5 was not a party to charge No. 4 which was framed against accused nos. 1, 6 and 7 the conviction and sentence of accused No. 5 by the High Court is unsustainable in law. [783FG] Topandas vs State of Bombay referred to. 2. The retracted judicial confession of accused 5 could not be relied upon against accused 6 in this case in view of the fact that accused 6 who had been tried alongwith accused 5 had been acquitted by the High Court of the charge of conspiracy under section 302 read with section 120B I.P.C. and accused 5 was not a party for the offence of murder of Malan for which only accused nos. 1, 6 and 7 were tried. [785E F] 3. However, the conviction and sentence of imprisonment for life under section 302 read with section 341 I.P.C awarded to accused 6 is in order as there is sufficient evidence against him proving his guilt in respect of charge No. 4 framed regarding the murder of Malan beyond all reasonable doubt. The evidence of the approver P.W. 1 and the retracted confession of accused 6 Exh. 138 with the corroborative evidence namely, the recovery of the bloodstained razor and the medical evidence of Dr. Suresh who conducted the autopsy and deposed that out of the antemortem injuries, injuries 1 to 7 collectively were sufficient to cause death in the ordinary course, conclusively prove the guilt of accused 6. [786A B; 785F G; 786A]

etition Nos. 1073 1100, 1117 19 1229 95, 142 1554, 1746 2140, 2155 2271, 2396 2459. 1198 1217, 1302 12, 1314 15, 1566 1641, 1140 70, 2360 95, 1643 1725,2272 2329,2152,2332,2339,2491,3486 89, 2498 2521, 2522, .533 74,2611 2638 and 2531 of 1983. (Under Article 32 of the Constitution of India) AND Writ Petition Nos. 4218,4571 and 5266 5280 of 1983 Under article 32 of the Constitution of India) AND Transfer Case Nos. 44 339 of 1983 K.K. Venugopal S.S Ray, P.P. Rao, V.M. Tarkuade and R K. Garg, V. Jogayya Sharma, M.P. Rao, Sudarsh Menon, T. V.S N. Churi, G. Narasimhulu, A. Subba Rao, M.K.D. Namboodiry, H.S. Guru Raj Rao, section Markandeya, A.T.M. Sampath, D.K. Garg, Nikhil Chandra and A K Panda for the Petitioners. L.N. Sinha, Attorney General, Anil B. Divan,B. Parthasarthi and K.R. Chaudhary for the Respondents. G.N. Rao for the State. Miss A. Subhashini for the Union. The Judgment of the Court was delivered by CHANDRACHUD, C. J. In the elections held to the Legislative Assembly of Andhra Pradesh in January 1983, a new political party called Telugu Desam was swept to power. It assumed office on January 9, 1983. On February 8, 1983 an Order (G.O. Ms. No. 36) was issued by the Government of Andhra Pradesh stating that it had decided to reduce the age of superannuation of all Government employees, other than in the last Grade Service, from 58 to 58 years. Two notifications issued in exercise of the power conferred 586 by the Proviso to Article 309 read with Article 313 of the Constitution was appended to that order. The relevant Fundamental Rules were amended by the first notification, while the corresponding rules of the Hyderabad Civil Services Rules were amended by the second notification. By these notifications, every Government servant, whether ministerial or non ministerial but not belonging to the last Grade Service, who had already attained the age of 55 years was to retire from service with effect from February 28, 1983. Speaking to the Government employees in the Secretariat premises the next day, the Chief Minister justified the reduction of the retirement age from 58 to 55 years on the ground that it had become necessary to provide greater employment opportunities to the youths. Over 18,000 Government employees and 10,000 public sector employees were superannuated as a result of the order. These writ petitions were filed by the Andhra Pradesh Government employees to challenge the aforesaid order and the notifications on the ground that they violate Articles 14, 16, 21 and 300A of the Constitution. The case of the petitioners as laid in the writ petitions is that there was no basis at all for reducing the age of retirement from 58 to 55; that the age of retirement was increased from 55 to 58 by the Government of Andhra Pradesh by a notification dated October 29, 1979 and nothing had happened since then to justify reduction of the age of retirement again to 5 i; that providing employment opportunities to the youths h Is no relevance on the question of fixing the age of retirement; that the Government had exercised its power arbitrarily without having regard to factors which are relevant on the fixation of the age of retirement; that the Government had acted unreasonably in not giving any previous notice to the employees which would have enabled them to arrange their affairs on the eve of retirement; that the Government was estopped from reducing the age of retirement to 55, since the employees had acted on the representation made to them in 1979 by increasing the age of retirement from 55 to 58; that as a result of the increase in the age of retirement from 55 to 58 years in 1976, a vested right had accrued to the employees, which could be taken away, if at all, only from future entrants to the Government service; that retirement of experienced and mature persons from Government service will result in grave detriment to public services of the State; and that, the decision of the Government is bad for a total non application of mind to the relevant facts and circumstances bearing on the question of the age of retirement, like increased longevity. The petitioners aver that the Government had not even considered the enormous delay which 587 would be caused in the payment of pensionary benefits to employees A who were retired from service without any pre thought. A counter affidavit was filed on behalf of the State of Andhra Pradesh by Shri R. Parthasarathy, Joint Secretary in the Finance Department of the State, at the stage of admission of the writ petitions. It is stated in that affidavit that the recommendation of the one Man Pay Commission appointed by the Government of Andhra Pradesh. after which the age of retirement was increased to 58 in 1979, has no relevance to the present decision of the State to reduce the age of retirement; that the fact that the average expectation of life is about 70 years is not a ground for increasing the age of retirement of Government employees; that the general trend was for reducing the age of retirement; that the Government of Kerala and Karnataka had reduce the age of retirement of their employees to 55, though it was earlier increased from 55 to 58; that in some States in India the age of retirement is 55 and not 58; the present decision was taken by the Government in order to fulfill its commitment that it will take welfare measures in order to improve the lot of the common man, and. particularly, in order to afford opportunities to qualified and talented unemployed youths whose number was increasing enormously due to expansion of educational facilities; that the Government employees was stagnated in the lower positions due to the increase in the age of retirement from 55 to 58: and that, the present measure was intended to have a salutary effect on the creation of incentives to the deserving employees The affidavit says further that the question as regards the age of retirement is a pure question of Governmental policy affording no cause of action to the petitioners to file the writ petitions. The affidavit asserts that the Government had reviewed the situation arising out of the enhancement of the age of retirement from 55 to 58 in 1979 and that it was revealed that on account of the enhancement of the age of retirement, the chances of promotion of the service personnel had deteriorated resulting in widespread frustration and unemployment. The inconvenience alleged by the petitioners in the matter of payment of their pension and other retirement benefits was imaginary, since the Government was making extensive arrangements to disburse such benefits expeditiously. By the counter affidavit, the Government of Andhra Pradesh denied that any of the provisions of the Constitution were violated by the impugned decision to reduce the age of retirement. Another affidavit was filed on behalf of the Government of Andhra Pradesh, after the rule nisi was issued in the writ petitions. 588 The affidavit is sworn by Shri A.K. Sharma, Deputy Secretary to Government of Andhra Pradesh. Finance and Planning. It is stated in that affidavit that the question of the age of superannuation was not referred to the one Man Pay Commission of Shri A. Krishnaswamy, which was appointed by the Andhra Pradesh Government on November 3, 1 977; that the recommendation made by the Pay Commission was casual and was not based on relevant criteria; that as many as 12,04,008 educated youths were left without employment on September 30, 1979 as a result of the unwarranted increase in the age of superannuation from 55 to 58; that the number of unemployed youths had grown to 17,84,699 by December 31, 1982; and that, the age of retirement was reduced because it is the duty of the State, within the limits of its economic capacity and development to make effective provision to solve the unemployment problem. The rest of the averments i`1 this affidavit are on the same lines as in the affidavit of Shri R. Partbasarathy. Rule Nisi was issued on the writ petitions by this Court on February 25, 1983. The Legislative Assembly of Andhra Pradesh was prorogued on April 9, 1983. On the very next day, that is, on April l0th Governor of Andhra Pradesh promulgated Ordinance No. 5 of 1983 called 'the Andhra Pradesh Public Employment (Regulation of Conditions of Service) Ordinance. ' The Ordinance was passed "to regulate the recruitment and conditions of service of persons appointed to Public Services and posts in connection with the affairs of the State of Andhra Pradesh and the officers and servants of the High Court of Andhra Pradesh". We are not concerned in these writ petitions with clauses 3 to 9 of the Ordinance which mostly regulate conditions of service. Clause 10(1) of the Ordinance prescribes that every Government employee, not being a workman and not belonging to Last Grade Service shall retire from service on the afternoon of the last day of the month in which he attains the are of 55 years. Clause 10(2) provides that every Government employee, not being a workman but belonging to the Last Grade Service, shall retire from service on the afternoon of the last day of the month in which he attains the age of 60 years. Clause 10(3) provides that every workman belonging to the Last Grade Service or employed on a monthly rate of pay in any service notified as Inferior, shall retire from service on the afternoon of the last day of the month in which he attains the age of 60 years. Workmen belonging to Ministerial Service or any service other than the Last Grade Service notified as Inferior have to retire on the afternoon of the last day of the month in which they attain the age of 55 589 years. By clause 15, All Rules and Regulations made under the proviso to Article 309 or continued under Article 3 l 3 of the Constitution or made under any other law for the time being in force, governing the recruitment and conditions of service of the Government employees, continue to be in force in so far as they are not inconsistent with the provisions of the Ordinance. Clause 16 of the Ordinance provides that no amendment to the Fundamental Rules shall be deemed to be invalid merely by reason of the fact that the proviso to rule 2 of the Fundamental Rules laid down that the said rules shall not be modified or replaced to the disadvantage of any person already in service. It provides further that all amendments made to the Fundamental Rules and particularly the amendments made by the notification dated February 8, 1983, shall be and shall be deemed always to have been made validly and shall have effect notwithstanding anything to the contrary contained in the proviso to rule 2 of the Fundamental Rules as if the Ordinance was in force on February 8, 1983. Clause 16 of the Ordinance declares that every amendment made before or after the commencement of the Ordinance to the Fundamental Rules and the Hyderabad Civil Services Rules, shall be and shall be always deemed to have applied to all Government employees whether appointed before or after the amendment. Clause 18 of the Ordinance provides by sub clause (i) that the proviso to rule 2 of the Fundamental Rules shall be and shall be deemed always to have been omitted. Rule 56 of the Fundamental Rules is omitted by Clause l 8(ii) while Rule 231 of the Hyderabad Civil Services Rules is omitted by clause 19 of the Ordinance. The age of retirement was previously governed by these two Rules. The arguments advanced before us fall under distinct heads, learned counsel having shared their burden equitably. Shri Venugopal challenged the Ordinance on the ground that it is unreasonable. Shri Tarkunde challenged it on the ground that the superannuation of the employees by reduction of the age of retirement amounts, in the circumstances, to 'removal ' of the employees within the meaning of Article 311. The challenge of Shri Siddhartha Shankar Ray is based on the ground of a total non application of mind. Shri R.K. Garg, who appears in a group of three Transferred Cases, contends that the Ordinance is bad because it supersedes all industrial adjudications and overrules even settlements arrived at between the management and the employees. Shri P.P. Rao contends that the Ordinance is bad because. whereas in the case of compulsory retirement a notice of three months is 590 required to be given by the Government under the relevant rules, in the case of superannuation of employees who had already attained the age of 55 on February 8, 1983; when the first Order was issued, the impugned law gives to the employees a notice of 20 days only since all such employees had to retire on February 28, 1983. Shri P P. Rao also challenges the retrospective deletion of the proviso to Rule 2 of the Fundamental Rules as being arbitrary. Shri Gururaj Rao challenges the Ordinance on the ground that it runs into the teeth of the recommendation which the Andhra Pradesh One Man Pay Revision Commission had made in 1979 in pursuance of which the age of retirement was raised from 55 to 58. Shri A.T.M. Sampath laid stress on the lack of acceptable reasons to justify the issuance of the Ordinance Like some of the other learned counsel, he suspects the bona fides of the state Government in issuing the Order and the Ordinance. It was suggested by the petitioners, though somewhat in passing, that the object of the State Government in reducing the age of retirement was to get rid of n senior members of Government service whose loyalty was thought to be not above suspicion. This is the broad outline of the petitioners ' case. We will presently set out the specific contentions advanced before us but, before doing so. it would be necessary to indicate the approach which in our opinion, should be adopted while examining a question of the present nature, namely, the fixation of the age of retirement. Barring a few services in a few parts of the world as, for example, the American Supreme Court, the terms and conditions of every public service provide for an age of retirement. Indeed, the proposition that there ought to be an age of retirement in public services is widely accepted as reasonable and rational. The fact that the stipulation as to the age of retirement is a common feature of all of our public services establishes its necessity, no less than its reasonableness Public interest demands that there ought to be an age of retirement in public services The point of the peak level of efficiency is bound to differ from individual to individual but the age of retirement cannot obviously differ from individual to individual for that reason. A common scheme of general application governing superannuation has therefore to be evolved in the light of experience regarding performance levels of employees, the need to provide employment opportunities to the younger sections of society and the need to open up promotional opportunities to employees at the lower levels early in their career. Inevitably, the public administrator has to counter balance conflicting claims while determining the age of superannua 591 tion. On the one hand, public services cannot be deprived of the benefit of the mature experience of senior employees; on the other hand, a sense of frustration and stagnation cannot be allowed to generate in the minds of the junior members of the services and the younger sections of the society. The balancing of these conflicting claims of the different segments of society involves minute questions of policy which must as far as possible, be left to the judgment of the executive and the legislature. These claims involve considerations of varying vigour and applicability. Often, the Court has no satisfactory and effective means to decide which alternative, out of the many competing ones, is the best in the circumstances of a given case. We do not suggest that every question of policy is outside the scope Of judicial review or that, necessarily, there are no manageable standards for reviewing any and every question of policy. Were it so, this Court would have declined to entertain pricing disputes covering as wide a range as cars to mustard oil. If the age of retirement is fixed at an unreasonably low level so as to make it arbitrary and irrational, the Court 's interference would be called for, though not for fixing the age of retirement but for mandating a closer consideration of the matter. "Where an act is arbitrary, it is implicit in it that it is unequal both according to political logic and constitutional law and is therefore violative of Article 14."(l) But, while resolving the validity of policy issues like the age of retirement, it is not proper to put the conflicting claims in a sensitive judicial scale and decide the issue by finding out which way the balance tilts. That is an exercise which the administrator and the legislature have to undertake. As stated in 'The Supreme Court And The Judicial Function '(2): "Judicial self restraint is itself one of the factors to be added to the balancing process, carrying more or less weight as the circumstances seem to require". We must therefore approach the problem before us with a view to determining whether the age of retirement has been reduced from 58 to 55 unreasonably or arbitrarily. Such a fixation of age would be unreasonable or arbitrary if it does not accord with the principles which are relevant for living the age of retirement or if it does not subserve any public interest. On the other hand, the Ordinance shall have to be held valid, if the fundamental premise upon which it proceeds has been accepted as fair and reasonable in comparable situations, if its provisions bear nexus with public interest and if it does not offend against the constitutional limitations either on legis (l) E.P Rovappa. State of Tamil Nadu; , (2) Edited by Philips B. Kurland, Oxford and IBH Publisning Co., Page 13. 592 lative competence or on the legislative power to pass laws which bear on fundamental rights. Shri Venugopal, who led the argument on behalf of the petitioners, contends that the provisions of the Ordinance whereby the age of retirement is reduced from 58 to 55 are arbitrary and irrational and hence violative of Articles 14 and 16 of the Constitution for the following reasons: (a) The age of superannuation was increased from 55 to 58 years with effect from October 29, 1979 after an elaborate and scientific inquiry by a One Man Pay Commission; (b) The State Government issued the order reducing the age of retirement within one month of the assumption of office by it. In the very nature of things, no scientific investigation could have been made, no material gathered and no statistics compiled as regards the number of employees who will retire, the number of persons who would get fresh employment and the hardship caused to the superannuated employees by the delay in the payment of retirement benefits to them. Neither the social nor the economic consequences of so grave a decision could have been or were in fact considered by the Government; (c) The reason given by the Government that promotional opportunities had deteriorated as a result of the increase in the retirement age from 55 to 58 is fanciful and non existent. That result is indeed produced by the impugned action of the State Government In 1979, when the age of retirement was increased from 55 to 58 years, promotional opportunities were denied to the employees because, those who would have retired at the age of 55 got a fresh lease of life for another years. Now, when their turn for promotion has come at about the age of 55, they have been superannuated; (d) The theory that reduction in the age of retirement provides employment opportunities to educated youths is fallacious. The various Pay Commissions have expressed the view that persons who are required to retire at 593 an early age are compelled by necessity to seek other employments. Even otherwise, not more than one per cent of the unemployed educated youths are likely to get employment as a result of the reduction in the age of retirement from 58 to 55. That is because, not more than 18,000 vacancies arose on account of the reduction in the age of retirement. (e) The careful planning by the employees of their important affairs of life like the construction of a house, the marriage of a daughter or the repayment of loans, has been suddenly set at naught by the reduction in the age of retirement; (f) Two of the most relevant circumstances bearing upon the fixation of the age of retirement have been ignored by the State Government: increase in longevity and the prevailing age of retirement in public sector undertakings; and (g) No consideration was given to the plain and direct con sequence of the reduction in the age of retirement, namely, that the State exchequer would have to find and pay Rs. 70 crores on one single day by way of retirement benefits, for which no budgetary provision was made It would appear from these contentions as also from the contions advanced by the other learned counsel that the main plank of the petitioners ' case is that the decision to reduce the age of retirement from 58 to 55 is unconstitutional because it is arbitrary, irrational and unconnected with the object which it seeks to achieve. In this connection, the first ground of challenge to the reduction of the age of retirement is that the One man Pay Revision Commission appointed by the Government of Andhra Pradesh had recommended that the age of retirement should be increased from 55 to 58, that the said recommendation was accepted by the State Government and consequently, the age of retirement was raised to 58 with effect from October 29, l 979. It is contended that the reversal of that well considered decision within a short span of less than three and a half years is patently unscientific and arbitrary, 594 especially since no fresh investigation was undertaken to examine the validity of the recommendation made by the One man Pay Commission. The very foundation of this argument is fallacious By G.O. NO. 745 dated November 3,1977 the Government of Andhra Pradesh had appointed Shri A. Krishnaswamy, a retired member of the l. A.S. as One man Pay Revision Commission to review the structure of the different scales of pay, dearness allowance and other compensatory allowances of all categories of employees of State Government, local bodies, aided institutions, work charge establishments etc. The terms of reference of the Commission were enlarged by the Government by an order dated January 28, 1978 SO as to require the Commission to review the existing retirement benefits available to all categories of employees referred to above and to examine the question of extension of retirement benefits to the work charged establishments. The question as to whether the age of retirement should be raised. p73 Ordinance which mostly regulate conditions of service. Clause 10(1) of the Ordinance prescribes that every Government employee, not being a workman and not belonging to Last Grade Service shall retire from service on the afternoon of the last day of the month in which he attains the are of 55 years. Clause 10(2) provides that every Government employee, not being a workman but belonging to the Last Grade Service, shall retire from service on the afternoon of the last day of the of the Commission cover the review of the existing 'retirement benefits ', the reference "would naturally include the age of retirement. " This was an erroneous and unwarranted reading of the terms of reference. A review of retirement benefits would undoubtedly cover the examination of the rules or schemes relating to pension, provident fund, gratuity, encasement of leave, etc, but it cannot include the power to examine the question as regards the fixation of the age of retirement. The Commission says in the same paragraph, as a possible justification of its consideration of the question of the age of retirement, that "it was mentioned on the floor of the House that this issue is referred to the Commission" Our attention has been drawn in this behalf to a statement made in the Andhra Pradesh Legislative Council on September 20, 1976 by the then Finance Minister, Shri G. Rajaram, to the effect that one of the terms of reference to the Commission was to review the existing retirement age of Government employees. We regret to say that the Finance Minister was not properly briefed when he made that statement. In any case, the power of a Commission to enquire into a question must depend 595 upon the terms of the Reference and not upon the statements made on the floor of the House. The fact that the Commission discussed the question of the age of retirement in passing shows that it was not properly seized of that question. The discussion of an important matter like the age of retirement is done in four brief paragraphs which occupy less than two pages of the Commission 's report. We do not blame the Commission for this hurried and inadequate treatment of an important question. That question was not within its purview. The State Government is therefore justified in its contention that the question of the age of retirement was not referred to the Commission and that the decision which the Government took later to increase the age of retirement from 55 to 58 was not based on the recommendation of the Commission. The report of the Commission has therefore to be kept out of consideration in so far as the question of the age of retirement is concerned and no argument can be founded on the fact that the view of the Commission was ignored or that nothing had happened since the date of the report to justify a departure from it. As regards Shri Venugopal 's argument at (b) above, the fact that the decision to reduce the age of retirement from 58 to 55 was taken by she State Government within one month of the assumption of office by it cannot justify the conclusion that lt the decision is arbitrary because it is unscientific in the sense that it is not backed by due investigation or by compilation of relevant data on the subject. Were this so, every decision taken by a new Government soon after assumption of office shall have to be regarded as arbitrary. The reasonableness of a decision, in any jurisdiction, does not depend upon the time which it takes. A delayed decision of the executive can also be had as offending against the provisions of the Constitution and it can be no defense to the charge of unconstitutionality that the decision was taken after the lapse of a long time. Conversely, decisions which are taken promptly cannot be assumed to be bad because they are taken promptly. Every decision has to examined on its own merits in order to determine whether it is arbitrary or unreasonable. Besides, we have to consider the validity of a law regulating the age of retirement. It is untenable to contend that a law is bad because it is passed immediately on the assumption of office by a new Government. It must also be borne in mind that the question as to what should be the proper age of retirement is not a novel or unprecedented question which the State Legislative had to consider. There is a wealth of material on that subject and many a Pay Commission has dealt with it comprehensively. The State 596 Government had the relevant facts as also the reports of the various Central and State Pay Commissions before it, on the basis of which it had to take a reasonable decision. The aid and assistance of a well trained bureaucracy which, notoriously, plays an important part not only in the implementation of policies but in their making, was also available to the Government. Therefore, the speed with which the decision was taken cannot, without more, invalidate it on the ground of arbitrariness. The contentions of Shri Venugopal which arc set out in paragraphs (c) to (g) above and, partly in paragraph (b) itself, are by and large matters of legislative policy in the formulation of which the Government of the day must be allowed a free, though fair play. Indeed, the acceptance of argument advanced by the various counsel for the petitioners must lead to the conclusion that there, has to be a uniform age of retirement all over India. If reduction of the retirement age from 58 to 55 is to be regarded as arbitrary on the ground that it overlooks the advance made in longevity, fixation of retirement age at 58 is also not likely to sustain the charge of arbitrariness. The argument could still be made that improvement in the expectation of life requires that the age of retirement should be fixed at 60 or 62 or even at 65. Then again, though immutable considerations which are generally or universally true like increased life expectation are as much Jammu and Kashmir as for Tamil Nadu, that cannot justify the conclusion that fixation of the retirement age at 55 in Jammu and Kashmir is invalid since the State of Tamil Nadu has fixed it at 58. Both can fall within the constraints of the Constitution and neither the one nor the other can be considered to be arbitrary or unreasonable. There is no one fixed or focal point of reasonableness. There can be a large and wide area within which the administrator or the legislator can act, without violating the constitutional mandate of reasonableness. That is the area which permits free play in the joints. The following table will show the variation in the retirement age which exists at present in the various States in India: .TB 3.0" State Retirement Age Haryana 58 years Jammu & Kashmir 55 years Karnataka 1979 58 years 1981 55 years Kerala 1967 55 years 1968 58 years 597 1969 55 years 1984 58 years Madhya Pradesh 58 years; Reduced to 55 years 1967; enhanced to S years in 1970. Maharashtra 58 years Orissa Previously 55 years; enhanced to 58 years. Rajasthan 55 years (Reduced from 58 years to 55 years about 12 years back) Uttar Pradesh 58 years (Reduced to 55 years in 1962; enhanced to 58 years) Tamil Nadu 58 years (For District Judges, lowered from 58 to 55 years) West Bengal 58 years (since 1961) .tb .9" It is clear from this table that the area between the ages of 55 and 58 is regarded in our country as a permissible field of operation for fixing the age of retirement. Neither the American nor the English notions or norms for fixing retirement age can render invalid the basis which is widely accepted in our country as reasonable for that purpose. On the question of policy regarding the fixation of retirement age, it will be useful to draw attention to the views expressed upon that question from time to time by the various Pay Commissions. Chapter XXXVII of the Report of the Second Central Pay Commission (1959) deals with the question as to the 'Age of Superannuation '. The history and background of the fixation of age of superannuation traced in that Chapter make useful reading. Prior to 1917, the superannuation rule applicable to both ministerial and non ministerial staff was that a Government servant who had attained the age of 55 might be required to retire; but that, in order to avod depriving the State of the valuable experience of efficient officers and adding unnecessarily to the non effective charges, the rule should be applied with discretion and, whenever it was applied, reasons should be recorded. In its general effect, here, the rule favoured the retention in Government service of officers who had attained the age of 55, and required inefficiency to be established as the condition of compulsory H 598 retirement. This was considered injurious to the efficiency of the public service, on the ground that most officers lost their keenness and initiative at the age of 55. The rule was, accordingly, changed so as to make retirement at 55 the normal practice, and retention in service beyond that age the exception. A distinction was, however, made between ministerial and non ministerial officers, presumbly because, it was thought that the duties of the former did not suffer from the effects of advancing age as did those of the others; and it was decided, in effect, that, subject to continued efficiency, ministerial officers should be retained in service till they attained the age of 60. This distinction was, however, abolished in 1937 38, partly as a measure of relieving unemployment which was acute at that time but largely in recognition of the invalidity of the distinction and on the consideration that the uncertainty which attended the service of senior men beyond 55 had a disturbing effect on those who were looking forward to succeeding them. Paragraph 5 of the Commission 's Report mentions that the Varadachariar Commission had recommended earlier that the age for compulsory retirement should be 58 years for all services pensionable and non pensionable with an option to the Government to retire an employee on the ground of loss of efficiency, at the age of 55. That recommendation involved reduction of the age of superannuation in the case of Class IV servants and in the case of industrial and workcharged staff outside the Railways, as well as raising the age for others. But, for some reason or the other, only the latter question was considered and it was ultimately decided in 1949, that there should be no change in the position. The main grounds for the decision were that the majority of persons retiring at the age of 55 were not capable of rendering efficient service any further; their replacement at the age of 55 by younger men would serve the interests of efficiency better; and that, the retirement age should be so fixed as would release men at an age when they would still be fit to render service to the country in other spheres of their choice, even though not wholly capable of keeping up with the fast tempo of Government work, or of meeting its other exacting requirements. It was observed that Government service ages employees quicker and that, the question was one of balancing limited use to Government of such men against, perhaps, their better usefulness to the nation at large. Paragraph 6 of the Commission 's Report shows that the question was reconsidered in 1963 when, the only additional argument advanced against an upward change its adverse effect on educated 599 unemployment. It was recognized that its actual effect would A be small but, importance was attached to its probable impact on public opinion. The earlier decision to maintain the age of retirement at 55 was re affirmed but, in view of the widespread shortage of trained personnel, it was decided that extension of service beyond that age might be given liberally on the ground of public interest, more specially in the case of scientific and technical personnel. The continuing shortage of trained man power led to a further review of the problem in 1958; but, apart from laying down the criteria for grant of extension and re employment, and re emphasizing the need to retain technical and scientific personnel beyond the age of superannuation, the only significant advance on the earlier decisions was that re employment or extension might be granted upto two years at a time. thus notwithstanding the recommendation of the Varadachariar Commission, the age of superannuation laid down for the non ministerial staff more than 40 years earlier and for ministerial staff more than 20 years earlier, continued to be in force when the Second Central Pay Commission took up that question for examination. There was an "extraordinary unanimity of opinion" amongst Heads of Departments, distinguished retired public servants, public men and economists who gave evidence before the Commission that the age of superannuation should be raised, the only difference being as to whether it should be raised to 58 or 60 years. The great majority of the employees ' organizations were also in favour of increasing the age of retirement, the only exception being the All India Railwaymen 's Federation. That Federation did not consider the age of 55 as the age of the onset of senile inefficiency, but it was of the opinion that the age of superannuation should not be raised in view of the then prevailing large scale unemployment. Some of the reasons on which there was unanimity for increasing the age of retirement were; the continuing mental and physical efficiency of most of the Government servants at the age of 55; the increased expectation of life resulting from improved public health conditions; and, the national waste involved in sending men and women into enforced idleness while they were still capable of rendering efficient service. The Commission found that there was an overall improvement in public health as shown by the decline in death rate and the increase in expectancy of life at birth. What was even of greater relevance, the Commission found that there was improvement in the expectancy of life in the fifties, that is to say, amongst people in the age group of 50 to 60. The data supplied to the Commission by the Comptroller and Audi 600 tor General showed that, at least in the case of Gazetted and Class 111 employees, there was a significant increase in the percentage of persons who lived for two years or more after superannuation. On this data, the Commission concluded in paragraph 11 of its Report: "Thus, however valid may have been the view taken in 1971, and re affirmed in 1937 38, that the age of 55 was normally the dividing line between health and efficiency on the one side, and marked physical deterioration and decline in efficiency On the other, there is sufficient reason to think that is no longer so, and that the deviding line can be safely moved a few years upwards. " The Commission then adverted to the prevailing ages of retirement in foreign countries and reiterated that whether we go by our own "vital statistics" or by the age of retirement prevalent in other countries, there was a clear case for raising the age of superannuation "substantially" above 55 years. In paragraph 15 of the Report, the Commission considered the effect of increasing the age of retirement on the employment situation and concluded that the likely repercussion of increasing the age of retirement on educated unemployment would not be substantial. After talking into account all the relevant considerations, including the fact that most Government servants themselves do not wish to continue in service until they are worn out and have "one foot in the grave", the Commission summed up its findings by saying that there was "much in favour of and very little against raising the age of superannuation". The Commission recommended that the age of superannuation should be 58 for all classes of public servants including those for whom the retirement age then was 60. The recommendation of the Second Central Pay Commission that the age of retirement should be raised from 55 to 58 years was not accepted by the Government initially because, it felt that raising the age of retirement would reduce employment opportunities in the immediate future. However. the Government reviewed the position subsequently and raised the age of retirement to 58 years with effect from December 1, 1962. The main considerations which weighed with the Government in reaching this decision were: The shortage of experienced and trained man power which could be met partly by raising the age of retirement; the insignificant effect which raising the age of retirement would have on employment opportunities; and, the improved life expectation. The Third Central Pay Commission (1973) dealt with the question of age of superannuation in Chapter 60 of its Report. Paragraph 601 3 of that Chapter shows that whereas some Service Associations Demanded that the age of superannuation should be increased to 60 years on account of increased longevity and on account of the fact that a large number of Government employees were not free from family responsibilities until much later in life because of late marriages, some of the Associations suggested that the age of retirement should be reduced again to 55 years mainly with a view to improving the promotional prospects and providing increased employment opportunities to the educated unemployed in the country. The conclusions of the Third Central Pay Commission can be summed up thus: (1) There was a further improvement in the expectancy of life at birth as revealed by the provisional 1971 Census figures; (2) There was improvement in the expectancy of life between the ages of 50 and 55 years, which was of great relevance on the question of fixation of the age of superannuation; (3) There was an appreciable increase since 1950 in the percentage of survivors among the Central Government employees during about ten years after retirement; (4) Though reduction in the age of superannuation to 55 years would result in making about 96,000 additional jobs available, that factor was counter balanced by the circumstance that a large number of retired Government employees are obliged to take up some employment or the other after retirement, due to the increased cost of living and the growing family responsibilities. A reduction in the age of superannuation would not therefore, ipso facto, improve the overall employment position for the educated unemployed; (5) Any increase in the age of superannuation beyond the age of 58 would reduce, during the period of the increase, employment opportunities for a very large number of technical, engineering and professional students passing out from the universities, technical institutions and industrial training institutes ; and, (6) The age of retirement should not be changed frequently since it has a vital bearing on the career prospects of and the retirement benefits available to Government employees and since it is an important factor in the attractiveness of Government service. For these reasons, the Commission recommended that the age of superannuation should continue to be 58 years for the Central Government employees with the modification that the retirement should take effect from the afternoon of the last day of the month in which the employee attains the age of superannuation. The Third Tamil Nadu Pay Commission (1978) has also dealt with the question of the age of retirement. The Commission noticed that the age of retirement was more than 60 in some of the develop 602 ing countries, the economic development of which was comparable to that of India. The age of retirement is 70 years in Brazil and Peru, 65 years in Chile, 63 years in Philippines and 64 years in Lebanon. The Commission examined the co relationship between increase in the age of retirement and unemployment amongst the educated youth with "a deep sense of concern" and observed that the number of jobs released by retirement would be very marginal as compared with the total number of job seekers and that, therefore, it was not fair to shift the focus of the problem of unemployment to the age of superannuation of the Government employees. In support of this view, it quoted the International Labour Organisation (The World Employment Programme): "The three pillars of a strategy for fuller employment are rural development, labour intensive public works programmes and the reduction of capital intensity of industrialisation." Observing that the dimensions of unemployment problem should not deter the Government from improving the service conditions of its employees. the Commission concluded that there was a case for increasing the retirement age of the State Government employees to 58 years. Our attention was also drawn to the views expressed on "Employment Policy" in the Sixth Five Year Plan (1980 85). It is observed therein that lasting solutions to unemployment problems had to be found within the framework of a rapid and employment oriented economic growth; that suitable measures had to be evolved in the short term in a co ordinated way, particularly for the benefit of the weaker sections; and that, since the dimension and gravity of educated unemployment vary from State to State, a decentralised approach should be adopted on the district employment plan. According to the Sixth Five Year Plan, unemployment would not be eliminated within the Sixth Plan unless efforts were immediately made to make the current unemployed more employable through short term training and vocational programmes and unless special employment programmes are directed towards their absorption. Soon after the assumption of office, the Government of Andhra Pradesh presented a White Paper to the State Legislative Assembly in March 1983 on the question of reduction in the age of superannuation from 58 years to 55 years in respect of Government employees, employees of Panchayat Raj Institutions, Local Bodies and aided Educational Institutions for whom the pensionary liability is borne by Government". After stating that the Krishnaswamy Commission was appointed on November 3, 1977 for the sole purpose of 603 examining the question of ' retirement benefits" and that the question of retirement age was not included in its terms of reference, the White Paper says that although the Government had accepted the recommendations of the Commission almost in their entirety, it did not accept its recommendation that the age of retirement should be increased from 55 to 58 years. By a notification dated September 17, 19,9 the recommendations of the Commission B in regard to the revision of pay scales were accepted by the Government but, not so the recommendation regarding increasing the age of retirement from 55 to 58 years. it was later, in October 1979, that the Government decided on its own to increase the age of retirement from 55 to 58 years. The specific case of the State Government on the question of reduction of the age of retirement from 58 to 55 years is stated thus: "As a result of revision of the age of superannuation upwards from 55 years to 58 years, the normal channels of promotions that would have opened up had the retirements taken place in the normal course, were choked. Consequently the resultant vacancies at the direct recruitment level which would have arisen in the chain of appointments that would follow each retirement, were also blocked for 3 years continuously, thereby denying the promotion opportunities to inservice personnel and employment opportunities for the unemployed causing a great deal of frustration all round. It is estimated that on an average there would be approximately 6,500 retirements each year from Government departments, Panchayat Raj Institutions and also Aided Institutions, where pensionary liability is borne by Government. Government, therefore, decided to revise the age of superannuation from 58 years to 55 years so that the unemployed talented youth who were eagerly awaiting chances of appointment could get opportunities of employment. Besides, experienced deserving inservice personnel whose legitimate aspirations for promotion were thwarted could also now look for this much awaited promotion. Government were thus able to create promotional avenues to serving employees at various levels and create opportunities for appointment against about 18,000 posts in Government, Panchayat Raj and aided educational institutions alone, not to speak of the opportunities that were created in the various Corporations etc, owned or controlled by Government. " 604 The White Paper explains that in order to ensure that the employees who had retired by the end of February 1983 should get their pensionary benefits without delay, the Government had constituted a special Pension cell in the Finance Department, by a notification dated February 16, 1983. The function of that cell is to "monitor the progress of settlement of pension eases" In addition, it is said, the Government had issued instructions by a notification dated February 14, 1983 for payment of "anticipatory pension" at 3110th of the last pay drawn in all cases wherein the sanction of pension was delayed. on the basis of this data, it is difficult to hold that in reducing the age of retirement from 58 to 55, the State Government or the Legislature acted arbitrarily or irrationally. There are precedents within our country itself for fixing the retirements age at 55 or for reducing it from 58 to 55. Either the one or the other of these two stages is regarded generally as acceptable, depending upon the employment policy of the Government of the day. It is not possible to lay down an inflexible rule that 58 years is a reasonable age for retirement and 55 is not. If the policy adopted for the time being by the Government or the Legislature is shown to violate recognised norms of employment planning, it would be possible to say that the policy is irrational since, in that event, it would not bear reasonable nexus with the object which it seeks to achieve. But such is not the case here. The reports of the various Commissions, from which we have extracted relevant portions, show that the creation of new avenues of employment for the youth is an integral part of any policy governing the fixation of retirement age. Since the impugned policy is actuated and influenced predominatly by that consideration, it cannot be struck down as arbitrary or irrational. We would only like to add that the question of age of retirement should always be examined by the Government with more than ordinary care, more than the State Government has bestowed upon it in this case. The fixation of age of retirement has minute and multifarious dimensions which shape the lives of citizens. Therefore, it is vital from the point of view of their well being that the question should be considered with the greatest objectivity and decided upon the basis of empirical data furnished by scientific investigation. What is vital for the welfare of the citizens is, of necessity vital for the survival of the State. Care must also be taken to ensure that the statistics are not perverted to serve a malevolent purpose 605 Shri V.M. Tarkunde, who appears for some of the petitioners, A limited his argument to the contention that arbitrary fixation of retirement age amounts to "removal" from service and is therefore violative of Article 311 (2) of the Constitution This argument has to be rejected because of our conclusion that the reduction of the age of retirement from 58 to 55 in the instant case is not hit by Article 14 or Article 16, since it is not arbitrary or unreasonable in the circumstances of the case. But, apart from this position, we find it difficult to appreciate how the retirement of an employee in accordance with a law or rules regulating his conditions of service can amount to his "removal" from service. It is well settled that Article 311 (2) is attracted only when a civil servant is reduced in rank, dismissed or removed from service by way of penalty, that is to say, when the effect of the order passed against him in this behalf is to visit him with evil consequences. See Satish Chandra vs Union of India,(1) Shyam Lal vs State of U P.,(1) State of Bombay vs Saubhagchand M. Doshi,(3) Purshottam Lal Dhingra vs Union of India(4) and P. Balakotiah vs Union of India(5). Besides, the point made by Shri Tarkunde is concluded by a Constitution Bench decision of this Court in Bishun Narain Misra vs State of Uttar Pradesh (6) In that case, the Government of Uttar Pradesh and raised the age of superannuation from 55 to 58 years by a Notification dated November 27, 1957 but reduced it again to 55 years by a Notification dated May 25, 1961. The appellant therein, who had attained the age of 55 years on December 11, 1960 and was continued in service when the age of retirement was raised to 58 years, was one of those who had to retire on December 31, 1961 as a result of reduction of the age of retirement to 55. It was held by this Court that the termination of service of an employee on account of his reaching the age of superannuation does not amount to his removal from service within the meaning of Article 311 (2). Learned counsel contends that this decision is of doubtful authority since the Court based its opinion on the majority judgment in Moti Ram Deka vs y,General Manager, North Frontier Railway(7), in which the Court was not called upon to consider and did not consider the validity of a rule of superannuation. It is true that in Moti Ram Deka, the Court was concerned to G (1) ; (2) [1955] 1 S.C.R.26. (3) ; (4) ; (5) [1958] S.C.R.1052. (6) [1965] I S.C.R. 693. (7) ; 606 determine the validity of Rules 148 (3) and 149 (3) of the Railway Establishment Code which provided for the termination of the service of a permanent servant by a mere notice But, interestingly, the judgment in Bishun Narain Mishra shows that it was the appellant therein who relied on the decision in Moti Ram Deka in support of his contention that the rule by which the age of retirement was reduced to 55 years amounted to removal within the meaning of Article 311 (2) The Court held that the decision in Moti Ram Deka had no application to the case before them since "that case did not deal with any rule relating to age of retirement". (See page 696 of the Report). It was after noticing this distinction that the Court observed that the very case, namely, Moti Ram Deka 's case on which the appellant relied, contained the observation that the rule as to supperannuation or compulsory retirement resulting in the termination of service of a public servant did not amount to removal from service The Court, in Bishun Narain Misra, came independently to the conclusion that "as the rule in question only dealt with the age of superannuation and the appellant had to retire because of the reduction in the age of superannuation it cannot be said that the termination of his service which thus came about was removal within the meaning of Article 311". The theme of Shri Siddhartha Sbankar Ray 's argument is "non application of mind". He made it clear that his argument should not be construed as a challenge to the power or jurisdiction of the Governor to issue the impugned Ordinance and that his sole attempt was to show that the Ordinance was passed in a hurry, as a result of which, considerations which are relevant to the fixation of retirement age were ignored. The instances of non application of mind cited by the learned counsel are these: The inclusion o f the employees of the High Court within the sweep of the Ordinance in violation of the provisions of Chapters V and VI of the Constitution; the inclusion of the employees of the Legislature Secretariat within the Ordinance; the extension of the Ordinance even to the daily rate workers; and, finally, the fact that nothing worthwhile is likely to be achieved by the passing of the Ordinance since, at the highest, it would create employment at this point of time only, for about 19,500 employees After that point of time passes, the same state of affairs will continue since the age of retirement will be merely substituted by 58 in place of 55 years. It is impossible to accept the submission that the Ordinance can be invalidated on the ground of non application of mind. The 607 power to issue an ordinance is not an executive power but is the power of the executive to legislate. The power of the Governor to promulgate an ordinance is contained in Article 213 which occurs in Chapter IV of Part VI of the Constitution. The heading of that Chapter is ' Legislative Power of the Governor". This power is plenary within its field like the power of the State Legislature to pass laws and there are no limitations upon that power except those to which the legislative power of the State Legislature is subject Therefore, though an ordinance call be invalidated for contravention of the constitutional limitations which exist upon the power of the State Legislature to pass laws it cannot be declared invalid for the reason of non application of mind, any more than any other law can be. An executive act is liable to be struck down on the ground of non application of mind. Not the act of a Legislature. On the question as to the legislative character of the ordinancemaking power, we may refer to the decisions of this Court in A.K. Roy vs Union of India(1) and R.K. Garg vs Union of India(2). Shri Ray raised upon a decision of this Court in High Court of Andhra Pradesh vs V.V.S. Krishnamurthy,(3) which has taken the view that in regard to the servants and officers of the High Court, Article 229 of the Constitution makes the power of` their appointment, dismissal, removal, compulsory retirement, etc., including the power to prescribe their conditions of service, the sole preserve of the Chief Justice and no extraneous executive authority can interfere with the exercise of that power. This decision cannot assist the petitioners since, it deals with the limitations on the executive power Of the Government to interfere with the power of the Chief Justice under Article 229. The executive cannot encroach upon that power. The decision of this Court in Moti Ram Deka which was also cited by the learned counsel, does not touch the point raised by him. Though Shri Ray presented his argument in the shape of a challenge to the Ordinance on the ground of non application Of mind, the real thrust of his argument was that the hurry with which the Ordinance was passed shows the arbitrary character of the action taken by the State Government. We have already rejected the contention of haste and hurry as also the argument that the provi (1) ; at 282, 291. (2) 11982]1 S.C.R. 947 at 964, 967. (3) [1979]1 S.C.R. 26. 608 sions of the Ordinance are, in any manner, arbitrary or unreasonable and thereby violate Articles 14 and 16 of the Constitution. Shri R.K. Garg, who appears in Transfer Cases Nos. 70, 71 and 72 of 1983, challenges the validity of the Ordinance on the ground that, casting all established norms aside, it fixes the age of retirement at 55 years, notwithstanding industrial adjudications and even settlements arrived at between employers and employees. Relying upon certain decisions of this Court like Maneka Gandhi vs Union India(1) and State of Madras vs V.G. Row(2) in support of his submission that arbitrariness invalidates laws, counsel contends that a law which overrules an industrial adjudication or settlement is fundamentally unreasonable or arbitrary and must, therefore, be held to be violative of Article 14 of the Constitution. It was also urged by counsel that by reducing the age of retirement to 55 years, the Government employees were deprived of their right to livelihood. There is no substance in this latter argument because, if a rule of retirement can be deemed to deprive a person of his right to livelihood, it will be impermissible to provide for an age of retirement at all. That will be contrary to public interest because the State cannot afford the luxury of allowing its employees to continue in service after they have passed the point of peak performance. Rules of retirement do not take away the right of a person to his livelihood: they limit his right to hold office to a stated number of years. This argument of the learned counsel can be rejected for other reasons also, we do not propose to deal with these Transferred Cases since, there is nothing on record to show that there are any industrial adjunctions or settlements between employers and employees providing for an age of retirement for any section of industrial workers. These Transferred Cases will be delinked from the other Writ Petitions and will be listed for hearing later, so that they can be dealt with upon their own facts. If the question raised by Shri Garg is academic, it will be needless to consider it. The argument of mala fides advanced by Shri A.T. Sampat, and adopted in passing by some of the other counsel, is without any basis. The burden to establish ma/a fides is a heavy burden to discharge. Vague and casual allegations suggesting that a certain act was done with an ulterior motive cannot be accepted without proper pleadings and adequate proof, both of which are conspi (1) [1978] 2 S.C.R. 621 at 659, 685, 689 and 702. (2) 11952] S.C.R. 597 at 607. 609 cously absent in these writ petitions. Besides, the ordinance making A power being a legislative power, the argument of mala Fides is misconceived. The legislature, as a body, cannot be accused of having passed a law for an extraneous purpose. Its reasons for passing a law are those that are stated in the Objects and Reasons and if no reasons are so stated, as appear from the provisions enacted by it. Even assuming that the executive, in a given case, has an ulterior motive in moving a legislation, that motive cannot render the passing of the law mala fide. This kind of 'transferred malice ' is unknown in the field of legislation. Finally, there is no substance in the contention that the amendment to the Fundamental Rules, whereby the proviso to rule 2 was deleted, is beyond the powers of the rule making authority or the Legislature. The Fundamental Rules and the amendments thereto are issued by the State Government under the powers delegated to it by the Civil Services (Governors ' Provinces) Delegation Rules 1926, the Civil Services (Classification, Control and Appeal) Rules 1930, and under the Proviso to Article 309 of the Constitution. The Fundamental Rules which came in to force with effect from January 1, 1972 were amended earlier by G.O. Ms. No. 128 dated April 29, 1969. By that amendment, a proviso was added to rule 2 which reads thus: "Provided that the rules shall not be modified or E; replaced to the disadvantage of any person already in service." By G.O. Ms. No. 48 dated February 17, 1983 this proviso was deleted with retrospective effect from February 23, 1979. The contention of the petitioners is that the proviso which conferred a benefit upon Government servants by protecting their conditions of service, cannot be amended so as to empower the Government to alter those conditions to their prejudice and, in any event, they cannot be amended retrospectively so as to take away rights which had already accrued to them The simple answer to this argument is that the amendment of February 17, 1983 to the Fundamental Rules was made by the Government of Andhra Pradesh in exercise of the powers conferred by the proviso to Article 309 read with Article 313 of the Constitution. It is well settled that the service rules can be as much amended, as they can be made, under the proviso to Article 309 and that, the power to amend these rules carries with it the power to amend them retrospectively. The power conferred by H 610 the proviso to Article 309 is of a legislative character and is to be distinguished from an ordinary rule making power. The power to legislate is of a plenary nature within the field demarcated by the Constitution and it includes the power to legislate retrospectively. Therefore, the amendment made to the Fundamental Rules in the exercise of power conferred by Article 309, by which the proviso to rule 2 was deleted retrospectively, was a valid exercise of legislative power. The rules and amendments made under the proviso to Article 309 can be altered or repealed by the Legislature but until that is done, the exercise of the power cannot be challenged as lacking in authority. (See B.S. Vaderu vs Union of India;(1) Raj Kumar vs Union of India(2). These then are the main points in controversy on which counsel made their contentions. For reasons aforesaid, we reject those contentions and dismiss these Writ Petitions. There will be no order as to costs. S.R. Petitions dismissed. (1) ; , 582 585. (2) , 965.

A new political party called Telugu Desam swept to power in the 1983 Andhra Pradesh Assembly elections, within a month of assuming office, the new Government of Andhra Pradesh, passed an order No. G.O.M.S. 36 GAD Services dated 8.2.83 (appending two Notifications) stating that in order to provide greater employment opportunities to the youths it had decided to reduce the age of superannuation of all Government employees, other than those in the last grade service, from 58 to 55 years with elect from February 28, 1983. Over 18,000 employees and 10,000 public sector employees were superannuated, as a result of the order. The aggreived employees, therefore filed writ petitions and challenged the constitutional validity of the said order and Notifications under Articles 14, 16, 21 and 300A of the Constitution. According to the petitioners: (i) there was no basis at all for reducing the age of retirement from 58 to 55, as nothing had happened since October 29,1979 on which date the age limit was raised from 55 to 58 years; (ii) providing employment opportunities to the youths has no relevance on the question of fixing the age of retirement; (iii) the government had exercised its power arbitrarily without having regard to factors which are relevant on the fixation of the age of retirement; (iv) the government had acted unreasonably in not giving any previous notice to the employees which would have enabled them to arrange their affairs on the eve of retirement; (v) the government was estopped from reducing the age of retirement to 55 since the employees had acted on the representations made to them in 1979 by increasing the age of retirement from 55 to 58; (vi) as a result of the increase in the age of retirement from 55 to 58 years in 1979, a vested right had accrued to the 580 employees. which could be taken away if at all, only from future entrants to the government service; (vii) retirement of experienced and mature persons from government service will result in grave detriment to public services of the State (viii) the decision of the government is bad for a total non application of the mind to the relevant facts and circumstances bearing on the question of age of retirement like increased longevity; and (ix) the government had not even considered the enormous delay which would be caused in the payment of pensionary benefits to employees who were retired from service without any pre thought. The respondent State filed two affidavits traverssing each and every ground of challenge and asserted that the age of retirement was reduced because "it is the duty of the State, within the limits of its economic capacity and development to make effective provisions to solve the unemployment problem which has gone upto 17,84,699 by December 31, 1 982. The contentions of the State were: (i) the question of the age of superannuation was not referred to the One man Pay Commission and therefore, its recommendations to increase the age from 55 to 58 was only casual not based on relevant criteria and has no relevance to the present decision of the State to reduce the age of retirement; (ii) as a result of the unwarranted increase in the age of superannuation from 55 to 58 not only was there a one third increase in the number of unemployed youths but also the chances of promotion of the service personnel had deteriorated resulting in wide spread frustration and unemployment: (iii) the age of retirement was reduced because it is the duty of the State, within its limits of economic capacity and development, to make effective provision to solve the unemployment problem; (iv) the fact that the average expectation of life is about 70 years is not a ground for increasing the age of retirement of Government employees; (v) the general trend was for reducing the age of retirement; (vi) the Government of Kerala and Karnataka had reduced the age of retirement of their employees to 55 and in some other States in India also the age of retirement is 55, (vii) the present decision was taken by the Government in order to fulfill its commitment that it will make welfare measures in order to improve the lot of the common man, and particularly, in order to afford opportunity to qualified and talented unemployed youths whose number was increasing enormously due to expansion of educational facilities; (viii) the present measure was intended to have a salutory effect on the creation of incentives to the deserving employees; and (ix) the question as regards the age of retirement is a pure question of governmental policy affording no cause of action to the petitioners to file the writ petitions. Rule Nisi was issued on the writ petitions by the court on February 25,1983. The Legislative Assembly of Andhra Pradesh was prorogued on April 9, 1983. On the very next day, i.e. April 10, 1983 the Governor promulgated Ordinance No. 5 of 1983 called the Andhra Pradesh Public Employment (Regulation of conditions of Service) Ordinance, 1983 by which proviso to Rule 2 and Rule 56 of the Andhra Pradesh Fundamental Rules and Rule 231 of the Hyderabad Civil Service Rules the rule governing the age of retirement were omitted. Dismissing the petitions, the Court ^ HELD: 1.1 Public interest demands that there ought to be an age of retirement in public services. The poin of the peak level of efficiency is bound to differ 581 from individual to individual for that reason. A common scheme of general application governing superannuation has, therefore, to be evolved in the light of experience regarding performance levels of employees, the need to provide employment opportunities to the younger sections of society and the need to open up promotional opportunities to employees at the lower levels early in their career. Inevitably, the public administrator has to counterbalance conflicting claims while determining the age of superannuation. On the one hand, public services cannot be deprived of the benefit of the mature experience of senior employees; on the other hand, a sense of frustration and stagnation cannot be allowed to generate in the minds of the junior members of the services and the younger sections of the society. The balancing of these conflicting claims of the different segments of society involves minute questions of policy and considerations of varying vigour and applicability which must, as far as possible, be left to the judgment of the executive and the legislature. [ 90F H; 591A B] E.P. Royappa vs State of Tamil Nadu, ; referred to. 1.2 While resolving the validity of policy issues like the age of retirement, it is not proper for the Court to put the conflicting claims in a sensitive judicial scale and decide the issue by finding out which way the balance tilts. That s an exercise which the administrator and the legislature have to undertake. This is so because often, the Court has no satisfactory and effective means to decide which alternative, out of the many competing ones, is the best in the circumstances of a given case. [591E; C] 1.3 It is not that every question of policy is out side the scope of judicial review or that necessarily, there are no manageable standards for reviewing any and every question of policy. If the age of retirement is fixed at an unreasonably low level so as to make it arbitrary and irrational, the Court 's interference would be called for though not for fixing the age of retirement but for mandating a closer consideration, of the matter. [591C D] 2. Fixing the age of superannuation by reducing it from 58 to 55 would be unreasonable or arbitrary if it does not accord with the principles which are relevant for fixing the age of retirement or if it does not subserve any public interest. On the other hand, the Ordinance shall have to be held valid, if the fundamental premise upon which it proceeds has been accepted as fair and reasonable in comparable situations, if its provisions bear nexus with public interest and if it does not offend against the Constitutional limitations either on legislative competence or on the legislative power to pass laws which bear on fundamental rights. [591G H: 592A] 3.1 The report of the One man Pay Commission has to be kept out of consideration in so far as the question of the age of retirement is concerned. The contention that the reversal of the well considered decision of the Commission to raise the age to 58 within a short span of less than three years and a half, as nothing had happened in between warranting a departure from it, is fallacious because the question, as to whether the age of retirement should be raised which was then 55, was not referred to the Commission at all in the terms of reference. Further the decision which the Government took later to increase the age of retirement from 55 to 58 years was not based on the recommendation of the Commission. [595D; C] 582 3.2 The Power of a Commission to inquire into a question must depend upon the terms of the reference and not upon the statements made on the floor of the House. [595A] 3.3 A review of retirement benefits would undoubtedly cover the examination of the rules or schemes relating to pension, provident fund, gratuity, encasement of leave etc., but it cannot include the power to examine the question as regards the fixation of the age of retirement. Therefore, paragraph 9 47 of the report of One man Pay Commission which begins by saying that "since the terms of reference of the Commission cover the review of the existing retirement benefits, the reference would naturally include the age of retirement" was an erroneous and unwarranted reading of the terms of the reference. [594F; E] 4.1 No law can be said to be bad because it is passed immediately on the assumption of office by a new Government. Were this so, every decision taken by a new Government soon after assumption of office shall have to be regarded as arbitrary. I 595E] 4.2 The reasonableness of a decision in any jurisdiction, does not depend upon the time which it takes. A delayed decision of the Executive can also be bad as offending against the provisions of the Constitution and it can be no defence to the charge of unconstitutionality that the decision was taken after the lapse of a long time. Conversely, decisions which arc taken promptly cannot be assumed to be bad because they arc taken promptly. [595F G] 4.3 Every decision has to be examined on its own merits, in order to determine whether it is arbitrary or unreasonable. Here, the State Government had the relevant facts as also the reports of the various Central and State Pay Commissions before it, 011 the basis of which it had taken a reasonable decision to reduce the age of retirement from 58 to 55. The aid and assistance of a well trained bureaucracy which notoriously, plays an important part not only in the implementation of policies but in their making was also available to the Government. Therefore, the speed with which the decision was taken cannot, without more, invalidate it on the ground of arbitrariness. [59 G; 596.A B] 5.1 By and large, in the formulation of matters of legislative policy, the government of the day must be allowed a free, though fair play and there need not necessarily be a uniform age of retirement all over India. Though immutable considerations which are generally or universally true like increased life expectation are as much valid for Jammu and Kashmir as for Tamil Nadu, that cannot justify the conclusion that fixation of the retirement age at 55 in Jammu and Kashmir is invalid since the State of Tamil Nadu has fixed it at 58 or that the age limit should be fixed at 62 or 65. There is no one fixed or focal point of reasonableness. There can be a large and wide area within which the administrator or the legislator can act, without violating the constitutional mandate of reasonableness. That is the area which permits free play in the joints. [596C D; F] 5.2 The area between the ages of 55 and 58 is regarded in our country as a permissible field of operation for fixing the are of retirement. Neither the American nor the English notions or norms for fixing the retirement age can render invalid the basis which is widely accepted in our country as reasonable for that purpose. [597D E] 5.3 On the basis of the data furnished in the White Paper presented to the State Legislative Assembly in March 1983 on the question of "reduction in 583 the age of superannuation from 58 years to 55 years" by the new Telugu Desam Party controlled State Government, the reduction of the age of retirement from 58 to 55, in the instant case is not hit by Article 14 or 16 of the Constitution and the State Government or the Legislature has not acted arbitrarily or irrationally. The precedents within our country itself for fixing the retirement age at 55 or for reducing it from 58 to 55 and their acceptance depending upon the employment policy of the Government of the day make it impossible to lay down an inflexible rule that 58 years is a reasonable age for retirement and 55 is not. If the policy adopted for the time being by the Government or the Legislature is shown to violate recognized norms of employment planning, it would be possible to say that the policy is irrational since, in that event, it would not bear reasonable nexus with the object which it seeks to achieve. The reports of the various Commissions show that the creation of new avenues of employment for the youth is an integral part of any policy governing the fixation of retirement age. Here, the impugned policy is actuated and influenced predominantly by that consideration. [604C F] However, the question of age of retirement should always be examined by the Government with more than ordinary care, more than the State Government has bestowed upon it in this case. The fixation. Of age of retirement has minute and multifarious dimensions which shape the lives of citizens. Therefore, it is vital from the point of view of their well being that the question should be considered with the greatest objectivity and decided upon the basis of empirical data furnished by scientific investigation. What is vital f`or the welfare of the citizens is, of necessity, vital for the survival or the State. Care must also be taken to ensure that the statistics are not perverted to serve a malevolent purpose. [604F H ] 6. It is well settled that Article 311(2) of the Constitution is attracted only when a civil servant is reduced in rank, dismissed or removed from service by way of penalty, that is to say, when the effect of the order passed against him in his behalf is to visit him with evil consequences. The termination of service of an employer on account of his reaching the age of superannuation does not amount to his removal from service within the meaning of Article 311(2). Here there being no arbitrariness in the fixation of reduced retirement age, there is no violation of Article 311(2) of the Constitution, either. [605C; F] Satish Chandra V Union of India[1953] SCR 655; Shyam Lal vs State of U.P., ; ; State of Bombay vs ,Saubhagchand M. Doshi; , ; Purshotam Lal Dhingra vs Union of India, ; ; P. Balakotiah V. Union of India; , ; Bishun Narain Misra vs State Union of Uttar Pradesh; , , relied on. Moti Ram Deka vs General Manager. North Frontier Railway, ; explained. Though an ordinance can be invalidated for contravention of the constitutional limitations which exist upon the power of the State legislature to pass laws it cannot be declared invalid for the reason of non application of mind, any more than any other law call be. An executive act is liable to be struck 584 down on the ground of non application of mind. Not the act of a Legislature. The power to issue an ordinance is no an executive power but is the power of the executive to legislate. The power of the Governor to promulgate an ordinance is contained in Article 213 which occurs in Chapter IV of Part VI of the Constitution. The heading of that Chapter is "Legislative Power of the Governor". This power is plenary within. its field like the power of the State Legislature to pass laws and there are no limitations upon that power except those to which the legislative power of the State Legislature is subject. [607C; A B] A.K. ROY vs Union of India. ; at pp. 282, 291; R K Garg vs Union of India, ; at pp. 964, 967; High Court of Andhra Pradesh vs V V. section Krishnamurthy, ; Motiram Dake vs General Manager, North Frontier Railway, ; distinguished. If a rule of retirement can be deemed to deprive a person of his right to livelihood, it will be impermissible to provide for an age of retirement at all. That will be contrary to public interest because the Slate cannot afford the luxury of allowing Its employees o continue in service after they have passed the point of peak performance. Rules of retirement do not take away the right of a person to his livelihood: they limit his right to hold office to a stated number of years. [608D E] 9.1 The burden to establish mala fides is a heavy burden to discharge. Vague and casual allegations suggesting that a certain act was done with an ulterior motive cannot be accepted without proper pleadings and adequate proof, both of which are conspicuously absent in these writ petitions. Besides the ordinance making power being a legislative power, the argument of mala fides is misconceived. The legislature, as a body, cannot be accused of having passed a law for an extraneous purpose. If no reasons are so stated as appear from the provisions enacted by it. Its reasons for passing a law or those that are stated in the Objects and Reasons. Even assuming that the executive, in a given case, has an ulterior motive in moving a legislation, that motive cannot render the passing of the law mala fide. This kind of 'transferred malice ' is unknown in the field of legislation. [608G H; 609A B] 9.2 The amendment made to the Fundamental Rules in the exercise of power conferred by Articles 309 by which the proviso to Rule 2 was deleted reirospectively, with effect from February 23, 1983 by G.O.M.S. dated P 17 2 83 was a valid exercise of legislative power. The rules and amendments made under the proviso to Article 309 can be altered or repealed by the Legislature but until that is done the exercise of the power cannot be challenged as lacking in authority. [610B C] 9.3 It is well settled that the service rules can be as much amended, as they can be mader, under the proviso to Article 309 and that, the power to amend these rules carries with it the power to amend them retrospectively. The power conferred by the proviso to Article 309 is of a legislative character and is to be distinguished from an ordinary rule making power. The power to legislate is of a plenary nature within the field demarcated by the Constitution and it includes the power to legislate retrospectively. [609H; 610A B] B.s. Vadera vs Union of India, ; 582 55, Raj Kumar vs Union of India [ , 965, followed 585

Civil Appeals Nos. 1264 67/71 etc. From the Judgment and Order dated 26.12.69 of the High Court of Andhra Pradesh at Hyderabad in W.P. Nos. 3956, 3971, 3983, 3899, 4421, 4474, 4537, 4544, 4570, 4825 and 4933/68. D.K. Sen, Gopal Subramonium and R.N. Poddar for the Appellant. Ex parte for the Respondents. The Judgment of the Court was delivered by TULZAPURKAR, J. In these 11 appeals only that part of the judgment of the Andhra Pradesh High Court is assailed by the Union of India where the challenge to the validity of section 28 of the Gold Control Act, 1968 has succeeded. The challenge to the other provisions of the Act at the instance of persons engaged in gold trade, i.e, manufacturers, shroffs and dealers in gold was rejected by the High Court. Section 28 of the Act runs thus: "28. Money lending business not to be carried on in licensed premises No licensed dealer shall unless authorised by the Administrator so to do, (a) carry on business as a money lender or banker on the security of any article, or ornament, or both, (b) permit any other person to carry on money lending, banking or any other business, in the same premises in which he carried on business as such dealer. " The High Court has struck down the aforesaid provision only on the ground that it suffers from the vice of excessive delegation of legislative power inasmuch as no criteria or guide lines have been 954 provided by reference to which the power conferred on the Administrator to refuse permission or grant permission should be exercised and that the section confers an arbitrary, uncanalised power upon the Administrator with the result that the licensed dealer is at his mercy while seeking permission to carry on money lending or banking business on the security of any article, ornament or both in the same premises in which he carried on business as such dealer. The High Court 's reasoning in this behalf is to be found in its judgment at page 87 of the paper book and it runs thus: "The Administrator as is evident from this provision, is given unlimited authority or power to refuse permission or to grant permission. No rules have been framed prescribing the conditions or circumstances under which the Administrator could refuse permission or grant permission. A dealer is at the mercy of the Administrator and is help less against the arbitrary exercise of the power by the Administrator when he chooses to negative the request. It is clear that Section 28 confers an arbitrary and uncanalised power without any criteria for guiding the discretion of the Administrator. Further, the section does not provide nor is any rule brought to our notice which enjoins upon the Administrator to give a hearing to dealer who seeks permission under this Section and give reasons in case he decides to refuse the permission. " Incidentally the High Court also proceeded to draw analogy from the reasoning adopted by this Court in its decision in Harakchand Ratanchand Banthias vs Asst. collector of Central Excise Poona, II Division while declaring sec. 27(6) of the Act, as it stood prior to its amendment by the Amending Act No. 26 of 1969, constitutionally invalid on the ground of conferal of a very wide and vague power upon the Administrator to grant or renew a license to a dealer. For the reasons which we shall indicate presently it is impossible to the reasoning given by the High Court for striking down sec. 28 in the manner done and in our view the analogy drawn by the High Court from the reasoning adopted by this Court while dealing with unamended sec. 27(6) of the Act is clearly inapplicable. It is true that no express rule prescribing the conditions or circumstances under which the permission can be granted or refused (1) 955 has been framed nor any particular guide line has been expressly indicated in sec. 28 by reference to which the power conferred upon him thereunder could be exercised by the Administrator, but that is not decisive of the matter. It cannot be disputed that sec. 28 is part and parcel of the entire scheme of Gold Control as envisaged by the Act and the object of the enactment and the scheme affords sufficient guidance to the Administrator in the matter of exercising his discretion under that section. The main object in putting the Act on the Statute Book as indicated by its long title is "to provide, in the economic and financial interests of the community, for the control of the production, manufacture, supply, distribution, use and possession of, and business in, gold ornaments and articles of gold and for matters connected therewith or incidental thereto. " In Harakchand Banthria 's case (supra) this Court has further pointed out that even though import of gold into India had been banned considerable quantities of contraband gold were finding their way into the country through illegal channels affecting the national economy and hampering the country 's economic stability and progress, that the Customs Department was not in a position to effectively combat the smuggling over the long borders and coast line, that therefore anti smuggling measures had to be supplemented by a detailed system of control over internal transactions and that the Gold (Control) Act, 1968 was passed for this purpose. In other words, the several restrictions that have been put on the activities of the traders doing business in gold will have to be viewed from the aforesaid perspective. It is also clear that the restrictions which have been imposed in sec. 28 are meant to prevent the circumvention of other provisions of the Act. Therefore, in our view the objective, the policy and the Scheme of the Act together with the necessity to ensure prevention of circumvention of the other provisions of the Act afford more than sufficient guidance to the Administrator in the matter of exercising the power of discretion conferred on him under sec. In fact, sec. 5(1 of the Act requires that the Administrator should have regard to the policy and purposes of the Act in making his orders. Moreover against his order under that section a revision lies to Central Government which implies that he will have to make judicious use of his power or discretion and any improper exercise is liable to be corrected by a higher authority. If that be so it cannot be said that unfettered or uncanalised or arbitrary power has been conferred upon the Administration under sec. Moreover, regard must be had to be the nature of the restrictions imposed by the Section. It does not impose any blanket or 956 absolute prohibition upon a dealer from carrying on money lending, banking or any other business in the same premises in which he carries on business as a dealer but he is prevented only from carrying on business as money lender or banker on the security of any article, ornament or both unless authorised by the administrator. Even the restriction in the case of a third person in carrying on business as a money lender, banker or any other business in the same premises is not absolute in as much as the Administrator can authorise the third person to carry on the business in the licensed premises of the dealer and while implementing such limited restrictions or granting relief against the same he will be guided by the policy and purposes of the Act and by the prime consideration that circumvention of the other provisions of the Act shall not be premitted. Having regard to this position which obtains in the case sec. 28 cannot be struck down on the ground of excessive delegation of legislative power and its validity has to be upheld. We may indicate that the same provision (section 28) was challenged before the Patna High Court in Bihar State Bullion Merchants ' Association vs Union of lndia(1) and the Gujarat High Court in Ramanlal Purshottamamdas Chokshi vs Union of India & Others (2) and these High Courts have upheld its validity. We approve the view taken in those cases As regards the analogy drawn by the High Court from the reasoning adopted by this Court in Harakchand Banthia 's case (supra) while declaring unamended sec. 27(6) of the Act invalid we would like to point out that while conferring power on the Administrator in the matter of granting or renewing a license to a dealer the unamended sec. 27(6) in several of its clauses referred to certain concepts which Administrator was required to take into account, and these concepts were regarded as indefinite, uncertain and vague. For instance under clause (a) the Administrator was required to have regard to the number of dealers existing 'in the region ' in which the applicant was intending to carry on business as dealer but the word 'region ' was no where defined in the Act; similarly clause (b) required the Administrator to have regard to the anticipated demand ', as estimated by him for the ornaments in that region but the expression 'anticipated demand ' was really vague and incapable of assessment leading to a great deal of uncertainty; similarly the expression (1)AIR 1971 Patna, 240. (2)14 Guj. L.R. 112. 957 'suitability of the applicant ' in cl. (e) and 'public interest ' in cl. (g) A did not provide any objective standard or norm and because such indefinite, uncertain and vague expressions or concepts had been used in some of the clauses under sec. 27(6) this Court struck down sec. 27(6) on the ground that it conferred a very wide and vague power on the Administrator. It may be mentioned that after this provision was struck down by this Court Parliament has carried out the necessary amendment in the Act. No such vague or indefinite expressions or concepts are to be found in sec. 28 by reference to which the Administrator is required to exercise his power. In the absence of parity of situation or circumstances the doctrine of parity of reasoning cannot be invoked. In the result we set aside the impugned judgment of the High Court and declare sec. 28 of the Act valid. The appeal succeeds but since the respondents have not appeared there will be no order as to costs. S.R. Appeal allowed.

Section 28 of the Gold Control Act, 1968 bars money lending business to be carried on in licensed premises, either by the licensed dealer or by any other person unless authorised by the Administrator to do so. Drawing analogy from the reasoning adopted by the Supreme Court in its decision reported in Harakchand Ratanchand Banthia vs Assistant Collector or Central Excise, Poona, II Division, [1970] I SCR 479=AIR , the High Court of Andhra Pradesh struck down the said provision on the ground that it suffers from the vice of excessive delegation of legislative power in as much, as no criteria or guidelines have been provided by reference to which the power conferred on the Administrator to refuse permission or grant permission should be exercised and that the section confers an arbitrary, uncanalised and unfettered power upon the Administrator with the result that the licensed dealer is at his mercy while seeking permission to carry on money lending or banking business on the security of any article, ornament or both in the same premises in which he carried on business as such dealer. Hence the appeal by special leave. Allowing the appeal, the Court ^ HELD: 1.1 Section 28 of the Gold Control Act, 1968 cannot be struck down on the ground of excessive delegation of legislative power and its validity must be upheld. [957C] 1.3 It is true that no express rule prescribing the conditions or circumstances under which the permission can be granted or refused has been framed nor any particular guide line has been expressly indicated in section 28 by reference to which the power conferred upon him thereunder could be exercised by the Administrator, but that is not decisive of the matter. [954H; 955A] 952 1.3 Section 28 of the Gold Control Act, 1968 is part and parcel of the entire scheme of the Gold Control Act the objective, the policy and the scheme of the Act together with the necessity to ensure prevention of circumvention of the other provisions of the Act afford more than sufficient guidance to the Administrator in the matter of exercising the power or discretion conferred on him under section 28. The several restrictions that have been put on the activities of the traders doing business in gold will have to be viewed, in the light of the purpose or which the Gold Control Act was passed viz., that even though import of gold into India had been banned considerable quantities of contraband gold were finding their way into the country through illegal channels affecting the national economy and hampering the country 's economic stability and progress, that the Customs Department was not in a position to effectively combat the smuggling over the long borders and coast line that therefore anti smuggling measures had to be supplemented by a detailed system of control over internal transactions. In fact section 5 (1) of the Act requires that the Administrator should have regard to the policy and purposes of the Act in making his orders. Moreover against his order under that section a revision lies to Central Government which implies that be will have to make judicious use of his power or discretion and any improper exercise is liable to be corrected by a higher authority. Therefore, it cannot be! said that unfettered or uncanalised or arbitrary power has been conferred upon the Administrator under section 28. 1955B; E G] 1.4 further section 28 does not impose any blanket or absolute prohibition upon a dealer from carrying on money lending, banking or any other business in the same promises in which he carries on business as a dealer but he is prevented only from carrying in business as money lender or banker on the security of any article, ornament or both unless authorised by the Administrator. Even the restriction in the case of a third person in carrying on business as a money lender, banker or any other business in the same premises is not absolute in as much as the Administrator can authorise the third person to carry of the business in the licensed premises of the dealer and while implementing such limited restrictions or granting relief against the same he will be guided by the policy and purposes of the Act and by the prime consideration that circumvention of the other provisions of the Act shall not be permitted. [956A C] Bihar State Bullion Merchants Association. Union of India, AIR 1971 Patna 240; Ramanlal Purshottamdas Chokshi vs Union of India & Others , approved. , Annam Ramalingam, etc. vs Union of India, Writ Petitions Nos. 3956 3873/68 etc. dated 26.12.69. Andhra Pradesh, reversed. 1.5 In Harakchand Banthia 's case the Supreme Court found, the phrases like 'in the region ', the anticipated demand '. 'suitability ' and 'public interest ' as vague, uncertain and therefore declared the unamended section 21(6) of the Gold Control Act as invalid and the Parliament has carried out suitable amendments thereafter. No such vague or indefinite expressions or concepts are to be found in section 28 by reference to which 953 the Administrator is required to exercise his power. In the absence of A parity of situation or circumstances the doctrine of parity of reasoning cannot be invoked. [957A C] Harakchand Ratanchand Banthia vs Assistant Collector of Central Excise Poona 11 Division, [1970] I SCR 479 AIR , explained and held in applicable.

minal Appeals Nos. 91 to 93 of 1954. Appeals by Special Leave granted by Supreme Court on the 18th January, 1954 from the Judgment and Order dated the 18th June, 1953 of the High Court of Judicature at Hyderabad in Confirmation Case No. 376/6 of 1952 53 and Criminal Appeals Nos.394/6, 395/6 and 392/6 of 1952 53 arising out of the Judgment and Order dated the 2nd June, 1952 of the Court of the Sessions Judge at Bidar in Sessions Case No. 9/8 of 1951 52. J. B. Dadachanji and Rajinder Narain, for the appellant. (In Criminal Appeal No. 91 of 1954). N. C. Chakravarty, for the appellants. (In Criminal Appeals Nos. 92 and 93 of 1954). P. A. Mehta and P. G. Gokhale, for the respondent. December 3. The Judgment of the Court was delivered by BOSE J. Five persons including the three appellants, were prosecuted for the murder of one Ram chander Shelke. Each was convicted and each was 1085 sentenced to death under section 302 of the Indian Penal Code. The appeals and the confirmation proceedings in the High Court were heard by M. section Ali Khan and V. R. Deshpande, JJ. They differed. The former considered that the convictions should be maintained but was of opinion that the sentence in each case should be commuted to imprisonment for life. The latter favoured an acquittal in all five cases. The matter was accordingly referred to a third Judge, P. J. Reddy, J. He agreed with the first about the convictions and adjudged all five to be guilty under section 302. On the question of sentence he considered that the death sentences on the three appellants, Pandurang, Tukia and Bhilia, should be maintained and that those of the other two should be commuted to transportation for life. It seems that the opinion of the third Judge was accepted as the decision of the Court and so the sentences suggested by him were maintained as well as the convictions. All five convicts then applied to the High Court for leave to appeal. The petition was heard by Ali Khan and Reddy, JJ. and they made the following order: "The circumstances of the crime in this case were such that a brutal murder had been committed and sentence of death was the only one legally possible for the Sessions Judge to have passed and it was confirmed by the High Court". Leave to appeal was refused. Pandurang, Tukia and Bhilia, who were sentenced to death, applied here for special leave to appeal. Their petition was granted. The other two have not appealed. The prosecution case is this. On 7 12 1950, about 3 o 'clock in the afternoon,, Ramchander Shelke (the deceased) went to his field known as "Bhavara" with his wife 's sister Rasika Bai (P.W.1) and his servant Subhana Rao (P.W.7). Rasika Bai started to pick chillies in the field while Ramehander went to another field "Vaniya che seth" which is about a furlong away. We gather that this field is near a river called 1086 Papana. Anyway, Rasika Bai heard shouts from that direction, so she ran to the river bank with Subhana and they both say that they saw all five accused attacking Ramchander with axes and sticks. Two other persons, Laxman (P.W.6) and Elba (P.W.5), who were in the neighbourhood, also heard the cries and ran to the spot. They also say they witnessed the assault and name all five accused. The former has a field near by and was working in it; the latter was a passer by. Rasika Bai shouted out to the assailants not to beat Ramchander but they threatened her and then ran away. Ramehander died on the spot almost immediately. There are four eye witnesses, and the main question we have to consider is whether they can be believed. Ordinarily, we would not have enquired into questions of fact but as three persons have been sentenced to death on the opinion of the third Judge, despite the opinion of one that the death sentence should not be imposed and of the other that the appellants are not guilty and so should be acquitted, we have deemed it advisable to examine the evidence. Two of the eye witnesses were considered unreliable by Reddy, J. in the High Court, so we will omit them from consideration and concentrate on the other two, Rasika Bai (P.W.1) and Subhana (P.W.7). Both give substantially the same version of what they saw of the assault. They heard Ramehander 's cries from the direction of the river bank and rushed there. They say they saw all five accused striking him, the three appellants Pandurang, Tukia and Bhilia with axes, the other two, who have not appealed, with sticks. It is said that there is some discrepancy between Rasika Bai 's statement in the Sessions Court and in the Committal Court about the order in which the blows were given and their number. Ali Khan, J. and Reddy, J. considered this unimportant and so do we. The important thing is that both witnesses are agreed on the following points (1) that Tukia struck Ramchander on his cheek; 1087 Rasika Bai adds that he also struck him on the head; (2) that Pandurang hit him on the head; (3) that after these blows Ramchander fell down and then Bhilia hit him on the neck. Subhana does not say that the other two struck any particular blow. Rasika says that one of them, Nilia, hit Ramchander on the thigh with his stick and assigns no particular blow to the other. Rasika Bai 's version is that on seeing the assault she called out to the accused not to hit but they " raised their axes and sticks" and threatened her, and then ran away. Subbana merely says that they ran away. After this all the accused absconded. They were arrested on different dates and were committed to trial separately. The dates of arrest and committal respectively in the case of each are as follows: Bhilia 9 1 1951 and 14 6 1951 Tukia 13 10 1951 and 10 1 1952 Pandurang 31 8 1951 and 10 1 1952 Tukaram 13 4 1951 and 29 9 1951 Nilia 13 10 1951 and 10 1 1952 The main attack on this evidence was directed to the fact that neither the accused nor the eye witnesses are named in the First Information Report. According to the prosecution, the report was made in the following circumstances. Rasika and Subbana say that after the assault they went back to the village and told Rasika 's sister Narsabai, P.W. 2 (the deceased 's widow) what they had seen. Narsabai says that they disclosed the names of the assailants at that time. From here we go to the Police Patel who lives in a neighbouring village one mile away. He is Mahadappa (P.W. 9). He says that he was standing outside his house in his own village when the sun was setting and saw Krishnabai, the mother in law of the deceased, crying as she passed by outside his house. He asked her what was wrong and she told him that her sonin law had been killed. On hearing this he wrote out 1088 a report, exhibit No. 4, and sent it to the Police Station at Udgir which is about six miles from the scene of the murder. The First Information Report was recorded on the basis of this report at 10 o 'clock the next morning. Now nobody tells us who carried the report to the Police Station. It is written on a printed form and is signed by the Police Patel. Opposite the column headed "Name and address of the complainant or informant" is entered "Tukaram s/o Panda Sheolka". The Sub Inspector, who wrote out the first information report on the basis of this report, entered the following in it: "I am to submit that today a report dated 7 12 1950 from the Police Patel, Neemgaon village, has been received stating that (1) Tukaram, s/o Panda Sheolka, r/o Neemgaon village, came and stated that on 7 12 1950 Ramchander, s/o Govind Reddy was murdered, etc". The Police Patel tells us that this Tukaram is a cousin of the deceased. He also says that "Tukaram, whose name is entered in column No. 2, is not the informant but is the complainant in this case. Tukaram had not given any written complaint to me. He had not given oral information to me. When I saw Krishnabai weeping and going, I did not know where Tukaram was. I do not know whether Tukaram was present in the village on that day or not". This does shroud the matter in mystery but the fact that the report was made is, we think, beyond dispute, also that it was made about 10 o 'clock the following morning. It is to be noted that the SubInspector does not say that Tukaram brought the report to him but that exhibit 4 (the report received from the Police Patel) states that Tukaram gave the Police Patel the information. In that he is not right (though the mistake is natural enough), because exhibit 4 merely places Tukaram 's name opposite the printed column headed "complainant or informant". That leaves the matter equivocal but in view of what the Police Patel tells us, we think that he did mean to convey that 1089 Tukaram was the complainant, probably because he did not want to enter a woman 's name and so picked on the nearest male relative. We see no reason to doubt his statement. He says he did not know any names at that time; and that is evident from the report. But what the learned counsel for the appellants says is that he saw Narsabai on the evening of the murder and as she did not give him any names it is evident that no one knew who the assailants were and that therefore the accusation made against the accused was a subsequent concoction and that it was for that reason that they waited till the next morning before reporting the matter to the police. The Police Patel Mahadappa admits that he went to the scene of the occurrence the same night and that he stayed there the whole night. He also admits that he saw Narsabai there but says he did not speak to her. We have no doubt that he learned the names of the assailants when he went there but this was after he had sent his report. There is some mystery about the report. It did not reach the Police Station till 10 A.M. the next day though it was written about sunset the evening before, but as we do not know who took it and why he delayed it is idle to speculate. What is certain is that there was no point in sending off a report without names the next morning if the idea of delay was to concoct a story and implicate innocent persons. They would either have hit on the names by then or would have waited a little longer until they made up their minds about the story they intended to tell. The haphazard way in which the report was written and dispatched indicates rustic simplicity rather than clever and well planned deceit. It has to be remembered that the deceased left no male relatives except this cousin Tukaram, about whom the Police Patel speaks, and his father Pandu, and though cause for enmity between Ramchander and three of the appellants is disclosed, there is nothing to connect this Tukaram or his father Pandu with the quarrel; and no one suggests that anybody else bore them a grudge. We think it unlikely that these three women, Rasikabai, Narsa 1090 bai and Krishnabai, would have been capable of concocting this elaborate story and of influencing the Police Patel to stay his hand till they bad thought of a suitable tale and found likely victims for their plot. Moreover, the whole village probably turned out as soon as the news spread; in any case the witnesses are agreed that there was a large crowd there. We think it would have been easy to find many persons to say that though they asked Rasikabai and Subhana and Narsabai and others present to tell them what had happened, nobody could because no one knew. It would be ridiculous to suppose that the whole village bore the accused a grudge and joined in an elaborate conspiracy against them. In the circumstances, we think Mahadappa told the truth. The absence of the names in the report is therefore not of much consequence in this case especially as the names were disclosed in full at the time of the inquest. All the witnesses who speak about this are agreed on that point. Once that hurdle is surmounted, there is very little else to criticise in the evidence of Rasikabai and Subhana, bar unimportant discrepancies and the fact that they have made a few small and unimportant contradictions between their testimony in court and some of their numerous earlier statements. There were three sets of committal proceedings, and of course the usual questioning by the police and then the proceedings in the Sessions Court, so it is not surpris ing, that these simple rustics should get confused and not remember in minute detail exactly what they had said from stage to stage. But the major part of their story hangs together remarkably well despite the many attempts to trip them in cross examination in the various courts. As Reddy, J. has dealt with these discrepancies in detail, we need not go over it all again. The injuries shown in the Inquest Report and the postmortem report do not tally. It is questionable how far an inquest report is admissible except under section 145 of the Indian Evidence Act but we do not regard the difference as of value so far as the appel 1091 lants are concerned; at best it could only have helped Tukaram and Nilia who have not appealed. The Inquest Report shows eight injuries. The first four are incised wounds and tally with the evidence given by the witnesses. The remaiding four are described as "blue and black marks". The postmortem mentions the first four but not the others. The doctor was recalled by the High Court and be gives some sort of explanation about postmortem stains on the body which we do not think is satisfactory, but the utmost this shows is that no stick blows were found on the body and that we are prepared to accept. On a careful consideration of the evidence we think Rasika and Subhana are telling the truth and that they can be relied on. We will not rely on the other two witnesses. We are prepared to disregard the evidence of Rasika and Subhana in so far as they say that Tukaram and Nilia also beat Ramchander because the medical evidence does not disclose any injuries which could have been caused by a stick or sticks. As a matter of fact Subhana does not ascribe any particular blow either to Tukaram or to Nilia though he does describe in detail what the other three did. All be says about Tukaram and Nilia is that"The accused present were striking Ramchander; Pandurang, Bhilia and Tukia were holding axes. Tukaram and Nilia had sticks in their bands". This sort of omnibus accusation is not of much value, and Rasikabai is not much better though she does say that Nilia bit Ramchander on the thigh. Except for this, all she says is that "We saw the accused present striking Ramchander Shelke". We think Rasika and Subhana are telling the truth when they say that these two accused were also there but we think that because of that they think they must have joined in the attack and so have added that detail to their story. It is also possible that Nilia did hit out at Ramchander but that the blow did not land on his body. In any case, they only 140 1092 had sticks in their hands which have not even been conceded the dignity of lathis. So the part they played was negligible. We have looked into their cases to this extent so that we can set them on one side in determining who was responsible for the remaining injuries and also because the part they played will be necessary in determining the extent of the common object or intention, if any. The medical evidence shows that the injury that caused death was the one on the neck. All the eyewitnesses are agreed that Bhilia was responsible for that. We refer to the other eye witnesses here to show that there is no discrepancy on this point, but we only rely on Rasikabai and Subhana for determining the fact Bhilia was directly charged with the murder and the injury on the throat is ascribed to him in the charge. His conviction cannot therefore be assailed on any of the technical points which arise in the case of the other two. We uphold his conviction under section 302 of the Indian Penal Code. The injury on the throat having been accounted for, we are left with three. They are (1) an incised wound on the scalp above the left ear, (2)an incised wound on the scalp, central part,and (3)a lacerated wound on the left side of the face which crushed the upper and lower jaws including the lips and teeth. The doctor says that (1) and (2) could not have caused death but that the third could. Rasikabai and Subhana are agreed that the only person who struck on the cheek is Tukia. Rasikabai adds that he also hit Ramchander on the bead. That means that Tukia and Pandurang caused the two non fatal injuries on the head, one each, and that Tukia alone caused the fatal one on the cheek. Tukia 's conviction under section 302 of the Indian Penal Code was therefore jusified. In Pandurang 's case we are left with the difficult question about section 34 of the Indian Penal Code. 1093 But before we deal with that, we will set section 149 of the Indian Penal Code aside. There is no charge under section 149 and, as Lord Sumner points out in Barendra Kumar Ghosh vs King Emperor(1), section 149, unlike section 34, creates a specific offence and deals with the punishment of that offence alone. We would accordingly require strong reasons for using section 149 when it is not charged even if it be possible to convict under that section in the absence of a specific charge, a point we do not decide here. But that apart, there is, in our opinion, no evidence here which would justify the conclusion of a common object even if one had been charged. There is some vague evidence to the effect that there had once been a dacoity at Ramchander 's house and that he suspected "the "accused" and reported them to the police who arrested them, but nothing came of it and they were later released. This is put forward as one of the grounds of enmity and to show why all five joined in the attack. But in the absence of anything specific we are not prepared to act on such a vague allegation especially about the persons who are said to have been wrongfully blamed. What, however, is more specific is this: Ramchander bought a field called Hatkerni at Neemgaon from one Shivamma Patelni about a year before the murder. Narsabai tells us that the three accused Nilia, Bhilia and Tukia, all of whom are Lambadas used to live in that field. When Ramchander bought it he turned them out and she says that gave them cause for enmity against him. Now even if it be accepted that this evidence is indicative of prior concert, it only embraces the three Lambadas, Nilia, Bhilia and Tukia. Pandurang, who is a Hatkar, is not included. As this is the only evidence indicating a common purpose, and as we know nothing about what preceded the assault (for the witnesses arrived after it bad started), we cannot gatber any common object from the fact that Pandu rang, though armed with an axe, only inflicted a light blow on the scalp which did not break any of the (1) (1924) L.R 52 I.A. 40, 52, 1094 fragile bones in that region and from the fact that two others who were lightly armed with what have been called "sticks" inflicted no injuries at all. Section 149 is therefore out of the question. Turning now to section 34, that was not charged in Pandurang 's case but we need not consider whether such an omission is fatal because even if it had been charged there is no evidence from which a common intention embracing him can legitimately be deduced. As we have just said, the witnesses arrived at a time when the beating was already in progress. They knew nothing about what went before. We are not satisfied that Tukaram is proved to have done anything except be present, and even if it be accepted that Nilia aimed a blow, at Ramchander 's thigh be was so half hearted about it that it did not even hit him; and in Pandurang 's case, though armed with a lethal weapon, he did no more than inflict a comparatively light head injury. It is true they all ran away when the eye witnesses arrived and later absconded, but there is nothing to indicate that they ran away together as a body, or that they met afterwards. Rasikabai says that the "accused" raised their axes and sticks and threatened her when she called out to them, but that again is an all embracing statement which we are not prepared to take literally in the absence of further particulars. People do not ordinarily act in unison like a Greek chorus and, quite apart from dishonesty, this is a favourite device with witnesses who are either not mentally alert or are mentally lazy and are given to loose thinking. They are often apt to say "all" even when they only saw "some" because they are too lazy, mentally, to differentiate. Unless therefore a witness particularises when there are a number of accused it is ordinarily unsafe to accept omnibus inclusions like this at their face value. We are unable to deduce any prior arrangement to murder from these facts. Now in the case of section 34 we think it is well established that a common intention presupposes prior concert. It requires a pre arranged plan because before a man can be vicariously convicted for the 1095 criminal act of another, the act must have been done in furtherance of the common intention of them all: Mahbub Shah vs King Emperor(1). Accordingly there must have been a prior meeting of minds. Several persons can simultaneously attack a man and each can have the same intention, namely the intention to kill, and each can individually inflict a separate fatal blow and yet none would have the common intention required by the section because there was no prior meeting of minds to form a pre arranged plan. In a case like that, each would be individually liable for whatever injury he caused but none could be vicariously convicted for the act of any of the others; and if the prosecution cannot prove that his separate blow was a fatal one he cannot be convicted of the murder however clearly an intention to kill could be proved in his case: Barendra Kumar Ghosh vs King Emperor(2) and Mahbub Shah vs King Emperor(1). As their Lordships say in the latter case, "the partition which divides their bounds is often very thin: nevertheless, the distinction is real and substantial, and if overlooked will result in miscarriage of justice". The plan need not be elaborate, nor is a long interval of time required. It could arise and be formed suddenly, as for example, when one man calls on bystanders to help him kill a given individual and they, either by their words or their acts, indicate their assent to him and join him in the assault. There is then the necessary meeting of the minds. There is a pre arranged plan however hastily formed and rudely conceived. But pre arrangement there must be and premeditated concert. It is not enough, as in the latter Privy Council case, to have the same intention independently of each other, e.g., the intention to rescue another and, if necessary, to kill those who oppose. In the present case, there is no evidence of any prior meeting. We know nothing of what they said or did before the attack not even immediately before. Pandurang is not even of the same caste as the others, (1) [1945] L.R. 72 I.A. 148, 153, 154. (2) [19241 L.R. 52 I.A. 40, 49. 1096 Bhilia, Tukia and Nilia are Lambadas, Pandurang is a Hatkar and Tukaram a Maratha. It is true prior concert and arrangement can, and indeed often must, be determined from subsequent conduct as, for example, by a systematic plan of campaign unfolding itself during the course of the action Which could only be referable to prior concert and pre arrangement, or a running away together in a body or a meeting together subsequently. But, to quote the Privy Council again, "the inference of common intention should never be reached unless it is a necessary inference deducible from the circumstances of the case". But to say this is no more than to reproduce the ordinary rule about circumstantial evidence, for there is no special rule of evidence for this class of case. At bottom, it is a question of fact in every case and however similar the circumstances, facts in one case cannot be used as a precedent to determine the conclusion on the facts in another. All that is necessary is either to have direct proof of prior concert, or proof of circumstances which necessarily lead to that inference, or, as we prefer to put it in the time honoured way, "the incriminating facts must be incompatible with the innocence of the accused and incapable of explanation on any other reasonable hypothesis". (Sarkar 's Evidence, 8th edition, page 30). The learned counsel for the State relied on Mamand vs Emperor(1) because in that case the accused all ran away and their Lordships took that into consideration to establish a common intention. But there was much more than that. There was evidence of enmity on the part of the accused who only joined in the attack but had no hand in the killing, and none on the part of the two who did the actual murder. There was evidence that all three lived together and that one was a younger brother and the other a tenant of the appellant in question. There was evidence that they all ran away together: not simply that they ran away at the same moment of time when discovered, but that they ran away together. As we have said, each case must rest on its own facts and the mere (1) A.I.R 1946 P C 45. 1097 similarity of the facts in one case cannot be used to determine a conclusion of fact in another. In the present case, we are of opinion that the facts disclosed do not warrant an inference of common intention in Pandurang 's case. Therefore, even if that had been charged, no conviction could have followed on that basis. Pandurang is accordingly only liable for what he actually did. In our opinion, his act falls under section 326 of the Indian Penal Code. A blow on the head with an axe which penetrates half an inch into the head is, in our opinion, likely to endanger life. We therefore set aside his conviction under section 302 of the Indian Penal Code and convict him instead under section 326. We are of opinion that in his case a sentence of imprisonment for a term of ten years will suffice. We accordingly set aside the sentence of death and alter it to one of ten years ' rigorous imprisonment. That leaves the question of sentence in the case of Bhilia and Tukia. It was argued that no sentence of death can be passed unless two Judges concur because of section 377 of the Code of Criminal Procedure, and it was argued that section 378 of the Code does not abrogate or modify that provision. We do not intend to examine that here because we are of opinion that the sentence should be reduced to transportation in these two cases mainly because of the difference of opinion in the High Court, not only on the question of guilt, but also on that of sentence. In saying this we do not intend to fetter the discretion of Judges in this matter, for a question of sentence is, and must always remain, a matter of discretion, unless the law directs otherwise. But when appellate Judges, who agree on the question of guilt, differ on that of sentence, it is usual not to impose the death penalty unless there are compelling reasons. We see no reason to depart from this practice in this case and so reduce the sentences of death in the case of Bhilia and Tukia to transportation for life because of the difference of opinion in the High Court.

It is well settled that common intention in section 34 of tile Indian Penal Code presupposes prior concert. It requires a prearranged plan because before a man can be vicariously convicted for the criminal act of another, the act must have boon done in furtherance of the common intention of them all. Accordingly there must have been a prior meeting of minds. Several persons can simultaneously attack a man and each can have the same intention, namely the intention to kill, and each can individually inflict a separate fatal blow and yet none would have the common intention required by the section because there was no prior meeting of minds to form a pre arranged plan. In a case like that, each would be individually liable for whatever injury he caused but none could be vicariously convicted for the act of any of the others; and if the prosecution cannot prove that his separate blow was a fatal one he cannot be convicted of the murder however clearly an intention to kill could be proved in his case. Care must be taken not to confuse same or similar intention with common intention; the partition which divides their bounds is often very thin, nevertheless the distinction is real and substantial, and if overlooked will result in miscarriage of justice. The plan need not be elaborate, nor is a long interval of time required. It could arise and be formed suddenly, But there must 139 1084 be pre arrangement and premeditated concert. It is not enough, to have the same intention independently of each other. The inference of common intention should never be reached unless it is a necessary inference deducible from the circumstances of the case. It is a question of fact in every case and however similar the circumstances, facts in one case cannot be used as a precedent to determine the conclusion on the facts in another. All that is necessary is either to have direct proof of prior concert, or proof of circumstances which necessarily lead to that inference, or, in other words, the incriminating facts must be incompatible with the innocence of the accused and incapable of ex planation on any other reasonable hypothesis. When appellate judges, who agree on the question of guilt differ on that of sentence, it is usual not to impose the death penalty unless there are compelling reasons. Barendra Kumar Ghosh vs King Emperor ([1924] L.R. 52 I.A. 40), Mahbub Shalt vs King Emperor ([1945] L.P. 72 I.A. 148) and Mamand vs Emperor (A.I.R. , referred to.

Tax Reference Cases Nos. 3 to 5 of 1975 Tax Reference under Section 257 of the Income tax Act, 1961 made by the Income tax Appellate Tribunal, Cuttack Bench, Cuttack P.A. Francis, Champat Rai and Miss A. Subhashini for the Appellant. C.S.S. Rao for the Respondent. The Judgment of the Court was delivered by 308 PATHAK, J. : These references under s.27(1) of the have been made by the Income Tax Appellate tribunal, Cuttack Bench at the instance of the Commissioner of Wealth Tax, Orissa for the opinion of this Court on the following question of law: "Whether on the facts and in the circumstances of the case, the Wealth Tax Officer was in law justified in including in the net wealth of the assessee interest due on accrual basis (though not realised) on the outstandings of the money lending business, the accounts of the assessee being maintained on cash basis ?" The respondent assessee was assessed to wealth tax for the assessment years 1965 66, 1966 67 and 1967 68 (the respective valuation dates being March 31, 1965, March 31, 1966 and March 31, 1967), in the status of a 'Hindu Undivided Family. In each of the assessments, the Wealth Tax Officer included a sum of Rs. 1,50,000 estimated as the accrued interest on the assessee 's money lending investments. The assessee appealed to the Appellate Assistant Commissioner and urged that as it maintained its books of account in accordance with the cash system of accounting the accrued interest on the money lending investments could not be included in the wealth tax assessments. The contention found favour with the Appellate Assistant Commissioner, and accordingly he deleted the additions of Rs. 1,50,000 representing accrued interest. In doing so the Appellate Assistant Commissioner followed "Commissioner of Wealth tax Bihar and Orissa vs Vysyaraju Badreenarayana Moorthy Raju (Orissa)(1), The Wealth Tax Officer appealed to the Appellate Tribunal and contended that accrued interest was liable to be included in the wealth tax assessments of the assessee. The Wealth Tax Officer sought support from a judgment of the Andhra Pradesh High Court in Vedreva Venkappa Rao vs Commissioner of Wealth tax(2) A.P. The Appellate Tribunal observed that the judgment of the Orissa High Court was binding on it, and accordingly by a consolidated order dated April 3, 1972, it dismissed the appeals. The Commissioner of Wealth Tax applied under sub section (1) of section 27 of the Wealth (1) (2) 309 Tax Act for a reference of the cases to this Court in view of the conflict of opinion between the Orissa High Court and the Andhra Pradesh High Court, and so these references have been made. The question can be disposed of shortly. Under section 3 of the Wealth Tax Act, wealth tax is charged for every assessment year in respect of the net wealth of the assessee on the corresponding valuation date. The expression "net wealth" is defined by cl. (m) of s.2 of the Act as "the amount by which the aggregate value . . Of all the assets, wherever located, belonging to the assessee on the valuation date. is in excess of the aggregate value of all the debts owed by the assessee on the valuation date. " According to the scheme of the Wealth Tax Act, the net wealth of an assessee has to be determined as it obtains on a particular date. That is the "valuation date". Clause (q) of s 2 defines the expression "valuation date" as follows: ; "(q) Valuation date, in relation to any year for which an assessment is to be made under this Act, means the last day of the previous year as defined in (Section 3) of the Income Tax Act, if an assessment were to be made under that Act for that year; Provided that (i) Where in the case of an assessee there are different previous years under the Income Tax Act for different sources of income, the valuation date for the purposes of this Act shall be the last day of the last of the previous years aforesaid, (ii) in the case of a person who is not an assessee within the meaning of the Income Tax Act, the valuation date for the purposes of this Act shall be the 31st day of March immediately preceding the assessment (z year; (iii)where an assessment is made in pursuance of section 19A, the valuation date shall be the same valuation date as would have been adopted in respect of the net wealth of the deceased if he were alive. " 310 The computation of the net wealth of an assessee calls for a determination of his assets and debts as on the valuation date. The definition embodied in the substantive part of cl. (q) of s.2 indicates that broadly Parliament has fixed upon the last day of the "previous year", as defined under the Income Tax Act, as the valuation date. The figure of net wealth of the assessee at the end of the "previous year" takes into account the financial activities of the assessee during that "previous year". His financial activities during that period determine how his net wealth on a particular valuation date differs from his net wealth on the immediately preceding valuation date. There is an obvious advantage in adopting as the valuation date the last day of a period which is also the relevant period under the Income Tax Act. The reasons for defining the valuation date in terms of the last day of the income tax "previous year" stop there. The system of accounting, mercantile or cash or hybrid, is of no relevance for the purpose of determining the assets of the assessee. That appears plainly from the definition or "net wealth" which speaks of "the aggregate value. of all the assets" belonging to the assessee on the valuation date. All the assets of the assessee, bar those expressly excepted by the statute, are to be taken into account, and it is immaterial whether the assessee employs one system of accounting or another. There is clear indication that the assets to be considered are not circumscribed by any consideration of the particular system of accounting adopted by the assessee. The assets are not confined to cash. Where the asset is an asset other than cash, its value is determined pursuant to sub section (I) of s.7 as the estimated price, which, in the opinion of the Wealth Tax Officer, the asset would fetch if sold in the open market on the valuation date. In other words, it would be the estimated open market value of the rights in the property which constitute the asset. When we speak of the value of a property, on a legal plane we refer to the value of the rights in that property. It is apparent that what accrues as a right also falls to be included within the assets of an assessee under the Wealth Tax Act. That being so, the conclusion is inescapable that even though the accounts of the assessee are maintained on cash basis interest due on accrual basis, though not realised, on the outstandings of the money lending business are liable to be included in the net wealth of the assessee. In this view of the matter, we approve of the opinion expressed by the Andhra Pradesh High Court in Vedrevu Venkappa Rao (supra) 311 and in Commissioner of Wealth Tax, A.P. I vs Pachigolla Narasimha Rao(1) and the Calcutta High Court in Dipti Kumar Basu vs Commissioner of Wealth Tax, West Bengal(2) and hold that the view taken by the Orissa High Court in Commissioner of Wealth tax vs Vysyaraju Badreenarayana Moorthy Raju (Orissa) (supra) and by the Karnataka High Court in A. T. Mirji vs Commissioner of Wealth Tax, Karnataka(3) cannot be accepted. In the result, the question is answered in the affirmative, in favour of the Revenue and against the assessee. There is no order as to costs.

The respondent assessee was assessed to wealth tax for the assessment years 1965 66, 1966 67 and 1967 68, in the status of a Hindu Undivided Family '. In each of the assessment years, the Wealth Tax Officer included a sum of Rs. 1.5 lakhs estimated as the accrued interest on the assessee 's money lending investments. The assessee appealed to the Appellate Assistant Commissioner, con tending that as the books of account were maintained in accordance with the cash system of accounting, the accrued interest on the money lending investment could not be included in the Wealth Tax assessments, the Appellate Assistant Commissioner following the decision of the Orissa High Court in Commissioner of Wealth tax Bihar and Orissa vs Vysyaraju Badreenarayana Moorthy Raju (Orissa) (1971)79 ITR 330 deleted the additions representing accrued interest. The Wealth Tax Officer, appealed to the Appellate Tribunal and con tended that the accrued interest was liable to be included in the Wealth Tax assessment of the assessee, relying on the judgment of the Andhra Pradesh High Court in Vedrevu Venkappa Rao vs Commissioner of Wealth Tax A.P. The Appellate Tribunal dismissed the appeal, as it was bound by the decision of the Orissa High Court. The Commissioner of Wealth Tax applied under Section 27(1) of the Wealth Tax Act, 1957 for a reference to the Supreme Court in view of the conflict of opinions between the Orissa High Court and the Andhra Pradesh High Court and the question: "Whether the Wealth Tax Officer was justified in including in the net wealth of the assessee, interest due on accrual basis (though not realised) on the outstandings 307 of the assessee 's money lending business, the accounts being maintained on cash," was referred to this Court. ^ HELD: 1. Even though the accounts of the assessee are maintained on cash basis interest due on accrual basis, though not realised, on the out standings of the money, lending business is liable to be included in the net wealth of the assessee. [310G] 2. The value of a property refers to the value of the rights in that property. What accrues as a right also falls to be included within the assets of an assessee under the Wealth Tax Act 1957. [310F] 2.1. The system of accounting, mercantile or cash or hybrid, is of no relevance for the purpose of determining the assets of the assessee. That appears plainly from the definition of "net wealth" which speaks of "the aggregate value. of all the assets" belonging to the assessee on the valuation date. All the assets of the assessee, bar those expressly excepted by the statute, are to be taken into account, and it is immaterial whether the assessee employs one system of accounting or another. [310 C D] 3. The assets are not confined to cash. Where the asset is an asset other than cash, its value is determined pursuant to sub section (I) of section 7 as the estimated price, which, in the opinion of the Wealth Tax Officer, the asset would fetch if sold in the open market on the valuation date. It would be the estimated open market value of the rights in the property which constitute the asset. [310E F] Vedrevu Venkappa Rao vs Commissioner of Wealth tax A.P. , Commissioner of Wealth, Tax. A.P_I. vs Pachigolla Narasimha Rao, and Dipta Kumar Basu vs Commissioner oz Wealth Tax, West Bengal, , approved. Commissioner of Wealth tax Bihar and Orissa vs Vysyaraju Badreenarayana MoorthY Raju (Orissa) and A.T. Mirji vs Commissioner of Wealth Tax, Karnataka, Over ruled.

Civil Appeal Nos.3677 3680 of 1986 Etc. From the Judgment and Order dated 10.3.1986 of the Karnataka High Court in W.P. Nos. 4053 to 4056 of 1985. Shanti Bhushan, Dr. Y.S. Chitale, H.B. Datar, K.R. Nagaraja, 1011 R.S. Hegde, R.B. Datar, S.S. Jawali, B.P. Singh, N.D.B. Raju, R.P., Wadhwani, Aruneshwar Gupta, Swaraj Kaushal, KMM Khan, S.R. Setia, A.T.M. Sampath and C.S. Vaidyanathan for the appearing parties. The Judgment of the Court was delivered by CHINNAPPA REDDY, J. Special leave granted in all the cases. These appeals raise common questions of law and may therefore, be disposed of by a common judgment. In exercise of its powers under section 63(7) of the , the Central Government specified 50 as the number of 'All India Tourist Vehicle Permits ' which may be granted by the Karnataka State Transport Authority. By section 24 of Amending Act 47 of 1978, a proviso to section 63(7) was introduced. We are concerned in these appeals with the vires and interpretation of this proviso. By the time the proviso came into force, 36 permits had been granted by the Karnataka State Transport Authority and 14 remained to be granted. There were as many as 495 applications for the grant of these 14 permits. By an order dated February 1, 1984, the Supreme Court directed the Karnataka State Transport Authority to dispose of these applications. The State Transport Authority, by its proceedings dated April 30, 1984, granted 11 out of the 14 permits to the Karnataka State Tourism Development Corporation, one permit to the Indian Tourism Development Corporation and two permits to the Karnataka State Road Transport Corporation. A number of appeals were preferred to the Karnataka State Transport Appellate Tribunal. The Tribunal by its order dated February 28, 1985 set aside the grant of the two permits in favour of the Karnataka State Road Transport Corporation, set aside the grant of three out of eleven permits to the Karnataka State Tourism Development Corporation and instead granted three permits to private operators and increased the number of permits granted to the Indian Tourism Development Corporation from one to three. The Tribunal took the view that having regard to the rule of preference enunciated by the proviso to section 63(7), the applications from the 'non preferred ' category had to be excluded as the number of applications from the applicants who were required to be given preference exceeded the number of permits to be granted. It was on that ground that the grant of two permits to the Karnataka State Road Transport Corporation was set aside, though the Appellate Tribunal had no doubt regarding the resources and ability of that corporation to operate the tourist services. It was on that ground again, it was so stated by the Tribunal, that some of the appellants 1012 before the Tribunal had to be denied the grant of permits though otherwise they would have been entitled to the grant of permits having regard to their expertise, experience and resources. The Tribunal rejected their appeals regretfully. A large number of applicants filed writ petitions in the High Court. The writ petitions were rejected by the High Court on the ground that the preference contemplated by the proviso to section 63(7) contemplated exclusion of the 'non preferred ' class if sufficient number of applicants from the preferred classes were available. The decision of this Court in Sher Singh vs Union of India, ; was distinguished on the ground that in that case the court interpreted the word 'preference ' occurring in section 47(1 H) in the back ground of the provisions of Chapters IV and IV A of the Act, under the former of which the State Transport Undertaking would have preference whereas under the latter the State Transport Undertaking would have a monopoly. The Karnataka State Road Transport Corporation, the Karnataka State Tourism Development Corporation and some other private operators have filed these appeals by special leave of this Court under article 136 of the Constitution. Shri Shanti Bhushan, learned counsel for the Karnataka State Road Transport Corporation, Dr. Chitley, learned counsel for some of the private operators, Shri Datar, learned counsel for the Karnataka State Tourism Development Corporation, Shri Sampat and Shri Javali, learned counsel for other private operators submitted that the State Transport Appellate Tribunal and the High Court were wrong in distinguishing the decision of this court in Sher Singh 's case and that the true position was that on a correct interpretation of the proviso to sec. 63(7), the preference became operative only if other things were equal. It was also urged that the fourth sub clause of the proviso offended article 14 and had to be struck down. Shri C.S. Vaidyanathan, learned counsel for some of the preferred private operators urged that the view taken by the High Court and the State Transport Appellate Tribunal was correct and that the fourth sub clause of the proviso to section 63(7) did not offend article 14 of the Constitution. We may now glance at some of the relevant provisions of the . section 2(33) defines a "transport vehicle" as meaning a "public service vehicle or a goods vehicle". A "public service vehicle" is defined in section 2(25) as "any motor vehicle used or adapted to be used for the carriage of passengers for hire or reward, and includes a motor cab, contract carriage, and stage carriage". A "motor car" is defined in section 2(16) as "any motor vehicle other than a transport vehicle, 1013 omni bus, road roller, tractor, motor cycle or invalid carriage". A "contract carriage" is defined as, broadly, a motor vehicle which carries a passenger or passengers for hire or reward under a contract. "Tourist vehicle" is defined by section 2(29 A) as "a contract carriage constructed or adapted and equipped and maintained in accordance with such specifications as the State Government may, by notification in the Official Gazette, specify in this behalf". "Stage carriage" is defined by section 2(29) as "a motor vehicle carrying or adapted to carry more than six persons excluding the driver which carries passengers for hire or reward at separate fares paid by or for individual passengers, either for the whole journey or for stages of the journey." Chapter IV, sections 42 to 68, deals with "Control of Transport vehicles". Section 42 prescribes permits for the use of a transport vehicle in any public place. Sections 46, 47 and 48 deal with the grant of stage carriage permits. Section 47(1) prescribes the matters to be taken into consideration in granting stage carriage permits and the first consideration, naturally, is "the interest of the public generally. " The proviso to section 47(1) prescribes that, other things being equal, a registered cooperative society and a person possessing a licence for driving transport vehicles shall be given preference over individual owners in granting stage carriage permits. Section 47(1 A) enables the State Government to reserve a certain percentage of stage carriage permits for the Scheduled Castes and Scheduled Tribes. Section 47(1 C) enables the State Government to reserve a certain percentage of stage carriage permits to persons belonging to economically weaker sections of the community. Section 47(1 H) prescribes that notwithstanding anything contained in the section, an application for stage carriage permit from a State Transport undertaking for operating in any inter State route shall be given preference overall other applications, provided, of course, the authority is satisfied that the State Transport Undertaking would be able to operate in the inter State route without detriment to its responsibility for providing efficient and adequate road transport services in any notified area or notified route. Sections 49, 50, 51 deal with the grant of contract carriage permits. Section 52 and 53 deal with private carrier 's permit and sections 54, 55 and 56 deal with public carrier 's permit. Section 57 deals, generally with the procedure to be followed in applying for and granting permits. Section 63(1) stipulates, broadly, that a permit granted by the Regional Transport Authority of any one region shall not be valid in any other region, unless the permit has been countersigned by the Regional Transport Authority of that other region, and a permit granted in any one State shall not be valid in any other State unless countersigned by the State Transport Authority of 1014 that other State or by the Regional Transport Authority concerned. Section 63(7) is the provision with whose interpretation and vires we are primarily concerned in this case. It is as follows: "(7) Notwithstanding anything contained in sub section(1) but subject to any rules that may be made under this Act, any State Transport Authority may, for the purpose of promoting tourism, grant permits valid for the whole or any part of India, in respect of such number of tourist vehicles as the Central Government may, in respect of that State, specify in this behalf, and the provisions of Sections 49, 50, 51, 57, 58, 59, 59 A, 60, 61 and 64 shall, as far as may be, apply in relation to such permits: Provided that preference shall be given to applications for permits from (i) the India Tourism Development Corporation; (ii) a State Tourism Development Corporation; (iii) a State Tourist Department; (iv) such operators of tourist cars, or such travel agents, as may be approved in this behalf by the Ministry of the Central Government dealing in tourism. " Section 68 enables the State Government to make rules for the purpose of carrying into effect the provisions of Chapter IV. Chapter IV A relates to "special provisions relating to State Transport Under takings. " Sections 68 C, 68 D and 68 E provide for the preparation and publication of schemes of road transport service to be provided by State Transport Undertakings, the procedure to be followed, etc. Section 68 F(1) prescribes that where, in pursuance of an approved scheme, a State Transport Undertaking applies for a stage carriage permit, a contract carriage permit or a public carrier 's permit in respect of a notified area or notified route, such permit shall be granted to the State Transport Undertaking by the State Transport Authority in a case where the said area or route lies in more than one region and the Regional Transport Authority in any other case. This is to be so notwithstanding anything to the contrary contained in Chapter IV. 1015 The general scheme of the Act in the matter of grant of permits for stage carriages and contract carriages appears to be that except in the case of a notified route or notified area, where under section 68 F(1) the permit has to be necessarily granted to the State Transport Undertaking, in all other cases, the claims of all eligible applicants must be considered on merits, applying the rules of preference wherever the claims are approximately equal. Except in the case of a notified route or notified area, the application of no applicant may be altogether excluded from consideration on the sole ground that another applicant is entitled to preference under one or the other provisions of the statute. The proviso to section 47(1) for example, provides that other conditions being equal, an application for a stage carriage permit from a cooperative society or a person holding a valid licence for driving transport vehicles shall as far as may be, be given preference over applications from individual owners. There is no problem here since the proviso itself says that the rules of preference will apply only if other conditions are equal. Section 47(1 H) also enunciates a rules of preference and says that an application for stage carriage permit from State Transport Undertaking for operating in any inter State route shall be given preference overall other applications. While it is true that section 47(1 H) does not expressly refer to "other things being equal", it appears to be implicit in the provision that other things are equal. The rule is a rule of preference and not a rule of exclusion. Section 47(1 H) does not say, for example, like section 68 F(1) that the permit shall be granted to the State Transport Undertaking. That is how section 47(1 H) was interpreted in Sher Singh 's case. Desai, J., speaking for the court observed: "However, when an application for a permit is made under Chapter IV, the Undertaking has to compete with private operators who may as well make an application for permit. When the Undertaking applies for permit under Chapter IV, it must satisfy the Regional Transport Authority that it is better suited than the private operator to render transport facility to the travelling public. 47(1 H) however, provides that in the case of inter State route, the Undertaking will have preference in the matter of stage carriage permit. Does preference of this nature deny equality guaranteed by article 14? The expression 'preference ' amongst others means prior right, advantage, precedence etc. But how would it be possible to give precedence to one over the other. It signifies that other things being equal, 1016 one will have preference over the others. When an application for a stage carriage permit is being processed as required by sec. 47, the application of the Undertaking for an inter State route shall be examined as application of any other private operator. Their merits and demerits must be ascertained keeping in view the requirements of (a) to (f) of section 47(1) and after comparing the merits and demerits of both, not with the yard stick of mathematical accuracy, but other things being equal, the application of the Undertaking will have preference over others. Qualitative and quantitative comparison on broad features of passenger transport facility such as fleet, facilities to travelling public and other relevant consideration may be undertaken and after balancing these factors other things being equal, the application of the Undertaking shall be given preference over other applicants. There is no question of eliminating private operators merely because the Undertaking applies for a stage carriage permit under Chapter IV. That situation is catered to under Chapter IV A. In an application under Chapter IV, Corporation has to enter the arena like any other applicant, face the competition and come up to the level of other private operators intending to obtain stage carriage permits and then in respect of the route in question claim preference. Would this statutory provision violate equality guaranteed by article 14? The answer is obviously in the negative." . . . . . . . . . . . . . . . . . ". . . let it be made clear that while considering the application for stage carriage permit under section 47, the private operator has an equal chance to get a permit even on inter State route if it shows that the Undertaking is either unable to provide efficient and economical service or that the private operator is better equipped to render the same. Preference in this context would mean that other things generally appearing to be qualitatively and quantitatively equal though not with mathematical accuracy, statutory provision will tilt the balance in favour of the Undertaking. " What has been said by the Court with reference to the preference 1017 provided for in section 47(1 H) applies with equal force to the preference provided for by the proviso to section 63(7). In the judgment under appeal, the High Court attempted to distinguish the decision of this Court in Sher Singh 's case on the ground that any other interpretation would have wiped out the difference between Chapter IV and Chapter IV A. We do not think the High Court was right in distinguishing the case in that fashion. The reference to Chapter IV A there was for the purpose of contrasting the exclusion contemplated by section 68.F(1) with the preference to be given under section 47 (1 H) and so to interpret the word 'preference ' occurring in section 47(1 H). We have no hesitation in saying that all that has been said about 'preference ' in Sher Singh 's case in relation to section 47(1 H) applies mutatis mutandis to the preference contemplated by the proviso to section 63(7). Since the State Transport Appellate Tribunal and the High Court have failed to consider the merits of the claims of the Karnataka State Road Transport Corporation and the private operators who did not get a certificate of approval from the Central Government, because of the rule of preference contained in proviso to section 63(7), the proper course for us is to set aside the orders of the State Transport Appellate Tribunal and the High Court and to direct the State Transport Appellate Tribunal to re hear the appeals and dispose them of in accordance with law, after considering the claims of the eligible applicants in the manner indicated in Sher Singh 's case and now. A question was raised before us about the vires of the fourth clause of the proviso to section 63(7). Clauses (i) to (iii) of the proviso providing for preference to be given to applications for permits from the Indian Tourism Development Corporation, the State Tourism Development Corporation and the State Tourist Department were not questioned, but the preference provided for by clause (iv) and to be given to "such operators of tourist cars, or such travel agents, as may be approved in this behalf by the Ministry dealing in tourism" was questioned as an infringement of article 14 of the Constitution. We find it difficult to sustain this clause and uphold its validity. The very idea that a Tribunal created by a statute for the purpose of considering rival claims and granting permits on merits should be compelled to give peference to persons securing the approval of the executive Government, appears to us to be arbitrary and unreasonable. To the extent that it goes, the clause pre empts the decision of the designated tribunal by executive discretion. It was said that the clause contained sufficient guidelines for the exercise of discretion in granting approval by the Central Government. It was said that the object of the proviso to section 1018 63(7) was very obviously the promotion of tourism and the approval of the Central Government would be given to those operators of tourist cars and travel agents who may be expected to serve that purpose. It is difficult to agree with these submissions. In the first place, clause (d), it is seen, provides for a preference, not to operators of tourist vehicles but to operators of tourist cars and travel agents. Though the permits to be granted are for tourist vehicles, the preference is confined to operators of tourist cars and travel agents. One may understand a preference granted to operators of tourist vehicles but it is difficult to understand why preference should be given to operators of tourist cars in the matter of granting permits for tourist vehicles which may well be omnibuses required to travel long distances. Surely it cannot be said that experience of running a tourist taxi is a better qualification than running a tourist bus when the question of granting permits for tourist vehicles arises. The High Court of Karnataka tided over the difficulty by interpreting the expression "tourist cars" as meaning "tourist vehicles". It is difficult to agree with the interpretation of the Karnataka High Court having regard to the definitions of "Transport Vehicle" and "motor car" contained in section 2(29 A) and section 2(16) respectively. While a tourist vehicle may include a motor car, a motor car, by definition, excludes an omnibus. In the second place, we have no indication as to the manner in which the approval of the Central Government is to be sought and granted and the considerations which are expected to weigh with the Central Government. Shri C.S. Vaidyanathan, learned counsel for the 'Preferred ' Operators has placed before us 'a Scheme for granting approval to tourist transport operators in India. ' The scheme makes no reference to the proviso to sec. 63(7) of the . On the other hand, it mentions that approval carries with it certain privileges, such as, allotment of ex STC vehicles and that it is, therefore, necessary that the department is able to exercise some control on the functioning of these operators. The terms and conditions to be fulfilled are that 'the party must have been in the car hire business for a period of 2 years with the help of cars of indigenous make or cars obtained from elsewhere and should have sufficient contacts with travel agencies hoteliers/airlines, etc. and should be financially sound or that they should be owning and operating five vehicles as tourist taxies of either indigenous make or acquired from elsewhere regardless of the period in the car hire business or that they should be ex Defence Service personnel, who satisfy certain prescribed conditions. It is seen that the scheme excludes omnibus operators and requires applicants to have 1019 either two years ' experience in the car hire business with contacts in the tourist business or to own five tourist taxies. There are no guidelines as to how the discretion to grant approval is to be exercised once the minimum conditions are fulfilled. The matter appears to be left to the total discretion of the Central Government, virtually as we said, pre empting the decision of the statutory tribunal. We think that clause (iv) of the proviso to section 63(7) is unconstitutional and we so declare it. In the result we set aside the orders of the State Transport Appellate Tribunal and the High Court and direct the State Transport Appellate Tribunal to hear the appeals in the light of what we have said. P.S.S. Appeals allowed.

Sub section (7) of section 63 of the empowers the State Transport Authority, for the purpose of promoting tourism, to grant permits valid for the whole or any part of India, in respect of such number of tourist vehicles as the Central Government may in respect of that State specify in this behalf. A proviso to that sub section, introduced by section 24 of the Amending Act of 1978 laid down that preference shall be given to applications for permits from (i) the India Tourism Development Corporation; (iii) a State Tourism Development Corporation; (iii) a State Tourist Department, and (iv) operators of tourist cars, or travel agents, approved in this behalf by the Central Government. There were as many as 495 applications before the Karnataka State Transport Authority for the grant of 14 All India Tourist Vehicle permits. By its proceedings dated April 30, 1984, the Authority granted 11 permits to the Karnataka State Tourism Development Corporation, one to the Indian Tourism Development Corporation and two to the Karnataka State Road Transport Corporation. 1009 On appeals being preferred, the Karnataka State Transport Appellate Tribunal, by its order dated February 28, 1985 set aside the grant of two permits in favour of the Karnataka State Road Transport Corporation, three out of eleven permits to the Karnataka State Tourism Development Corporation, and instead granted three permits to private operators and increased the number of permits granted to the Indian Tourism Development Corporation from one to three, on the premises that in view of the rule of preference enunciated by the proviso to section 63(7) the applications from the non preferred category had to be excluded as the number of applications from the applicants who were required to be given preference exceeded the number of permits to be granted. Though some of the appellants before the Tribunal had better expertise, experience and resources they did not succeed. The High Court rejected the writ petitions on the ground that the rule of preference contained in the proviso to section 63(7) contemplated exclusion of the 'non preferred ' class, if sufficient number of applicants from the preferred classes were available. In these appeals by special leave, it was contended for the appellants that on a correct interpretation of the proviso to section 63(7) the preference became operative only if other things were equal. It was also urged that the fourth sub clause of the proviso offended article 14 of the Constitution, and had to be struck down. Allowing the appeals, the Court, ^ HELD: 1.1 The rule contained in the proviso to section 63(7) of the is a rule of preference and not a rule of exclusion, for it does not say that the permit shall be granted to the categories of operators specified therein. The claims of eligible applicants must be considered on merits, applying the rule of preference whenever the claims are approximately equal. The application of an applicant is not to be altogether excluded from consideration on the sole ground that another applicant is entitled to preference. Though the proviso does not expressly refer to other things being equal, the principle is very much implicit in it. [1015B E] 1.2 What has been said by this Court in Sher Singh vs Union of India; , , about preference in relation to section 47(1 H) applies mutatis mutandis to the preference contemplated by the proviso to section 63(7) in the instant case. [1017C] 1010 2.1 Clause (iv) of the proviso to section 63(7) is arbitrary, unreasonable and unconstitutional. There is no indication in it as to the manner in which the approval of the Central Government is to be sought and granted and the considerations which are expected to weigh with the Central Government. It compels a tribunal, created by a statute for the purpose of considering rival claims and granting permits on merits, to give preference to persons securing the approval of the Executive Government. To the extent the clause goes, it pre empts the decision of the designated tribunal by executive discretion. [1017E G] 2.2 The clause provides for a preference not to operators of tourist vehicles but to operators of tourist cars and travel agents, though the permits to be granted are for tourist vehicles. It is difficult to understand why preference should be given to operators of tourist cars in the matter of granting permits for tourist vehicles which may well be omnibuses required to travel long distances. [1018B C] 2.3 The experience of running a tourist taxi cannot be said to be a better qualification than running a tourist bus when the question is of granting permits for tourist vehicles. [1018C D] 3. Having regard to the definitions of 'tourist vehicle ' and 'motor car ' contained in section 2(29 A) and section 2(16) respectively of the Act, the expression 'tourist cars ' cannot be said to mean 'tourist vehicles '. While a tourist vehicle may include a motor car, a motor car, by definition, excludes an omnibus. [1018D E] In the instant case, the State Transport Appellate Tribunal and the High Court have failed to consider the merits of the claims of the Karnataka State Road Transport Corporation and the private operators who did not get a certificate of approval from the Central Government, because of the rule of preference contained in proviso to section 63(7). Their orders are, therefore, set aside. The State Transport Appellate Tribunal is directed to re hear the appeals and dispose them of in accordance with law. [1017C E]

N: Criminal Appeal No. 317 of 1986 From the Judgment and order dated 27.2.1986 of the Patna High Court in C.W.J.C. No. 33 of 1986. With W.P. (Criminal)No. 316 of 1986. R.K. Garg and Miss Rani Jethmalani for the Appellant/ Petitioner. D. Goburdhan for the Respondents. 907 The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J. Criminal Appeal No. 317 of 1986 arises out of the judgment and order of the High Court of Patna and the Writ Petition No. 316 is in respect of the same detenu. Both these challenge the order of detention dated 2nd January, 1986 passed by the respondent no.1. The District Magistrate Dhanbad in respect of the petitioner under section 3(2) of the , hereinafter called the 'Act ' on the ground that the petitioner 's activities were prejudicial to the maintenance of public order. Several criminal cases had been filed against the petitioner between 3rd January, 1983 to 18th February, 1985. On or about 2nd January, 1985 the order of detention was passed on an incident relating to the exchange of fire between two rival groups. The order states the grounds as follows: 1. On 24.12.1985, between 10 and 10.30. A.M. the subject alongwith Ramashish Bangali, Gulam, Rambriksha armed with Rifle, gun etc. came in Car No. BHG 9372 on Katras Coal Dump and started indiscriminate firing to kill Birendra Pratap Singh a rival of his calendestine business of coal to establish his criminal superiority in full view of the shopkeepers customers and passers by of the area. Birendra Pratap Singh and his associates who were there also returned the firing in same manner. As a result of this firing one innocent namely Brahamdeo Mishra was killed. The exchange of indiscriminate firing in the main market area of Katras created great panic and alarm in the area. The normal tempo of life was completely disturbed. The people started running helter and skelter for their lives. Shopkeepers put down their shutters. Doors and windows were closed. The vehicular traffic came to halt. This refers to Katras P.S. Case No. 331/85 dated 24.12.85 u/s 149/307/32 IPC/27 Arms Act. Besides the aforesaid ground the following cases are also referred hereunder as background to show the criminality of the subject. KATRAS P.S. CASE No. 5/83 dated 3.1.83 u/s 147, 341/353/307 I.P.C. In this case subject and his associates tried to set free 908 the trucks and driver from the police custody by force and when he failed in his attempt he threatened the police officer and CISF Personnel to do away with their lives, C.S.No. 5/83 has already been submitted in this case. Katras P.S. Case No. 303/83 u/s 147/148/452/323 IPC. In this case subject and his associates went to the tailoring shop of Saukat Ansari and asked him to keep his cloths ready by 9.10.83 and on his refusal, he assaulted him in presence of customers and others C.S.No. 196/83 has already been submitted in this case. Jogta P.S. Case No. 22/84 dated 11.3.84 u/s 147/148, 307/326/353/333/324/325 I.P.C./27 Arms Act. In this case subject and his associates opened fire on police party who went to apprehend Raghunath Singh absconder under NSA. As a result of this indiscriminate firing by him and his associates one Police officer namely Shri R.K. Verma, received serious head injury and is still incapable to work. Charge sheet No. 25/84 has already been submitted in this case. Jogta P.S. Case No. 9/85 dated 18.2.85 u/s 369, 307/323/ 324/ 176/34 I.P.C./27 Arms Act. In this case Sisir Rajan Das, who was coming in a religious procession on the eve of Shivratri and was dancing in the role of Shiva was compelled by his associates to dance before the marriage party of subject 's sister. Sri Sisir Rajan Das, however, acceded to their request and started dancing. When he was dancing some of the members opened fire on him as a result of which he fell down. The subject and his associates however put his body in his car and fled away. Neither Shri Das nor his body could be traced out till date. 909 Charge sheet No. 20/85 has already been submitted in this case. (Emphasis supplied) 5. Jogta P.S. Case No. 68/85 dated 1.12.85 u/s 341/34 IPC. In this case subject threatened Sri Krishana Ballav Sahay, General Secretary, Colliery Shramik Sangh, Sijua, to do away with his life if he takes out any procession or oppose him. It is the case of the detenu that the order of detention was made on one incident relating to exchange of fire between two rival groups. A criminal case had been registered in relation to the said incident pursuant to which the petitioner was already in custody. The order of detention though dated 2nd January, 1986 was served on or about 11th January, 1986. It is the case of the appellant/petitioner that the detenu was not served with all the documents referred to and/or relied on. The detenu was served with order of approval of the said order of detention by the Government of Bihar. The petitioner/appellant made representation on 22nd January, 1986 and the petitioner/ appellant was informed that the said representation was rejected. Thereafter the petitioner 's appellant 's matter was referred to the Advisory Board. The petitioner/appellant states that he desired that he should be heard in person by the Advisory Board. The petitioner/appellant submits that he was produced before the Advisory Board but he was not given any hearing. By letter dated 22nd February, 1986 the petitioner/appellant was informed that the Advisory Board had confirmed the order of detention. The petitioner/ appellant thereafter filed a writ petition in the High Court of Patna which was dismissed without any speaking order. The grounds of challenge are all stated in the writ petition as well as special leave petition. The petitioner/ appellant was in detention when the petitioner/appellant was served with the order of detention. There were criminal cases against the petitioner. There was a murder case in respect of Crime No. 331 of 1985. In the said case investigation was in progress and the defence of the petitioner in the murder case was that he was falsely implicated and was not at all concerned with the murder. When the order was passed, the petitioner had not surrendered but when the order was served, the petitioner had already surrendered in respect of the criminal charge against him. At the relevant time the petitioner was undertrial in the said criminal case. 910 It is the contention of the petitioner/appellant that the order of preventive detention could only be justified against a person in detention if the detaining authority was satisfied that his release from detention was imminent and the order of detention was necessary for putting him back in jail. The service of order of detention on the petitioner while he was in jail was futile and useless since such an order had no application under section 3(2) of the Act. In the affidavit of the District Magistrate, the detaining authority, it has been stated that the activities of the petitioner 's brother and the petitioner have disturbed the normal tempo of life in Katras and Jogta Police Stations in Dhanbad area. The series of offences against the detenu and the manner of their perpetuation, which have been noted before, indicate a calculated move to create panic and fear in the mind of the people. It further appears from the affidavit f f the District Magistrate filed before the High Court of Patna that the petitioner was absconding from the very day of the issuance of the detention order. There is a statement in the order as follows D "Subject is already in jail. He is likely to be enlarged on bail. Hence detention order served in jail. " According to the District Magistrate when police pressure to apprehend him became heavy, the detenu opted to surrender before the Sub Divisional Judicial Magistrate on 10th January, 1986 in substantive case to frustrate the service of the detention order. It has been further stated that the service of the detention order had been properly made. Grounds were all indicated. All the documents which formed the basis of detention were supplied to the detenu. His representation, was duly considered and rejected. The grounds stated that there was indiscriminate firing on 24th December, 1985 on Katras Coal Dump and the petitioner started indiscriminate firing to kill Birendra Pratap Singh a rival of his calendestine business of coal to establish the criminal superiority in full view of the shopkeepers, customers and passers by of the area. The acts alleged created a terror and not only law and order problem but problem of public order. In those circumstances it appears that the grounds for forming the satisfaction for the need for the detention were there, and there was rational nexus between the object of the order as contemplated by the Act and the materials on record. The principles applicable in these types of preventive detention cases have been discussed in the decisions of Suraj Pal Sahu vs State of Maharasthra & Ors., W.P. (crl) No. 2 96/86 with SLP (crl) No. 1265/86 dt. 25.9.86 and Raj Kumar Singh vs The State of Bihar & Ors. Crl A. 353/86 with W.P. (crl) 27/86 dt. 26.9.86. Judged on the basis of 911 the said principles there is no ground for interference with the order of detention as passed. It, however, appears that after the order of detention was passed and before the actual service of the order of detention, the petitioner was taken into custody. From the affidavit of the District Magistrate it does not appear that either the prospect of immediate release of the detenu or other factors which can justify the detention of a person in detention were properly considered in the light of the principles noted in the aforesaid decision and especially in the decisions, in Rameshwar Shaw vs District Magistrate, Burdwan & Anr., ; and Ramesh Yadav vs District Magistrate Etah and others, though there was a statement to the effect that the petitioner was in jail and was likely to be enlarged on bail. But on what consideration that opinion was expressed is not indicated especially in view of the fact that the detenu was detained in a murder charge in the background of the facts mentioned before. His application for bail could have been opposed on cogent materials before the Court of Justice. In this case there were grounds for the passing of the detention order but after that the detenu has surrendered for whatever reasons, therefore the order of detention though justified when it was passed but at the time of the service of the order there was no proper consideration of the fact that the detenu was in custody of that there was any real danger of his release. Nor does it appear that before the service there was consideration of this aspect properly. In the facts and circumstances of this case, therefore, the continued detention of the detenu under the Act is not justified. It is well settled in our Constitutional framework that the power of directing preventive detention given to the appropriate authorities must be exercised in exceptional cases as contemplated by the various provisions of the different statutes dealing with preventive detention and should be used with great deal of circumspection. There must be awareness of the facts necessitating preventive custody of a person for social defence. If a man is in custody and there is no imminent possibility of his being released, the power of preventive detention should not be exercised. In the instant case when the actual order of detention was served upon the detenu, the detenu was in jail. There is no indication that this factor or the question that the said detenu might be released or that there was such a possibility of his release, was taken into consideration by the detaining authority properly and seriously before the service of the order. A bald statement is merely an ipso dixit 912 of the officer. If there were cogent materials for thinking that the detenu might be released then these should have been made apparent. Eternal vigilance on the part of the authority charged with both law and order and public order is the price which the democracy in this country extracts from the public officials in order to protect the fundamental freedoms of our citizens. In the affidavits on behalf of the detaining authority though there are indications that transfer of the detenu from one prison to another was considered but the need to serve the detention order while he was in custody was not properly considered by the detaining authority in the light of the relevant factors. At least the records of the case do not indicate that. If that is the position, then however disreputable the antecedents of a person might have been without consideration of all the aforesaid relevant factors, the detenu could not have been put into preventive custody. Therefore, though the order of preventive detention when it was passed was not invalid and on relevant considerations, the service of the order was not on proper consideration. It may be mentioned that in the petition it is nowhere stated that the detenu has since been released or that the prospect of his imminent release was properly and with seriousness considered by the detaining authority. The order of detention, therefore, is set aside. The writ petition and the appeal are allowed to the extent indicated above. This, how ever, will not affect detenu 's detention under the criminal cases. If, however, the detenu is released on bail in the aforesaid criminal cases, the matter of service of the detention order under the Act on the aforesaid materials may be reconsidered by the appropriate authority in accordance with the law. There is no statement in the petition that the detenu is on bail. There will, therefore, be no orders for release of the detenu. M.L.A. Petition and Appeal allowed.

The respondent passed an order of detention in respect of the appellant under section 3(2) of the , on the ground that the appellant 's activities were prejudicial to the maintenance of public order. Several criminal cases were pending against the appellant when the aforesaid order was passed. The appellant had already surrendered in respect of a criminal charge against him before the order was served. He filed a writ petition in the High Court challenging the detention order, but it was dismissed without any speaking order. Aggrieved by the order of the High Court, the appellant filed the present criminal appeal by special leave as also a writ petition challenging the aforesaid order of detention on the ground that the order of preventive detention could only be justified against a person in detention if the detaining authority was satisfied that his release from detention was imminent and the order of detention was necessary for putting him back in jail. The service of order of detention on the appellant/ petitioner while he was in jail was futile and useless since such an order had no application under section 3(2) of the Act. Allowing the writ petition and the appeal in part, ^ HELD: 1. The continued detention of the detenu under the Act is not justified. The order of detention therefore is set aside. However, this will not affect detenu 's detention under the criminal cases. If however, the detenu is released on bail in the criminal cases already pending against him, the matter of service of the detention order under the Act may be reconsidered by the appropriate authority in accordance with law. [912 E F] 906 2. In our constitutional framework, the power of directing preventive detention given to the appropriate authorities must be exercised in exceptional cases as contemplated by the various provisions of the different statutes dealing with preventive detention and should be used with great deal of circumspection. There must be awareness of the facts necessitating preventive custody of a person for social defence. If a man is in custody and there is no imminent possibility of his being released, the power of preventive detention should not be exercised. [911 F G] In the instant case, when the actual order of detention was served upon the detenu the detenu was in jail. There is no indication that this factor or the question that the said detenu might be released or that there was such a possibility of his release was taken into consideration by the detaining authority properly and seriously before the service of the order. If there were cogent materials for thinking that the detenu might be released, then these should have been made apparent. In the affidavits on behalf of the detaining authority though there are indications that transfer of detenu from one prison to another was considered but the need to serve the detention order while he was in custody was not properly considered by the detaining authority in the light of relevant factors. If that is the position then however disreputable the antecedents of a person might have been, without consideration of all the aforesaid relevant factors, the detenu could not have been put into preventive custody. Therefore, though the order of preventive detention when it was passed was not invalid, and on relevant considerations the service of the order was not on proper consideration. The order of detention is, therefore set aside. [911 G H; 912 A D] Rameshwar Shaw vs District Magistrate, Burdwan & Anr., ; and Ramesh Yadav vs District Magistrate Etc. and others, , relied upon.

Appeal No. 1713(NT) of 1973. From the. Judgment and Order dated 6.1.1971 of the Allahabad High Court in Wealth Tax Reference No. 285 of 1965 124 S.C. Manchanda and Ms. A. Subhashini for the Appellant. Respondent in person. (Not present ) The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J. The appeal under section 29(1) of the (hereinafter called the Act) is directed against the judgment and order of the High Court of Allahabad dated 6th of January 1971. The questions involved before the Allahabad High Court in the reference under section 27(1) of the Act were as follows: (1) Whether, on the facts and in the circumstances of the case, the Tribunal right ly held that the assessee did not make valid gifts aggregating Rs. 1,50,000 on 1.1. 1957? (2) Whether, on the facts and in the circumstances of the case, the Tribunal right ly held that the assessee did not validly assign Rs. 1,50,000 in favour of his sons and grand sons by his letter dated 1.1. 1957? (3) Whether, on the facts and in the circumstances of the case, the Tribunal tight ly held that the sum of Rs. 1,50,000 was properly included in the assessee 's net wealth? (4) Whether, on the facts and in the circumstances of the case, the Tribunal right ly held that the assessee did not make valid gifts aggregating Rs.67,560/ (5) Whether, on the facts and in the circumstances of the case, the Tribunal right ly held that the sum of Rs.67,560/12/ was rightly included in the net wealth of the assessee? The case relates to the assessment year 1957 58 and the relevant date of valuation was 31st March, 1957. The asses see, Dr. R.S. Gupta had maintained an account in the books of Messrs. Tika Ram and Sons Pvt. On 1st January, 1957, the account showed a credit of Rs. 1,50,740. On that day, the assessee had addressed a letter to the Company stating that he had decided to gift away for love and affection various sums to the following persons: 125 Ved Prakash Gupta . Rs.25,000 Om Prakash Gupta . Rs.25,000 Hari Prakash Gupta . Rs.50,000 Pravin Kumar Gupta . Rs. 50,000 By that letter the assessee had directed the Company to debit his account to the extent of Rs. 1,50,000 and credit the respective amounts in the names of the aforesaid per sons. It appears further that copies of this letter were sent to one Om Prakash Gupta and Ved Prakash Gupta. There was no dispute that instructions of the assessee were car ried out by the Company and relevant debit and credit en tries were made in the respective accounts. On the same day i.e. on ist January, 1957, Om Parkash Gupta wrote to the assessee, his father, thanking him for the gift of Rs.25,000 made in his favour and the gift of Rs.50,000 in favour of his son Pravin. A similar letter was written by Ved Prakesh thanking the assessee, his father, for the gift of Rs.25,000 made to him and Rs.50,000 gifted to his son. It must be mentioned, however, that the company i.e. Messrs Tika Ram and Sons. Ltd. was stated to be running an oil mill and carrying on business as grain tillers. contractors and brick kiln owners. It was also stated to be carrying on business of advancing money and taking money on loan when necessary. But it appears that it was admitted position that Tika Ram & Sons had a cash balance of Rs.4000 only on 1.1.1957 and it did not have any overdraft facilities with any bank. The respective donees were stated to have later on withdrawn amounts from the amounts so transferred to their accounts. The assessee contended that a total sum of Rs. 1,50,000 was validly gifted by him to his sons and grand sons and hence the amounts had been wrongly included in his net wealth by the Income Tax Officer and the Appellate Assistant Commissioner. It was his contention that Tika Ram & Sons carried on the business of banking and hence the gifts were valid. But there was no evidence that Tika Ram and Sons were carrying on any banking business. The Tribunal held that they were not carrying on banking business. The main question therefore that falls for consid eration is whether gifts in question made by transfer en tries in the books of debtor company were valid gifts even though the debtor company was not carrying on business of banking and had no cash in hand for the amount in question on that date. Gift is defined in section 122 of the as transfer of certain existing mova ble or immovable property made voluntarily and without consideration by 126 one person, called the donor, to another, called the donee, and accepted by or on behalf of the donee. Section 123 of the said Act deals with how transfers are effected and stipulates, inter alia, that for the purpose of making a gift of movable property as in this case, the transfer must be effected either by a registered instrument signed by the donor and attested or by delivery. Such delivery may be made in the same way as goods sold may be delivered. The next contention was regarding the inclusion of net wealth a sum of Rs.67,560/12/ standing to the credit of the assessee in the books of M/s Pearls & Beads. The assessee claimed to have gifted the said amounts by transfer entries in the books of M/s Pearls & Beads on 30th March, 1957. No letter as in the previous case was addressed by the assessee but only oral instructions were said to have been given. The Tribunal held that there was no valid gifts. There was no evidence, it appears, that the said sum was available with the said firm of M/s Pearls & Beads. The High Court in view of the decision of the Division Bench of the Allahabad High Court in the case of Gopal Raj Swarup vs Commissioner of Wealth tax, Lucknow, answered the first question in the negative and so far as the second question is concerned, it declined to answer as it did not arise in view of the answer given to the first question and the questions Nos. 3,4 and 5 were answered in the negative. Aggrieved by the said decision, the revenue has come up in appeal. In order to constitute a valid gift there must be an existing property. In case of entries in the books of ac count by credit and debit, the sums should be available on the date of gift in the account of the firm whose accounts are said to be credited or debited. In the case of banking companies or other firms and companies who have overdraft facilities, even if the sums are not in credit of the donor and are not with such companies or firms, gifts might be possible by adjustment of the book entries. But in the cases of non banking companies or firms, if these companies or firms do not have overdraft facilities, it is not possible to make valid gift if sums or funds are not available. This question has been examined by the various High Courts. It is possible in certain circumstances for a donor to make a valid gift by instructing a firm or a company or a H.U.F. in which the donor has an account to give effect to the gift by debiting his account and crediting the account in the name of the donee. But in such cases 127 merely books entries would not suffice. The circumstances must be such as to make it clear that there were sufficient funds at the disposal of the donor by reason of which he could make the gift by such book entries. The firm in which the donor may have account may or may not have sufficient cash balance but it must have sufficient provision for overdraft with the bank on the basis it could honour in structions given by the assessee. This position of law has been referred to and reiterated by the Bench decision of the Delhi High Court in the case of India Glass Agency vs Com missioner of Income Tax, New Delhi, Justice Ranganathan of the Delhi High Court after referring to several authorities has observed that book entries may be sufficient only when circumstances make it clear that the gift was genuine and the firms where accounts transfer are effected must have sufficient cash in hand or sufficient provision for overdraft facility upon the basis of which it would honour the instructions given by the assessee. The assessee must also have sufficient credit balance to enable him to make the gift. Reference may also be made for this proposition to the decision of the Delhi High Court in New India Colour Co. vs Commissioner of Income:Tax, New Delhi, The effect of the two aforesaid decisions of the learned fudges of the Delhi High Court indicates that in case there was not sufficient cash balance from out of which the amount gifted could be physically given to the donee, more entries in the books of account in the form would not constitute delivery of possession over the gifted property to the donee and gift in such case will not be valid. The position, however, might be different if such firms or companies or H.U.F. in whose accounts gifts are effected have overdraft facilities. The Calcutta High Court had occasion to discuss this aspect in the case of Commissioner of Income Tax, West Bengal 111 vs Ashok Glass Works, There it was held on facts that the entries had been made contemporane ously showed that the transaction was genuine and there was no suggestion that the interests which were credited in the accounts of the minor donees by the firm which carried on money lending business also were fictitious. The Tribunal therefore, it was found, tightly held that the gifts were valid and the interest paid in respect of the accounts standing in the name of the donees was allowable as a deduc tion in the hands of the assessee firm. The Calcutta High Court had to consider this in the case of Commissioner of Gift Tax, West Bengal 111 vs Tara chand Maghraj, There the High Court after discussing various decisions 128 including certain decisions of the Allahabad High Court which we shall presently note and the provisions of section 122 of the , and the Sale of Goods Act. held that under section 123 of the , in case of gift of movable property, the transfer may be effected by delivery. Such delivery may be in the same way as goods sold may be delivered. Section 33 of the Sale of goods Act permitted the parties to deliver by any manner or method which the parties agreed would be treated as delivery or which had the effect of putting the goods in the possession of the buyer. In that case, it was found that the effect of the transaction in that case was to put the amounts in the possession of the assessee who was authorised to hold the amounts on behalf of the donees which resulted in a delivery of the amounts within the meaning of the Sale of Goods Act. The Court, however, pointed out that it was held that there was no valid gift on the date of the entries, then it could not be held that, subsequently, when the money was transferred by further entries in the same books, it resulted in a valid gift. In the instant case before us and we have noted and we reiterate only a sum which could be taken by the donees was Rs.4000 in Messrs Tika Ram & Sons Pvt. Ltd. and there was no overdraft facility of Tika Ram & Sons with any bank. In that view of the matter, there was no existing goods to be part ed. Before the Bombay High Court, in the case of Chimanbhai Lalbhai vs Commissioner of Income Tax (Contral), Bombay, there were entries in the books of a Banking Company and gifts were held to be valid. In the case of Commissioner of IncomeTax, Ahmedabad vs Digvijaysinghji Tin Factory, , on the contrary it was held that the gifts were valid though not sufficient cash with firm avail able but proper book entries were made. See also the cases of Commissioner of Income Tax, Bombay City H vs Popatlal Mulji, and also in the case of Addl. Commis sioner of Income Tax, Poona vs Dharsey Keshavji, 143 I.T.R. 509 and Commissioner of Income Tax, Poona vs Devichand Uttamchand, In the background of facts of those cases the Bombay High Court held that the gifts were valid. In the case of Baliram Mathuradas (By his legal Heir, Madanlal Paliram) vs Commissioner of Income Tax, Bombay City II, the Bombay High Court had occasion to consider this question and held that there was no evidence of acceptance. It was held by the Bombay High Court that there was no valid gift. Similarly, in the case of Virji Devshi vs Commissioner of Income Tax, Bombay, the Bombay High Court held 129 "Just as the entries in his own account book by a person would not constitute a valid transfer even the entries in the accounts of the firm would not be sufficient." The Madras High Court had also taken divergent views. It may be noted that in E.M.V. Muthappa Chettiar vs Commission er of Income Tax, Madras, the Madras High Court held that mere entries were not enough to constitute valid gifts particularly when gift of fund continued to be used in the donors ' business. The Madras High Court in the case of Mrs. Ida L. Cham bers and Three Others vs Kelland Huxford Chambers, was dealing with a case where C, proprietor of a business who had invested a large amount of capital in it, caused entries to be made in his account books crediting his wife and certain other members of his family with sums which were debited to his capital account. Separate accounts in their names were opened in the books and in their accounts the credits were entered. The entries were followed up by letters to the effect, inter alia, that the sums were en tirely in the nature of personal gifts from C and would bear interest payable half yearly. C was not in a position to make gifts in cash of the amounts credited in favour of his wife and relatives. He had large assets but these were represented by land, buildings, plant, machinery and stock in trade. Interest on the amounts was also credited in the accounts regularly for some time, until a bank from which C had obtained an overdraft objected to such crediting of interest. C 's wife withdrew various sums of money from time to time from the interest account and whenever C desired to retransfer amounts to his capital account he obtained let ters of consent from her. The principal amounts credited were shown as 'deposits" in the balance sheets of the busi ness for some years and were thereafter referred to as "unsecured loans". On a question arising whether there was a valid gift or trust in respect of the said amounts, it was held by the Division Bench of the Madras High Court that there was no completed gift of the principal amounts as there was no registered deed and as there was no delivery of the property. Though C had the intention of making gifts, the entries in the books did not complete the gift. It was further held that there was no trust either and that there was nothing in the acts or conduct of C to show that he intended to create a trust or to constitute himself a trus tee. Where moneys were actually paid by way of interest on the alleged gifts, those became completed gifts. This deci sion went up to the Privy Council but on the aspect of gift, no opinion was expressed by the Judicial Committee. The decision of the Privy Council is reported in ILR 1944 at page 617. 130 The Punjab and Haryana High Court in Balireal Nawal Kishore vs Commissioner of Income Tax, Punjab, held that the credit cash balance of the donor was Rs.81,000 and cash balance with firm was only Rs.4,299 but the unuti lised overdraft of the firm was Rs. 1,27,088. The gift was held to be valid. In Sukhlal Sheo Narain vs Commissioner of Wealth Tax, Haryana, the Punjab & Haryana High Court had dealt with a case where the father had gifted Rs.84,000 i.e. Rs.28,000 to each of his sons. Father had complete control and dominion over that amount. There was no evidence that gifts were accepted on behalf of minors. It was held by the High Court that gifts were invalid. Rangoon High Court in Abba Dada and Company vs Commis sioner of Income Tax, Burma, held that the mere book entries were not sufficient in that case to constitute valid gift. The Rajasthan High Court in K.P. Brothers vs Commission er of Income Tax, New Delhi, held that there was a valid gift but in that case it was a banking company. The Allahabad High Court in the case of Commissioner of Income Tax, U.P.v. Smt. Shyamo Bibi, had to deal with a case where the credit balance of 2 1/2 lakhs was with the firm. Balance of the firm was only Rs. 15. Memo of gift recorded on stamp paper. It was held that the gift was not valid. In Commissioner of Wealth Tax vs Gulab Rai Govind Pra sad, there was an alleged gift of Rs.2 lakhs to minor son by book entries. Cash Balance was only Rs.7626. No interest was credited to donee 's account. No acceptance was produced. Property purchased out of gift and income was used by the family. It was ' held that there was no valid gift. But the Allahabad High Court in the case of Gopal Raj Swarup vs Commissioner of Wealth Tax, Lucknow (supra) had to deal with the wealth tax. There the assessee was the karta of a Hindu undivided family. On 20th November, 1956, the assessee purported to transfer Rs.50,000 from his account to the account of his son. The transfer was effected by debit ing the assessee 's personal account in the books of the Hindu undivided family with Rs.50,000 and crediting the same in the personal account of his son. On 20th November, 1956, the assessee had a substantial credit balance exceeding the sum of Rs.50,000 which he purported to give to his son. The adjustment of entries made in the books of account was in pursuance of a letter 131 written by the assessee to the said Hindu undivided family on the same date. The Wealth Tax Officer and the Income Tax Officer rejected the contention that he made a gift of Rs.50,000 to his son and this amount should be excluded from his taxable net wealth. The Tribunal never doubted that the transaction in question was bona fide but dismissed the appeal of the assessee on the sole ground that the transfer evidenced by the entries in the books of account and by the declaration, did not operate to bring into existence a valid gift. It was held on the facts of that case that the asses see had made a valid gift of the value of Rs.50,000. In the impugned judgment, the Allahabad High Court had followed the said decision. The said decision was also followed in Bhau Ram Jawaharmal vs Commissioner of Income Tax, U.P., in Gopal Jalan vs Commissioner of Income Tax, U.P., and in Phool Chand Gajanand vs Commis sioner of Income Tax, U.P., We are of the opinion that each case must be decided on the facts of that case. Where the assessee has a credit amount with firm or with family or with a banking company and that sum is available to that firm or the company or H.U.F. on the date of the gift, then a valid gift by book entries might be possible but where a sum was not available with the firm or the family or a company which was not a banking company or which had no overdraft facility, by mere book entries even though there was acceptance of that gift by the donee would not effectuate a valid gift. The Court in Controller of Estate Duty, Punjab, Haryana, J. & K., H.P., and Chandigarh vs Kamlavati, had to deal with gift by way of transfer in the account books. There this Court held that when the property was gifted by a donor the possession and enjoyment of which was allowed to a partnership firm in which the donor was a partner, then the mere fact of the donor sharing the enjoy ment or the benefit in the property was not sufficient for the application of section 10 of the , until and unless such enjoyment or benefit was clearly referable to the gift, i.e. to the parting with such enjoy ment or benefit by the donee or permitting the doner to share them out of the bundle or rights gifted in the proper ty. If the possession, enjoyment or benefit of the donor in the property was consistent with the facts and circumstances of the case other than those of the factum of gift, it could not be said that the donee had not retained the possession and enjoyment of the property to the entire exclusion of the donor, or, to the entire exclusion of the donor in any benefit to him by contract or otherwise. There, M, the deceased, was a 132 partner in a firm having a half share in the partnership. On 27th March, 1957, M made a gift of Rs. 1 lakh to his son, L, and of Rs.50,000 to his wife, K, by making debit entries in his account in the firm and corresponding credits to the accounts of L and K. With effect from 28th March, 1957, L was taken as a partner in the firm by giving L one forth share out of the half share of M. M died on 9th January, 1962. The Tribunal held that section 10 of the was not attracted and the sum of Rs. 1,50,000 could not be included in the property passing on the death of M; and the High Court, on a reference, affirmed the viewes of the Tribunal. This Court held affirming the decision of the High Court that section 10 did not apply to the gifts of Rs. 1 lakh and Rs.50,000 made by the deceased to his son and to his wife respectively. But in that case, the question in the present form in which it arises before us in the instant case did not arise. This Court in the case of Badri Prasad Jagan Prasad vs Commissioner of Income Tax, U.P., (judgment by one of us) had occasion to refer to the effect of book entries but this question which is present before us in the present appeal was not before this Court in that case. No useful purpose, therefore, will be served by reference to that case. In that view of the matter, except to the extent indi cated above, the entries in the books of account could not effectuate gifts. As we have discussed the facts on the principles, we are of the opinion that the High Court was in error in answering the question in the manner it did. The order and judgment of the High Court are therefore set aside. All the questions are answered in favour of the revenue. As the respondent is not appearing, there will be no order as to costs. N.P.V. Appeal allowed.

The Income Tax Officer included in the net wealth of the respondent assessee for the assessement year 1957 58, two sums, viz., Rs. 1,50,000 and Rs.67,560/12/ which the asses see claimed to have gifted. It is stated that on January 1, 1957 the respondent assessee, by a letter directed a company in which he maintained an account, to debit his account to the extent of Rs. 1,50,000 and credit in the names of his two sons and grandsons various sums, as he had decided to give away these amounts to them out of love and affection. The company carried out the instructions and relevant debit and credit entries were made in the respective accounts. On the same day, by two separate letters, the gifts were ac cepted by the sons and later on these amounts were withdrawn by the respective donees. In the case of second gift, oral instructions were given for transferring the amounts stand ing to his credit. The respondent assessee having failed before the Income Tax Officer and the Appellate Assistant Commissioner, ap pealed to the Income Tax Appellate Tribunal and contended that the first company was carrying on the business of banking and hence the gifts in question were valid, and that the Income Tax Officer and the Appellate Assistant Commis sioner had wrongly included these amounts in his net wealth and in the case of second gift, the assessee claimed that the amounts were gifted by him by transfer entries. The Tribunal found that there was no evidence that the first company was carrying on any banking business, and in the case of second gift, the sum was available with the company. It, therefore, held that the first company was not carrying on banking business, and in the 122 second case, there was no valid gift. It, however, referred the matter to the High Court. The High Court held that the Tribunal was not right in holding that the assessee did not make valid gifts and in holding that the amounts were rightly included in the net wealth of the assessee. Allowing the appeal by the Revenue, this Court, HELD: 1. In order to constitute a valid gift there must be an existing property. In case of entries in the books of account by credit and debit, the sums should be available on the date of gift in the account of the firm whose accounts are said to be credited or debited. In the case of banking companies or other firms and companies who have overdraft facilities, even if the sums are not in credit of the donor and are not with such companies or firms, gifts might be possible by adjustment of book entries. But in the cases of non banking companies or firms, if these companies or firms do not have overdraft facilities, it is not possible to make valid gift if sums or funds are not available. [126E G] 2. It is possible in certain circumstances for a donor to make a valid gift by instructing a firm or a company or H.U.F., in which the donor has an account to give effect to the gift by debiting his account and crediting the account in the name of the donee. But in such cases merely book entries would not suffice. The circumstances must be such as to make it clear that there were sufficient funds at the disposal of the donor by reason of which he could make the gift by such book entries. The firm in which the donor may have account may or may not have sufficient cash balance but it must have sufficient provision for overdraft with the bank on the basis of which it could honour instructions given by the assessee. [126H;127A B] 3. Each case must be decided on the facts of that case. Where the assessee has a credit account with a firm or with a family or with a banking company and that sum is available to that firm or the company or H.U.F. on the date of the gift, then a valid gift by book entries might be possible. But where a sum was not available with the firm or the H.U.F. or a company which was not a banking company or which had no overdraft facility, by mere book entries, even though there was acceptance of that gift by the donee a valid gift would not be effectuated. [131D E] 4. In the instant case, the entries in the books of account could not effectuate valid gifts. The only sum which could be taken by the donee was Rs.4,000 in the case of the first company, which had no 123 overdraft facility with the bank. Thus, there was no exist ing goods to be parted. The High Court was, therefore, in error in answering the questions against the Revenue. [132E F] [Appeal allowed. Order and Judgment of the High Court set aside.] Gopal Raj Swarup v, Commissioner of Wealth tax, Lucknow, 12; Indian Glass Agency vs Commissioner of Income Tax, New Delhi, ; New India Colour Co. vs Commissioner of Income Tax, New Delhi, ; Commissioner of Income Tax, West Bengal 111 vs Ashok Glass Works, ; Commissioner of Gift Tax, West Bengal 111 vs Tarachand Meghraj, ; Chimanbhai Lalbhai vs Commissioner of Income Tax (Central), Bombay, 34 I.T.R. 259; Commissioner of Income Tax, Ahmedabad vs Digvijay singhji Tin Factory, ; Commissioner of Income Tax, Bombay City I1 vs Popatlal Mulji, ; Addl. Commissioner of Income Tax, Poona vs Dharsev Keshavji, ; Commissioner of Income Tax, Poona vs Devinchand Uttamchand, ; Baliram Mathuradas (By his Legal Heir, Madanlal Paliram) vs Commissioner of Income Tax, Bombay City H, ; Virji Devshi vs Commissioner of Income Tax, Bombay, ; E.M.V. Muthappa Chet tiar vs Commisioner of Income Tax, Madras, ; Mrs. Ida L. Chambers and Three Others vs Kelland Huxford Chambers, ; Balimal Nawal Kishore vs Commis sioner of Income Tax, Punjab, ; Sukhlal Sheo Narain vs Commissioner of Wealth Tax, Haryana, 89 I.T.R. 157; Abba Dada and Company vs Commissioner of Income Tax, Burma, ; K.P. Brothers vs Commissioner of In come tax, New Delhi, ; Commissioner of Income Tax, U.P.v. Smt. 'Shyamo Bibi, ; Commissioner of Wealth Tax vs Gulab Rai Govind Prasad, ; Bhau Ram Jawaharmal vs Commissioner of Income Tax, ' U.P., ; Gopal Jalan vs Commissioner of Income Tax, U.P., ; Phool Chand Gajanand vs Commissioner of Income Tax, U.P., ; Controller of Estate Duty, Punjab, Haryana, J. & K., H.P. and Chandigarh vs Kamlavati, , referred to.

ivil Appeal No. 378 of 1987. 237 From the Judgment and Order dated 4.8.1986 of the Cal cutta High Court in F.M.A.T. No. 1500 of 1984. L.M. Singhvi S.K. Jain, I. Makwana, A.M. Singhvi, Sud hanshu Atreya and S .D. Sharma for the Appellants. N.N. Gooptu, Dipanker Gupta P. Mondal, D.K. Sinha, J.R. Das, T. Ray. R. Pal, B.R. Agarwala and Ms. section Manchanda for the Respondent. The following Judgments of the Court were delivered: CHINNAPPA REDDY, J. We grant special leave and proceed to dispose of the appeal. A hundred and thirty two years ago, in 1854, 'the wise Indian Chief of Seattle ' replied to the offer of 'the great White Chief in Washington ' to buy their land. The reply is profound It is beautiful. It is timeless. It contains the wisdom of the ages. It is the first ever and the most under standing statement on environment. It is worth quoting. To abridge it or to quote extracts from it is to destroy its beauty. You cannot scratch a painting and not diminish its beauty. We will quote the whole of it: * "How can you buy or sell the sky, the warmth of the land? The idea is strange to us. "If we do not own the freshness of the air and the sparkle of the water, how can you buy them? "Every part of the earth is sacred to my people. Every shining pine needle, every sandy shore, every mist in the dark woods, every clearing and humming insect is holy in the memory and experience of my people. The Sap which courses through the trees carries the memories of the red man. "The white man 's dead forget the country of their birth when they go to walk among the stars. Our dead never forget this beautiful earth, for it is the mother of the *Reproduced verbatim from Pariyavaran Vol. I No. 1, June 1984. 238 red man. We are part of the earth and it is part of us. The perfumed flowers are our sisters; the horse, the great eagle, these are our brothers. The rockly crests, the juices in the meadows, the body heat of the pony, and man all belong to the same family. "So, when the Great Chief in Washing ton sends word that he wishes to buy our land, he asks much of us. The Great Chief sends word he will reserve us a place so that we can live comfortably to ourselves. He will be our father and we will be his children. So we will consider your offer to buy our land. But it will not be easy. For this land is sacred to us. "This shining water moves in the streams and rivers is not just water but the blood of our ancestors. If we sell you land, you must remember that it is sacred, and you must teach your children that it is sacred and that each ghostly reflection in the clear water of the lakes tells of events and memo ries in the life of my people. The water 's murmur is the voice of my father 's father. "The rivers are our brothers, they quench our thirst. The rivers carry our canoes, and food our children. If we sell you our land, you must remember, and teach your children, that the rivers are our brothers, and yours and you must henceforth give the kindness you would give any brother. "We know that the white man does not understand our ways. One portion of, land is the same to him as the next, for he is a stranger who comes in the night and takes from the land whatever he needs. The earth is not his brother but his enemy, and when he has conquered it, he moves on. He leaves his fathers ' graves behind, and he does not care. "He kidnaps the earth from his chil dren. His father 's grave and his children 's birth right are forgotten. He treats his mother, the earth, and his brother, the sky, as things to be bought, plundered, sold like sheep or bright beads. His appetite will devour the earth and leave behind only a desert. 239 "I do not know. Our ways are different from your ways. The sight of your cities pains the eyes of the red man. But perhaps it is because the red man is a savage and does not understand. "There is no quite place in the white man 's cities. No place to hear the unfurling of leaves in spring or the rustle of an in sect 's wings. But perhaps it is because I am a savage and do not understand. The clatter only seems to insult the ears. And what is there to life if a man cannot hear the lonely cry of the whippoorwill or the arguments of the frogs around a pond at night? I am a red man and do not understand. The Indian prefers the soft sound of the wind darting over the face of a pond, and the small of the wind itself, cleansed by a mid day rain, or scented with the pinon pine. The air is precious to the red man, for all things share the same breath the beast, the tree, the man, they all share the same breath. The white man does not seem to notice the air he breathes. Like a man dying for many days, he is numb to the stench. But if we sell you our land, you must remember that the air is precious to us, that the air shares its spirit with all the life it supports. The wind that gave our grandfather his first breath also receives the last sigh. And if we sell you our land, you must keep it apart and sacred as a place where even the white man can go to taste the wind that is sweetened by the meadows flowers. "So we will consider your offer to buy our land. If we decide to accept, I will make one condition. The White man must treat the beasts of this land as his brothers. "I am a savage and I do not understand any other way. I have seen a thousand rotting buffaloes on the prairie, left by the white man who shot them from a passing train. I am a savage and I do not understand how the smoking iron horse can be more important than the buffalo that we kill only to stay alive. "What is man without the beasts? If all the beasts were gone, man would die from a great loneliness of spirit. 240 For whatever happens to the beasts soon hap pens to man. All things are connected. "You must teach your children that the ground beneath their feet is the ashes of our grandfathers. So that they will respect the land. Tell your children that the earth is rich with the lives of our kin. Teach your children what we have taught our children, that the earth if sun mother. Whatever befalls the earth befalls the sons of the earth. If men spit upon the ground, they spit upon themselves. "This we know: The earth does not belong to man; man belongs to the earth. This we know: All things are connected like the blood which unites one family. All things are con nected. "Whatever befalls the earth befalls the sons of the earth. Man did not weave to web of life: he is merely a strand in it. Whatever he does to the web he does to himself. "Even the white man, whose God walks and talks with him as friend to friend, cannot be exempt from the common destiny. We may be brothers after all. We shall see. One thing we know, which the white man may one day discov er our God is the same God. You may think now that you own Him as you wish to own our land; but you cannot. He is the God of man, and His compassion is equal for the red man and the white. This earth is precious to Him, and to harm the earth is to heap contempt on its Creater. The white too shall pass; perhaps sooner than all other tribes. Contaminate your bed and you will one night suffocate in your own waste. "But in your perishing you will shine brightly, fired by the strength of the God who brought you to this land and for some special purpose gave you dominion over this land and over the red man. That destiny is a mystery to us, for we do not understand when the wild buffalo are all slaughtered, the wild horses are tamed, the secret corners of the forest heavy with scent of many man and the view of the ripe hills blotted by talking wires. Where is the thicket? 241 Gone. Where is the eagle? Gone. The end of living and the beginning of survival." Today society 's interaction with nature is so extensive that the environmental question has assumed proportions affecting all humanity. Industrialisation, urbanisation, explosion of population, overexploitation of resources, depletion of traditional sources of energy and raw materials and the search for new sources of energy and raw materials, the disruption of natural ecological balances, the destruc tion of a multitude of animal and plant species for economic reasons and sometimes for no good reason at all are factors which have contributed to environmental deterioration. While the scientific and technological progress of man has invest ed him with immense power over nature, it has also resulted in the unthinking use of the power, encroaching endlessly on nature. If man is able to transform deserts into cases, he is also leaving behind deserts in the place of cases. In the last century, a great German materialist philosopher warned mankind: "Let us not, however, flatter ourselves overmuch on account of our human victories over nature. For each such victory nature takes its revenge on us. Each victory, it is true, in the first place brings about the results we expect ed, but in the second and third places it has quite differ ent, unforeseen effects which only too often cancel the first. " Ecologists are of the opinion that the most impor tant ecological and social problem is the wide spread disap pearance all over the world of certain species of living organisms. Biologists forecast the extinction of animal and plant species on a scale that is incomparably greater than their extinction over the course of millions of years. It is said that over half the species which became extinct over the last 2,000 years did so after 1900. The International Association for the Protection of Nature and Natural Re sources calculates that now, on an average, one species or sub species is lost every year. It is said that approximate ly 1,000 bird and animal species are facing extinction at present. So it is that the environmental question has became urgent and it has to be properly understood and squarely met by man. Nature and history, it has been said, are two compo nent parts of the environment is which we live, move and prove ourselves. In India, as elsewhere in the world, uncontrolled growth and the consequent environmental deterioration are fast assuming menacing proportions and all Indian cities are afflicted with this problem. The once Imperial City of Calcutta is.no exception. The question raised in the present case is whether the Government of West Bengal has shown such lack of awareness of the problem of environment in making an 242 allotment of land for the construction of a Five Star Hotel at the expense of the zoological garden that it warrants interference by this Court? Obviously, if the Government is alive to the various considerations requiring thought and deliberation and has arrived at a conscious decision after taking them into account, it may not be for this Court to interfere in the absence of mala fides. On the other hand, if relevant considerations are not borne in mind and irrele vant considerations influence the decision, the Court may interfere in order to prevent a likelihood of prejudice to the public. Whenever a problem of ecology is brought before the Court, the Court is bound to bear in mind article 48A of the Constitution, the Directive Principle which enjoins that "The State shall endeavour to protect and improve the envi ronment and to safeguard the forests and wild life of the country," and article 51A(g) which proclaims it to be the fundamental duty of every citizen of India "to protect and improve the natural environment including forests, lakes, rivers and wild life, and to have compassion for living creatures. " When the Court is called upon to give effect to the Directive Principle and the fundamental duty, the Court is not to shrug its shoulders and say that priorities are a matter of policy and so it is a matter for the policy making authority. The least that the Court may do is to examine whether appropriate consideration are borne in mind and irrelevancies excluded. In appropriate cases, the Court may go further, but how much further must depend on the circum stances of the case. The Court may always give necessary directions. However the Court will not attempt to nicely balance relevant considerations. When the question involves the nice balancing of relevant considerations, the Court may feel justified in resigning itself to acceptance of the decision of the concerned authority. We may now proceed to examine the facts of the present case. There is in Calcutta a zoological garden located in Allipore, now almost the heart of Calcutta, on either side of Belvedere Road, one of Calcutta 's main arterial roads, fortynine acres on one side and eight acres on the other. The main zoo is in the fortynine acres block of land. There are some old buildings and vacant land in the eight acre plot of land. This eight acre plot of land is known as the Begumbari land. It is out of these eight acres that the land of the extent of four acres has been carved out and given to the Taj Group of Hotels for the construction of a Five Star Hotel. It is this giving away of land, that was challenged before the High Court and is now challenged in this Court in this appeal by two citizens of Calcutta, one of them the Secretary of the Union of workmen of the zoological garden and the other a life 243 member of the zoo, both of whom claiming to be lovers of wild life and well wishers of the zoo. In January 1979, the Director General of Tourism, Gov ernment of India, addressed a letter to the Chief Secretary, Government of West Bengal conveying the resolution of the Tourism Conference which was presided over by the Union Minister of Tourism and attended by several State Ministers and requesting that land in good locations may be made available for construction of hotels in a drive to encourage tourism. In May, 1980 the Taj Group of Hotels came forward with a suggestion that they would be able to construct a Five Star Hotel if any of three properties on Chowringhee, specified by them, was made available to them. The Govern ment found that there was some litigation connected with the Chowringhee properties and, therefore, it would not be possible to convey the Chowringhee properties to the Taj Group of Hotels. On September 29, 1980 and November 29, 1980, there were two notes by the Secretary of the Metropol itan Development Department to the effect that the I.T.D.C. was interested in a property known as the Hastings House Property and that the Taj Group of Hotels who considered the Hastings House property unsuitable may be offered four acres out of the eight acres of Begumbari land. On the same day the Taj Group of Hotels wrote to the Government of West Bengal stating that the proposed land could be seriously considerd for construction of a Hotel. Thereafter the Chief Minsiter along with the Minister of Tourism and the Minister for Metropolitan Development visited the site accompanied by the Director of the Zoo who apparently knew about the pro posal right from the start. A note was then prepared by the secretary, Metropoli tan Development Department and put up to the Chief Minister for his approval. The note suggested that the Hastings House property may be offered to the I.T.D.C. and the Begumbari property may be offered to the Taj Group and that at a later stage a suitable Committee might be appointed to negotiate with the two groups of hotels. The Chief Minister approved the proposal and re quired it to be placed before the Cabinet. On January 7, 1981 a memorandum was prepared for the consideration of the Cabinet explaining the need for more Five Star Hotels in Calcutta and the benefits flowing out of the construction and establishment of such Five Star hotels. It was suggested that the Hastings House Property may be leased to the I.T.D.C. Group and the Begumbari property to the Taj Group of Hotels. In regard to the Begumbari property, it was stated: "From the property of the Zoological Gardens on the Belvedere Road it is possible to carve out about four acres of land currently used for dumping garbage and also for 244 growing grass for the elephants. It will be necessary and in any case advisable to shift the dumping ground, while ade quate space can be made available for growing grass else where in the same area. " It was stated that the Finance and Tourism Department had agreed to the proposal to lease the properties to the I.T.D.C. and the Taj Group respectively. It was stated that though the Forest Department had suggest ed that Salt Lake was a better place for establishing a Five Star Hotel, there was no demand for a Five Star Hotel in that area and the request for a hotel in Salt Lake was confined to a Three Star Hotel. Cabinet approval was sought for the offers to be made to the I.T.D.C. and to the Taj Group and for the constitution of a suitable Committee to undertake negotiations with the two groups. On February 12, 1981, the Cabinet took a decision ap proving the proposal contained in the last paragraph of the Cabinet Memorandum, thus clearing the way for negotiations with the Taj Group. Meanwhile, it appeared that the Public Undertakings Committee appointed by the West Bengal Legislative Assembly submitted a port on February 14, 1981 about the zoo in which they stated. "* * * * * * Originally this zoo was on the outskirts of the City but the City has grown in such a fashion that the zoo has vertually become the City Centre and there is hardly any scope for its expansion. The zoo is situated on the left bank of the Tolly 's Nallla divided with two parts on either said of the Alipore Road. The zoo proper is about 40 acres on the Western side, while the eastern part comprises the Zoo Hospital, audiovisual centre acquari um, Zoo store and Staff quarters. The Commit tee was informed that now adays migratory birds were coming less in number though previ ously more foreign birds used to come here and in the opinion of the Managing Committee, the main reason for this was due to air and sound pollution. Breeding potentialities of animals and birds have been retarded due to constant stress and strain on the animals and also due to atmospheric reasons. * * * * * *The Commit tee came to learn that a big hotel was pro posed to be constructed on the plot of land where fodder for elephant are being grown to meet at least a portion of the elephants food. Moreover, the staff quarters, hospitals for animals and the morgue are also situated near the said plot of land. If the proposed hotel is set up, all the existing buildings, viz. hospital, morgue etc. 245 would have to be shifted to the main Gardens resulting in unhealthy atmosphere for the zoo animals and also hampering the beauty of the zoo Gardens. This would also create problems to the staff quarters and acquarium. " The Committee also referred to a proposal to establish a 'Subsidiary Zoo ' some slight distance from Calcutta City and the request said to have been made for the allotment of 200 acres of land for that purpose. It was suggested that the Government may consider abandoning the proposal to set up a hotel on the Eastern side of the Zoo. The Chief Town Planner also visited the site at the request of the Secretary, Metropolitan Development Depart ment. The inspection was made in the presence of the Direc tor of the zoo. The Chief Town Planner thought that two to 21/2 acres of land only might be made available for the hotel. He expressed the apprehension that if four acres of land were to be given for construction of a hotel, then the entire hospital and the dumping ground would have to be removed and the southern boundary of the hotel would come very close to the residential block. On March 19, the Taj Group submitted a proposal to the Government containing fairly detailed information about the tourism industry and its needs, the situation in Calcutta, the realities of hotel construction, the facts relating to what had been done in other cities, the benefits flowing out of the construction of hotels and their own proposals for constructing a hotel in the four acres of land in Belyedere Road. Two alternative financial arrangements were suggested. The first alternative was the payment of annual rent on the basis of the valuation of the land, the second alternative was based on the concept of nett sales, nett sales being defined as sales after deducting all taxes and levies and service charges. The Metropolitan Development Department expressed a preference for the second alternative and sug gested the constitution of a Committee. The Finance Depart ment also approved. The Taj Group was invited to send the financial projection on the basis of the second alternative. Correspondence went on. On June 5, 1981, a Committee of Secretaries was formally constituted. In the meanwhile, WEBCON, a West Bengal Government Consultancy Undertaking, was asked to examine the proposals and to advise the Government. The WEBCON submitted its report on July 14, 1981 and on the request of the Committee of Secretaries a further report was submitted on July 22, 1981. The report of WEBCON is a 246 comprehensive report on various topics connected with the establishment of a Five Star Hotel in Calcutta. Among other things the report also suggested various financial alterna tives and recommended the second alternative based on nett sales as the best. It is to be mentioned here that even by February 21, 1981 the proposal to lease out the Begumbari land to the Taj Group of Hotels had become public knowledge and newspapers carried reports on the same. On June 9, 1981, the Secretary of the Animal Husbandary and Veterinary Services Department complained to the Secre tary of the Metropolitan Development Department that they were not aware of the decision to lease the Begambari land. The Secretary, Metropolitan Development Department made an endorsement on the letter to the effect that the Minister for Animal Husbandry and Veterinary services had himself visited the site. In fact, as we have seen, the matter had been considered and approved by the Cabinet itself and all Departments must necessarily have been appraised of the proposal. While so, the Managing Committee of the Zoo, on June 11, 1981, passed a resolution expressing itself against the proposal to construct a hotel on land belonging to the Zoo. The Resolution said, "The proposal for soil testing of zoo land in the Begumbari Compound for the purpose of construction of Five Star Hotel was discussed in the meeting. The Committee resolved that construction of a multistories buildings in the near vicinity of the zoo will be highly detrimental to the animals of the Zoo, its ecological balance and adversely affect the bird migration which is one of the greatest attractions of the zoo. The area proposed to be taken for Hotel construction is already used by the zoo for fodder cultivation, burial ground for dead animals, animal hospital, operation theater, quarantine area, segrega tion wards, postmortem room and nursery both for zoo animals and horticultural section. These essential services cannot be accommodat ed within the campus of the main zoo for risk of spreading of infection to other animals of the zoo. Procurement of green fodder for the large number of harvivorous animals of the zoo is already a serious problem for the zoo and any disturbance to fodder cultivation will aggravate the situation. The Calcutta Zoo has the smallest area in comparison to other reputed Zoo. The Committee is of a opinion that no portion of Zoo land can be parted with for any other 247 purpose. This being the position soil testing will hardly be of any avail as the zoo cannot spare the land. Shri Ashoka Basu, M.L.A., Shri K.P. Banerjee and Shri A.K. Das abstained from participation in the proceedings. " The Minister for Metropolitan Development submitted a note to the Chief Minister on the resolution of the Managing Committee of the Zoo. He pointed out that even if four acres out of the eight acres of Begumbari land was given to the Taj Group, there would still remain sufficient land for accommodation of the facilities. He added that the Managing Committee 's resolution was not binding on the Government and suggested that the Director of the Zoo might be asked to allow the Taj Group to undertake soil testing etc. so that work may proceed according to the time schedule. The Chief Minister endorsed the following. "I agree. It is unfortunate that we have not been able to accept the contentions of the Managing Committee. If further facilities are necessary for the Zoo, the Government will provide them." In June 25, 1981, the Managing Committee of the Zoo met again and passed another Resolution by which they withdrew their earlier objections. The Resolution stated. "In view of the letter issued to the Zoologi cal Gardens, Alipore and the Cabinet decision regarding the land of Begumbari Compound and in consideration of the assurance conveyed through Shri Ashoka Bose, Chief Whip and Member that the State Government will give to the Garden adjacent lands and matching grants for the purposes of shifting of the Depart ments of the Zoo within the said compound, the members do not press their objections as contained in the resolution of the Managing Committee held on 11.6.81. This was passed by the majority of the members present, the President Justice Shri R.K. Banerjee dissenting. " On June 29, 1981, the Director of the Zoo wrote to the Secretary of the Animal Husbandry and Veterinary Services Department stating his objections to the Proposal to lease the land for construction of a hotel. He stated, 248 "It appears that a total of four acres of Begumbari land is proposed to be taken for hotel construction. It may be mentioned that this four acres of land proposed to be taken is the only area available there and it is presently covered by structures of hospital buildings, Research Laboratory, Operation Theatre, Segregation Wards, Quarantine areas, post mortem room, burial ground for dead animals. In addition there are flower nursery, dumping ground and fodder cultivation area. It is not at all possible to carve out from this four acres of land without disturbing these structures and services nor it is true that adequate space can be made available in this site for these essential services. It may also be stated in this connection that the Zoo cannot be run for a single day without these essential services, i.e. (i) burial ground for dead animals, a number of which die of infectious and commu nicable diseases, (2) quarantine area for keeping animals coming to the Zoo, at least for 15 days before being shifted to the Zoo proper, (3) isolation wards away from Zoo Hospital and quarantine area for treatment of animals suffering from infectious and conta gious diseases. (4) post mortem room for carrying out p.m. findings, (5) dumping ground for dumping huge garbages coming out of the Zoo daily, (6) fodder cultivation area for growing fodder for the harbivorous animals and (7) pathological laboratory for carrying pathological tests of animals and birds. "As per clause 11 of the Alipore Zoological Garden (Management) Rules, 1957, the disposal of properties and funds are vested in the Managing Committee of he Garden. The relevant clause of the rule reads as below: "The Managing Committee shall have custody and disposal of the property and funds of the Gardens and shall be responsible for proper maintenance. " Presumably as a consequence of the letter from the Director of the Zoo there was a note by the Secretary, Animal Husbandry and Veterinary Services Department suggest ing the postponement of the implementation of the Cabinet decision till the necessary facilities then available at Begumbari land were shifted to other land of the same extent within a reasonable distance from the Zoological Garden, as 249 these facilities were originally linked with the Zoo. He pointed out that the Metropolitan Development Department had not consulted the Animal Husbandry Department before the Cabinet note was prepared and circulated. So the practical problems of the Zoo did not receive detailed consideration earlier. The note also pointed out that immediate transfer of the four acre plot of land would mean discontinuance of existing hospital facilities, research laboratory, operation theatre, segregation wards, quarantine facilities etc. A reference was also made to the report of Public Undertakings Committee. Meanwhile negotiations with Taj Group proceeded apace. The WEBCON submitted further reports. Taj Group suggested further modifications. On September 9, 1981 a detailed memorandum was prepared for cabinet discussion. Two alterna tive financial proposals were set out. A reference was made to the Committee of Secretaries who negotiated with the Taj Group of Hotels. Note was taken of the suggestion of the Negotiation Committee that the overall development plan for the environmental beautification, widening of approach roads, landscaping of Tolley 's Nullah were responsibilities of the State Government and estimated to cost Rs. 2 crores but that it was expected to be of considerable public bene fit. Stress was laid on the direct and indirect economic activities which would be generated by the establishment of a Five Star Hotel. Reference was also made to the report of WEBCON and it was noted that the projected profitability of the ventur to the Government was expected to be high. It was also mentioned that the Ministers, Incharge of Tourism, Animal Husbandry, Land Revenue and Finance had seen the note and agreed to it. On September 10, 1981 the Cabinet took the final decision to grant a ninety nine years lease of the Four acres of Begumbari land to the Taj Group of Hotels. On September 28, 1981 the Government of West Bengal officially conveyed its acceptance of the proposal of the Taj Group of Hotels for the construction of a Five Star Hotel. The terms and conditions of the lease were set out. On January 7, 1982, there was a joint meeting of the Establishment and Finance sub committees of the Zoo and it was decided to recommend to the Committee of management that the demarcated area of four acres may be relinquished in favour of Animal Husbandry and Veterinary Services Department subject to the requirement that the Zoo will continue to get the services and facilities in the existing structures until they were reconstructed on the adjacent land. On January 11, 1982 the Managing Committee endorsed the view of the sub committees and this was communicated to the Government. On January 15, 1982, the Government of West Bengal wrote to the Land Acqui sition Officer, with 250 copies to the Taj Group of Hotels, directing the Land Acqui sition Officer to give possession of the land to the Taj Group of Hotels subject to their later executing a proper long term lease. It was mentioned in the letter that the construction of the hotel should not be started till the lease deed was executed and registered. It was further expressly stipulated as follows: "The Alipur Zoological Garden will continue to get the services and facilities from the existing essential structures which fall within the demarcated in the annexed sketch map till such time when these essential struc tures i.e. hospital and operation theatre are reconstructed on the adjacent land occupied by the Zoological Garden. A copy of the sketch map is enclosed for ready reference. The India Hotels Co. Ltd. will find out in consultation with and with the concurrence of the Animal Husbandry and Veterinary Services Department of this Government and the authorities of the Alipore Zoological Garden the period of time required for reconstruction of the essential structures standing on the land proposed to be leased out to the said company. It will also let this department have in consultation with and with the concurrence of the Animal Hus bandry and Veterinary Services Department of this Government and the Alipore Zoological Garden a plan and estimate for reconstruction of the aforesaid essential structures on the land adjacent to the land proposed to be leased out, so that all these points are incorporated in the deed of lease between the said company and the State Government in this Department for the said land measuring four acres. "As agreed by the said company during the various meetings its representatives had with various departments of this Government, the company will either place the necessary fund in the hands of Animal Husbandry and Veterinary Services Department or the Zoo Garden authorities as the case may be, for reconstruction of the aforesaid essential structures or reconstruction the aforesaid essential structures under its own supervision to the satisfaction of the the Zoo Garden authorities or Animal Husbandry and Veterinary Services Department as the case may be, such funds will in either case be advanced or deemed to be advanced by the Company without interest to 251 be adjusted against dues of the State Govern ment in accordance with the terms and condi tions of the lease. " It is to be noted here that though the stipulation was that the cost of new construction was to be initially met by Taj Group of Hotels and later to be adjusted against the rent payable by Taj Group, the Taj Group later agreed to waive such reimbursement. We are told that a total sum of Rs. 30 lakhs has now been spent by Taj Group of Hotels in connection with the reconstruction. We are also told that an extent of 288 square meters out of the plot given to the Taj Group was carved out and given back for accommodating part of the reconstructed structures. Pursuant to the letter dated January 15, 1982 possession was given to Taj Group on January 16, 1982. Thereafter an expert Committee was consti tuted to supervise the construction Of alternative facili ties. At that stage the writ petition out of which the present appeal arises was filed on February 26, 1982. Ini tially the relief sought was primarily to restrain the Zoo authorities from giving effect to the two resolutions dated January 7, 1982 and January 11, 1982 to hand over the four acres to the Animal Husbandry Department of the Government. Subsequent to the filing of the Writ Petition, a lease deed was executed by the Taj Group of Hotels in favour of the Government. The writ petition was therefore, amended and a prayer for cancellation of the lease deed was added. First a learned Single Judge dismissed the Writ Petition. On appeal, a Division Bench of the High Court confirmed the judgment of the learned Single Judge. The original petitioners are now before us having obtained special leave under article 136 of the Constitution. Before adverting to the submission of the learned coun sel, it is necessary, at this juncture, to refer to certain correspondence. On April 23, 1982, Late Smt. Indira Gandhi, Prime Minister of India wrote to Shri Jyothi Basu, Chief Minister of West Bengal expressing the hope that he would not allow the Calcutta Zoo to suffer in any manner and would leave in intact. She drew the Chief Minister 's attention to the fact that 'apart from ' reduction in the already inadecu ate space for the Zoological Garden construction of a Five Star Multystoreyed Building would disturb the inmates and adversely affect birds migration which was a great attrac tion. ' She also mentioned that the expert Committee of the Indian Board for Wild Life also unanimously disapprove the idea. She queried whether the Hotel could not be located elsewhere. For one reason or the other the Prime Minister 's letter did not reach the Chief Minister for a considerable time. On August 21, 1982 the Chief Minister sent his reply pointing out that the 252 four acres of land were agreed to be relinquished by the Committee of management of the Zoological Garden on condi tion that alternate arrangements were made for shifting the existing structures which were necessary for the Zoo from the plot in question to the adjacent plot. The Chief Minis ter also mentioned that there appeared to be some misconcep tion that the plot in question was a part of the Zoo Garden. It was not so. It was outside the Zoological Garden and separated from it by a 80 100 feet road. The Chief Minister assured the Prime Minister that the existing structures would be relocated on the adjacent land and until that was done the Zoo would continue to get their services and facil ities from the existing structures. The Chief Minister further drew the attention of the Prime Minister to the fact that the hotel was likely to be a six storeyed one and would not be the only tail building near the Zoo. There were already a large number of high rise residential buildings around the Zoo. No one had raised any objection when those building were constituted. Another multistoreyed building which was going to be the largest in the locality was under construction near the Zoo for the Post and Telegraph Depart ment. There was no report that the existing multistoreyed buildings had any adverse affect on the migratory birds or the animals. The Chief Minister also pointed out that the lessee and their experts on wild life has assured them that in any case adequate precaution would be taken in regard to illumination of the hotel and the layout of the surrendings so that no disturbance would be caused to the flight path of the birds or animals. On August 30, 1982, Shri J.R.D. Tata wrote to the Prime Minister pointing out that their Hotel management had discussed the matter at length with represen tatives of the Wild Life fund who were satisfied that the proposed hotel would cause no disturbance to the birds. He had again gone thoroughly into the project with special reference to its possible impact on the birds or environment and had also visited Calcutta in that connection. He was satisfied that the project could not possibly disturb birds using the lake or interfere with their free movement. He gave his reasons as follows: "The four acre plot assigned to the Hotel Company by the State Government is not within the boundaries of the area belonging to the Zoological Gardens but on the other side of Belvedere Road, an important thoroughfare parallel to the main boundary of the zoo and some 700 feet from the main part of the lake. It forms part of an area belonging to the State Government which the Zoo authorities have upto now been allowed to use to look after sick animals of the Zoo and as labour quarters. It contains five small structures 253 including a cage and a small veterinary labo ratory or dispensary. The whole area is in sheckingly unkept condition, most of it cov ered by a single or spear grass and other wild growth. "The hotel is planned to be built away from the frontage of that plot of Belva dere Road and to be low rise structure, the Highest point of which will not exceed 75 feet. "Dr. B. Biswas, a renowned ormitholo gist, who recently retired as Professor Emeri tus of the Zoological Survey of India, whom the Taj Management consulted, confirmed that a 75 feet high building on the location would not worry birds landing on the lake or climb ing out of it. In fact, as the grounds of the zoo between the lake and Belvedre Road are covered with high trees, the climbing or descent angle which the birds have to negoti ate to get over the trees is already steeper that it will be between the lake and the proposed hotel. "As regards the objection that arise from the hotel itself from vehicular traffic to and from the hotel would disturb the birds, the hotel will be totally airconditioned so that no noise will emanate from it, while noise from the heavy traffic on Belvedere Road does not seem to have bothered the birds upto now. The occasional additional cars plying into and out of the hotel could therefore hardly trouble birds resting on the lake some 250 yards away. "Regarding the fear that lights emanating from the hotel or illuminate of signs of the hotel would disorient the birds and possibly cause them to hit the building the Management of the Hotel Company has taken a firm decision that there will be no bright lights or noon signs emanating from the hotel." Shri Tata further suggested that if necessary the Prime Minister could appoint a small advisory Committee consisting of Shri Pushpa Kumar, Director of the Hyderabad Zoo consid ered to be the finest zoo in India and one of the best in Asia, Dr. Biswas, Mrs. Anne Wright and the Chairman of the Managing Committee of the Zoological Garden to advise on the subject. On September 1, 1982, Smt. Indira Gandhi 254 wrote to Mr. Tata expressing her happiness that the Hotel was not going to upset the Zoo animals and welcoming his offer to help the State Government to improve the Zoo 's facilities. Dr. L.M. Singhvi, learned counsel for the appellants made the following submission before us; The Begumbari land was statutorily vested in the Managing Committee of the Zoological Garden and that the Committee could not be di vested by an executive decision without proper procedure being followed. The land could not be leased to the Taj Group of Hotels without inviting tenders from willing per sons and without complying with the requirements of para graphs 166 and 167 of the Land Manual. In taking a decision to take away the land from the Zoo and to lease the same to the Taj Group of Hotels, relevant considerations had been ignored and irrelevant considerations had been taken into account. The decision was taken without considering the impact on the Zoo and without consulting various interested authorities and institutions. Several authorities and insti tutions like the Director of the Zoo, the Managing Committee of the Zoo, the Public Undertakings Committee of West Ben gal, the Indian Wild Life Board, leading ornithologists of the country, etc. had disapproved the taking away of the land from the Zoo and leasing it to the Taj Group of Hotels. These persons and institutions had made several points, none of which had been taken into account by the Government before it took the decision to lease the land. The attention of the government was not focussed on these questions as evident from the fact that the Cabinet Memorandum hardly refers to any of the objections. The decision of the Govern ment was also wrong as it was apparently based on some assumptions which had been made without inquiry and verifi cation. The Chief Minister appeared to be under the impres sion that Dr. Biswas and others were not opposed to the proposal. That was not correct. The construction of a Five Star Hotel was too heavy a cost to pay for the environmental detriment caused by it. The terms on which the lease had been granted were detrimental to the public revenue. Shri Dipankar Gupta, learned counsel for the Taj Group of Hotels and Shri Gooptu learned counsel for the State of West Bengal argued that the former facilities available in the four arce plot of land were not displaced but were replaced and preserved by better facilities in the adjacent plot of land. This was not to the disadvantage, but to the advantage of the Zoo and its inmates. If the dumping ground and the burial ground had to be moved elsewhere, it was certainly more hygienic and a matter for gratification rather than for disgruntlement. Nor was there any obstruc tion to the flight of the visiting birds as the 255 hotel was to be constructed at a distance of 700 feet from the lake and was to rise to a maximum height of 75 feet, being a medium rise and not a high rise building. On the other hand there was going to be an environmental improve ment of the area as the dumping ground, burial ground and the semi dilapidated buildings were to be replaced by a hotel surrounded by broad roads and a very large number of trees proposed to be planted by the hotel management. The landscaping was also designed to improve the ecology and not to diminish it. There was no occassion for the Government to invite tenders since the establishment of a Five Star hotel was not something which could practicably be undertaken by anyone in that fashion. It could only be done by negotiation between the persons coming forward with proposals to estab lish Five Star Hotels. The terms of the lease were not to the financial disadvantage of the Government. The matter had been considered at great length by the Committees of Secre taries appointed by the Government as well as by WEBCON and they had recommended the acceptance the nett sales arrange ment in preference to the arrangement of rent based on land cost. We are unable to agree with the submission of Dr. Singhvi, learned counsel for the appellants, that the Gov ernment of West Bengal decided to grant the lease of the Begumbari land to the Taj Group of Hotels without applying their mind to very important relevant considerations. Much of the argument on this question was based on the assumption that the decision to lease the Begumbari land to the Taj Group of Hotels was taken on February 12, 1981. The decision taken by the Cabinet on February 12, 1981 was merely to enter into negotiations with the I.T.D.C. and the Taj Group of Hotels in regard to leasing the Hastings House property and the Begumbari land. Negotiations with the I.T.D.C. did not fructify while negotiations with the Taj Group of Hotels fruitioned. It was on September 10, 1981 that the Cabinet finally took the decision to lease the Begumbari land to the Taj Group. If there was any decision on February 12, 1981 in regard to leasing the Begumbari land it could at best to characterised as purely tentative and it could not by any stretch of imagination be called an irrevocable or irrevers ible decision in the sense that the Government was powerless to revoke it or that it had created any rights in anyone so as to entitle that person to question any reversal of the tentative decision. It was not a decision, if it was one, on which any right could be hung. At that stage, the Government of West Bengal appeared to have been on the search for two suitable plots of land which could be offered, one to the I.T.D.C. and the other to the Taj Group of Hotels for the construction of Five Star Hotels. The record 256 shows that these two chain hoteliers wer the only hoteliers and, they certainly were leading hoteliers of the country who had come forward to negotiate with the West Bengal Government regarding the construction of Five Star Hotels. The city of Calcutta was noticeably lacking in the 'Five Star Hotel amenity ' to attract tourist, local and foreign, and the Government of West Bengal was anxious to do its best to promote the tourist industry which it was hoped, would provided direct and indirect employment, earn foreign exchange and confer other economic benefits to the people of the State. It is immaterial whether the move come first from the Government or from the Taj Group. The Government was anxious that more Five Star Hotels should be established at Calcutta and the Taj Group was willing to establish one. They wanted a suitable plot for its construction. It was the suggestion for the All India Tourism Conference presided over by the Union Minister for Tourism that State Government should make plots in good locations available at concession al rates for construction of hotels in order to promote the Tourist Industry. It was in pursuance of this general all India policy and, in particular, to fulfill the feltneeds of Calcutta that the Government of West Bengal was looking out for a suitable plot in a good location. They were clearly not doing so at the behest of the Taj Group of Hotels. It does not require much imagination to say that location is among the most important factors to be considered when constructing a Five Star Hotel, particularly if it is to promote tourism. Obviously, one place is not as good as another and the place has to be carefully chosen. After excluding Salt Lake and after considering some properties in Chowringhee, the Government felt that two properties, the Hastings House property and the Begumbari property could be thought of as meeting the requirements. Since the Hastings House property, was not found acceptable by the Taj Group, it was decided to negotiate with them in regard to construc tion of a Five Star Hotel on the Begumbari land. We find it difficult to treat this decision to negotiate with the Taj Group in regard to construction of a Five Star Hotel on the Begumbari land as a final decision to part with the land. The prominent use to which the land was evidently put at the time was as a dumping ground for refuse and rubbish and for growing fodder for elephants. This was noticed and mentioned in the note prepared for the consideration of the Cabinet and it was suggested that separate provision would have to be made for them. Therefore, it is clear that it was not forgotten that if the land was to be allotted to the Taj Group, separate provision would have to be made for whatever use the land was being put to them. The Government was not unmindful of the interests and requirements of the Zoologi cal Garden though at that stage no detailed investigations had 257 apparently been made. The decision of the Government was not one of those mysterious decisions taken in the shrouded secrecy of Ministerial Chambers. It appears to have been taken openly with no attempt at secrecy. The decision, perhaps proposal would be a more appropriate word, was known to the Public Undertakings Committee in less then two days. They expressly refer to it in their report dated February 14, 1981 made two days after the Cabinet decision. By Twen ty first February it was public knowledge and news of the proposal was published in the daily newspapers. We have no evidence or any immediate or subsequent public protest but there were certain objections from some circles. Earlier we have extracted the report of Public Undertakings Committee. The substance of the objection of the Public Undertakings Committee was that the facilities available in the Begumbari land would be left unprovided for if the land was given to the proposed hotel. The available facilities were mentioned as Staff quarters, hospital for animals, burial ground for animals, fodder for elephants etc. It was also said that if the hospital and the burial ground were to be shifted to the main garden it would result in an unhealthy atmosphere for the animals and the zoo and would detract from the beauty of the Zoo Garden. The assumption of the Public Undertakings Committee that the hospital and the burial ground were to be shifted to the main garden was baseless, since, there was never any such proposal. A modern zoo hospital for animals has been constructed in the remaining extent of Begumbari land replacing the old hospital which was housed in a semi dilapidated building. Surely, there should be no complaint about it. It has also been proposed to shift the burial ground elsewhere. That would be most desirable from any point of view. Fodder for elephants should not again be considered to be problem. It would be stretching credibility to suggest that it is necessary to grow fodder in the Begum bari land to feed the elephants in the zoo. Fodder may be bought and brought from elsewhere. The Chief Town Planner who was deputed to visit the site at the request of the Secretary, Metropolitan Development Department and who visited the Zoo accompanied by the Director of the Zoo reported that 2 to 21/2 acres of land might be made avail able for the hotel. If four acres of land were given, he expressed the apprehension that the hospital and the dumping ground would have to be moved elsewhere. The hospital as we have already mentioned has since been conveniently and comfortably accommodated in a new building and the proposal is to move the dumping ground elsewhere. The Managing Com mittee of the Zoo also initially expressed its opposition to the proposal to construction hotel on land belonging to the Zoo. The Committee 's objections were two fold: (1) A muliti storied building in the vicinity of the Zoo will disturb the 258 animals and the ecological balance and will affect the bird migration (2) the land was already used for various pur poses, that is, fodder cultivation, burial ground for ani mals, hospital, operation theatre, quarantine area, post martom room and nursery. It would be impossible, according to the Committee to accommodate these essential services within the campus of the main Zoo. The objections of the Managing Committee were first brought to the notice of the Minister for Metropolitan Development who submitted a note to the Chief Minister pointing out that even if four acres of land out of the eight acres of Begumbari land was given to the Taj Group, there would still remain sufficient land for accommodating the existing facilities. The Chief Minis ter considered the objections and noted that if further facilities were necessary for the Zoo, Government would provide them. Thereafter the Managing Committee reversed its earlier stand. and agreed to the proposal on the assurance that adjacent land and matching grants would be given to the Zoo. We have earlier referred to the letter of the Director of the Zoo dated June 29, 1981 addressed to the Secretary, Animal Husbandary Department where he expressed his opposi tion to the proposal on the ground that the Zoo could not be run for a single day without the essential services which were being provided in the four acres of land proposed to be given for the hotel. This again, we notice, is based on the assumption that there was going to be no provision for those facilities once the hotel was constructed. We have already pointed out that this assumption is wholly incorrect. The letter of the Director of the Zoo was followed by a note by the Secretary of the Animal Husbandry Department suggesting that the practical problems of the Zoo should receive de tailed consideration and that the immediate transfer of the land to the hotel would mean discontinuance of the existing facilities. In the face of all this material, we do not see how it can be seriously contended that the interests and the requirements of the Zoo were totally ignored and not kept in mind when the decision was taken to lease the land to the Taj Group of Hotels. The Chief Minister 's attention was expressly drawn to the Managing Committee 's first Resolution expressing its opposition to the proposal to give the land for the construction of a hotel and detailing the objections and the Chief Minister had expressly noted that all facili ties necessary for the Zoo would be provided by the Govern ment. The assurance was also conveyed to the Managing Com mittee through the amissaries of the Chief Minister. There were inter departmental notings which we presume must also have been brought to the notice of the Chief Minister. We find it impossible to agree with the stricture that the Chief Minister turned a blind eye and a dent ear to the interests and the requirements of the Zoo and went about the question 259 of allotment of land to the Taj Group of Hotels determined to give the land to them and with a mind closed to every thing else. We cannot do so in the face of the assurance of the Chief Minister that facilities would be provided for the Zoo and if, as the saying goes, the proof of the pudding is in the eating, the Chief Minister 's assurances are found reflected in the lease executed by the Taj Group of Hotels in favour of the Government of West Bengal. In Clause 25 of the lease dead, it is expressly stipulated that the lessee shall reconstruct the structures now existing on the demised land (as found in the sketch accompanying the deed) on the adjacent plot of land and that the plan, design, lay out, estimates, etc. of the proposed new structures should be supplied by the Alipur Zoological Garden to the lessee. The reconstructed structures were required to be equal be the existing ones in floor area, but it was open to them to increase the floor area by agreement. The amount expended by the lessee towards the reconstruction of the structures was to be adjusted without interest against the dues of the lessee to the Government. The Alipore Zoological Garden authorities were required to vacate the existing structure within a period of six months which was also the period stipulated for raising the new constructions. We may add here that the Taj Group of Hotels have spent a sum of Rs. 30 lakhs towards the cost of the new constructions, but that they have waived their fight to claim reimbursement from the Government. An affidavit to that effect was also filed before the trial court. Thus we see that the contention of the appellants that the Government of West Bengal had no thought to spare for the facilities which were till then being provided in the Begumbari land is unsustainable. The learned counsel for the appellants urged that the second Cabinet Memorandum dated September 9, 1981 on which date the Government took the final decision to grant the lease made no mention of the needs and interests of the Zoo or the facilities provided in the Begumbari land for the Zoo. It is true that there is no reference to these matters in the second Cabinet Memorandum. But that is for the obvious reason that the matter had already been the subject matter of inter department discussion and communication. The Manag ing Committee of the Zoo which had initially opposed the proposal had also come round and had agreed to the proposal. It was, therefore, thought that there was no need to mention the needs and interests of the Zoo which were already well known and had also received consideration. It was suggested that the Zoo itself required to be expended and there was, therefore, no land which could be spared. The land allotted to the hotel was, as we have seen, not used for the main purpose of the 260 zoo and was not in fact part of the main Zoological Garden. The Government had already in mind a proposal to start a subsidiary Zoo in an extent of about 200 acres of land in the outskirts of Calcutta. This has been mentioned in the various notings made from time to time. We have no doubt that the Government was quite alive to the need for expan sion of the zoo when they decided to grant four acres of Begumbari land which was not used for the main purpose of the zoo for the construction of a Five Star hotel. The next question is whether the Government was alive to the ecological considerations, particularly to the question of the migratory birds when they took the decision of lease the land to the Taj Group of Hotels. Again sustenance to the argument of the learned counsel for the appellants is sought to be drawn from the circumstance that neither of the two Cabinet Memoranda dated January 7, 1981 and September 9, 1981 referred to the migratory birds. It is wrong to think that everything that is not mentioned in the Cabinet Memo randa did not receive consideration by the Government. We must remember that the process of choosing and allotting the land to the Taj Group of Hotels took merely two years, during the course of which objections of various kinds were raised from time to time. It was not necessary that every one of these objections should have been mentioned and considered in each of the Cabinet Memoranda. The question of the migratory birds was first raised in the resolution of the Managing Committee dated June 11, 1981. This resolution was forwarded to the Chief Minister and considered by his as evident from the note of the Chief Minister and the suse quent reversal of the Managing Committee 's resolution at the instance of the Chief Minster and on his assurances. The Chief Minister was certainly aware of the question of the migratory birds before it was finally decided to allot the Begumbari land to the Taj Group of Hotels. That the Govern ment was aware of the dissension based on the alleged ob struction likely to be caused by a mulit storeyed building to the flight of the migratory birds appears from the letter of the Chief Minister to the Prime Minister. In this letter, the Chief Minister pointed out that there were already in existence a number of multistoreyed buildings all around the Zoological Garden, but there was no report that they had any adverse effect on the migratory birds or the animals. He also pointed out that all precautions would be taken in the matter of illumination of the hotel and lay out of the surroundings so that no disturbance would be caused to the flight path of the birds or animals. Shri J.R.D. Tata, on behalf of the Taj Group of Hotels, also wrote to the Prime Minister assuring her that the hotel management had dis cussed the matter at length with a representatives of the Wild 261 Life Fund who, after discussion, had been satisfied that the proposed hotel would cause no disturbance to the birds. He further assured her that he had himself gone thoroughly into the project with special reference to the possible impace on the birds and the environment and had satisfied himself that project would not caused any disturbance to the birds or their free movement. The reasons given by him have already been extracted earlier by us from his letter. He pointed out that the four acre plot was not within the main Zoological Garden, but was separated from it by the Belvedere Road which was an important thoroughfare in the city. It was about 700 feet from the main part of the lake. The hotel was porposed to be built away from the frontage of the plot in Belvedere Road and was to be a low rise structure, the highest point of which would not exceed 75 feet. This was mentioned apparently to indicate that the building would not come within the trajectory of the birds. He mentioned that Dr. Biswas, a renowned ornithologist had also been consulted by the Taj Management and he had also confirmed that a 75 feet building would not interfere with the landing or climb ing out of the birds from the lake. He further mentioned that the grounds of the Zoo between the lake and the Belve dere Road were covered with tall trees and that the birds negotiating the trees would have to fly at the steeper angle than it would be necessary to negotiate the proposed hotel. The vehicular traffic on Belvedere Road which was also heavy did not bother the birds and the slight increase of the vehicular traffic consequent on the construction of the hotel was also not likely to bother them either. It was also pointed out that particular care would be taken in the matter of illumination of the hotel so that bright lights or neor signs emanating from the hotel would not disturb the birds and animals. The learned counsel for the appellants drew our atten tion to a letter written by Dr. Biswas to the Statesman dated August 3, 1982 in which he disowned having made any statement to a press correspondent by name, Bachi J Karkaria that the hotel posed no threat at all to the migratory flight path. He explained that what he meant to say was that migratory birds visiting the Zoo lake choose places to the east and south east of the lake for nocturnal feeding and that their flight to the nocturnal feeding grounds in the marshes would be affected, if the proposed hotel was a high rise building. Apart from the fact that he did not mention what he had in mind when he spoke of a high rise building, the point made by Shri J.R.D. Tata in his letter to the Prime Minister that birds flying in or flying out had to fly at a very steep angle while negotiating the tall trees between the lake and Belvedere Road, an angle much steeper than the angle at which they would have to fly 262 to negotiate a 75 feet tall building, such as, the proposed hotel, remains unanswered. Be it noted that Belvedere Road is to the east of the lake. We may also note here a point made by Dr. Biswas in his letter to the Statesman that there were possible health hazards in the re location of the Zoo hospital, quarantine area and post mortem room in the area adjacent to the staff quarters. He is no expert on the subject of public health and no one has complained that there would be any hazard to the health of those living in the staff quarters by the re location Of the hospital, etc. We are satisfied that the question of obstruction which may be caused to migratory birds did not go unnoticed by the Government before the deciSion to lease the land was taken and we are also satisfied that the building of the proposed hotel is not likely to cause any obstruction to the flight path of the migratory birds. We may refer here to the resolution of the Wild Life Board to which a reference was made by the Prime Minister in her letter to the Chief Minister. Our attention was drawn by the learned counsel for appellants to the presence of two renowned experts at the meeting of the Wild Life Fund on September 25, 1981. They were Shri Pushp Kumar, Director of the Hyderabad Zoo and Mrs. Anne Wright. The subject which was discussed by the Expert Committee on September 25, 1981 was "Construction of a Five Star Hotel within the premises of Alipore Zoo in Calcutta." The proceedings of the Commit tee were recorded as follows: "Director, Geological Survey of India ex plained the whole matter and pointed out the utter impropriety of the decision of the Government of West Bengal to construct a FiveStar Hotel within the premises of Alipore Zoo in Calcutta. The Committee agreed fully with this view and desired that this matter should be taken up immediately by the Central Government with the State Government." This record of the proceedings shows that the Experts Com mittee of the Wild Life Fund was proceeding on the fundamen tal wrong assumption that the hotel was proposed to be constructed "within the premises of Alipore Zoo". The reso lution was justified on the assumed premises but unfortu nately it was rounded on a wrong premises. Later Mrs. Anne Wright appeared to be satisfied with what was finally done as evident from her letter dated November 19, 1983 to Mr. J.R.D. Tata, a copy of which has been placed before us. Bearing in mind the proper approach that we have to make when 263 questions of ecology and environment are raised, an approach which we have mentioned at the outset, we are satisfied that the facts and circumstances brought out by the appellants do not justify an inference that the construction of the pro posed hotel in the Begumbari land would interfere in any manner with the animals in the Zoo and the birds arriving at the Zoo or otherwise disturb the ecology: The proposed hotel is a Garden hotel and there is perhaps every chance of the ecology and environment improving as a result of planting numerous trees all around the proposed hotel and the removal of the burial ground and dumping ground for rubbish. Dr. Singhvi cited before us the well known decisions of this Court in Rohtas Industries Ltd. vs S.D. Agarwal, ; ; Barium Chemicals vs A.G. Rana, ; and Mohinder Singh Gill vs Central Election Commission, to urge that even an administrative decision must be arrived at after taking into account all relevant considera tions and eschewing irrelevant considerations and that the reasons for an order must find a place in the order itself and those reasons cannot be supplemented later by fresh reasons in the shape of an affidavit or otherwise. The submission was that neither the Cabinet memorandum of Janu ary 7, 1981 nor the Cabinet Memorandum of September 9, 1981 revealed that relevant considerations had been taken into account. What was not said in either of the Cabinet Memoran da, it was said, could not later be supplemented by consid erations which were never present to the mind of the deci sion making authority. We do not agree with the submission of Dr. Singhvi. The proposition that a decision must be arrived at after taking into account all relevant considera tions. eschewing all irrelevant considerations cannot for a moment be doubted. We have already pointed out that relevant considerations were not ignored and, indeed, were taken into account by the Government of West Bengal. It is not one of those cases where the evidence is first gathered and a decision is later arrived at one fine morning and the deci sion is incorporated in a reasoned order. This is a case where discussions have necessarily to stretch over a long period of time. Several factors have to be independently and separately weighed and considered. This is a case where the decision and the reasons for the decisions can only be gathered by looking at the entire course of events and circumstances stretching over the period from the initiation of the proposal to the taking of the final decision. It is important to note that unlike Mohinder Singh Gill 's case where that Court was dealing with a Statutory Order made by a statutory functionary who could not therefore, be allowed to supplement the grounds of this order by later explana tions, the present is a 264 case where neither a statutory functions nor a statutory functionary is involved but the transaction bears a commer cial though public character which can only be settled after protracted discussion, clarification and consultation with all interested persons. The principle of Mohinder Singh Gill 's case has no application to the factual situation here. It was said that the principles of Natural Justice had not been observed and that those who are most interested in the Zoological Garden were not heard in the matter before the decision was taken. We do not think that anyone can have a justifiable grievance on this score. The proposal to lease the Begumbari land was public knowledge as we have seen. Such as those as were really interested in the matter like the Managing Committee of the Zoological Garden and the Director of the Zoo did have their say in the matter. The Public Undertakings Committee in its report discussed the matter and invited the Government 's attention to various factors. The matter was further discussed on the floor of the Legislative Assembly. It is impossible to agree with the submission that there was any failure to observe principles of Natural Justice. One of the submissions of Dr. Singhvi, learned counsel for the appellants, was that the Bengal Public Parks Act, 1904 vested the Begumbari land in the Managing Committee of the Zoological Garden and that what had become statutorily vested in the Committee could not be divested by an execu tive fiat. We agree that an Act of the Legislature cannot be undone by a mere act of the executive. But what is the position here? Did the Act deal with the land at all? The Begumbari land was given to the Zoological Garden by the Government in 1880. We do not have the original grant before us. The entire file of the Government relating to the Begum bari land was produced before the Trial Court without any attempt at withholding any document. The records were before the High Court and there are now before us two copies of a letter written on July 7, 1880 by the Assistant Secretary to the Government of Bengal in the Public Works Department to Mr. L. Schwandler, Honorary Secretary, Zoological Garden conveying to him the sanction of the Lt. Governor for the transfer of the land to the east of Belvedere Road, known as Begumbari land to the charge of the Committee of the Zoolog ical Garden on the terms agreed to by the Committee in their letter dated April 23rd. The conditions were mentioned as: "1st. That the land is to be used for the purpose of acclimatization only. 265 2nd. That Oarnivors are not to be kept on any part of it, on any account. That the grounds are to be kept clear and neat. That the land must be restored to the Government if hereafter required. The Zoological Garden Committee being reimbursed for any expenditure they may have incurred in building there." Dr. Singhvi questioned the authenticity of the documents and also objected to their reception in evidence on the ground that no foundation had been laid for the reception of sec ondary evidence. We must straightaway say that no objection was taken either before the single judge or before the Division Bench either to the authenticity or to the admissi bility of the documents. We do not for a moment doubt the genuineness of the two documents which have been produced from old official records. What is important is that the Managing Committee of the Zoological Garden never doubted the authenticity of the documents nor was any question ever raised to suggest that the terms of the grant were other than those mentioned in the letters. We are satisfied that for the purposes of the present case, we will be justified in proceeding on the basis that the land which was undoubt edly Government land, to start with, was given to the Zoo logical Garden upon the terms set out in the two letters. One of the terms was that the land should be restored to the Government whenever required. Another term was that the Zoological Garden Committee would be suitably compensated for any expenditure incurred by it on the construction of any building on the land. The further submission of Dr. Singhvi was that whatever might have been the terms of the grant in favour of the Zoological Garden, the Bengal Parks Act, 1904, vested the land in favour of the Zoological Garden and there was no way by which the Government could divest the Zoological Garden of the land except by a procedure known to the law such as acquisition or requisition. We are unable to find any sub stance in the argument. The Bengal Parks Act, 1904 was enacted "to protect public parks and gardens in Bengal from injury and to secure the public from molestation annoyance while resorting to such parks and gardens. " The Act was made applicable to the public parks and gardens mentioned in the schedule. The Zoological Garden, Alipore was one such park. Section 3 unables the State Government, by notification in the official Gazette "to declare that any specified land, bridge or pontoon shall, for the purposes of this Act, be deemed to be included 266 in any park. " Section 4 enables the Government to make rules for the management, and preservation of any park, and for regulating the use thereof by the public. In particular, the rules may regulate the admission into the park of persons, animals and vehicles, prohibit the causing of any manner of injury to the trees, plants, monuments, furniture etc. in the park, prohibit shooting, bird testing etc. prohibit or regulate fishing or boating, prohibit bathing, or the pollu tion of water by any other means, prohibit the grazing of horses or ponies, prohibit the teasing or annoying of ani mals or birds kept in the park, prohibit the commission of any nuisance, or the molestation or annoyance of any person resorting to the park etc. From the Preamble and the provisions of the Act, it is clear that the Act is intended to protect the inmates and the property of the park from injury by persons resorting to the park and to protect persons resorting to the park from molestation or annoyance by others. The Act is aimed at protecting the park and its visitiors from injury and annoyance by despoilers and ma rauders. The Act has nothing whatever to do with the vesting of any property in the parks. There is infact no provision which deals with the vesting of property in a park. Section 3 enables the State Government to extend by a notification, the boundaries of a park but that can only be for the pur poses of the Act and not for the purpose of vesting or creating any title in a property. If a piece of adjacent land, for example, is taken on lease for a specified number of years by the park and included in the park by a notifica tion under sec. 3, it does not mean that the land has become the property of the park; it only means that the various things, the doing of which is regulated or prohibited by the Act and the rules will not be done or will be regulated on the adjacent land also. We do not think that the provisions of the Bengal Public Parks Act have any relevance to the question of the power of the Government to transfer the Begumbari land to the Taj Group of Hotels. One of the arguments strenuously pressed by Dr. Singhvi was that, even if it was assumed that the Government had the power to transfer the land, the Government did not have the power to deal with the land in any manner that they liked. Certain norms and procedures had to be observed and nothing could be done which would result in loss to the public exchequer. The Bengal Land Manual prescribed the procedure to be followed in the matter of transferring land belonging to the Government. That procedure had to be observed. In any case, it was necessary either to held a public auction or to invite tenders atleast from the limited class of persons interested in utilising the land for the purpose for which the land was proposed to be transferred. The learned 267 counsel invited our attention to several decisions of the court: Rash Bihari Panda vs State of Orissa, ; ; R.D. Shetty vs International Airport Authority, ; ; Kasturi Lal Laxmi Reddy vs State of Jammu & Kashmir, ; ; State of Haryana vs Jage Ram, ; Ram & Shyam Co. vs State of Haryana, and Chenchu Rami Reddy vs Government of Andhra Pradesh, [1986] 3 SCC 391. The West Bengal Land Management Manual, 1977 is pub lished under the authority of the Board of Revenue, West Bengal. Like similar volumes going by whatever name, pub lished by the Boards of Revenue of other States, the West Bengal Land Management Manual also is compendium of (1) statutes and rules framed either by the Government or by the Board of Revenue pursuant to a statutory power conferred on them; (2) Orders issued by the Government from time to time; and (3) Orders, circulars, instructions and memoranda issued by the Board of Revenue from time to time. All these are arranged in such a manner that reference to them by the officials of the Revenue hierarchy is easy. Statutes and statutory orders have, no doubt, to be obeyed. It does not mean that other orders, instructions, etc. may be departed from in an individual case, if applicable to the facts. They are not to be ignored until amended. The Government or the Board may have the power the amend these orders and instruc tions, but nonetheless they must be obeyed so long as they are in force and are applicable. The appellants invited our attention to paragraphs 165, 166 and 167 of the Land Management Manual and urged that the rules laid down by the provisions have been ignored by the Government of West Bengal. These provisions of the Land Management Manual do not appear to have anything to do with the transfer and use of the land in the manner proposed, in which the State also has a vital stake apart from the mere raising of revenue for the State. Paragraphs 165, 166 and 167 deal with simple cases of creation of non agricultural tenancies by way of long term leases. They generally deal with land which is at the disposal of the Government as waste or surplus land and are intended to secure the best revenue for the State. They do not deal with cases of trans fer of land for a specific socio economic object, where, the securing of immediate revenue is not the principal object but other special and economic benefits are sought. In pursuing the socio economic objective is the State bound to 268 invite tenders or held a public auction? To answer this question, we may refer to the cases cited at the Bar. In Rash Bihari Panda vs State of Orissa (supra) the Government offered the option to purchase kendu leaves to certain old contractors on the same terms as in the previous year. Realising that the scheme of offering to renew con tracts with the old licences on the same terms was open to objection, the Government changed its policy and formulated a new scheme by which offers were invited from intending purchasers of Kendu leaves but the invitation was restricted to these individuals who had carried out the contracts in the previous year without default and to the satisfaction of the Government. The Court held that the right to make offers being open to a limited class of persons, it effectively shut out all other persons carrying on trade in Kendu leaves and also new entrants into that business. It was, therefore, ex facie discriminatory and imposed unreasonable restric tions upon the right of persons other than existing contrac tors to carry on business. It is to be seen that in the present case no one has come forward alleging that he has been discriminated against and his fundamental right to carry on business had been affected. The very nature of the construction and establishment of a Five Star Hotel is indicative of a requirement of expertise and sound financial position on the part of those who might offer to construct and establish them. The decision taken by the All India Tourism Council was an open decision well known to everyone in the hotel business. Yet no one except the I.T.D.C. and the Taj Group of Hotels had come forward with any proposal. We have it in the record that the Oberoi Group of Hotels already had a Five Star Hotel in Calcutta while the Welcome Group of Hotels were making their own Private negotiations and arrangements for establishing a Five Star Hotel. In the circumstances, particularly in the absence of any leading hoteliers coming forward, the Government of West Bengal was perfectly justified in entering into negotiations with the I.T.D.C. and the Taj Group of Hotels instead of inviting tenders. In R.D. Shetty vs International Airport Authority (supra). Bhagwatti, J. speaking for the Court observed that the activities of the Government had a public element and if it entered into any contract, it must do so fairly without discrimination and without unfair procedure. Whenever the Government dealt with the public, whether by way of giving jobs or entering into contracts or issuing quotas or li cences or granting other forms of larges, the Government could not act arbitrarily at its sweet will but must act in conformity with standards or norms without being arbitrary, irrational or irrelevant. If 269 the Government departed from such standard or norm in any particular case or cases its action was liable to be struck down unless it could be shown that the departure was not arbitrary but was based on some valid principle which was not irrational, unreasonable or dicriminatory. In the present case as earlier explained by us direct negotiation with these who had come forward with proposals to construct Five Star Hotels was without doubt the most reasonable and rational way of proceeding in the matter rather than invit ing tenders or holding public auction. There was nothing discrminatory in the procedure adopted since no other lead ing hotlier had shown any inclination to come forward. Tenders and Auction were most impractical in the circum stances. In Kasturilal Lakshmi Reddy vs State of Jammu and Kash mir (supra), Bhagwati, J. again, speaking for the Court reiterated what had said earlier in R.D. Shetty vs Interna tional Airport Authority (supra). He proceeded to say, "The Government, therefore, cannot, for exam ple, give a contract or sell or lease out its property for a considerations less than the highest that can be obtained for it, unless of course there are other considerations which render it reasonable and in public interest to do so. Such considerations may be that some Directive Principle is sought to be advanced on implemented or that the contract or the property is given not with a view to earning revenue but for the purpose of carrying out a welfare scheme for the benefit of a particular group or section of people deserving it or that the person who has offered a higher consideration is not otherwise fit to be given the contract or the property. We have referred to those considerations only illustratively, for there may be an infinite variety of con siderations which may have to be taken into account by the Government in formulating its policies and it is on a total evaluation of various considerations which have weighed with the Government in taking a particular action, that the Court would have to decide whether the action of the Government is reasonable and in public interest. But one basic principle which must guide the Court in arriving at its determination on this question is that there is always a presumption that the Governmental action is reasonable and in public interest and it is for the party challenging its valid ity to show that is wanting in reasonableness or is not 270 informed with public interest. This burden is a heavy one and it has to be discharged to the satisfaction of the Court by proper and ade quate material. The Court cannot lightly assume that the action taken by the Government is unreasonable or without public interest because, as we said above, there are a large number of policy considerations which must necessarily weigh with the Government in taking action and therefore the Court would not strike down governmental action as invalid on this ground, unless it is clearly satisfied that the action is unreasonable or not in public interest. But where it is so satisfied, it would be the plainest duty of the Court under the Constitution to invalidate the governmental action. " With reference to the particular facts of the case, it was stated, "The argument of the petitioners was that at the auctions held in December, 1978, January 1979 and April 1979, the price of resin rea lised was as much as Rs. 484, Rs. 520 and Rs. 700 per quintal respectively and when the market price was so high, it was improper and contrary to public interest on the part of the state to sell resin to the second respondents at the rate of Rs. 320 per quintal under the impugned order. This argument, plausible though it may seem is fallacious because it does not take into account the policy of the state not to allow export of resin outside its territories but to allot in only for use in factories set up within the State. It is obvious that, in view of this policy, no resin would be auctioned by the State and there would be no question of sale of resin in the open market and in this situation, it would be totally irrelevant to import the concept of market price with reference to which the adequacy of the price charged by the State to the second respondents could be judged. If the State were simply selling resin, there can be no doubt that the State must endeavour to obtain the highest price subject, of course, to any other over riding considerations of public interest and in that event, its action in giving resin to a private individual at a lesser price would be arbitrary and contrary to public interest. But, where the State has, as a matter of policy, stopped selling resin to outsiders and decided to allot it only to industries set up within the State for the purpose of encouraging industrialisation, there can be no scope for 271 complaint that the State is giving resin at a lesser price than that which could be obtained in the open market. The yardstick of price in the open market would be wholly inept, because in view of the State Policy, there would be no question of any resin being sold in the open market. the object of the State in such a case is not to earn revenue from sale of resin, but to promote the setting up of industries within the State." And again, "If the State were giving tapping contract simpliciter there can be no doubt that the State would have to auction or invite tenders for securing the highest price, subject, of course, to any other relevant overriding considerations of public weal or interest. but in a case like this where the State is allo cating resources such as water, power raw materials etc. for the purpose of encouraging setting up of industries within the State, we do not think the State is bound to advertise and tell the people that it wants a particular industry to be set up within the State and invite those interested to come up with pro posals for the purpose. The State may choose to do so, if it thinks fit and in a given situation, it may even turn to be advantageous for the State to do so, but if any private party comes before the State and offers to set up an industry, the State would not be commit ting breach of any constitutional or legal obligation if it negotiates with such party and agrees to provide resources and other facilities for the purpose of setting up the industry. " The observations of the Court in the light of the facts therein appear to fully justify the action of the West Bengal Government in the present case not inviting tenders or not holding public auction. In State of Haryana vs Jage Ram (supra), it was held that it was not open to the Excise Authorities to pick and choose a few persons only as the recipients of the notice of reauc tion. There was no explanation as to how they came to be chosen and what their status and standing in the trade were to justify the choice. The conduct of the authorities was thought not above suspicion. We have already explained why the choice of the Taj Group of Hotels must be held to be beyond suspicion and above reproach. 272 In Ram & Shyam Company vs State of Haryana (supra) dealing with the question of disposal of State property Desai, J. speaking for the court said, "Let us put into focus the clearly demarcated approach that distinguishes the use and dis posal of private property and socialist property. Owner of private property may deal with it in any manner he likes without causing injury to any one else. But the socialist or if that word is jarring to some, the community or further the public property has to be dealt with for public purpose and in public inter est. The marked difference lies in this that while the owner of private property may have a number of considerations which may permit him to dispose of his property for a song. On the other hand, disposal of public property par takes the character of a trust in that in its disposal there should be nothing hanky panky and that it must be done at the best price so that larger revenue coming into the coffers of the State administration would serve public purpose viz. the welfare State may be able to expand its beneficial activities by the avail ability of larger funds. This is subject to one important limitation that socialist property may be disposed at the price lower than the market price or even for a token price to achieve some defined constitutionally recongnised public purpose, one such being to achieve the goals set out in Part IV of the Constitution. But where disposal is for aug mentation of revenue and nothing else, the State is under an obligation to secure the best market price available in a market econo my. An owner of private property need not auction it nor is he bound to dispose it of at a current market price. Factors such as per sonal attachment, or affinity, kinship, empa thy, religious sentiment or limiting the choice to whom he may be willing to sell, may permit him to sell the property at a song and without demure. A welfare State as the owner of the public property has no such freedom while disposing of the public property. A welfare State exists for the largest good of the largest number more so when it proclaims to be a socialist State dedicated to eradica tion of poverty. All its attempt must be to obtain the best available price while dispos ing of its property because the greater the revenue, the welfare activities will get a fillip and shot in the arm. Financial con straint may weaken the tempo of activities. Such an 273 approach serves the larger public purpose of expanding welfare activities primarily for which Constitution envisages the setting up of a welfare State." In Chenchu Rami Reddy vs Government of Andhra Pradesh (supra) it was observed that public officials entrusted with the care of 'public property ' were required to show exem plary vigilance. The Court indicated that the best method of disposal of such property was by public auction and not by private negotiation. That was a case where land belonging to a Math was sold by private trenty for Rs. 20 lakhs when there were people ready to purchase the land for Rs. 80 lakhs. The difference between sale of land and other readily saleable commodities and the allotment of land for estab lishing a modern Five Star Hotel of International standard is so obvious as to need no more explanation. On a consideration of the relevant cases cited at the bar the following propositions may be taken as well estab lished. State owned or public owned property is not to be dealt with at the absolute discretion of the executive. Certain precepts and principles have to be observed. Public interest is the paramount consideration. One of the methods of securing the public interest, when it is considered necessary to dispose of a property, is to sell the property by public auction or by inviting tenders. Though that is the ordinary rule, it is not an invariable rule. There may be situations where there are compelling reasons necessitating departure from the rule but then the reasons for the depar ture must be rational and should not be suggestive of dis crimination. Appearance of public justice is as important as doing justice. Nothing should be done which gives an appear ance of bias. jobbery or nepotism. Applying these tests, we find it impossible to hold that the Government of West Bengal, did not act with probity in not inviting tenders or in not holding a public auction but negotiating straightaway at arm 's length with the Taj Group of Hotels. , The last and final submission of the learned counsel for the appellants relates to the commercial and financial aspects of the lease. According to the learned counsel, the 'nett sales ' method of calculating the compensation payable to the Government for the lease of the land had totally sacrificed the State 's interests. He submits that if the market value of the land had been fairly determined and the rent had been stipulated at a percentage of that value, the return to the Government would have been much higher. We do not think that there is any 274 basis for any genuine criticism. The 'nett sales ' method appears to be a fairly well known method adopted in similar situations. This was what was recommended by WEBCON, the consulting agency of the West Bengal Government which sub mitted a detailed report on the subject. This was also the recommendation of the Committee of Secretaries who went into the matter in depth. Even to lay persons like us who are no financial experts, it appears that the 'nett sales ' method does and the rent based on market value method does not take into account the appreciating value of land, the inflation ary tendency of prices and the profit orientation. Even on a prima facie, there appears to be nothing wrong or objection able in the 'nett sales ' method. It is profit oriented and appears to be in the best interests of the Government of West Bengal. On a consideration of all the facts and circumstances of the case, we are satisfied that the Government of West Bengal acted perfectly bona fide in granting the lease of Begumbari land to the Taj Group of Hotels for the construc tion of a Five Star hotel in Calcutta. The Government of West Bengal did not fail to take into account any relevant consideration. Its action was not against the interests of the Zoological Garden or not in the best interests of the animal inmates of the zoo or migrant birds visiting the zoo. The financial interests of the State were in no way sacri ficed either by not inviting tenders or holding a public auction or by adopting the 'nett sales ' method. In the result, the judgments of the learned single judge and the Division Bench of the Calcutta High Court are affirmed and the appeal is dismissed. In the circumstances of the case, we do not desire to award any costs. KHALID, J: The tenacity with which this expensive public interest litigation was pursued by the petitioners, before the learned Single Judge and a Division Bench of the Calcut ta High Court and before this Court is commendable. But, after hearing the lengthy arguments advanced, I ask myself the question whether this exercise could not have been avoided. Originally the writ petition was filed by five persons. The supporting affidavit to the writ petition was sworn to by the first petitioner who described himself as a trade unionist. Petitioner No. 2 & 3 are the life members of the Zoo and the remaining two, bona fide residents of Greater Calcutta and lovers of wild life. The same five persons figured as appellants before the Division Bench. However, before this Court there are only two petitioners, the 1st and the 2nd in the writ petition. 275 3rd and 4th petitioners figure here as respondents 6th and 7th. The 5th petitioner does not figure in the array of parties. My learned brother has considered the facts in detail and the questions of law relevant for the purpose of this appeal. I fully agree with his conclusions. This short tail piece is with a purpose. This case goes by the name "Public Interest Litigation. " I wish to delineate the parameters of public interest litigation concisely, against the background of the facts of this case, so that this salutory type of litigation does not lose its credibility. Today public spirited litigants rush to Course to file cases in profusion under this attractive name. They must inspire confidence in Courts and among the public. They must be above suspicious. See the facts of this case and end result. The concern of the appellants has been to preserve the Zoo, to protect and encourage the migratory birds, to keep their trajectory clear, to preserve their diurnal feed and nocturnal habitat and to protect the Zoo. To serve this purpose they want to prevent a 5 Star Hotel coming up in its vicinity in_four acres land belonging to the Zoo and thus to see that this land is not lost to the Zoo. The litigation has been pending from 1982 and in the bargin what has hap pened is described by the learned Trial Judge as follows, in paragraph 130 of his Judgment: "130. Prayer for stay of the operation of this order is rejected. Because of the pendency of this matter, valuable time has been lost and if further time is lost, the respondent No. 5 may not have any further interest in the matter. They have suffered sufficient loss and the Govt. will also suffer loss. The public has also suffered. Accordingly, I am not inclined to stay this matter any further. I ought to point out further that as the peti tioners obtained the interim order, obviously they were not interested in an early hearing of this matter and until a few months back no step was taken to have this matter heard. If a stay is granted, similar situation will fol low. " This public interest:litigation takes its birth, perhaps from the righteous indignation of the petitioners, against the State Government at their bartering away of four acres of land belonging to the Zoo to the Taj Group of Hotels. The writ petition is mainly based on the ground that the deci sion of the Government is arbitrary. The question to be answered is whether this accusation can be justified. On a 276 perusal of the records I find that the State Government had made available to the Court all the relevant documents so as to satisfy the Court about the propriety of its action. This is how the trial Judge deals about this aspect of the case: "4. Before I deal with the contention of the parties before me I ought to point out one thing. In this case, ultimately the hearing was not confined only in respect of the mate rials specified .in the petition and affida vits or annexure to the same, but the submis sions were based on the further documents and files produced before me mainly by the State and also some documents by the private re spondent being respondent No. 5.1 ought to point out that this is one of the exceptional cases where the State has made available to this Court all documents in connection with the proposal for lending over a piece of the State Government land to respondent No. 5 to enable them to construct a 5 star hotel in Calcutta. The State Government has produced before me the original files, including those containing the notes and Cabinet Memorandum for my inspection, the facts which I shall set out herein are gathered from these records and files produced before me, though most of them do not find place in the affidavits . . . " The two portions of Judgment extracted above show that things: one, the petitioners did not take any steps to get the matter heard expeditiously, after they obtained an interim order to get all the work stopped; two, that the State Government made available to the Court all the materi als to prove that its decision was taken after mature con sideration at all levels. The appellants failed before the learned Trial Judge on all the points raised by them. After an exhaustive discus sion of the various aspects of the case, the learned Trial Judge dismissed the petition. The only ground on which the appellants succeeded before the Trial Judge was on locus standi. This preliminary objection of the Hotel Group was rejected. The matter was taken in appeal. The Division Bench in an equally reasoned Judgment, adverting to all the factual aspects of the case, upheld the Judgment of the learned Trial Judge and dismissed the appeal. 277 One redeeming factor in this case is the total absence of any allegation of malafides against the Government by the petitioners. This is how the Division Bench deals with aspect of the case in its Judgment: "The appellants before us have impunged the State Government 's decision to grant aforesaid four acres of land out of Begumbari Compound to India Hotel Co. Ltd., mainly on the ground that the same was unreasonable and arbitrary. The State Government did not apply its mind to relevant facts before disposing of the said valuable lands in discharge of the public interest. In their writ petition or in course of their submissions before us the appellants did not try to make out a case of personal malice against the State Government or its Ministers and Civil Servants . . " The Division Bench held that the decision taken was neither unreasonable nor arbitrary and that taking away of four acres of land from the Zoo was not detrimental to public interest. One would have thought that the concurrent decisions of the learned Single Judge and the Division Bench, on the facts of the case, would have persuaded the appellants, to rest content with the litigation by accepting the verdicts so given. They could have moved the Government or taken other steps to expedite the starting of an additional Zoo with a larger extent which the Government promised. But the appellants felt that public interest would be served better by moving this Court for reconsideration of the factual details. When the matter came up before this Court, this Court gave priority to this case despite the huge pendency of cases before it, to see whether public interest was really in peril or not. During the course of the arguments, we soared high along with the migratory birds into the realms of ecology, envi ronmental protection, public interest, natural justice, arbitrariness, eminent domain and the like and ultimately, from those ethereal regions descended on the terraferma faced with the reality that this case is devoid of any merits and has only to be dismissed. That is why I prefaced this Judgment with the observation that this was an avoid able exercise. The approach of the Taj Group Hotels in this case has been creditably fair. They have given all the assurances necessary to preserve the Zoo and its inmates. They were willing to afford all the 278 requisite safeguards. In the place of a dilapidated hospi tal, operation theater and the like, they constructed build ings anew at a cost of Rs.30 lakhs which amount they were entitled to be reimbursed under clause 25 of the lease, which they voluntarily gave up. In addition to this, they surrendered an area of 288 sq. mtrs. from the land allotted to them to the Zoo. They agreed to build not the usual skyscrapper hotel, but a garden hotel, the height of which would not go beyond 75 feet, despite the fact that there existed in the surrounding area buildings which were very high. This was done to keep free the route of the flight of the birds. They also agreed to have subdued light in ' the hotel, again in the interest of the birds. They agreed to keep the surroundings of the hotel and the flora well main tained. We were told that already 30000 plants were getting ready to adorn the area to be occupied by them. Regarding the commercial and financial aspects of the lease also there is nothing secretive though they came in for sharp criticism at the hands of the appellants before us. This criticism again, according to me, is unfounded. The learned counsel for the Taj Group made available to us, the method adopted. The method adopted is the nett sales method of calculating the compensation paid. This is a fairly well known method adopted in such situations. This method was also subject to criticism by the appellants ' counsel and he in support of his submission handed over to us a calcula tion, which according to me, betrays unawareness with the method of calculation to be adopted in similar cases. The calculation given to us so far as its arithmetic is con cerned is correct. That is this. An amount of 4 crores, if deposited in bank, at a particular rate of compound inter est, for 99 years, would swell to an astronomical figure. This calculation is relevant only when you think of selling the land and investing the sale proceeds in a bank. This calculation conveniently forgets that what is involved here is not the sale of the land but a lease by the Government, as a policy decision to the hotel group to start a Five Star Hotel, which according to the Government was a prime need to the city of Calcutta. The calculation handed over has no bearing to the facts of this case at all. A deal like this cannot be concluded by public auction. Here, we do not have a case, again, sale of a Government property. Therefore, public auction has necessarily to be ruled out. Only Taj Group of Hotels came forward with an offer to start the hotel. The lease was the culmination after a long, elaborate and open procedure with nothing to hide which therefore cannot justifiably be subject to ad verse criticism. 279 My purpose in adding these few lines of my own is to highlight the need for restraint on the part of the public interest litigants when they move Courts. Public interest litigation has now come to stay. But one is led to think that it poses a threat to courts and public alike. Such cases are now filed without any rhyme or reason. It is, therefore, necessary to lay down clear guide lines and to outline the correct parameters for entertainment of such petitions. If courts do not restrict the free flow of such cases in the name of Public Interest Litigations, the tradi tional litigation will suffer and the courts of law, instead of dispensing justice, will have to take upon themselves administrative and executive functions. I should not be understood to say that traditional litigation should stay put. They have to be tackled by other effective methods, like. decentralising the judicial system and entrusting majority of traditional litigation to village courts and Lok Adalats without the usual populist stance and by a complete restructuring of the procedural law which is the villain in delaying disposal of cases. It is only when courts are apprised of gross violation of fundamental rights by a group or a class action or when basic human rights are invaded or when there are complaints of such acts as shock the judicial conscience that the courts, especially this Court, should leave aside procedural shackles and hear such petitions and extend its jurisdiction under all available provisions for remedying the hardships and miseries of the needy, the under dog and the neglected. I will be second to none in extending help when such help is required. But this does not mean that the doors of this Court are always open for anyone to walk in. It is necessary to have some self imposed restrain of public interest liti gants. Ultimately, by the dismissal of this appeal, the hotel will be completed and will be commissioned. Six long years have passed by. I do not think that the appellants have achieved anything. The first appellant who is a trade union ist has not espoused any grievance of the mazdoors before us. It was faintly suggested by the Government 's counsel that the first petitioner does not represent all the maz doors. This was refuted by the appellants. For the purpose of this case, we will accept the assertion of the first appellant. Still, we did not have before us any of their grievances ventilated, which, if there were any, we would have willingly considered. 280 I conclude this short Judgment, with a lurking doubt in my mind, and with a question "Is there something more than what meets the eye in this case?" S.R. Appeal dis missed.

There is in Calcutta, a Zoological garden located in Alipore, now almost the heart of Calcutta, on either side of Belvedere Road, one of Calcutta 's main arterial roads, fortynine acres of land on one side and eight acres on the other. The main zoo is in the fortynine acres block of land. The said eight acres of land was outside the Zoological garden and separated from it by a 80 100 feet road and is also known as the Begumbari land. The Begumbari land was given to the Zoological garden in '1880. According to a letter written on July 7, 1880 by the Assistant Secretary to the Government of Bengal in the Public works Department to Mr. L. Schwandler, Honorary Secretary Zoological garden conveying the sanction of the Lt. Governor for the transfer of the Begumbari land to the charge of the Committee of the Zoological Garden, on the terms agreed to by the Committee in their letter dated April 23, 1880, the conditions of the transfer were: "(i) that the land is to be used for the purpose of acclimatization only; (ii) that Carnivors are not to be kept on any part of it, on any account; (iii) that the grounds are to be kept clear and neat; (iv) that the land must be restored to the government if hereafter required, the Zoological Garden Committee being reimbursed for any expenditure they may have incurred in building there." In this eight acres of land there are some old buildings and the vacant land was used for fodder cultivation,for raising flower nursery, as a sumping ground for huge garbages and as burial ground for dead animals. In January, 1979, the Director General of Tourism Gov ernment of India addressed a letter to the Chief Secretary Government of West Bengal conveying the Resolution of the Tourism conference which was presided over by the Union Minister of Tourism and attended by several State Ministers and requesting that land in good location may be made avail able for construction of hotels in a drive to encourage tourism. In May, 1980, the Taj Group of Hotels came forward with a suggestion that they would be able to construct a Five Star Hotel. On September 29, 1980 and November 29, 1980, there were two notes by the Secretary of the Metropol itan Development Department to the effect that the I.T.D.C. was interested in a property known as the Hastings House Properly and that the Taj Group of Hotels who considered the Hastings House properly unsuitable may be offered four acres out of the eight acres of Begumbari land. On the same day the Taj Group of Hotels wrote to the Government of West Bengal stating that the proposed land could be seriously considered for construction of a hotel. Thereafter, 225 the Chief Minister along with the Minister of Tourism and the Minister for Metropolitan Development visited the site accompanied by the Director of the Zoo to apparently knew about the proposal right from the start. A note was then prepared by the Secretary, Metropolitan Development Depart ment and put up to the Chief Minister for his approval. The Chief Minister approved the proposal and required it to be placed before the Cabinet. On January 7, 1981 a memorandum was prepared for the consideration of the Cabinet explaining the need for the more Five Star Hotels in Calcutta and the benefits flowing out of the construction and establishment of such Five Star Hotels and suggesting the lease of Hast ings House Property to the I.T.D.C. Group and the Begumbari property to the Taj Group of Hotels. In regard to the Begum bari property, it was stated: "From the property of the Zoological Gardens on the Belvedere Road it is possible to carve out about four acres of land currently used for dump ing garbage and also for growing grass for the elephants. It will be necessary and in any case advisable to shift the dumping ground. While adequate space can be made available for growing grass elsewhere in the same area. " It was stated that the Finance and Tourism Departments had agreed to the proposal to lease the properties to the I.T.D.C. and the Taj Group respectively. It was stated that though the Forest Department had suggested that Salt Lake was a better place for establishing a Five Star Hotel, there was no demand for a Five Star Hotel in that area and the request for a hotel in Salt Lake was confined to a Three Star Hotel. Cabinet approval was sought for the offers to be made to the I.T.D.C. and to the Taj Group and for the constitution of a suitable Committee to undertake negotiations with the two groups. On February 12, 1981, the Cabinet took a decision ap proving the proposal contained in the last paragraph of the Cabinet Memorandum, thus clearing the way for negotiations with the Taj Group. Meanwhile the Public Undertakings Committee appointed by the West Bengal Legislative Assembly submitted a report on 14.2. 1981 about the Zoo. While suggesting that the govern ment may consider abandoning the proposal to set up a hotel on the eastern side of the zoo, the Committee also referred to a proposal to establish a "Subsidiary Zoo" some slight distance from Calcutta and the request said to have been made for the allotment of 200 acres of land for that pur pose. The Chief Town Planner who visited the site at the request of the Secretary, Metropolitan Development Depart ment and in the presence of the Director of the Zoo, sug gested that 2 to 2 1/2 acres of land might be 226 made available for the Hotel. On March 19, 1981 the Taj Group submitted a proposal to the government containing fairly detailed information about the tourism industry and its needs, the situation in Calcut ta, the realities of Hotel construction the facts relating to what had been done in other cities, the benefits i]owing out of the construction of hotels and their own proposals for constructing a hotel in the four acres of land in Belve dere Road. Two alternative financial arrangements were suggested. The first alternative was the payment of annual rent on the basis of the valuation of the land, the second alternative was based on the concept of nett sales, nett sales being defined as sales after deducting all taxes and levies and service charges. The Metropolitan Development Department expressed a preference for the second alternative and suggested the constitution of a Committee. The Finance Department also approved. The Taj Group was invited to send the financial projection on the basis of the second alterna tive. Correspondence went on. On June 5, 1981 a Committee of Secretaries was formally constituted. In the meanwhile WEBCON, a West Bengal Government Consultancy Undertaking, was asked to examine the proposals and to advise the Govern ment. On June 11, 1981, the Managing Committee of the Zoo passed a resolution expressing itself against the proposal to construct a hotel on land belonging to the Zoo. Accepting the note put up by the Secretary Metropolitan Development Department on the said resolution the Chief Minister minuted that "if further facilities are necessary for the zoo, the government will provide for them." On June 25, 1981, the Managing Committee met again and passed another resolution by which they withdrew their earlier objections dated 11.6.1981. On June 29, 1981, the Director of the Zoo, who was a party to all the proceedings etc. right from the beginning wrote to the Secretary of Animal Husbandry and Veterinary Services Department stating his objections to the proposal to lease the land for construction of a hotel. On July 14, 1981, the WEBCON submitted its report and on the request of the Committee of Secretaries a further report was submitted on July 22, 1981. The report of WEBCON is a comprehensive report on various topics connected with the establishment of a Five Star Hotel in Calcutta. Among other things the report also suggested various financial alterna tives and recommended the second alternative based on nett sales as the best. 227 Meanwhile negotiations with Taj Group proceeded apace. The WEBCON submitted further reports. Taj Group suggested further modifications. On September 9, 1981 a detailed memorandum was prepared for cabinet discussion. Two alterna tive financial proposals were set out. A reference was made to the Committee of Secretaries who negotiated with the Taj Group of Hotels. Note was taken of the suggestion of the Negotiation Committee that the overall development plan for the environmental beautification, widening of approach roads, landscaping of Tolley 's Nullah were responsibilities of the State Government and estimated to cost Rs.2 crores but that it was expected to be of considerable public bene fit. Stress was laid on the direct and indirect economic activities which would be generated by the establishment of a five Star Hotel. Reference was also made to the report of WEBCON and it was noted that the projected profitability of the venture to the government was expected to be high. It was also mentioned that the Ministers, incharge of Tourism, Animal Husbandry, Land Revenue and Finance had seen the note and had agreed to it. On September 10, 1981 the Cabinet took the final decision to grant a ninety nine years lease of the four acres of Begumbari land to the Taj Group of Hotels. On September 29, 1981 the Government of West Bengal officially conveyed its acceptance of the proposal of the Taj Group of Hotels for the construction of a Five Star Hotel. The terms and conditions of the lease were set out. On January 7. 1982, there was a joint meeting of the Establishment and Finance sub Committees of the Zoo and it was decided to recommend to the Committee of management that the demarcated area of four acres may be relinquished in favour of Animal Husbandry and Veterinary Services Department subject to the requirement that the zoo will continue to get the services and the facilities in the existing structures until they were reconstructed on the adjacent land. On January 11, 1982 the Managing Committee endorsed the view of the sub commit tees and this was communicated to the government. On January 15, 1982, the Government of West Bengal wrote to the Land Acquisition Officer, with copies to the Taj Group of Hotels directing the Land Acquisition Officer to give possession of the land to the Taj Group of Hotels subject to their later executing a proper long term lease. It was mentioned in the letter that the construction of the Hotel should not be started till the lease deed was executed and registered. Several other stipulations were also made. Though the stipu lation was that the cost of the new construction was to be initially met by Taj Group of Hotels and later to be adjust ed against the rent payable by Taj Group, the Taj Group later agreed to waive such reimbursement (in fact a total sum of Rs.30 lakhs has been spent by Taj Group of Hotels in connections with the reconstruction. Not only this. land in the extent of 288 square 228 meters out of the plot given to them was carved out and given hack for accommodating part of the reconstructed structures. Pursuant to the letter dated January 15, 1982 possession was given to Taj Group on January 16, 1982. Thereafter an expert committee was constituted to supervise the construc tion of alternative facilities. Five petitioners a Trade Unionist, two life members of the Zoo, two other bonafide residents of Greater Calcutta, all lovers of wild life filed a petition in public interest on 26.2.1982. Initially the relief sought was primarily to restrain the Zoo authorities from giving effect to the two Resolutions dated January 7, 1982 and January 17, 1982 to hand over the four acres to the Animal Husbandry Department of the Government. Subsequent to the filing of the writ petition a lease deed was executed by the Taj Group of Hotels in favour of the government. The Writ Petition was therefore amended and a prayer for cancellation was added. While the writ petition was pending in the High Court, Late Smt. Indira Gandhi wrote a letter to Sri Jyothi Basu, the Chief Minister of West Bengal expressing the hope that he would not allow the Calcutta Zoo to suffer in any manner and would leave it intact. The Chief Minister in his reply letter dated 21.8.82 pointed out that:(i) the four acres of land were agreed to be relinquished by the Committee of management of the Zoological Garden on condition that alter native arrangement were made for shifting the existing structures which were necessary for the Zoo from the plot in question to the adjacent plot; (ii) the plot in question was not a part of the Zoo Garden; (iii) till the existing struc tures are relocated on the adjacent land, the zoo would continue to get their services and facilities from the existing structures. (iv) the hotel was not the only tall building since there existed many such residential buildings to which none raised an objection and that P&T Department are also constructing one such tall building; and (v) the lessee and their experts on wild life had assured them that in any case adequate precaution would be taken in regard to illumination of the hotel and the layout of the surrounding so that no disturbance would be caused to the flight path of the birds or animals. To similar effect was .the letter dated 30.8.1982 from Shri J.R.D. Tata to the Prime Minister on September 1, 1982. Indira Gandhi wrote to Mr. Tata expressing her happiness that the hotel was not going to upset the Zoo animals and welcoming his offer to help the State Government to improve the Zoo 's facilities. 229 A learned Single Judge of the High Court dismissed the writ petition holding that the West Bengal Government did not show any lack of awareness of the problem of environment ecology in granting the lease of land. On appeal, a Division Bench confirmed the said judgment. Hence the appeal by Special leave of the Court. Dismissing the appeal, the Court, HELD: (Per Chinnappa Reddy J.) 1.1 Whenever a problem of ecology is brought before the Court, the Court is bound to bear in mind article 48 A of the Constitution the Directive Principle which enjoins that "The State shall endeavour to protect and improve the environment and to safeguard the forests and wild life of the country, "and article 51A(g) Which proclaims it to be the fundamental duty of every citizen of India "to protect and improve the natural environment in cluding forest, lakes, rivers and wild life, and to have compassion for living creatures. " When the Court is called upon to give effect to the Directive Principle and the fundamental duty, the Court is not to shrug its shoulders and say that priorities are a matter of policy and so it is matter for the policy making authority. The least that the court may do is to examine whether appropriate considera tions are borne in mind irrelevancies excluded. In appropri ate cases, the Court may go further, but how much further must depend on the circumstances of the case. The court may always give necessary directions. However the Court will not attempt to nicely balance relevant considerations When the question involves the nice balancing of relevant considera tions, the court may feel justified in resigning itself to acceptance of the decision of the concerned authority. If the Government is alive to the various considerations re quiring thought and deliberation and has arrived at a con scious decision after taking them into account, it may not be for the court to interfere in the absence of mala fides. On the other hand, if relevant considerations are not borne in mind and irrelevant considerations influence the deci sion, the Court may interfere in order to prevent a likeli hood of prejudice to the public. [242B F] 1.2 Applying the above guidelines to be followed when questions of ecology and environment are raised, it is clear that the facts and circumstances brought out by the appel lants do not justify an inference that the construction of the proposed hotel in the Begumbari land would interfere in any manner with the animals in the Zoo and the birds arriv ing at the zoo or otherwise disturb the ecology. The pro posed hotel is a Garden hotel and there is perhaps every chance of the ecology and environment improving as a result of planting numerous trees all 230 around the proposed hotel and the removal of the burial ground and dumping ground for rubbish. [263A B] 1.3 That the question of obstruction which may be caused to migratory birds did not go unnoticed by the government before the decision to lease the land was taken, is clear from the following: (i) the question of the migratory bird was first raised in the resolution of the Managing Committee dated June 11, 1981. This resolution was forwarded to the Chief Minister and considered by him as evident from the note of the Chief Minister and the subsequent reversal of the Managing Committee 's resolution at the instance of the Chief Minister and on his assurance; (ii) that the govern ment was aware of the dissension based on the alleged ob struction likely to be caused by a multi storeyed building to the flight of the migratory birds appears from the letter of the Chief Minister to the Prime Minister. In this letter, the Chief Minister pointed out that there were already in existence a number of multistoreyed buildings all around the Zoological Garden, but there was no report that they had any adverse effect on the migratory birds or the animals. He also pointed out that all precautions would be taken in the matter of illumination of the hotel and lay out of the surroundings so that no disturbance would be caused to the flight path of the birds or animals; (iii) Shri J.R.D. Tata, on behalf of the Taj Group of Hotels also wrote to the Prime Minister assuring her that the hotel management had dis cussed the matter at length with a representative of the Wild Life Fund who, after discussion had been satisfied that the proposed hotel would cause no disturbance to the birds. He further assured her that he had himself gone thoroughly in to the project with the special reference to the possible impact on the birds and the environment and had satisfied himself that project would not cause any disturbance to the birds or their free movement. He pointed out that the four acre plot was not within the main Zoological Garden, but was separated from it by the Belvedere Road which was an impor tant thoroughfare in the city. It was about 700 feet from the main part of the lake. The hotel was proposed to be built away from the frontage of the plot in Belvedere Road and was to be a low rise structure, the highest point of which would not exceed 75 feet, far below the trajectory of the birds. He mentioned that Dr. Biswas a renowned ornithol ogist had also been consulted by the Taj Management and he had also confirmed that a 75 feet building would not inter fere with the landing or climbing out of the birds from the lake. He further mentioned that the grounds of the Zoo between the lake and the Belvedere Road were covered with tail trees and that the birds negotiating the trees would have to fly at a steeper angle than it would be necessary to negotiate the proposed hotel. The vehicu 231 lar traffic on Belvedere Road which was also heavy did not bother the birds and the slight increase of the vehicular traffic consequent on the construction of the hotel was also not likely to bother them either. It was also pointed out that particular care would be taken in the matter of illumi nation of the hotel so that bright lights or neon signs emanating from the hotel would not disturb the birds and animals. In the circumstances, the government was alive to the ecological considerations particularly the question of the migratory birds. [260E H; 261A E] 2.1 It is wrong to think that every thing not mentioned in the Cabinet Memoranda did not receive consideration by the government. In the instant case the process of choosing and allotting the land to the Taj Group of Hotels nearly took two years during the course of which objections of various kinds were raised from time to time. It was not necessary that everyone of these objections should have been mentioned and considered in each of the Cabinet Memoranda. [260C E] 2.2 The proposition that a decision must be arrived at after taking into account all relevant considerations, eschewing all irrelevant considerations cannot for a moment be doubted. In the instant case, relevant considerations were not ignored and indeed were taken into consideration by the Government of West Bengal. It is not one of those cases where the evidence is first gathered and a decision is later arrived at one flue morning and the decision is incorporated in a reasoned order. This is a case where discussion had necessarily to stretch over a long period of time. Several factors have to be independently and separately weighed and considered. This is a case where the decision and the rea sons for the decision could only be gathered by looking at the entire course of events and circumstances stretching over the period from the initiation of the proposal to the taking of the final decision. The argument that what was not said in either of the Cabinet Memoranda could not later be supplemented by considerations which were never present in the mind of the decision making authority is not correct. [263E G] Rohtas Industries Ltd. vs S.D. Agarwal, ; and Barium Chemicals vs A.G. Rana, ; , re ferred to. Mohinder Singh Gill vs Central Election Commission, , distinguished. There was no failure to observe the principles of Natural Justice. Such as those as were really interested in the matter like the Managing Committee of the Zoological Garden and the Director of the 232 Zoo did have their say in the matter. The Public Undertak ings Committee in its report discussed the matter and invit ed the Government 's attention to various factors. The matter was further discussed on the floor of the Legislative Assem bly. [264B D] 4.1 The two letters dated 23.4. 1880 and 7.7. 1880, pertaining to the grant relating to the transfer of land to the east of Belvedere Road, known as Begumbari land in 1880, produced from old official records, are public documents within the meaning of the Evidence Act. No objection either to the authenticity or to the admissibility of the documents was taken either before the Single Judge or before the Division Bench. The Managing Committee of the Zoological Garden never doubted the authenticity of the documents, nor was any question even raised to suggest that the terms of the grant were other than those mentioned in the letters. [265C E] 4.2 The new plea relating to authenticity or admissibil ity of evidence cannot be accepted in an appeal under article 136 of the Constitution. The land which was undoubtedly government land was given to the Zoological Garden upon the terms set out in the two letters. One of the terms was that the land should be restored to the government whenever required. Another terms was that the Zoological Garden Committee would be suitably compensated for any expenditure incurred by it on the construction of any building on the land. [265E] 5.1 It is true that the Act of the legislature cannot be undone by a mere act of the Executive. This is not a case where the statute vests land in the Committee and the Execu tive takes it away by its fiat. The Begumbari land was government land transferred to the charge of the Zoological Garden Committee in 1880 in accordance with the conditions and terms agreed to by the Committee in their letter dated 23.4.1880; namely; "(i) that the land is to be used for the purpose of acclimatization only; (ii) that Carnivors are not to be kept on any part of it, on any account; (iii) that the grounds are to be kept clear and neat; (iv) that the land must be restored to the government if hereafter required. The Zoological Garden Committee being reimbursed for any expenditure they may have incurred in building there. " Therefore, this is a case of resumption of Government land under the terms of Agreement. [264E H; 265A B] 5.2 From the Preamble and the provisions of the Bengal Public Parks Act, 1904, it is clear that the Act is intended to protect the inmates and the property of the park from injury by persons resorting 233 to the park from molestations or annoyance by others. The Act is aimed at protecting the part and its visitors from injury and annoyance by despoilers and marauders. The Act has nothing whatever to do with the vesting of any property in the parks. There is in fact no provision which deal with the vesting of property in a park, Section 3 enables the State Government to extend by a notification, the boundaries of a park but that can only be for the purposes of the Act and not for the purpose of vesting or creating any title in a property. If a piece of adjacent land, for example, is taken on lease for a specified number of years by the park and included in the park by a notification under s.3 it does not mean that the various things, the doing of which is regulated or prohibited by the Act and the rule will not be done or will be regulated on the adjacent land also. The provisions of the Bengal Public Parks Act have no relevance to the question of the power of the government to transfer the Begumbari land to the Taj Group of Hotels. [266C F] 6.1 Statutes and statutory orders have no doubt to be obeyed. It does not mean that other orders, instructions, etc. may be departed from in an individual case, if applica ble to the facts. They are not to be ignored until amended. The government or the Borad may have the power to amend these orders and instructions, but nonetheless they must be obeyed so long as they are in force and are applicable. But, from the perusal of the provisions of paragraphs 165 to 167 of the West Bengal Land Management Manual, it is clear that these provisions of the Land Management Manual do not appear to have anything to do with the transfer and use of the land in the manner proposed, in which the State also have a vital stake apart from the mere raising of revenue for the State. Paragraphs 165, 166 and 167 deal with simple cases of crea tion of non agricultural tenancies by way of long term leases. They generally deal with land which is at the dis posal of the government as waste or surplus land and are intended to secure the best revenue for the State. They do not deal with cases of transfer of land for a specific socio economic object, where, the securing of immediate revenue. is not the principal object but other social and economic benefits are sought. [267E H] 6.2 The following propositions may be taken as well established on a considerations of the earlier decisions of the Supreme Court. State owned or public owned property is not to be dealt with at the absolute discretion of he execu tive. Certain precepts and principles have to be observed. Public interest is the paramount consideration. One of the methods of securing the public interest, when it is consid ered necessary to dispose of a property, is to sell the property by public auction or by inviting tenders. Though that is the ordinary rule. it is not an invariable 234 rule. There may be situations where there are compelling reasons necessitating departure from the rule, but then the reasons for the departure must be rational and should not be suggestive of discrimination. Appearance of public justice is as important as doing justice. Nothing should be done which gives an appearance of bias, jobbery or nepotism. [273D F] 6.3 Applying the above tests, it cannot be held that the government of West Bengal did not act with probity in not inviting tenders or in not holding a public auction but negotiating straight away at arm 's length with the Taj Group of Hotels, in its pursuit or socio economic objective of encouraging tourism and earning more foreign exchange. In the present case no one has come forward alleging that he has been discriminated against and his fundamental right to carry on business had been affected. The very nature of the construction and establishment of a Five Star Hotel is indicative of a requirement of expertise and sound financial position on the part of those who might offer to construct and establish them. The decision taken by the All India Tourism Council was an open decision well known to everyone in the hotel business. Yet no one except the I.T.D.C. and the Taj Group of Hotels had come forward with any proposal. The Oberoi Group of Hotels already had a Five Star Hotel in Calcutta while the Welcome Group of Hotels were making their own Private negotiations and arrangements for establishing a Five Star Hotel. In the circumstances, particularly in the absence of any leading hotliers coming forward, the govern ment of West Bengal was perfectly justified in entering into negotiation with the I.T.D.C. and the Taj Group of Hotels instead of inviting tenders. Negotiations with those who had come forward with proposals to construct Five Star Hotels was without doubt the most reasonable and rational way of proceeding in the matter rather than inviting tenders or holding public auction. There was nothing discriminatory in the procedure adopted since no other leading hotlier had shown any inclination to come forward. Tenders and auction were most impractical in the circumstances. The choice of the Taj Group of Hotels must therefore be held to be beyond suspicion and above reproach. [273F; 268D F] Rash Bihari Panda vs State of Orissa, ; R.B. Shetry vs International Airport Authority, 14; Kasturi Lal Laxmi Reddy vs State of Jammu & Kashmir, ; ; State of Haryana vs Jaga Ram, ; Ram and Shvam Co. vs State of Haryana, ; and Chenchu Rami Redav vs Go/vt. of Andhra Pradesh, [1986] 3 SCC 391, discussed. 7.1 On a consideration of all the facts and circumstances of the 235 case, it is clear, that the government of West Bengal acted perfectly bonafide in granting the lease of Begumbari land to the Taj Group of Hotels for the construction of a Five Star Hotel in Calcutta. The government of West Bengal did not fail to take into account any relevant consideration. Its action was not against the interest of the Zoological Garden or not in the best interests of the animal inmates of the zoo or migrant birds visiting the zoo. The financial interests of the State were in no way sacrificed either by not inviting tenders or holding a public auction or by adopting the ' 'nett sales" method. [274C E] 7.2 The "nett sales" method appears to be fairly well known method adopted in similar situations. This what was recommended by WEBCON, the consulting agency of the West Bengal Government which submitted a detailed report on the subject. This was also the recommendation of the Committee of Secretaries who went into the matter in death, even to lay persons who are no financial experts, it appears that the "nett sales" method does and the rent based on market value method does not take into account the appreciating value of land, the inflationary tendency of the prices and the profit orientation. Even on a prima a facie view, there appears to be nothing wrong. or objectionable in the "nett sales" method. It is profit oriented and appears to be in the best interests of the Government of West Bengal. [274A C] Per Kahlid J. (concurring) 1. Today public spirited litigants rush to courts to file cases in profusion under attractive name Public Inter est Litigation. They must inspire confidence in courts and amongst the public. They must be above suspicions. Public Interest Litigation has now come to stay. Bue one is led to think that it poses a threat to courts and public alike. Such cases are now filed without any rhyme or reason. It is, therefore, necessary to lay down clear guide lines and to outline the correct parameters for entertainment of such petitions. If courts do not restrict the free flow of such cases in the name of Public Interest Litigations, the tradi tional litigation will suffer and the courts of law, instead of dispensing justice, will have to take upon themselves administrative and executive functions. This does not mean that traditional litigation should stay put. They have to be tackled by other effective methods, like decentralising the judicial system and entrusting majority of traditional litigation to village courts and Lok Adalats without the usual populist stance and by a complete restructuring of the procedural law which is the villain in delaying disposal of cases. It is only when courts are apprised of gross viola tion of fundamental rights by a group or a class action or when 236 basic human rights are invaded or when there are complaints of such acts as shock the judicial conscience that the courts, especially this Court, should leave aside procedural shackles and hear such petitions and extend its jurisdiction under all available provisions for remedying the hardships and miseries of the needy, the under dog and the neglected. Extending help when help is required does not mean that the doors of the Supreme Court are always open to anyone to walk in. It is necessary to have some self imposed restrained on public interest litigants, so that this salutary type of litigation does not lose its credibility. [275C; 279A F] 2. The approach of the Taj Group Hotels in this case has been creditably fair. They have given all the assurances necessary to preserve the Zoo and its inmates. They were willing to afford all the requisite safeguards. In the place of a dilapidated hospital, operation theater and the like, they constructed buildings, a new at a cost of Rs. 30 lakhs which amount they were entitled to be reimbursed under cl. 25 of the lease, which they voluntarily gave up. In addition to this, they surrendered an area of 288 sq. metrs. from the land allotted to them to the Zoo. They agreed to build not the usual sky scrapper hotel, but a garden hotel, the height of which would not go beyond 75 feet, despite the fact that there existed in the surroundings area buildings which were very high. This was done to keep free the route of the flight of the birds. They agreed to have subdued light in the hotel, again in the ineterest of the birds. They also agreed to keep the surroundings of the hotel and the flora well maintained and already 30,000 plants were getting ready to adjourn the area to be occupied by them. [277H; 278A C] 3.1 Regarding the commercial and financial aspects of the lease also, there is nothing secretive. The method adopted is the nett sales method of calculating the compen sation paid, which is a well known method adopted in such situations like the one, here namely lease of land by the Government. [278C E] 3.2 A deal like the one is given cannot be concluded by public auction as it is not a case of sale of a government property. Being not a sale but a lease of land by the gov ernment public auction has necessarily to be ruled out. Only Taj Group of Hotels came forward with an offer to start the hotel. The lease was the culmination after a long, elaborate and open procedure with nothing to hide which therefore cannot justifiably be subject to adverse criticism. [278G H]

vil Appeal No. 10761077 of 1987. From the Judgment and Order dated 17.8.1985 of the Allahabad High Court in C.M. Writ No. 6849 of 1984. K. Parasaran, B. Datta, P.P. Rao, K.L. Hathi, Anil Nauriya, S.R. Aggarwal, Y. Ramachandran, U.J. Rana, R.P. Srivastava, Hem 188 ant Sharma, P. Parmeshwaran, Ms. Sushma Suri and C.V. Subba Rao for the Appellants. M.K. Ramamurthy, C.S. Vaidyanathan, section Ravindra Bhatt, Mohan, S.R. Setia and Probir Choudhary for the Respondents. The Judgment of the Court was delivered by VENKATARAMIAH J. The question involved in these appeals by special leave which are filed against the judgment dated August 17, 1985 of the High Court of Allahabad in Civil Miscellaneous Writ No. 6849 of 1984 relates to the constitu tional validity of regulation 19(2) of the Life Insurance Corporation of India (Staff) Regulations, 1960 (hereinafter referred to as 'the (Staff) Regulations, 1960 '), as amended on 21.1. 1977 by the Life Insurance Corporation of India (hereinafter referred to as 'the Corporation ') which pro vides that an employee belonging to Class I or Class II appointed to the service of the Corporation on or after 1st September, 1956 shall retire on completion of 58 years of age but the competent authority may, if it is of the opinion that it is in the interest of the Corporation to do so, direct such employee to retire on completion of 50 years of age and at any time thereafter on giving him three months ' notice or salary in lieu thereof. Prior to January,. 1955 there were more than 200 insur ers carrying on life insurance business in India. As it came to the notice of the Government that the Indian life insur ers, with a few exceptions, were virtually controlled by few individuals who were utilising the funds of those companies to the detriment of the industry and the policyholders, the Government decided to nationalise the life insurance busi ness. Pursuant to the said decision, the President of India promulgated the Life Insurance (Emergency Provisions) Ordi nance, 1956 on January 19, 1956 providing for the vesting of the management of the life insurance business (which was called the controlled business under the Ordinance) which was being carried on by any insurer in India on that day in the Central Government and providing for its management. On the passing of the said Ordinance the management of the controlled business of all the insurers in India thus vested in the Central Government and pending the appointment of the custodians for the controlled business of any insurer the person in charge of the management of such business immedi ately before the passing of the Ordinance was required to be in charge of the management of the business for and on behalf of the Central Government. The Ordinance contained detailed provisions for the carrying on of the life insur ance business by 189 the Government for the time being. The Ordinance was replaced by the which was published on 21st of March, 1956. The said Act was followed by the (Act 31 of 1956) (hereinafter referred to as 'the Act ') which was published in the Gazette on 18th June, 1956. The Act, howev er, came into force on 1st July, 1956. The Act provided for the establishment and incorporation of the Corporation. The Corporation was accordingly established on 1st September, 1956. Under the Act the expression 'appointed day ' is de fined as the date on which the Corporation is established. The appointed day for the purposes of the Act is, therefore, September 1. 1956. By virtue of section 7 of the Act on the appointed day all the assets and liabilities appertaining to the controlled business of all insurers, the management of which it had been taken over earlier by the Central Govern ment, stood transferred to and vested in the Corporation. When the Corporation thus came into existence it had no employees of its own to carry on the vast business of the large number of insurers which had been taken over by it. It, therefore, became necessary to transfer the services of the existing employees of the insurers to the Corporation because without the services of those employees it was almost impossible for the Corporation to run the life insur ance business in India which involved management of the various offices situated in different parts of India, serv icing of lakhs of insurance policies, the administration of the assets taken over from the insurers and several other activities connected with the life insurance business. The nature of the work of the Corporation was such that it required the services of the employees with sufficient experience and expertise in running the life insurance business. In order to meet the above need section 11 of the Act came to be enacted. Section 11 of the Act originally stood as follows: "11. Transfer of service of existing employees of insurers to the Corporation (1) Every whole time employee of an insurer whose controlled business has been transferred to and vested in the Corporation and who was employed by the insurer wholly or mainly in connection with his controlled business immediately before the appointed day shall, on and from the appointed day, become an employee of the Corporation, and shall hold his office therein by the same tenure, at the same remuneration and upon the same terms and conditions and with the same rights and privi leges as to pen 190 sion and gratuity and other matters as he would have held the same on the appointed day if this Act had not been passed, and shall continue to do so unless and until his employ ment in the Corporation is terminated or until his remuneration, terms and conditions are duly altered by the Corporation: Provided that nothing contained in this sub section shall apply to any such employee who has, by notice in writing given to the Central Government prior to the ap pointed day, intimated his intention of not becoming an employee of the Corporation. (2) Notwithstanding anything con tained in sub section (1) or in any contract of service, the Central Government may, for the purposes of rationalising the pay scales of employees of insurers whose controlled business has been transferred to and vested in it or for the purpose of reducing the remuner ation payable to employees in cases where in the interest of the Corporation and its policyhold ers a reduction is called for, alter the terms of service of the employees as to their remuneration in such manner as it thinks fit; and if the alteration is not acceptable to any employee the Corporation may terminate his employment on giving him compensation equivalent to three months ' remuner ation unless the contract of service with such employee provides for a shorter notice of termination. Explanation: The compensation payable to an employ ee under this sub section shall be in addition to and shall not affect any pension, gratuity, provident fund money or any other benefit to which the employee may be entitled under his contract of service. (3) If any question arises as to whether any person was a whole time employee of an insurer or as to whether any employee was employed wholly or mainly in connection with the controlled business of an insurer immediately before the appointed day the question shall be referred to the Central Government whose decision shall be final. (4) Notwithstanding anything contained in the (14 of 1947), or in any other 191 law for the time being in force, the transfer of the serv ices of any employee of an insurer to the Corporation shall not entitle any such employee to any compensation under that Act or other law, and no such claim shall be entertained by any Court, tribunal or other authority. " Sub section (1) of section 11 of the Act provided that every whole time employee of an insurer whose controlled business had been transferred to and vested in the Corpora tion and who was employed by the insurer wholly or mainly in connection with the controlled business immediately before the appointed day, i.e., September 1, 1956, would on and from the appointed day become an employee of the Corpora tion, and would hold his office therein by the same tenure, at the same remuneration and upon the same terms and condi tions and with the same rights and privileges as to pension and gratuity and other matters as he would have held the same on the appointed day if the Act had not been passed, and would continue to do so unless and until his employment in the Corporation was terminated and until his remunera tion, terms and conditions were duly altered by the Corpora tion. The proviso to that sub section provided that nothing contained in sub section (1) of section 11 of the Act would apply to any such employee who had by notice in writing given to the Central Government prior to September 1, 1956 intimated his intention of not becoming an employee of the Corporation. The whole time employees of the erstwhile insurers whose services were thus transferred to the Corpo ration are hereinafter referred to as 'the transferred employees ' of the Corporation. As mentioned earlier, there were more than 200 insurers whose controlled business had been taken over by the Corporation and we are informed that there were about 27,000 whole time employees working in them. The conditions of service of these transferred employ ees of the Corporation whose services were transferred to the Corporation under section 11(1) of the Act were not uniform. It was naturally difficult to continue after the establishment of the Corporation in the cases of all the transferred employees, the conditions of service enjoyed by them when they were in the employment of the former insur ers. The conditions governing the retirement of those offi cials with which we are concerned in these appeals were also diverse and different. In some cases the age of retirement had been fixed at 55 years, in some at 58 years and in some others at 60 years. In many cases the insurers had permitted their employees to continue in their service even beyond 60 years depending upon their efficiency and physical capacity. The conditions of service of employees and in particular the terms of remuneration prevalent in some of the former 192 insurance organisations were also disadvantageous to the policyholders. It, therefore became necessary to bring about uniformity in the conditions of service of the transferred employees. Parliament therefore, enacted sub section (2) of section 11 of the Act which provided that notwithstanding anything contained in sub section (1) of section 11 or in any contract of service, the Central Government might for the purposes of rationalising the pay scales of employees of insurers whose controlled business had been transferred to and vested in it or for the purposes of reducing the remu neration payable to those employees in cases where in the interest of the Corporation and its policyholders a reduc tion was called for, alter the terms of service of the employees as to their remuneration in such manner as it thought fit and if the alteration was not acceptable to any employee the Corporation might terminate his employment on giving him compensation equivalent to three months ' remuner ation unless the contract of service with such employee provided for a shorter notice of termination. Doubts arose as regards the meaning of sub section (2) of section of the Act. In Christopher Pimenta and Others vs Life Insurance Corporation of India, the High Court of Bombay opined that under section 11(2) of the Act the Central Government could alter the terms and conditions of service of the employees only as to the remuneration and that the said sub section had no reference to the other terms and conditions of the service. The above decision of the Bombay High Court was delivered on 16.4.1957. It is stated that there were cases pending in other courts also questioning the scope and ambit of sub section (2) of sec tion 11 of the Act as it stood originally. Hence in order to remove all doubts the President of India promulgated an ordinance (which was replaced by Act 17/1957) substituting a new sub section in the place of the original sub section (2) of section II of the Act making it more comprehensive and thus enabling the Central Government to alter suitably all conditions of service of the transferred employees. The new sub section (2) of section 11 of the Act was further modi fied by Act 36 of 1957. Thereafter sub section (2) of sec tion 11 of the Act read as follows: "(2) Where the Central Government is satisfied that for the purpose of securing uniformity in the scales of remuner ation and the other terms and conditions of service applica ble to employees of insurers whose controlled business has been transferred to, and vested in the Corporation, it is necessary so to do, or that, in the interest of the Corpora tion and its policy holders, a reduction in the remuneration payable, or a revision of the other terms and 193 conditions of service applicable, to employees or any class of them is called for, the Central Government may, notwith standing anything contained in sub section (1), or in the , or in any other law for the time being in force, or in any award, settlement or agree ment for the time being in force, alter (whether by way of reduction or otherwise) the remuneration and the other terms and conditions of service to such extent and in such manner as it thinks fit, and if the alteration. is not acceptable to any employee, the Corporation may terminate his employ ment by giving him compensation equivalent to three months ' remuneration unless the contract of service with such em ployee provides for a shorter notice of termination. Explanation The compensation payable to an employee under this sub section shall be in addition to, and shall not affect, any pension, gratuity, provident fund money or any other benefit to which the employee may be entitled under his contract of service. " Section 49(1) of the Act conferred powers on the Corpo ration to make with the previous approval of the Central Government regulations not inconsistent with the Act and the rules made thereunder. It provided for making regulations to provide for all matters for which provision was expedient for the purposes of giving effect to the provisions of the Act. Clause (b) of sub section (2) of section 49 of the Act in particular conferred power on the Corporation to make regulations as regards the method of recruitment of employ ees and agents of the Corporation and the terms and condi tions of such employees or agents. It was felt that clause (b) of section 49(2) of the Act was not in terms applicable to the transferred employees who became the employees of the Corporation under sub section (1) of section 11 of the Act but only referred to the employees and agents of the Corpo ration who were employed after the Corporation was estab lished, that is, after 1st September 1956. To remove the above doubt by Act 17 of 1957 section 49 of the Act was amended by introducing clause (bb) in sub section (2) of section 49 of the Act which expressly conferred power on the Corporation to make regulations with the previous approval of the Central Government as regards 'the terms and condi tions of service of persons who have become employees of the Corporation under sub section (1) of section 11 '. The above clause was introduced into the Act with retrospective effect along with the new sub 194 section (2) of section 11 of the Act. It is this to be seen that the conditions of service of the transferred employees were to be regulated by the provisions of the Act, by an order made by the Central Government under section 11(2) of the Act and the regulations made under clause (bb) of sec tion 49(2) of the Act. Even before clause (bb) was actually introduced into the Act with retrospective effect by Act 17 of 1957 the Corporation had promulgated the Life Insurance Corporation of India (Staff) Regulations, 1956 (hereinafter referred to as 'the (Staff) Regulations, 1956 '). Under regulation 21 of the (Staff) Regulations, 1956 provision was made regarding superannuation and retirement of the employ ees of the Corporation. Regulation 21 reads as follows: "21. An employee shall retire at fifty five years of age provided that the appointing authority may at its discretion extend the service every year upto 60 years of age. Provided, however, that in respect of some of the employees of insurers who are allowed to continue in service beyond age 60 because of the terms and conditions of employ ment having not 'been favourable in the past, the Executive Committee may at its discretion extend their service every year upto age 65. Provided further that during the three years, beginning from 1st September, 1956, the Executive Committee may, at its discretion, extend the service of a class I employee, who has completed sixty years of age for such period as may be specified but not exceeding one year at a time if such extension is considered necessary in the inter est of the Corporation. Explanation Notwithstanding anything contained in this Regulation, where an employee has privilege leave earned but not availed of as on the date of retirement as prescribed in the above Regulation he may be permitted to avail of the leave and in that case the employee will be deemed to retire from service at the expiry of the leave. " The above regulation fixed the age of retirement of an employee at 55 years while empowering the authority to extend the service of an employee, at its discretion, every year upto 60 years of age. The first proviso to regulation 21 of the (Staff) Regulations, 1956, however, 195 authorised the Corporation to allow some of the employees of insurers who were allowed to continue in service beyond the age of 60 years for the reasons mentioned therein. The above regulation thus made a distinction between an employee who entered the service of the Corporation after it was estab lished, i.e., after 1st September, 1956 and the transferred employees insofar as the age of retirement was concerned. Pursuant to the power conferred on it under sub section (2) of section 11 of the Act the Central Government issued an order on 1.6.1957 called the Life Insurance Corporation of India (Alteration of Remuneration and other Terms & Conditions of Service of Employees) Order, 1957 which came into force retrospectively from 1st September, 1956. This order is called the 'standardisation order '. This Order applied to all transferred employees who had become employ ees of the Corporation under section 11(1) of the Act and who were in supervisory, clerical and subordinate grades (now classified as Class III and Class IV employees) of the erstwhile insurers on 31st August, 1956. Clause 13 of the above Order, which related to the age of superannuation read as follows: "13. Retirement: The normal age of retirement shall be 60. But the Corporation may require any employee who has attained the age of 55 to retire if his efficiency is found to have been impaired. " Clause 13 of the above Order, therefore, modified regu lation 21 of the (Staff) Regulations, 1956 to the extent indicated therein with effect from the commencement of the Corporation. After the promulgation of the Order the trans ferred employees to whom it applied were entitled to contin ue in the service of the Corporation till they attained the age of 60 years subject to the Corporation exercising its powers to retire a transferred employee on his attaining the age of 55 years if his efficiency was found to have been impaired. In the case of the other employees who joined service subsequent to 1st September, 1956 regulation 21 of the (Staff) Regulations, 1956, which prescribed the age of retirement at 55 years subject to the appointing authority at its discretion extend the age of retirement to 60 years as provided therein, continued to apply. This Order applied to the members of the staff of the Corporation belonging to Class III and Class IV categories. As regards the trans ferred officers belonging to the Class II category, 196 namely, the Field Officers, a standardisation order was made under sub section (2) of section 11 of the Act on 30th December, 1957. Clause 6 of that order originally read as follows: "6. Leave and retirement In the matter of leave and retire ment, Field Officers shall be governed by the same regula tions as are applicable to Class I officers of the Corpora tion. " The above clause 6 was substituted by a new clause on 25.11.1962 which read as follows: "6. Leave and retirement In the matter of leave and retire ment, Development Officers shall be governed by the Life Insurance Corporation of India (Staff) Regulations, 1960, as amended from time to time. " It may be noted that the Field Officers referred to in the former clause 6 had been redesignated as the Development Officers before it was substituted by the later clause 6 of the standardisation order. Insofar as the transferred offi cers belonging to Class I were concerned, the question of determination of their age of superannuation was taken up for consideration by the Services and Budget Committee of the Corporation on 20th November, 1959. Para 9 of the office note circulated amongst the members of that committee gave a true picture of the conditions prevailing then. It read thus: "9. As regards retirement, the Government has mentioned that the Department of Expenditure has objected to raising the date of superannuation to 58 years of age on the ground that other statutory Corporations are also demanding the same benefit on the analogy of the Life Insurance Corporation 's proposal. Standardisation Order provides that an employee shall retire at 60 years of age, but the competent authority may require an employee to retire at any time after 55 years of age if his efficiency is found to have been impaired. In the amended Regulations approved by the Board, this provi sion of the Standardisation Order was incorporated as far as employees in Classes III & IV are concerned but in the case of transferred officers and Field Officers, the retirement age was fixed at 55 extensible to 58 with a further proviso that in special circumstances only the competent authority may extend the services 197 beyond age 58 and upto 60 years of age. The Board has also decided that administratively we shall grant exten sion upto 60 liberally till the end of 1963. Most of the insurers permitted their officers to continue in service upto 60 years of age and even beyond, depending upon their efficiency. There is no reason why there should be distinc tion between officers and staff in this matter as both of them had similar privileges with regard to retirement in the past. There is thus a strong case for extending the provi sions of the Standardisation Order regarding retirement to the transferred officers also. As regards new recruits, it was thought that there was no justification to bring down the retirement age from 60 to 55 all of a sudden nor was it considered necessary to maintain any distinction between officers and staff. All the employees have often represented that the age of retirement should be raised to 60. A compro mise was, therefore, struck by fixing the age at 58. In the light of the above it is suggested that the provisions of the Standardisation Order may be extended to transferred officers and the retirement age may be retained at 58 for persons recruited on or after 1st January 1959. It may be added that this would mean a modification of the earlier decision of the Board in this matter. " After the matter was duly considered by the Services and the Budget Committee and by the Corporation, regulations were framed under clauses (b) and (bb) of section 49(2) of the Act prescribing the ages of retirement of the employees of the Corporation belonging to different categories with the previous approval of the Central Government and were incorporated in the (Staff) Regulations, 1960 made by the Corporation which came into effect on July 1, 1960. Regula tion 19 of the (Staff) Regulations, 1960 dealt with the subject of superannuation and retirement of the employees of the Corporation. It reads thus: "Superannution and Retirement: 19(1). A transferred employee shall retire on completion of age 60; but the appointing authority may direct such employ ee to retire on completion of 55 years of age or at any time thereafter, if his efficiency is found to have been im paired. (2) An employee appointed to the service of the 198 Corporation on or after 1st September, 1956 shall retire on completion of 58 years of age; but the appointing authority may direct such employee to retire on completion of 55 years of age or at any time thereafter, if his efficiency is found to have been impaired. . . . . . . . It is seen from the above regulation that the cases of all transferred employees were dealt with by sub regulation (1) of regulation 19 and the cases of employees appointed to the service of the Corporation that year after 1st Septem ber, 1956 were dealt with by sub regulation (2) of regula tion 19. All the transferred employees were entitled to remain in service till they completed 60 years of age but the appointing authority was empowered to retire any such transferred employee on completion of 55 years of age or at any time thereafter if his efficiency was found to have been impaired. All employees appointed to the service of the Corporation on or after 1st September, 1956 were required to retire on completion of 58 years of age but the appointing authority was empowered to retire any such employee on completion of 55 years of age or at any time thereafter if his efficiency was found to have been impaired. This regula tion was made in supersession of all other earlier regula tions. In the case of the transferred employees the regula tion was in conformity with the standardisation order passed in respect of Class III and Class IV transferred employees in whose case the age of retirement was fixed at 60 years. The result was that the regulation made a clear and distinct classification of all the employees of the Corporation belonging to all classes into two groups transferred em ployees and the employees appointed after 1st September, 1956, for purposes of the age of retirement having regard to the historical reasons. It would appear that an industrial dispute arose between the Class III and Class IV employees who entered the service of the Corporation on or after 1st September, 1956 and the Corporation and one of the points of dispute related to the age of retirement. These employees demanded that their age of retirement should also be fixed at 60 years as in the case of Class III and Class IV employ ees belonging to the category of transferred employees. The dispute ultimately ended in a settlement which was incorpo rated in the Memorandum of Settlement arrived at under section 2(p) and section 18(1) of the and rule 58 of the Industrial (Central) Disputes Rules, 1957 dated 29th January, 1965. The relevant part of the settlement arrived at between the parties to the said industrial dispute as regards the age of retirement of class III and class IV emp 199 loyees who entered the service of the Corporation on or after 1st September, 1956 read as follows: "1. Retirement age for new employees: There will be no distinction between Class 111 and Class IV 'transferred employees ' and Class III and Class IV employees who entered the service of the Corporation on or after 1.9.1956 in regard to retirement age which shall be 60" After the above settlement was arrived at regulation 19 of the (Staff) Regulations, 1960, which had been brought into force with effect from July 1, 1960, was suitably amended to bring it in conformity with the settlement. The relevant part of the amended regulation 19 which was noti fied on 19.6.1965 read thus: "19(1). An employee belonging to Class III or Class IV and a transferred employee belonging to Class I or Class II shall retire on completion of age 60; but the appointing authority may direct such employee to retire on completion of 55 years of age or at any time thereafter, if his efficiency is found to have been impaired. (2) An employee belonging to Class I or Class II appointed to the service of the Corporation on or after 1st September, 1956 shall retire on completion of 58 years of age, but the appointing authority may direct such employee to retire on completion of 55 years of age or at any time thereafter, if his efficiency is found to have been im paired. (2A) Notwithstanding what is stated in sub regula tions (1) and (2) above, an employee may be permitted to retire at any time after he has completed age 55. . . . . " On account of the settlement arrived at between Class III and Class IV employees, who were appointed subsequent to 1st September, 1956 and the Corporation, which was followed up by the amendment of the (Staff) Regulations with effect from 19.6.1965, the employees of the Corporation were divid ed both longitudinally and latitudinally insofar as the age of superannuation was concerned. The longitudinal division of the employees was as follows. All the transfer 200 red employees belonging to Class I and Class II became entitled to continue in service till they attained the age of 60 years subject of course to the power of the Corpora tion to retire any of them prematurely on completion of 55 years of age if his efficiency was found to have been im paired and all the Class I and Class II officers appointed to the service of the Corporation on or after 1st September, 1956 had to retire on completion of 58 years of age subject again to the power of the Corporation to retire any such employee on completion of 55 years of age or at any time thereafter if his efficiency was found to have been im paired. The employees of the Corporation were divided lati tudinally into two groups. All the employees belonging to Class III and Class IV irrespective of the fact whether they were transferred employees or employees appointed after 1st September, 1956 were entitled to continue in service till 60 years of age, but the employees belonging to Class I and Class II, who were appointed to the service of the Corpora tion on or after 1st September, 1956 had to retire on the completion of 58 years of age subject to the usual clause relating to premature retirement. Sub regulation (2) of regulation 19 which affected the employees belonging to Class I and Class II appointed to the service of the Corpo ration on or after 1st September, 1956 was substituted by a new sub regulation which was notified on September 3, 1966. This new sub regulation (2) of regulation 19 read as fol lows: "(2). An employee belonging to the Class I or Class II ap pointed to the service of the Corporation on or ' after 1st September, 1956 shall retire on completion of 58 years of age, but the appointing authority may at its discretion, extend his service for one year at a time upto 60 years of age. The appointing authority may, however, direct an em ployee to retire on completion of 55 years of age or at any time thereafter if his efficiency is found to have been impaired. " The modification made by the new sub regulation (2) of regulation 19 empowered the appointing authority to extend at its discretion the service of any employee of the Corpo ration belonging to the Class I or Class II categories appointed to the service of the Corporation on or after 1st September, 1956 for one year at a time upto 60 years of age. Since the Corporation found that the discretion conferred on the appointing authority to extend the services of Class I or Class II officers beyond 58 years of age at its discre tion was not being exercised satisfactory but very often abused, sub regulation (2) was again amended on 21.1.1977 withdrawing the power to extend the service of 201 employees belonging to Class I and Class 11 appointed to the service of the Corporation on or after 1st September, 1956 beyond 58 years of age. It also provided that in the inter est of the Corporation, the Corporation could retire an employee after completion of 50 years of age. The relevant part of regulation 19 amended on 21.1.1977 reades thus: "19(1). An employee belonging to Class III or Class IV and a transferred employee belonging to Class I or Class II shall retire on completion of age 60; but the competent authority may, if it is of the opinion that it is in the interest of the Corporation to do so, direct such employee to retire on completion of 55 years of age or at any time thereafter, on giving him three months ' notice or salary in lieu thereof. An employee belonging to Class I or Class II appointed to the service of the Corporation on or after 1st September, 1956 shall retire on completion of 58 years of age, but the competent authority may, if it is of the opinion that it is in the interest of the Corporation to do so, direct such employee to retire on completion of 50 years of age or at any time thereafter on giving him three months ' notice or salary in lieu thereof." The 1st Respondent S.S. Srivastava entered the service of the Corporation as a Class III employee on 22.3.1957 on which date he was appointed as an Assistant in the Corpora tion. From the said Class III post he was promoted to the Class I post (since there was no necessity to pass through a Class II post before entering a Class I post) on 8.10.1963 and was appointed as Assistant Branch Manager (Admn.). From the post of Assistant Administrative Officer he was promoted to the post of Administrative Officer in June, 1971 and was further promoted as Assistant Divisional Manager on 18.7.1978. Since he was born in the month of June, 1926, notice was issued in February, 1984 to Respondent No. 1 of his retirement which was due on 30th June, 1984 on his completing the age of 58 years. Before the date of his retirement, he instituted a writ petition out of which these appeals arise in Civil Miscellaneous Writ No. 6849 of 1984 on the file of the High Court of Allahabad questioning the validity of regulation 19(2) of the (Staff) Regulations, 1960 as it stood then and praying for the issue of a writ in the nature of mandamus to the Corporation not to retire him before he completed the age of 60 years. The High Court 202 issued 'an interim order of stay of his retirement on May 22, 1984. Hence, he was not retired on the 30th June, 1984 as originally notified and allowed to continue in service. The Writ Petition was allowed striking down regulation 19(2) as being violative of Articles 14 and 16 of the Constitution of India and the Corporation was directed not to retire the 1st Respondent before he attained the age of 60 years. By virtue of the judgment of the High Court, the 1st Respondent continued in the service of the Corporation till he complet ed 60 years of age. He was retired from service on 30th of June, 1986 during the pendency of these appeals. In the Writ Petition filed by the 1st Respondent it was contended that there was no justification to prescribe two different ages of retirement one for the transferred employ ees belonging to Class I and Class II categories and the other for the employees who joined the service of the Corpo ration after 1st September, 1956 and who also belonged to Class I and Class II categories. It was also contended that whatever may be the position in respect of persons who were appointed directly to any post belonging to Class I or Class II category after 1st September, 1956, as regards those who joined the service of the Corporation on being appointed to a Class III post after 1st September, 1956 there could not be any reduction of the age of retirement from 60 years to 58 years on their being promoted to a Class I post or Class II post. In other words the contention of the 1st Respondent before the High Court was that since he had the fight to continue in service if he had remained in Class III only till he attained the age of 60 years as a Class III employee by virtue of the settlement and the amendment of the regula tion 19 in the year 1965, the age of retirement in his case could not be reduced to 58 years only because he had been promoted to a Class I post. The Writ Petition was contested by the Corporation and the Union of India. It was urged on behalf of the Corporation and the Union of India that the transferred employees and the employees who joined the service after 1st September, 1956 belonged to two distinct and separate classes which had been treated differently throughout for valid reasons. It was pleaded by them that on the establishment of the Corporation under the Act it became necessary to continue the services of the employees of the erstwhile insurers whose life insurance business was taken over by the Corporation to run the business of the Corpora tion because the Corporation had no employees of its own in the month of September, 1956 when it was established. Since as regards the age of retirement there was no uniformity in the establishments in which the transferred employees were working prior to the nationalisation of the life insurance business 203 and as in some cases the age of retirement had been fixed at 55 years, in some other cases it was 58 years, in few other cases at 60 years and in many cases there was no age of retirement and the employees could continue as long as they were found to be physically and mentally fit, it became necessary to fix the age of retirement of the transferred employees on a fair, equitable and just basis. The Central Government and the Corporation felt that 60 years of age could be a proper age of retirement in the circumstances in respect of the transferred employees and that was the reason why by regulation 19 and the standardisation order issued earlier in the case of certain classes of transferred em ployees under section 11(2) of the Act the retirement age was fixed at 60 years and this was done with a view to retaining the services of the experienced employees of the erstwhile insurers. It was pleaded on behalf of the Corpora tion and the Union of India that in the circumstances the classification of the employees into two categories, namely, transferred employees and others who joined the service of the Corporation on or after 1st September, 1956 for the purposes of the age of superannuation was a valid classifi cation and Articles 14 and 16 of the Constitution of India had not been violated. It was further pleaded that the discrimination made between the employees belonging to Class I and Class II on the one hand and the employees belonging to Class III and Class IV on the other in the matter of the age of superannuation was not invalid since they belonged to two distinct categories of employees who were governed by different conditions of service as regards pay, perquisites, allowances, administrative powers etc. After heating the arguments of both the sides the learned Judges of the High Court allowed the Writ Petition. The High Court did not find any unconstitutionality in a rule or regulation providing the age of retirement at 60 years of employees who had been absorbed from the service of the erstwhile insurers and to that extent it observed that one could say that the grouping being reasonable the Court might not travel into the domain of legislative policy. It, however, found that when once a transferred employee belonging to Class III and an employee appointed after 1st September, 1956 by the Corporation to a Class III post are promoted to Class I the distinction of transferred employee and direct appointee could not be maintained as on promotion they became persons belonging to the same category of employees enjoying the same conditions of service. Hence the age of retirement should be the same in the case of both such promoters. It accordingly held that the 1st Respondent was entitled to continue till he attained the age of 60 years as other Class I employees belonging to the category of transferred employees. Aggrieved by the judgment of 204 the High Court the Corporation and the Union of India have filed these appeals by special leave. It should be stated at the outset that some of the questions raised before us are already covered by pronounce ments made by this Court. The object of enacting section 11 of the Act is dealt with in. detail by this Court in the Life Insurance Corporation of India vs D.J. Bahadur & Ors., ; which unfortunately was not brought to the notice of the High Court. Krishna Iyer, J. at pages 1098 1099 has observed in the course of the said decision thus: "The Corporation, to begin with, had to take over the staff of the private insurers lest they should be thrown out of employment on nationalisation. These private compa nies had no homogenous policy regarding conditions of serv ice for their personnel, but when these heterogenous crowds under the same management (the Corporation) divergent emolu ments and other terms of service could not survive and broad uniformity became a necessity. Thus, the statutory transfer of service from former employers and standardization of scales of remuneration and other conditions of employment had to be and were taken care of by section 11 of the Life Insur ance Corporation Act, 1956 (for short, the LIC Act). The obvious purpose of this provision was to enable the Corpora tion initially to absorb the motley multitudes from many companies who carried with them varying incidents of service so as to fit them into a fair pattern, regardless of their antecedent contracts of employment or industrial settlements or awards. It was elementary that the Corporation could not perpetuate incongruous features of service of parent insur ers, and statutory power had to be vested to vary, modify or supersede these contracts, geared to fair, equitable and, as far as possible, uniform treatment of the transferred staff. Unless there be unmistakable expression of such intention, the ID Act will continue to apply to the Corporation employ ees. The office of section 11 of the LIC Act was to provide for a smooth take over and to promote some common conditions of service in a situation where a jungle of divergent contracts of employment and industrial awards or settlements confront ed the State. Unless such rationalisation and standardiza tion were evolved the ensuing chaos would itself have spelt confusion, conflicts and difficulties. The functional focus of section 11 205 of the LIC Act will dispel scope for interpretative exer cises unrelated to the natural setting in which the problem occurs. " Pathak, J. (as he then was) in his judgment in the same case observed at pages 1134 to 1136 thus: "The first question is whether the new clause (9) of the Standardisation Order succeeds in defeating the claim of the workmen. To determine that, section 11 of the Corporation Act must be examined. Sub section (1) guarantees to the trans ferred employee the same tenure, at the same remuneration and upon the same terms and conditions on the transfer to the Corporation as he enjoyed on the appointed day under the insurer, and he is entitled to them until they are duly altered by the Corporation or his employment in the Corpora tion is terminated. The sub section envisages alteration by the Corporation. Sub section (2) of section 11, by its first limb, confers power on the Central Government to alter the scales of remuneration and other terms and conditions of service applicable to transferred employees. Predictably, when the transferred employees of different insurers were brought together in common employment under the Corporation they would have been enjoying different scales of remuneration and other terms and conditions of service. The power under this part of sub section (2) is intended for the purpose of securing uniformity among them. The second limb of sub section (2) is the source of controversy before us. It empowers the Central Government to reduce the remuneration payable or revise the other terms and conditions of service. That power is to be exercised when the Central Government is satisfied that the interests of the Corporation and its Policy holders require such reduction of revision. The question is whether the provision is confined to transferred employees only or extends to all employees generally. In my opinion, it is confined to transferred employees. The provision is a part of the scheme enacted in Chapter IV providing for the trans fer of existing life insurance business from the insurers to the Corporation, and the attendant concomitants of that process. There is provision for the transfer of the assets and liabilities pertaining to the business, of provident funds, 206 superannuation and other like funds, of the services of existing employees of insurers to the Corporation and also of the services of existing employees of chief agents of the insurers to the Corporation, and finally for the payment of compensation to the insurers for the transfer of the busi ness to the Corporation. They are all provisions relating to the process of transfer. Sub section (2) of section 11 is a part of that process, involving as it does the integration of the Corporation 's staff and labour force. While the first limb of the sub section provides for securing uniformity among the transferred employees in regard to the scales of remu neration and other terms and conditions of service, the second limb provides that if after such uniformity has been secured, or even in the process of securing such uniformity, the Central Government finds that the interests of the Corporation and its policy holders require a reduction in the remuneration payable or revision of the other terms and conditions of service applicable to those employees, it may make an order accordingly. It is true that the words "em ployees or any class of them" in the second limb are not prefaced by the qualifying word "transferred" or "such". But that was hardly necessary when regard is had to the mosaic of sections in which the provision is located. Admittedly, the first limb of sub section (2) relates to transferred employ ees only, and it must be held that so does the second limb. Both provisions are intended to constitute a composite process for rationalising the scales of remuneration and other terms and conditions of service of transferred employ ees with a view not only to effecting a standardisation between the transferred employees but also to revising their scales of remuneration, and terms and conditions of service to a pattern which will enable the newly established Corpo ration to become a viable and commercially successful enter prise. The standpoint of the second limb of the sub section, as its language plainly indicates, is provided by the inter ests of the Corporation and its policy holders. For that reason, it is open to the Central Government under sub section to ignore the guarantee contained in sub section (1) of section 11 in favour of the employees, or anything contained in the , or any other law for the time being in force or any award, settlement or agree ment for the time being in force. Benefits conferred there under on the employees must yield 207 to the need for ensuring that the Corporation and its policy holders do not suffer unreasonably from the burden of such benefits. The need for such a provision arises because it is a burden by which the Corporation finds itself saddled upon the transfer a burden not of its own making. Unless the statute provided for such relief, the weight of that burden could conceivably cripple the successful working of the Corporation from its inception as a business organisation. It is a situation to be distinguished from what happens when the Corporation, launched on its normal course, voluntarily assumes, in the course of its working, obligation in respect of its employees or becomes subject to such obligations by reason of subsequent industrial adjudication. Like any other employer, the Corporation is then open to the normal play of industrial relations in contemporary or future time. That the two provisions of sub section (2) are linked with the process of transfer and integration is further indicated by the circumstances that the power thereunder is vested in the Central Government. The scheme of the sections in Chapter IV indicates generally that Parliament has appointed the Cen tral Government as the effective and direct instrumentality for bringing about the transfer and integration in the different sectors of that process. There is no danger of an order made by the Central Government under the second limb of sub section (2) in respect of transferred employees being struck down on the ground that it violates the equality provisions of Part 111 of the Constitution because similar action has not been taken in respect of newly recruited employees. So long as such order is confined to what is necessitated by the proc ess of transfer and integration, the transferred employees constitute a reasonably defined class in themselves and form no common basis with newly recruited employees." (underlining by us) emphasis supplied Pathak, J. also observed at Page 1136 thus: "Another point is whether the power under the second limb of sub section (2) of section 11 can be exercised more than once. Clearly, the answer must be in the affirmative. To effectuate the transfer appropriately and completely it may be necessary to pass through different stages, and at each 208 stage to make a definite order. So long as the complex of orders so made is necessarily linked with the process of transfer and integration, it is immaterial that a succession of orders is made. I am not impressed by the circumstances that the original Bill moved in Parliament for amending sub section (2) of section 11 contained the words "from time to time" and that these words were subsequently deleted when enact ment took place. The intent of the legislative provision must be discovered primarily from the legislation itself. " We have given extracts from the above decisions which are fairly long since they relate to the identical provi sions of law and also cover a large part of the arguments urged before us. Having regard to the different conditions of service that were prevailing in the various establishments whose business was taken over by the Corporation it can hardly be disputed that the fixation of age of superannuation is one of the essential parts of the process of transfer and inte gration to which sub section (2) of section 11 of the Act is applicable. The fixation of 60 years as the age of superan nuation in the case of transferred employees cannot be considered to be unreasonable in view of the history of this case. The observation made by Pathak, J. in the course of his judgment that "there is no danger of an order made by the Central Government under the second limb of sub section (2) in respect of transferred employees.being struck down on the ground that it violates the equality provisions of Part III of the Constitution because similar action has not been taken in respect of newly recruited employees" is signifi cant. A discrimination made by a State between the employees who are directly recruited to the service of the State and the employees whose services are taken over by the State on the taking over of the institutions where they were working has been held to be not unconstitutional by this Court in Ram Lal Wadhwa & Anr. vs The State of Haryana & Ors., ; The facts of that case were these. There were some schools run by municipal boards and district boards in the then State of Punjab which were taken over by the Punjab Government with effect from October 1, 1957. The teachers then employed in those schools, thus became State employees. Those teachers called 'provincialised ' teachers were to be given the same grades of pay and other allowances as were given to their counterparts in Government employment. The teachers in Government employment were governed by the Punjab Educational Service Class III School Cadre Rules, 1955. On February 13, 1961, the Punjab Government promulgat ed under the proviso to Article 309 of 209 the Constitution, the Punjab Educational Service (Provincia lised Cadre) Class III Rules, giving them retrospective effect from October 1, 1957. By these Rules the provincia lised teachers were treated as failing under a Cadre sepa rate and distinct from teachers in the State Cadre governed by the 1955 Rules. The 'provincialised ' Cadre was to be a diminishing cadre to become extinct in course of time. There was to be no further recruitment to that cadre and all vacancies arising in that cadre were to be replenished by direct recruitment to the State cadre. The transfer of such posts to the State cadre was to be done by splitting up such vacant posts into blocks of 7 and 6 by rotation. Consequent ly, the selection grade of 15% in the State cadre progres sively increased in strength which was determined by the total cadre strength while the selection grade in the pro vincialised cadre progressively decreased. Thus those re cruited to the State cadre had a progressively larger chance of getting into the selection grade. In State of Punjab vs Joginder Singh, [1963] Supp. 2 S.C.R. 169 this Court upheld the validity of the 196 1 Rules repelling challenge under Articles 14 and 16 of the Constitution. In the view of the majority in that case the two cadres started as independent services, they were never integrated into one service and, therefore, the dissimilarity of the treatment by the Rules was not a denial Of equal opportunity. But, the Punjab Government never implemented the Rules at any time. On the reorganisation of the erstwhile Punjab State into Punjab and Haryana on November 1, 1966, the Haryana Government put the 1961 Rules into operation. The petitioners in the above case, i.e., Ram Lal Wadhwa & Anr. vs The State of Haryana & Ors., (supra) appointed in the local bodies Schools before 'provincialisation ', challenged the validity of the 1961 Rules. Their complaint was that the Rules created, without any valid justification, two cadres, the State cadre and the provincialised cadre, the former including not only the Government School teachers but also those recruited after October 1, 1957 and posted in the provincialised schools; that by reason of having two cadres and providing for both a uniform 15 per cent for selection grade posts, coupled with making the provincialised cadre a diminishing one, the result had been that teachers deemed to have been appointed to the State cadre with effect from October 1, 1957 and even those recruited thereafter had been promoted to the selec tion grade, while those in the provincialised cadre, though senior in service and performed identical duties and had identical scales of pay, remained in the ordinary grade. According to the petitioners in that case these Rules and their implementation contravened Articles 14 and 16 of the Constitution. The petitioners in that petition contended that the earlier decision of this Court in State of Punjab vs Joginder Singh, (supra) required reconsideration. In the 210 course of its decision this Court while rejecting the con tention of the petitioners observed thus at pages 635 636: "The principles on which discrimination and breach of articles 14 and 16 can be said to result have been by now so well settled that we do not think it necessary to repeat them here once again. As already seen, ever since 1937 and even before, the two categories of teachers have always remained distinct, governed by different sets of rules, recruited by different authorities and having, otherwise than in the matter of pay scales and qualifications, differ ent conditions of service. This position remained as late as February 13, 1961. On that day whereas the State cadre teachers were governed by 1955 Rules, rules had yet to be framed for the provincialised cadre a diminishing one and bringing about ultimately through that principle one cadre only in the field in a phased manner. If through historical reasons the teachers had remained in two separate catego ries, the classification of the provincialised teachers into a separate cadre could not be said to infringe article 14 and article 16. It was also not incumbent on the Government to frame the 1961 Rules uniformly applicable to both the cate gories of teachers, firstly, because a rule framing authori ty need not legislate for all the categories and can select for which category to legislate, (see Sakhawat Ali vs State of Orissa, ; Madhubhai Amathalal Gandhi vs The Union of India, ; and Vivian Joseph Ferreria vs The Municipal Corporation of Greater Bombay, , and secondly, because it had already come to a decision of gradually diminishing the provincia lised cadre so that ultimately only the state cadre would remain in the service. That was one way of solving the intricate difficulty of inter se seniority. There can be no doubt that if there are two categories of employees, it is within Government 's power to recruit in one (and) not re cruit in the other. There is no right in a government em ployee to compel it to make fresh appointments in the cadre to which he belongs. It cannot also be disputed that govern ment had the power to make rules with retrospective effect and therefore, could provide therein that appointments made between October 1, 1957 and February 13, 1961 shall be treated as appointments in the State cadre. That had to be done for the simple reason that 211 the provincialised cadre was already frozen even before October 1, 1957 and Government had decided not to make fresh appointments in that cadre since that cadre was to be a diminishing one. " It has to be observed in the case before us also that the transferred employees belong to a diminishing cadre. When the Corporation was established they were about 27,000 in number and we are informed today that there are only about 22% of those employees in service. Already 30 years have elapsed from the date of the establishment of the Corporation. All the transferred employees who have already retired have retired only after completion 60 years. The remaining transferred employees are likely to go out of office within a short period. Thereafter only the employees who are directly recruited by the Corporation who are about 54,000 in number would continue to remain in its service. The observation made by this Court in Ram Lal Wadhwa & Anr. v The State of Haryana & Ors. , (supra) clearly applies to the case before us also. As this stage we should refer to another aspect of the case presented before us which relates to 16 persons who were appointed as the employees of the Corporation by virtue of an Order dated March 15, 1966. There was a department in existence in the year 1963 called Department of Insurance. The Government and the Corporation felt that the services 16 persons who were working in the Department of Insurance were required by the Corporation. Accordingly, the President of India agreed to release 16 persons from the service of the Government of India to enable the Corporation to appoint them in its service by the Order of the Central Government dated 25th February, 1964. The resignation of those 16 persons from the service of the Government of India was accepted on 15th March, 1966 and from that date those per sons became the employees of the Corporation. Out of those 16, 13 have already retired from service on attaining the age of 60 years. Only three of them are now in the service of the Corporation. One of them is no longer an employee of the Corporation since he is holding the post of the Chairman of the Corporation. The second of them is due to.retire within 2/3 months and only one of them would continue in the service of the Corporation for about a period of two years more. In the case of those 16 people the Corporation passed a separate order fixing their age of retirement as 60 years having regard to the negotiations which had taken place between the Corporation and the Government before the taking over of their services by the Corporation. They again belong to a different category altogether and 212 the fixation of the age of retirement in their case at 60 years cannot be challenged by those who were directly re cruited by the Corporation after September 1, 1956 as there is no similarity between them and the said 16 officers. The next question for consideration is whether the fixation of 58 years as the age of superannuation in the case of the employees who entered the service after 1st September, 1956 is unreasonable. While dealing with this question, the Court can take judicial notice of the differ ent ages of retirement prevailing in the several services in India. In almost all the public sector corporations, Central services and State services 58 years age is considered to be a reasonable age at which officers can be directed to retire from their service. So, the determination of 58 years as the age of superannuation by itself cannot be considered to be arbitrary. We do not also find much substance in the contention of the 1st Respondent that there cannot be any discrimination as regards the age of retirement between the employees belonging to Class I and Class II on the one hand and Class III and Class IV on the other. It is true that originally employees belonging to Class III and Class IV categories amongst the transferred employees were given the benefit of retirement at the age of 60 years but the employees belong ing to Class III and Class IV categories recruited after 1st September, 1956 were required to retire on the completion of 58 years of age. In the Settlement which was arrived at between the management and the Class III and Class IV em ployees recruited after 1st September, 1956 it was agreed that there should be no discrimination as regards the age of retirement between the employees belonging to Class III and Class IV categories amongst the transferred employees and the Class III and Class IV employees recruited after 1st September, 1956. It was pursuant to the said settlement that regulation 19 was amended with effect from 19.6.1965. Having regard to the lower emoluments and other benefits which the employees belonging to Class III and Class IV are entitled to get from the Corporation and the higher emoluments and other benefits to which officers belonging to Class I and Class II are entitled and also the nature of their work and the powers enjoyed by them we are of the view that fixation of different ages of retirement to the different classes of employees would not by itself be violative of Articles 14 and 16 of the Constitution. In Tejinder Singh and Another vs Bharat Petroleum Corporation Ltd. and Anr., [1986] 4 S.C.C. 237 this Court has observed at page 239 thus: 213 "This Court in Workmen vs Bharat Petroleum Corpn. Ltd., directed the retirement age of the clerical staff of the Refinery Division of respondent 1 to be fixed at 60 years. Petitioners have contended that the disparity in the age of retirement between two groups of employees gives rise to discriminatory treatment. This stand is not tenable for more than one reason. Clerical staff and officers of the manage ment staff belong to separate classifications and no argu ment is necessary in support of it. Petitioners have not contended and perhaps could not legitimately contend, that the two classes of officers stand at par. In the Workmen case itself, this Court did not extend the benefit of super annuation at the age of 60 to all clerical staff but limited the same to that category of employees working in the Refin ery Division, Bombay. Classification on the basis of reason able differentia is a well known basis and we are of the view that the petitioners are not entitled in the facts of the case to seek support from Article 14 for their claim. " It was, however, contended on behalf of the 1st Respond ent that since he had been recruited originally into the Class III post and he would have had the benefit of retire ment at the age of 60 years if he had remained in that Class, the said benefit cannot be denied to him on his promotion to the Class I category. We do not find any merit in this contention too. When the 1st Respondent was promoted to the Class I post in 1963 the age of retirement of offi cers in the Class I post had been fixed at 58 years and was not different from the age of retirement of Class III em ployees. It was only in 1965 under the settlement the age of retirement of employees in Class III and Class IV who joined service after September 1, 1956 was raised to 60 years. If he felt that the conditions of service of Class I officers were likely to be prejudicial to him he could have refused the promotion offered to him. Having accepted the promotion along with the higher benefits flowing from it he cannot contend after several years that he had been prejudicially affected by the condition relating to the age of retirement applicable to Class I officers appointed after September 1, 1956. That apart the higher emoluments and other perquisites to which Class I employees may be entitled to and the better conditions of work which are enjoyed by them substantially compensate the effect of the lowering of the age of retire ment from 60 years to 58 years. We do not find any substance in the argument urged on behalf of the 1st Respondent rely ing upon the judgment of this Court in Roshan Lal Tandon vs Union of India; , which lays down that when employees are 214 recruited to a lower grade from two sources no favourable treatment should be extended to recruits from one source on their promotion to the higher grade. In the decision, re ferred to above, the facts were these. Vacancies in grade 'D ' of Train Examiners were filled by (a) direct recruits, i.e., apprentice train examiners who had completed the prescribed period of training, and (b) promoters from skilled artisans Promotion from grade 'D ' to 'C ' was on the basis of seniority cum suitability. In October, 1965 the Railway Board issued a notification by which it was provided that eighty percent of the vacancies in grade 'C ' were to be filled up from apprentice train examiners recruitment. or after April 1, 1966 and the remaining twenty per cent by train examiners from grade 'D '. The notification further provided that apprentice train examiners who had already been absorbed in grade 'D ' before April, 1966 should en bloc be accommodated in grade 'C ' in the eighty per cent of the vacancies without undergoing any selection and with regard to twenty per cent of the vacancies, reserved for the other class promotion was to be on selection basis and not on the basis of seniority cum suitability. The petitioner in the said case who entered Railway service in 1954 as a skilled artisan and was selected and confirmed in grade 'D ' chal lenged that part of the notification which gave favourable treatment to apprentice train examiners who had already been absorbed in grade 'D ' as arbitrary and discriminatory anti violative of Article 14 and 16 of the Constitution. This Court held that when once the direct recruits and promoters were absorbed in one cadre they formed one class and they could not be distinguished again for the purpose of further promotion to the higher grade 'C ' The Court further ob served that before the impugned notification was issued there was only one rule of promotion applicable to both direct recruits and promoters but by the impugned notifica tion discriminatory treatment was made in favour of the apprentice train examiners who had already been absorbed in grade 'D '. The Court, therefore, held that the notification was discriminatory. This decision has no relevance to the present case although the High Court has relied on it in deciding this case. We have already shown that the Act itself made a distinction between the transferred employees and the employees recruited to the service of the Corpora tion after 1st September, 1956 by making amendments in section II and in clauses (b) and (bb) of sub section (2) of section 49 of the Act. In the (Staff) Regulations, 1956 and the (Staff) Regulations, 1960 there was again a distinction made between the transferred employees and employees re cruited after 1st September, 1956. We find that the distinc tion between the two classes is recognised by Parliament even as late as 1981 when it amended section 49 of the Act by deleting clause (bb) of sub section (2) thereof and by 215 amending section 48 of the Act by introducing clause (cc) in subsection (2) and the new sub section (2A) in it. After the amendment, the relevant part of section 48 reads thus: "48. (2) . . . . . . . (cc). The terms and conditions of service of the employees and agents of the Corporation, including those who became employees and agents of the Corporation on the appointed day under this Act, . . . . . . (2A). The regulations and other provisions as in force immediately before the commencement of the Life Insurance Corporation (Amendment) Act, 1981, with respect to the terms and conditions of service of employees and agents of the Corporation including those who became employees and agents of the Corpo ration on the appointed day under this Act, shall be deemed to be rules made under clause (cc) of sub section (2) and shall, subject to the other provisions of this section, have effect accordingly." (underlining by us) empha sis supplied Clause (cc) of section 48(2) of the Act, however, has been given retrospective effect from 20th June, 1979. Sub section (2A) of section 48 has given statutory recognition to the (Staff) Regulations of 1960 and in particular to Regulation 19(2) as amended in 1977 which is impugned in these proceedings. It is thus seen that at no point of time the transferred employees were integrated into one cadre along with the employees appointed after September 1, 1956 as such and the transferred employees have retained their birth marks throughout. The fact that the pay, allowances and other conditions of service have been made the same in respect of both the transferred employees and the employees of the Corporation recruited after 1st September, 1956 has not brought about the integration of the two classes of employees into one single cadre. Even the High Court in the instant case accepts that it was just and proper to extend the benefit of the higher age of retirement to the trans ferred employees but it has held that when once a trans ferred employee is promoted he would lose the right to a special treatment as regards the age of superannuation. The relevant portion of the judgment of the High Court reads thus: "A reasonable classification which prevents a Court from dissecting it is one which includes all persons who are similarly situated with respect to the purpose of law or 216 objective which the rule or section seeks to achieve. The apparent or inherent intention sought to be achieved by the regulation 19 framed by Corporation was to continue upto age of sixty years the employees of insurers as the age of superannuation in some of the companies was sixty and to derive benefit from expertise and experience of employees who had worked with insurers. May be laudable, reason able and proper. But is it like that? Obvious ly not. An employee in Class III of insurer could be continued upto sixty. But what hap pens when he climbs the ladder of promotion and reaches Class I. Does he still carry the stamp of experience and expertise of having worked with insurer? Once a transferred em ployee of Class III and a direct appointee in (that) class are promoted to Class I obviously on merit, efficiency and seniority then how can the distinction of 'transferred ' and 'direct ' be maintained. So long employees are in Class III they can be said to constitute two different classes of transferred and direct appointees but once they are promoted they become similarly situated and the dis tinction stands obliterated. They on promotion form one integrated cadre of Class I officers. To segregate them here for purposes of retire ment is invidious when their pay, responsibil ity and benefits are same. " While we agree with the first part of the observations made in the above extract from the judgment of the High Court, namely, that it was not discriminatory to extend the benefit of the age of 60 years to the transferred employees, we do not agree with the latter part of the observations made therein which suggests that on promotion from Class III to Class I the transferred employees and the directly re cruited employees would lose their birth marks. Pathak, J., as he then was, has observed in D.J. Bahadur 's case (supra) that it is open to the Government to make an order trader section 11(2) of the Act from time to time in respect of the transferred employees and that power is not exhausted when it is exercised once. It suggests that the transferred employees are always amenable for separate treatment and they do not lose their identity. It appears to be the inten tion of Parliament that even as late as in 1981 that the two categories of employees, namely, the transferred employees and employees recruited after 1st September, 1956 in the Corporation should be kept separate. In these circumstances the High Court was in error in relying upon the judgment of this Court in Roshan Lal Tandon 's case (supra). 217 In O.P. No. 5295 of 1985 and connected cases on the file of the High Court of Kerala which was decided on 4.2. 1987 the claim of the employees of the Corporation belonging to class I but appointed after 1st September, 1956 to continue in service till they attained the age of 60 years arose for consideration. The High Court has negatived it. In the course of its judgment it has referred to the judgment under appeal in this case but has only distinguished it. The High Court of Kerala was right in not following the decision of the High Court of Allahabad which is now under appeal. It, however, distinguished it on the ground that the employees in question had not been promoted from Class III to Class I as it was the case here but the petitioners before it had continued in Class I or Class 11 right from the commence ment. We, however, approve of the reasons given by the High Court of Kerala in holding that the employees of the Corpo ration belonging to Class I and Class II who had entered service of the Corporation after 1st September, 1956 were not entitled to continue in service beyond the age of 58 years. In our view the fact that an employee had entered the service of the Corporation after September 1, 1956 in a Class III post and is later on promoted to a Class I post does not make any difference in so far as the question which arises for decision before us. The High Court of Delhi has rejected two petitions in which the very question raised in this case arose for consideration, namely, N.L. Aneja vs Union of India and Others, (Civil Writ No. 1911 of 1986) and H.S. Kochar vs L.I.C. of lndia & Ors., (C.W. No. 1660 of 1986) at the stage of admission itself giving reasons, though short, for its orders. The two decisions, referred to above, have been rendered by two different Division Benches. We may also refer to one decision of the Madras High Court and another decision of the Calcutta High Court which arose trader the provisions of the Banking Companies (Acqui sition and Transfer of Undertakings) Act, 1970 (Act 5 to 1970) where again the claim of employees of the banks in question who joined their service after nationalisation to the benefit of the conditions prescribed in the case of employees of the former banking companies whose services were taken over on nationalisation as regards the age of retirement arose for consideration. The scheme of section 12(2) of the and the scheme of section 11(1) of the Act, which is trader consideration before us, were the same. In Govindarajulu vs The Management of Union Bank of India & Ors., (Writ Petition No. 5486 of 1980) the High Court of Madras rejected the said claim by its judgment dated 21.11. In Dr. Nikhil Bhushan Chandra vs Union of India & Ors., (Civil Order 218 No. 13958 (W) of 1980) decided on December 21, 1982 the High Court of Calcutta has rejected a similar claim. We may at this stage refer to a recent decision of this Court in Miss Lena Khan vs Union of India and Ors. , J.T. decided on 30.3. 1987 in which the validity of the continua tion of some foreign Air Hostesses beyond the prescribed age of retirement came up for consideration. The Court rejected the petition stating that the management of Air India having taken a decision "to phase out U.K. incumbents when they attain the age of 45", it was not discriminatory to Air Hostesses of Indian origin who were to retire at the age of 35 years and was not unconstitutional. The principle enunci ated in this case can be applied to the cases of three officers who belong to the Department of Insurance who joined the service of the Corporation after resigning their posts in the Government of India in the year 1965, there being no chance of any addition to their class. Classification of employees into two categories for purposes of fixing the age of superannuation depending upon their dates of entry into service when the necessity for doing so arises on account of certain historical reasons is not unknown. This Court had to deal with a case involving a similar situation in Railway Board vs A. Pitchumani, ; Several railway companies which were running their own railways in different parts of India were amalaga mated with the Indian Railway Administration in 1947. On such amalagamation servants of the railway companies, whose railways were taken over, became the employees of the Indian Railway Administration. On the absorption of the services of the servants of the previous railway companies it became necessary for the Indian Railway Administration to frame rules with regard to their conditions of service including the determination of the age of retirement of those railway employees. Accordingly, rule 2046 (F.R. 56) of the Indian Railway Fundamental Rules had to be modified. That rule was, therefore, substituted by a new rule on January 11, 1967. The new rule read as follows: "2046. 56) (a) Except as otherwise provided in this rule, every railway servant shall retire on the day he attains the age of fifty eight years. A ministerial railway servant who entered Government service on or before the 31st March, 1938 and held on that date (i) a lien or a suspended lien on a permanent post, or 219 (ii) a permanent post in a provision al substantive capacity under Clause (d) of Rule 2008 and continued to hold the same without interruption until he was confirmed in that post, shall be retained in service till the day he attains the age of sixty years. NOTE: For the purpose of this Clause, the expression "Government Service" includes service rendered in ex company, and ex State Railways, and in a former provincial Govern ment. " In the above new rule every railway servant, whose case did not fall under clause (b) of that rule was required to retire on the date he attained the age of 58 years. Clause (b), however, provided that every ministerial railway serv ant who had entered the Government service on or before 31st March, 1938 and who satisfied the conditions mentioned either in sub clause (i) or sub clause (ii) thereof was entitled to continue in service till he attained the age of 60 years. As may be seen from that rule, the classification of the employees was made on the basis of the date of entry into the service of the Government. That clause (b) of the said rule applied also to the employees of ex companies and ex State railways which were taken over by the Indian Rail way Administration is clear from the note attached to clause (b) of rule 2046 which provided that for the purpose of that clause the expression 'Government Service ' included service rendered in ex company and ex State railways and in a former provincial Government. On December 27, 1967 the Indian Railway Administration substituted the note attached to clause (b) of rule 2046 by the new note which read thus: "For the purpose of this clause the expression 'Government Service ' includes service rendered in a former provincial gov ernment and in ex company and ex State Rail ways, if the rules of the Company or the State had a provision similar to Clause (b) above." The effect of the new note was that an employee who satis fied the condition in sub section (i) or sub clause (ii) of clause (b) was entitled to continue upto 60 years after December 23, 1967 only if the rules of the company in which he was formerly working had a provision similar to clause (b) of rule 2046 which fixed the age of retirement at 60 years. 220 The Respondent in that case, that is, A. Pitchumani while he was entitled before December 23, 1967 to continue in service till he attained the age of 60 years as he had joined the service of the Madras and Southern Mahratta Railway Company on August 16, 1927, i.e., prior to March 31, 1938 and satis fied the other conditions mentioned in clause (b) of rule 2046 could not have the benefit of that clause on and after December 23, 1967 since in the Madras and Southern Mahratta Railway Company where he was formerly working there was no rule similar to clause (b) as regards the age of retirement. He was asked to retire from service on April 14, 1968 on which date he was completing the age of 58 years. The Re spondent, A. Pitchumani questioned before the High Court of Mysore (Karnataka) the validity of the note substituted by the Order dated December 23, 1967 which took away his right to continue in service till he attained the age of 60 years which he otherwise possessed before the introduction of the said note. The High Court of Mysore struck down a part of the new note only on the ground that it was discriminatory and directed that the Respondent, A. Pitchumani should be allowed to continue in the service till he completed the age of 60 years. On appeal, the judgment of the High Court was affirmed by this Court in Railway Board vs A. Pitchumani (supra). This Court did not find fault with the classifica tion that had been made between the persons falling under clause (a) and persons falling under clause (b) on the basis of the date of entry into service since clauses (a) and (b) of rule 2046 had uniform application to all the employees of the Indian Railway Administration who came within the re spective clauses. It, however, agreeing with the High Court found fault with the classification of the employees falling under clause (b) into two categories, namely, those employ ees belonging to a company where there was a rule similar to clause (b) as regards the age of superannuation and those employees who came from companies where there was no rule similar to clause (b) as regards the age of superannuation. In Manindra Chandra Sen vs Union of India & Ors. A.I.R. 1973 CAL. 385 Sabyasachi Mukharji J., has upheld the said classi fication of railway employees into two categories viz. those who joined on or before 31.3. 1938 and those who joined after 31.3. 1938 for purposes of fixing the age of superan nuation on the basis of same historical facts which are set out in detail in that judgment. Such classification for purposes of fixing the age of superannuation depending upon the date of entry into services is not, therefore, something which is unusual and such classification becomes necessary on account of historical facts and the need for treating the employees in a fair and just way. 221 On behalf of the 1st Respondent reliance is placed on the decision of this Court in M/s. British Paints (India) Ltd. vs The Workmen, ; in support of his case that there should be no discrimination amongst the employees of an establishment with regard to the age of superannuation. That decision was rendered in an appeal against an award passed by an Industrial Tribunal. In that decision this Court has, no doubt, observed that generally speaking there should not be any difference in the age of retirement of existing workmen and others to be employed in future unless there are special circumstances justifying such difference. By making the above observation this Court has virtually accepted the position that when there are special circumstances justifying the difference, it is open to fix different ages of retirement for the employees of an establishment in appropriate cases. We have already ex plained earlier the reason for treating the transferred employees differently from the employees appointed after 1st September, 1956 by the Corporation. The transferred employ ees who are treated favourably belong to a vanishing group and, perhaps, within a period of few years none of them would be in the service of the Corporation. Thereafter only one class of employees would be in the service of the Corpo ration, namely, those appointed subsequent to 1st September, 1956 by the Corporation in respect of whom the Corporation has fixed the age of retirement as 58 years which corre sponds to the age of retirement in almost all the public sector establishments, the Central Government services and the State Government services. The 1st Respondent cannot derive any assistance from the decision of this Court in Mohammad Shujat Ali & Ors. vs Union of India & Ors. etc. ; , in support of his case before us. In the above decision this Court was concerned with reservation of posts for graduate Supervisors in the cadre of Assistant Engineers giving them a preferen tial treatment over non graduate Supervisors who were also eligible to be promoted along with the graduate Supervisors to the cadre to Assistant Engineers after the graduates and non graduates had been integrated into one cadre of Supervi sors. Merely because the pay, allowances and other perqui sites drawn by the transferred employees and by the employ ees appointed after 1st September, 1956 by the Corporation are the same it cannot be said that the transferred employ ees and the other employees had been integrated so as to form one cadre. So far as the age of retirement is concerned as it is already shown they are being treated differently right from the date on which the Corporation was estab lished. The decision of this Court in Workmen of the Bharat Petrole um 222 Corporation Ltd. (Refining Division) Bombay vs Bharat Petro leum Corporation Ltd. and Another, ; no doubt lays down that under the modern conditions there is a general trend in favour of raising the age of retirement in the case of employees in industrial establishments. It may be so. We are not concerned in this case with the question whether the age of retirement of employees who have joined the service of the Corporation after 1st September, 1956 should be raised to 60 years. That is a matter of policy which has got to be decided by the Corporation and the Central Government. We are only concerned with the question whether the employees appointed after 1st September, 1956 have been subjected to any hostile discrimination while fixing the age of retirement contrary to Article 14 and Article 16 of the Constitution. Since the classification of the employees for the purpose of age of retirement into two categories in this case appears to us to be reasonable and not arbitrary and that there is a reasonable nexus between the classification and the object to be attained thereby, it is not possible to hold that regulation 19(2) is violative of Article 14 and 16 of the Constitution. We may at this stage refer to the following passage in Tamil Nadu Education Department Ministerial & General Subor dinate Service Association vs State of Tamil Nadu & Anr., ; "In Service Jurisprudence integration is a complicated administrative problem where, in doing broad justice to many, some bruise to a few cannot be ruled out. Some play in the joints, even some wobbing, must be left to Government without fussy forensic monitoring, since the administration has been entrusted by the Constitution to the Executive, not to the Court. All life, including administrative life, involves experiment, trial and error, but within the leading strings of fundamental rights, and, absent unconstitutional 'exces ses ', judicial correction is not right. Under Article 32, this Court is the constitutional sentinel not the national ombudsman. We need an ombudsman but the court cannot make do." (page 1031) The decision taken by the Corporation and the Central Government as regards the ages of retirement of the differ ent classes of the employees of the Corporation in the instant case is a bona fide one and cannot be characterised as unreasonable. It is not, therefore, liable to be upset by a decision of the Court. On a careful consideration of all 223 the aspects of the case we feel that the High Court erred in striking down regulation 19(2) of the (Staff) Regulations, 1960 as amended in the year 1977, and in directing the Corporation to continue the 1st Respondent in its service till he completed the age of 60 years. We, therefore, set aside the judgment of the High Court and dismiss the writ petition filed in the High Court. The appeals are according ly allowed. There shall, however, be no order as to costs. N.P.V. Appeals allowed.

The Life Insurance Corporation was established on Sep tember 1, 1956 under the Life Insurance Act of 1956 (Act 31 of 1956) by amalgamating about 200 insurers carrying on life insurance business in the country. It had no employees of its own to carry on the vast business which had been taken over and the nature of the work was such that the Corpora tion required the services of employees with experience and expertise in running life insurance business. In order to meet the above need, Section 11 of the Act came to be enact ed. Sub section (1) provided that with effect from September 1, 1956, every whole time employee of the erstwhile insurers would become an employee of the Corporation and hold office therein by the same tenure, at the same remuneration, and upon the same terms and conditions and with the same rights and privileges as to pension and gratuity and other matters as he would have held on September 1, 1956, had the Act not been passed. The conditions of service of the employees whose serv ices were transferred to the Corporation under Section 11(1) were not uniform. The conditions governing the retirement of those employees were also diverse and different. In some cases the age of retirement had been fixed at 55 years, in some at 58 years and in some others at 60 years. In many cases, the insurers had permitted their employees to contin ue in 181 their services even beyond 60 years depending upon their efficiency and physical capacity. For the purposes of rationalising the pay scales of the transferred employees, under sub section (2) of Section 11 the Central Government was empowered to alter the terms of service of the employees as to their remuneration in such manner as it thought fit. The sub section was amended by Acts 17 and 36 01 ' 1957. Clause (bb) of sub section (2) 01 ' Section 49 conferred power on the Corporation to make regulations with the previ ous approval of the Central Government as regards 'the terms and conditions of service of persons who had become employ ees of the Corporation under subsection (1) 01 ' Section 11 '. Under clauses (b) and (bb) of Section 49(2) 01 ' the Act, Regulations were framed prescribing the ages of retirement of the employees of the Corporation belonging to different categories with the previous approval of the Central Govern ment and were incorporated in the Life Insurance Corporation of India (Staff) Regulations, 1960 made by the Corporation which came into effect on July, 1960. Under Regulation 19(1), all transferred employees were entitled to remain in service till they completed 60 years of age but the appointing authority was empowered to retire any such transferred employee on completion of 55 years of age or at any time thereafter, if his efficiency was found to have been impaired. Under Regulation 19(2) employees appointed to the service of the Corporation on or after September, 1956, were required to retire on completion of 58 years of age but the appointing authority was empowered to retire any such employee on completion of 55 years of age or thereafter if his efficiency was found to have been im paired. In the case of the transferred employees this regulation was made in conformity with the 'standardisation order ' passed in respect of Class III and Class IV transferred employees. in whose case the age of retirement was fixed at 60 years. The result was that the regulation made a clear and distinct classification 01 ' all the employees of the Corporation belonging to all classes into two groups transferred employees and the employees appointed after September 1, 1956 for purposes of the age of retire ment having regard to the historical reasons. 182 Consequent upon the settlement arrived at, upon an industrial dispute which arose between Class III and Class IV employees who were appointed subsequent to September 1, 1956 in the Corporation. Regulation 19 of the Life Insurance Corporation of India (Staff) Regulations 1960 which came into force w.e.f. July 1, 1960 was amended and the employees of the Corporation were divided both longitudinally and latitudinally insofar as the age of retirement was con cerned. Longitudinally, all the transferred employees be longing to Class I and II became entitled to continue in service till they attained the age of 60 years, the Corpora tion being empowered to retire any of them prematurely on completion of 55 years of age if his efficiency was found to have been impaired, and all the Class I and Class II offi cers appointed to the service of the Corporation on or after September 1, 1956 had to retire on completion of 58 years of age subject again to the power of the Corporation to retire any such employee on completion of 55 years of age or at any time thereafter if his efficiency was found to have been impaired. Latitudinally, the employees were divided into two groups and all the employees belonging to Class III and Class IV, irrespective of the tact whether they were trans ferred employees or employees appointed after September 1, 1956 were entitled to continue in service till 60 years of age, but the employees belonging to Class I and Class II who were appointed to the service of the Corporation on or after September 1, 1956 had to retire on the completion of 58 years of age subject to the usual clause relating to prema ture retirement. Sub regulation (2) of Regulation 19 was modified empow ering the appointing authority to extend at its discretion of service of any employee of the Corporation belonging to Class I or Class II categories appointed to service on or after September 1, 1956 for one year at a time upto 60 years of age. The power to extend the service of employees belong ing to Class I and Class II appointed on or after September 1, 1956 beyond 58 years or ' age was withdrawn from January 21, 1977 and the Corporation was permitted to retire an employee on completion of 50 years of age. The first respondent joined the Corporation as a Class III employee on March 22, 1957. Subsequently, he was promot ed to a Class I post and ultimately as Assistant Divisional Manager. Since he was born in the month of June, 1926, notice was issued to him in February, 1984 of his retirement which was due on June 30, 1984 on his completing the age of 58 years. Before the date of his retirement, he instituted a writ petition in the High Court questioning the validity of Regulation 19(2) of the (Staff) Regulations, 1960, as it stood then and prayed for the issue 183 of writ of mandamus directing the Corporation not to retire him before he attained the age of 60 years. It was contended by the first respondent before the High Court that there was no justification to prescribe two different ages of retirement one for the transferred employ ees belonging to Class I and Class II categories and the other for the employees who joined the service of the Corpo ration alter September 1, 1956 and who also belonged to Class I and Class II categories, and that in regard to those who joined the service after being appointed to Class III post after September 1, 1956, there could not be any reduc tion of age of retirement from 60 to 58 years on their being promoted to a Class I or Class II post. Since he had the right to continue in service if he had remained in Class III only till he attained the age of 60 years as a Class III employee, age of retirement could not be reduced to 58 years only because he had been promoted to a Class I post. It was urged on behalf of the Corporation and the Union of India that the transferred employees and the employees who joined the service after September 1, 1956 belonged to two distinct and separate classes which had been treated differently throughout for valid reasons. Since there was no uniformity in the establishments in which the transferred employees were working prior to nationalisation of the life insurance business, it became necessary to fix the age of retirement of the transferred employees on a lair, equitable and just basis. In the circumstances, the classification of the employees into two categories, namely, transferred employees and others who joined on or after September 1, 1956 for the purposes of age of superannuation was a valid classification and Articles 14 and 16 of the Constitution had not been violated. It was further submitted that the discrimination made between the employees belonging to Class I and Class II on the one hand and the employees belonging to Class III and Class IV on the other in the matter of the age of superannuation was not invalid since they belonged to two different categories of employees who were governed by different conditions of service as regards pay, perquisites, allowances, administrative powers etc. The High Court did not find any unconstitutionality in a rule or regulation providing the age of retirement at 60 years of employees who had been absorbed from the service of the erstwhile insurers and to that extent it held that the grouping being reasonable the Court might not travel into the domain of legislative policy. It, however, found that when once a transferred employee belonging to Class III and an emp 184 loyee appointed after 1st September, 1956 by the Corporation to a Class III post is promoted to Class I, the distinction of the transferred employee and direct appointee could not be maintained, as on promotion they became persons belonging to the same category of employees enjoying the same condi tions of service. Hence the age of retirement should be the same in the case of both such promotees. It accordingly held that the first respondent was entitled to continue till he attained the age of 60 years as other Class I employees belonging to the category of transferred employees. The Writ Petition was allowed and Regulation 19(2) was struck down as being violative of Articles 14 and 16 of the Constitution of India and the Corporation was directed not to retire the first respondent before he attained the age of 60 years. Allowing the appeals, by special leave, of the Life Insurance Corporation of India and the Union of India, this Court, HELD: 1.1 The decision taken by the Corporation and the Central Government as regards the ages of retirement of the different classes of the employees of the Corporation is a bona fide one and cannot be characterised as unreasonable and it is not, therefore, liable to be upset by a decision of the Court. [222G] 1.2 In the instant case, the High Court erred in strik ing down Regulation 19(2) of the L.I.C. (Staff) Regulations 1960 as amended in the year 1977 and in directing the Corpo ration to continue the first respondent in its service till he completed the age of 60 years. [223A] 2.1 Classification of employees into two categories for purposes of fixing the age of superannuation depending upon the date of entry into service is not something which is unusual, and such classification becomes necessary on ac count of historical facts and the need for treating the employees in a fair and just way. [220G] 2.2 Merely because the pay, allowances and other perqui sites drawn by the transferred employees and by the employ ees appointed after September 1, 1956 by the Corporation are the same, it cannot be said that the transferred employees and the other employees had been integrated so as to form one cadre. So far as the age of retirement is concerned, they are being treated differently right from the date on which the Corporation was established. [221G] 2.3 In the instant case, since the classification of the employees for the purpose of age of retirement into two categories is reasonable 185 and not arbitrary and there is a reasonable nexus between the classification and the object to be attained thereby, it is not possible to ho1d that Regulation 19(2) is violative of Articles 14 and 16 of the Constitution. [222C] 3. The Act itself made a distinction between the trans ferred employees and the employees recruited to the service of the Corporation after September 1, 1956 by making amend ments in Section 11 and in clauses (b) and (bb) of sub section (2) of Section 49 of the Act. In the (Staff) Regula tions, 1956 and the (Staff) Regulations, 1960 there was again a distinction made between the transferred employees and the employees recruited alter September 1, 1956. The distinction between the two classes Is recognised by Parlia ment even as late as 1981 which it amended Section 49 of the Act by deleting clause (bb) of sub section (2) thereof and by amending Section 48. of the Act by introducing clause (cc) in sub section (2) and the new sub section (2A) in it. At no point of time the transferred employees were integrat ed into one cadre alongwith employees appointed after Sep tember 1, 1956 as such and the transferred employees have retained their birth marks throughout. The tact that the pay, allowances and other conditions or services have been made the same in respect of both the transferred employees and the employees of the Corporation recruited after Septem ber 1, 1956 has not brought about the integration of the two Classes of employees into one single cadre. [214GH; 215A: E F] 4.1 The determination of 58 years as age of superannua tion, in the case of the employees, who entered service after September 1, 1956 by itself cannot be considered to be arbitrary since in almost all the public sector corpora tions, Central services and the State services, 58 years age is considered to be a reasonable age at which officers can be directed to retire from their service. [212C] 4.2 Regarding the dIscrimination in the age or ' retire ment between employees belonging to Class I and Class II on the one hand and Class III and Class IV on the other, it is true that originally employees belonging to Class III and Class IV categories amongst the transferred employees were given the benefit of retirement at the age of 60 years, but the employees belonging to Class III and Class IV categories after 1st September, 1956 were required to retire on the completion of 58 years of age. Pursuant to the settlement arrived at between the Management and the Class III and IV employees recruited after September 1, 1956. this discrimi nation was removed and Regulation 19 was amended w.e.f. June 19, 1965. [212D F] 186 4.3 Having regard to the lower emoluments and other benefits which the employees belonging to Class III and Class IV are entitled to get from the Corporation and the higher emoluments and other benefits to which officers belonging to Class I and Class II are entitled to and also the nature of their work and the powers enjoyed by them, fixation of different ages of retirement to the different classes of employees could not by itself be violative of Articles 14 and 16 of the Constitution. [212F G] 5. Having regard to different conditions of service that were prevailing in the various establishments whose business was taken over by the Corporation, fixation of age of super annuation is one of the essential parts or ' the process of transfer and integration to which sub section (2) of Section 11 of the Act is applicable. The fixation of 60 years as the age of superannuation in the case of transferred employees cannot be considered to be unreasonable in view of the history of this case. [208C D] 6. The transferred employees who are treated favourably belong to a vanishing group and, perhaps, within a period of two years none of them would be in the service of the Corpo ration. Thereafter, only one class of employees would be in the service of the Corporation, namely, those appointed subsequent to September 1, 1956 by the Corporation in re spect of whom the Corporation has fixed the age of retire ment as 58 years which corresponds to the age or ' retirement in almost all the public sector establishments, the Central Government services and the State Government services. [221C E] 7. The High Court was right in holding that it was not discriminatory to extend the benefit of the age of 60 years to the transferred employees. However, it was not correct in holding that on promotion from Class III to Class I, the transferred employees and the directly recruited employees would lose their birth marks. The intention of Parliament was that even as late as in 1981 the two groups of employ ees, namely, the transferred employees and employees re cruited after September 1, 1956 in the Corporation should be kept separate. In these circumstances, the High Court was in the error in holding that when employees are recruited to a lower grade from two sources, no favourable treatment should be extended to recruits from one source on their promotion to the higher grade. The fact that an employee had entered the service of the Corporation after September 1, 1956 in a Class III post and is later on promoted to a Class I post does not make any difference. [216E H; 217D] 187 8. In the instant case, when the first respondent was promoted to the Class I post in 1963 the age of retirement of officers in the Class I post had been fixed at 58 years and was not different from the age of retirement of Class III employees. It was only in 1965 under the settlement, the age of retirement of employees in Class III and Class IV who joined service after September 1, 1956 was raised to 60 years. If he felt that the conditions of service ill ' Class I officers were likely to be prejudicial to him, he could have refused the promotion offered to him. Having accepted the promotion alongwith the higher benefits flowing from it he cannot contend after several years that he had been prejudicially affected by the condition relating to the age of retirement applicable to Class I officers appointed after September 1, 1956. That apart, the higher emoluments and other perquisites to which Class I employees may be entitled to and the better conditions of work which are enjoyed by them substantially compensate the effect of the lowering of the age of retirement from 60 years to 58 years. [213E G] Christopher Pimenta and Others vs Life Insurance Corpo ration of India, ; Life Insurance Corporation of India vs D.J. Bahadur & Ors., [1981] 1 S.C.R. 1083; Ram Lal Wadhwa & Anr. vs The State of Haryana & 0rs. ; , ; State of Punjab vs Joginder Singh, [1963] Supp. 2 S.C.R. 169; Tejinder Singh and Another vs Bharat Petroleum Corporation Ltd. and Anr., [1986] 4 S.C.C. 237; Roshan Lal Tandon vs Union of India, [1968] 1 S.C.11. 185; Miss Lena Khan vs Union of India and Ors., Jt. ; Railway Board vs A. Pitchumani, [1972] 2 S.C.R. 187; Manindra Chandra Sen vs Union of India & Ors., A.I.R. ; M/s British Paints (India) Ltd. vs The Work men; , ; Mohammad Shujat Ali & Ors. etc. vs Union of India & Ors. etc. ; ; Workmen of the Bharat Petroleum Corporation Ltd. (Refining Division) Bombay vs Bharat Petroleum Corporation Ltd. and Another, ; ; Tamil Nadu Education Department Minis terial & General Subordinate Service Association vs State of Tamil Nadu & Anr., ; , referred to.

No. 7338 of 1981. (Under Article 32 of the Constitution of India). Ram Jethmalani and Miss Rani Jethmalani for the Petitioner. G. Ramaswamy, Additional Solicitor General, R.P. Srivastava 634 and Miss. A. Subhashini for the Respondent. The Judgment of the Court was delivered by RANGANATH MISRA, J. The petitioner of this application under Article 32 of the Constitution is an engineer who was employed in the Central Public Works Department under the Ministry of Works and Housing in Government of India and was compulsorily retired by order dated 3.8.1976 with effect from 5.11.1976 made under Rule 56(j) of the Fundamental Rules. He has assailed that order for retirement and has claimed payment of remuneration which he would have been entitled to draw upto the normal date of superannuation. The short facts are these. The petitioner was born on 10.2.1922 and secured his first appointment as a Section Officer under the named employer on 22.10.1947. He was pro moted as officiating Assistant Engineer in class II service with effect from ' 25.5. 1954, and came to be confirmed as Section Officer by an order dated 8.10.1955. On 3.7.1961, he was further promoted as officiating Executive Engineer in Class I service but on 4.9.1965, he was reverted to the post of Assistant Engineer in officiating position and was con tinuing in that post when he was compulsorily retired. The vires of Rule 56(j) of the Fundamental Rules as also the power to compulsorily retire a public servant have been upheld by this Court and do not require to be re examined. The basis of attack to the impugned order is as specified in Ground No. A and is to the following effect: "The impugned order is contrary to the judg ment delivered by this Hon 'ble Court on 26.2.1980, copy at Annexure C hereto. (Union of India vs K.R. Tahiliani and Anr.) [1980] 1 SLR 847. According to the said judgment F.R. 56 (j)(i) has no application to officiating government servants, hence can have no appli cation to the petitioner since the petitioner was an officiating government servant. " The impugned notice ran thus: "No. 32/452/66 EC. 111 Government of India Central Public Works Department New Delhi, the 3.8.76 635 ORDER WHEREAS the Engineer in Chief is of opinion that it is in public interest to do so: NOW, THEREFORE, in exercise of the powers conferred by clause (j) of Rule 56 of the Fundamental Rules, the Engineer in Chief hereby gives notice to Shri A.L. Ahuja, As sistant Engineer (Civil), at present under suspension, that he, having already attained the age of fifty years on 10.2.1972, shall retire from service with effect from the forenoon of 3rd November, 1976, or, from the date of expiry of three months computed from the date of issue of the service of this notice on him, whichever is latter. Sd/ (V.R . VAISH) ENGINEER IN CHIEF To Shri A.L. Ahuja, Assistant Engineer (Civil), (Under Suspension), A11/85, Lajpat Nagar, New Delhi 110024. " It is clear from it that the petitioner attained the age of 50 years on 10.2.1972 and, therefore, on the date of the order he had completed the age of 54 years. Admittedly, he was holding a class II post when the impugned order was served on him. Fundamental Rule 56(j) under which notice was given provides: "(j) Notwithstanding anything contained in this rule, the appropriate authority shall, if it is of the opinion that it is in the public interest so to do, have the absolute right to retire any Government servant by giving him notice of not less than three months in writ ing or three months ' pay and allowances in lieu of such notice; (i) if he is in Class I or Class II service or post (and had entered Government service before attaining the age 636 of thirty five years), after he has attained the age of fifty years; (ii) in any other case after he has attained the age of fifty five years; . . . . . . . . . . ." The appropriate authority is entitled to exercise power under clause (j) in the case of a Government servant in Class I or Class II service or post where he entered into service before attaining the age of 35 years after the said servant attained the age of 50 years; and in other cases after he has attained the age of 55 years. In the instant case, the petitioner was promoted as officiating Assistant Engineer which is a Class II post on 25.5. 1954 and contin ued to hold that post when the order of compulsory retire ment was passed. By 25.5.1954 the petitioner had not at tained the age of 35 years. As already indicated above he had crossed the age of 50 years but had not attained the age of 55 years by the date of the impugned order. Therefore, sub clause (1) was not contravened when the order was made. It has been argued before us that as the petitioner was holding an officiating appointment in Class 117 he could not have been compulsorily retired under sub clause (i). Support is claimed from the observations in the Tahilia ni 's case (supra). The sole question that fell therein for decision before this Court was whether a Government servant officiating in Class I or Class II service or post could be retired compulsorily by exercising the power under Rule 56(j)(i) after he has attained the age of 50 years. The two Judge Bench which decided the case held: " An officiating hand has no right to the post and is perhaps a fleeting. bird who may have to go back to the substantive post from which he has been promoted on an officiating basis what is more to the point, a person who has been appointed de novo may begin his service on an officiating basis or on a tempo rary basis and it is obvious that he has no right to the post and cannot be strictly said to be in that service or post as a member of that service. In short, an officiating Govern ment servant does not really belong to Class I or Class II service until he acquires a right thereon. Even viewed closely and meticulously, the structure of the clause, namely, "if he is in Class I or Class II 637 service or post", emphasises the nature of the service or post vis a vis the Government servant concerned. We need not go into the semantic shapes, lexical niceties or linguis tic nuance but only go through the meaning and purpose of the provision. When a Government servant belonging to a Class I or Class II service or post on regular basis has to be retired compulsorily, Rule 56(j)(i) comes to the rescue of the Government. But if he is only a temporary hand, he has no right to the post and can always be reverted to the post, if any, on which he has a lien. Similar is the position of an officiating hand. Thus we have reached an inevitable conclusion that Rule 56(j) is meant to cover only those who are in a post on a regular basis, i.e. in a substan tive capacity, and not on an officiating basis only. " Strong reliance was placed by counsel for the petitioner on the reasons extracted above. It is clear that sub clause (ii) is the general rule applicable to all Government servants and sub clause (i) carves out a class of Government servants into a category and makes a special provision. We have already indicated that sub clause (ii) did not apply to the facts of this case as the petitioner had not attained the age of 55 years by the date of the order. The observations made in Tahiliani 's case indisputably support the petitioner. But the correct ness thereof is disputed by learned Additional Solicitor General appearing for the Union of India and that is why this writ petition was directed to be heard by a larger Bench. There is no reference to officiating service in sub clause (i). The relevant words used in sub clause (i) are "if he is in Class I or Class II service or post". A person can be in Class I or Class II service or post even when he hold a post of either class substantively or temporarily or on officiating basis. Instances are abundant where officers are promoted to Class I or Class II service or post of such class on officiating basis and such officiation lasts for a number of years. Officiating promotion certainly does not confer a right to the post and at any time the Government servant may be sent back to his substantive post. There is, however, no reasons why sub clause (i) should be confined to service or post held on substantive basis. Learned counsel for the petitioner does not dispute the position that a person who is in Class I or Class II service or post is in such service or post as covered by sub clause (i). The possibility of such incumbent being sent back to the 638 substantive post is not at all relevant in the matter of exercising powers of compulsory retirement. If the officia tion is not brought to an end by reverting the Government servant to his substantive post before the power of compul sory retirement is exercised, the Government servant con cerned must be taken to be in Class I or Class II service or post at the relevant time and would come within the ambit of sub clause (i). There is no warrant for the conclusion that officiating Government servants in Class I or Class II service or post are outside the purview of sub clause (i). The possibility of a reversion to the substantive post is not germane to the exercise of power contained in F.R. 56. The purpose of Fundamental Rules 56(j) is to confer power on the appropriate authority to compulsorily retire Government servant in the public interest and the classification of Government servants into two categories covered by sub clauses (i) and (ii) has a purpose behind it. If the condi tion indicated in sub clause (i) is satisfied, namely, the Government servant is in Class I or Class II service or post and he had entered into service before attaining the age of 35 years, and has attained the age of fifty, the further condition that he must substantively belong to the two classes of service or post cannot be introduced into the scheme. The purpose of the sub clauses is to classify Gov ernment servants into two categories and sub clause (i) takes within its sweep those Government servants who at the relevant time are in Class I or Class II service or post, whether substantively, temporarily or on officiating basis. We would accordingly hold that the ratio of the decision in Tahiliani 's case is not correct and sub clause (i) of Rule 56(j) applies to Government servants in Class I or Class II service or post on substantive, temporary or offi ciating basis. On this conclusion the writ petition is liable to be dismissed. It has been represented to us by counsel for the petitioner that the similarly placed persons had gone before the Delhi High Court challenging the orders of compulsory retirement and the Delhi High Court relying upon Tahiliani 's case give them relief. Such judgments have become final and Union of India has given effect to the decisions of the Delhi High Court. When this was put to learned Additional Solicitor General he agreed that the Union of India will have no objection to treat the petitioner alike and would be prepared to give the same relief to the petitioner. The petitioner would have superannuated from service on 29.2.1980 if he had not been compulsorily retired with effect from 639 5.11. 1976. Even if the writ petition is allowed and the order of compulsory retirement is set aside the petitioner cannot go back to service. But he would be entitled to pecuniary benefit of salary and allowances admissible under the rules. Accordingly, we allow the.writ petition and direct the respondent to pay to the petitioner the salary and other allowances which would have been payable for the period between 5.11. 1976 and 29.2. Such payment be made within two months from today. There will be no order for costs. WRIT PETITION NOS. 6251 & 8189 OF 1981 Each of the petitioners in these two writ applications under Article 32 of the Constitution was employed in the Central Public Works Department in the Ministry of Works and Housing of Government of India and has been compulsorily retired under Fundamental Rule 56(j). The facts of each of these applications are more or less similar to those in Writ Petition No. 7338 of 1981 which we have disposed of today. For the reasons given therein we allow each of the writ petitions and quash the order of compulsory retirement made against each of the petitioners. By now both the petitioners would have retired from service and, therefore, they cannot be resorted in service. They would, however, be entitled to salary and other service allowances payable to them from the date of compulsory retirement till the date of their normal superannuation. There will be no order for costs. H.L.C. Petition allowed.

Fundamental Rule 56(j) confers power on the appropriate authority to compulsorily retire a Government servant, if it is in the public interest to do so, by giving 3 months ' notice or 3 months ' pay and allowances in lieu of such notice; while sub cl. (i) thereof states that a public servant in class I or class II service or post who had entered service before attaining the age of 35 years can be retired after he has attained the age of 50 years, sub cl. (ii) thereof states that any other public servant can be retired after he has attained the age of 55 years. In Union of India vs K.R. Tahiliani & Anr., this Court had held that F.R. 56(j) is meant to cover only those who are in a post on a regular basis, i.e., in a substantive capacity, and not on an officiating basis only. Basing his case on this decision, the petitioner, who had been compulsorily retired while working in a class II post In an officiating capacity, challenged the order of his compulsory retirement. Overruling the decision in Union of India vs K.R. Tahi liani & Anr., but, allowing the petition on the ground that the Delhi High Court, relying upon that decision, had grant ed relief to persons similarly placed as the petitioner, and, directing payment of his salary and allowances upto the date of his normal superannuation, HELD: Sub clause (1) of r. 56(j) of the Fundamental Rules applies to Government servants in Class I or Class II service or post on substantive, temporary or officiating basis. [638E F] There is no reference to officiating service in sub cl. The relevant words used in sub cl. (i) are "if he is in CIasa I or CIasa II service or post. " A person can be in Class I or CIasa II service or post even when he holds a post of either ciasa substantively or temporarily or on officiating basis. Instances are abundant where officers are promoted to CIasa I or Class II service or post of such class on officiating basis and 633 such officiation lasts for a number of years. Officiating promotion certainly does not confer a right to the post and at any time the Government servant may be sent back to his substantive post. There is, however, no reason why sub cl. (i) should be confined to service or post held on substan tive basis. It is not disputed that a person who is in Class I or Class II service or post is in such service or post as covered by sub cl. The possibility of such incumbent being sent back to the substantive post is not at all rele vant in the matter of exercising powers of compulsory re tirement. If the officiation is not brought to an end by reverting the Government servant to his substantive post before the power of compulsory retirement is exercised, the Government servant concerned must be taken to be in Class I or Class II service or post at the relevant time and would come within the ambit of sub cl. There is no warrant for the conclusion that officiating Government servants in Class I or Class II service or post are outside the purview of sub cl. The possibility of a reversion to the sub stantive post is not germane to the exercise of power con tained in F.R. 56. [637F H; 638A C] The purpose of F.R. 56(j) is to confer power on the appropriate authority to compulsorily retire a Government servant in the public interest and the classification of Government servants into two categories covered by sub cls. (i) and (ii) has a purpose behind it. If the condition indicated in sub cl. (i) is satisfied, namely, the Govern ment servant is in Class I or Class II service or post and he had entered into service before attaining the age of 35 years, and has attained the age of fifty, the further condi tion that he must substantively belong to the two classes of service or post cannot be introduced into the scheme. The purpose of the sub clauses is to classify Government serv ants into two categories and sub cl. (i) takes within its sweep those Government servants who at the relevant time are in Class I or Class II service or post, whether substantive ly, temporarily or on officiating basis. [638C E] Union of India vs K.R. Tahiliani & Ant., , over rulled.

ION: Special Leave A Petition (CRL. ) No. 1765 of 1987 From the Judgment and order dated 8/9.7.1987 of the Bombay High Court in W.P. No. 332 of 1987. V.N. Ganpule for the Petitioner. Soli J. Sorabjee, K.J. John and A.K. Desai for the Respondents. The Judgment of the Court was delivered by SEN, J. The by section 630, enacts: "630. Penalty for wrongful withholding of property (1) If any officer or employee of a company (a) wrongfully obtains possession of any property of a company; or D (b) having any such property in his possession wrongfully withholds it or knowingly applies it to purposes other than those expressed or directed in the articles and authorised by this Act; he shall, on the complaint of the company or any creditor or contributory thereof, be punishable with fine which may extend to one thousand rupees. (2) The Court trying the offence may also order such officer or employee to deliver up or refund, within a time F to be fixed by the Court, any such property wrongfully obtained or wrongfully withheld or knowingly misapplied, or in default, to suffer imprisonment for a term which may extend to two years. " The only question involved in this special leave petition is as to the scope and effect of sub section (1) of section 630 of the Act. The controversy is as to the meaning of the term 'officer or employee ' used in sub s(1) of section 630 and as to the meaning of the words 'any such property ' in cl. (b) thereof and there is a conflict of opinion between the High Courts of Calcutta and Bombay on the question. On a literal construction of the term 'officer or employee ' occurring in sub section (1) of section 630 of H 172 the Act, the High Court of Calcutta in Amritlal Chum vs Devi Ranjan Jha & Anr., held that it refers only to the existing officers and employees of a company. It also held that the words 'any such property ' in section 630(l)(b) relate to property specified in cl. (a) viz. property of a company wrongfully taken possession of by a present officer or employee of the company. The High Court of Bombay, on the other hand, has placed a beneficent construction on the provisions contained in section 630 and according to it, the term 'officer or employee ' in sub section (1) of section 630 must be interpreted to mean not only the present officers and employees of a company but also to include past officers and employees of the company. It is also of the view that the words 'any such property ' in ck (b) qualify the words 'any property of a company ' appearing in cl. That has been the consistent view taken by the High Court of Bombay in a series of cases. See: Harkishan Lakhimal Gidwani vs Achyut Kashinath Wagh & Anr., , Govind T. Jagtiani vs Sirajuddin section Kazi & Anr., [ which have since been followed in a series of cases referred to by the learned Single Judge (Ashok Agarwal, J.). The issues involved in the special leave petition are of considerable importance to the corporate sector as many of the business organisations, both in the public as well as the private sector, are required to provide residential accommodation to their officers and employees as a condition of their service to attract better talent and have of necessity to purchase residential flats in multi storeyed buildings in large cities and towns for the use of such officers and employees during the course of their employment, and the question is whether the provisions contained in sub section (1) of section 630 which provide for the launching of a prosecution against an officer or employee of a company for wrongful possession of such property under cls. (a) and (b) of sub section (1) of section 630 and for the recovery of such property by the issue of process under sub section (2), also extends to past officers and employees of the company and whether the Court trying the offence has the power to issue a process under sub section (2) against such officer or employee. At the conclusion of the hearing we had by a short order dismissed the special leave petition and held that the view expressed by the learned Single Judge following the earlier decisions of the High Court in Harkishan Lakhimal Gidwani and reiterated in Govind T. Jagtiani was to be preferred to the view to the contrary expressed by the High Court of Calcutta in Amritlal Chum. As the respondent Shipping Corporation of India, a public sector undertakings, was in dire need of the flat in question which is situate in a posh locality like the Cuffe Parade in 173 Bombay, for the use of its senior executive, we could not accede to the request of the learned counsel for the petitioner to refer the case to a bench of three judges and heard learned counsel for the parties at quit some length on August 27,1987 and dismissed the special leave petition. The reasons therefor follow. At the very threshold it is necessary to set out a few facts. The petitioner Baldev Krishan Sahi was an Under Secretary to the Government of India in the Ministry of Shipping & Transport and on May 21, 1974 accepted employment as Joint Manager in the Mogul Line Limited, a Government of India undertaking, after obtaining release from government service. He was first allotted a service quarter. In 1975 the company purchased a spacious flat being flat No. 151 in Jolly Maker Apartment III at 119, Cuffe Parade and the petitioner being the senior most executive was allotted the flat for his residence. The petitioner retired from the service of the company on or about September 30, 1984. Prior to that i.e. On September 26, 1984 he addressed a letter requesting the company to permit him to continue to live in the company 's premises during the period of his accumulated leave after his retirement i.e. for a period of six months, undertaking to vacate the flat as early as possible. It appears that the company on humanitarian grounds acceded to this request and permitted the petitioner to stay on in the company 's flat for six months after his retirement and in accordance with the company 's rules, he was required to pay compensation for the use of the premises. After the expiry of the said period of six months, the company addressed a letter dated April 26, 1985 requesting the petitioner to vacate the premises stating that if he failed to do so, he would be liable to pay higher compensation as per the company 's rules. Since the petitioner failed to vacate the flat, the company initiated proceedings for his eviction under the Public Premises (Eviction of Unauthorised occupants) Act, 1971. The Estate officer by order dated December 2, 1985 directed the eviction of the petitioner. The petitioner carried an appeal to the City Civil & Sessions Court, Bombay but the same was dismissed by the Principal Judge, City Civil Court by his order dated January 16, 1986. He then preferred a revision to the High Court and the High Court by its order dated January 28, 1986 allowed the same, set aside the eviction order and directed the Estate officer to give a personal hearing to the petitioner. Instead of availing of that opportunity, the petitioner on March 3, 1986 moved the High Court by a petition under article 226 of the Constitution and obtained ad interim stay of the proceedings before the Estate officer. A few days thereafter i.e. On March 7, 1986 the petitioner instituted a suit being Civil Suit No. 174 1382/86 in Small Causes Court, Bombay seeking a declaration that he was a tenant of the disputed flat, which is now pending. In view of this, the company was constrained to lodge a complaint against the petitioner under section 630 of the Act in the Court of the Additional Chief Metropolitan Magistrate, 37th Court, Esplanade, Bombay alleging that he was wrongfully withholding the flat in question which had been given to him for his residence during the period of his employment and and thereby committed an offence punishable under section 630. The learned Magistrate by his order dated May 22, 1986 took cognizance of the complaint against the petitioner and directed issue of process. On June 30, 1986 the company merged with the Shipping Corporation of India and all its assets and liabilities were taken over by the Corporation. The Corporation in the counter affidavit interalia has pleaded that there is acute shortage of housing accommodation in the Metropolitan City of Bombay and it becomes necessary for the Corporation with a view to attract good talent to provide suitable housing accommodation to its officers and employees, and that due to acute financial liquidity it is not possible for the Corporation to buy property in Bombay for this purpose. It is further pleaded that the petitioner was given the flat for his residence during the period of his employment and that he was bound to vacate the same after his retirement. It is asserted that the petitioner with a dishonest intention is wrongfully with holding the flat and has instituted false and frivolous proceedings with the ulterior object of protracting and delaying the eviction proceedings. We are informed that the petitioner has been deliberately and dishonestly withholding the flat covering an area of 1750 square feet in Cuffe Parade which is a posh area, valued at approximately Rs.30 lakhs and putting it to his own use contrary to the terms of his employment. The first and foremost argument of learned counsel for the petitioner is that the provision contained in section 630 of the Act is a penal provision and therefore must be subject to a strict construction and there is no room for intendment. It is submitted that on a true construction, the scope and effect of the section was limited to such property of the company which was wrongfully obtained by an officer or employee of the company. Emphasis was placed upon the words any such property ' in cl. (b) of sub section (1) for the contention that cl. (b) does not stand by itself but is inter connected with cl. (a) and therefore both clauses (a) and (b) must be read together. In essence, the submission is that sub section (1) of section 630 of the Act makes it an offence where any officer or employee of a company wrongfully withholds possession of 175 such property of the company. Secondly, it is contended that the legislature never intended to include past officers and employees of a company within the ambit of section 630 of the Act which provides for prosecution of an officer or employee of a company for wrongfully withholding the property of the company inasmuch as it has used different languages where it was so intended, namely, in sections 538 and 545. The entire argument of the learned counsel is based upon the judgment of the High Court of Calcutta in Amritlal Chum 's case. We are afraid, we find it difficult to subscribe to the narrow construction placed by the High Court of Calcutta on the provision contained in sub section (I) of section 630 of the Act which defeats the very purpose and object with which it had been introduced. The beneficent provision contained in section 630 no doubt penal, has been purposely enacted by the legislature with the object of providing a summary procedure for retrieving the property of the company (a) where an officer or employee of a company wrongfully obtains possession of property of the company, or (b) where having been placed in possession of any such property during the course of his employment. wrongfully withholds possession of it after the termination of his employment. It is the duty of the Court to place a broad and liberal construction on the provision in furtherance of the object and purpose of the legislation which would suppress the mischief and advance the remedy. Section 630 of the Act which makes the wrongful withholding of any property of a company by an officer or employee of the company a penal offence, is typical of the economy of language which is characteristic of the draughtsman of the Act. The section is in two parts. Sub section (1) by clauses (a) and (b) creates two distinct and separate offences. First of these is the one contemplated by cl. (a), namely, where an officer or employee of a company wrongfully obtains possession of any property of the company during the course of his employment, to which he is not entitled. Normally, it is only the present officers and employees who can secure possession of any property of a company. It is also possible for such an officer or employee after termination of his employment to wrongfully take away possession of any such property. This is the function of cl. (a) and although it primarily refers to the existing officers and employees, it may also take in past officers and employees. In contrast, cl. (b) contemplates a case where an officer or employee of a company having any property of a company in his possession wrongfully withholds it or knowingly applies it to purposes other than those expressed or directed in the 176 articles and authorised by the Act. It may well be that an officer or employee may have lawfully obtained possession of any such property during the course of his employment but wrongfully withholds it after the termination of his employment. That appears to be one of the functions of cl. It would be noticed that cl. (b) also makes it an offence if any officer or employee of a company having any property of the company in his possession knowingly applies it to purposes other than those expressed or directed in the articles and authorised by the Act. That would primarily apply to the present officers and employees and may also include past officers and employees. There is therefore no warrant to give a restrictive meaning to the term 'officer or employee ' appearing in sub section (1) of section 630 of the Act. It is quite evident that clauses (a) and (b) are separated by the word 'or ' and therefore are clearly disjunctive. The High Court of Calcutta in Amritlal Chum 's case obviously fell into an error in seeking to curtail the ambit of section 630(l)(b) by giving a restrictive meaning to the terms 'officer or employee ' which must take its colour from the context in which it appears. The whole object of enacting sub section (1) of section 630 is the preservation of the property of a company by the creation of two distinct offences by clauses (a) and (b) which arise under different sets of circumstances, and it would be rendered nugatory by projecting cl. (a) into cl. There is also no warrant for the construction placed by the High Court of Calcutta on the words 'any such property ' occurring in cl. (b) as applicable to such property of a company, possession of which is wrongfully obtained by an officer or employee of the company i.e. refers to the whole of cl. According to the plain construction, the words 'any such property ' in cl. (b) relate to any property of a company as mentioned in cl. Section 630 of the Act plainly makes it an offence if an officer or employee of the company who was permitted to use any property of the company during his employment, wrongfully retains or occupies the same after the termination of his employment. By a curious process of reasoning, the High Court of Calcutta in Amritlal Chum 's case held that section 630 of the Act applies only to the existing officers and employees and not to those whose employment has been terminated. In somewhat similar facts, an officer of Messrs Jardine Hendersons Limited who had been placed in possession of a furnished flat in premises No. 27, Ballygunj Park, Calcutta as a condition of his service, wrongfully retained possession thereof after ceasing to be an officer of the company. The question was whether he had thereby committed an 177 Offence punishable under section 630 of the Act. N.G. Chaudhuri, J. speaking for himself and G.C. Chatterjee, J. held that the opening words of sub section (1) of section 630, namely, 'if any officer or employee of a company ' qualify 'the acts of delinquency ' specified in clauses (a) and (b) thereof. He further held that the High Court of Bombay was in error in laying down in Govind T. Jagtiani 's case that for purposes of prosecution, cl. (a) of section 630(1) was referable to existing officer or employee of a company, while cl. (b) was wide enough to include former or past officer or employee of the company inasmuch as on a plain reading of the section the two clauses do not permit different interpretations, as suggested. Further, whenever the framers of the law in their wisdom thought it proper to bring within the mischief of the provisions of the Act former officers or employees of a company, they did not hesitate to do so and they expressly legislated. In particular, the learned judge referred to section 538 which provides for prosecution for offences by officers of companies in liquidation and uses the expression 'a past or present officer of a company etc. ', as also section 545 which provides for prosecution of delinquent officers and members of a company during the course of winding up and uses the words 'any past or present officer etc. ' Upon that basis, he observed that there was no reason to give a twisted and laboured interpretation to the provisions of section 630 of the Act which its plain reading does not permit. The learned Judge also referred to the words 'any such property ' in cl. (b) as taking in the property mentioned in cl. (a) i.e. property wrongfully obtained. The reasoning of the learned Judges does not bear scrutiny and renders cl. (b) of section 630( l) wholly redundant. It is the wrongful withholding of such property, meaning the property of the company after termination of the employment. which is an offence under section 630(l)(b) of the Act, as rightly pointed out by V.S. Kotwal, J. in Harkishan Lakhimal Gidwani vs Achyut Kashinath Wagh (supra). The facts were also identical as here. The petitioner there was the General Manager of a company known as the English Electrical Company of India Limited, a company incorporated under the having its registered office at Calcutta. He had been allotted the premises of a flat, approximately 3,500 square feet in area, located at Mayfair Gardens, Little Gibbs Road, Bombay. He had been inducted into the flat only by virtue of his capacity as the General Manager of the company 's branch office at Bombay but the company allowed him to retain the same on humanitarian grounds for a short period after his retirement to enable him to find alternative accommodation. This humanitarian and charitable consideration shown by the company was reciprocated by the petitioner by adopting H 178 an adamant attitude and he declined to vacate the same on one pretext or another. The question was whether such wrongful retention of the flat amounted to an offence under section 63() of the Act. The Court repelled the contention that section 630 of the Act applies only to the existing officers and employees of the company and not to former officers and employees, and that the phrase 'any such property ' used in cl. (b), even though cls. (a) and (b) are separated by the word 'or ' which must in the context in which it appears be read as 'and ' and so construed, must mean withholding of property wrongfully obtained by an existing officer or employee. Kotwal, J. On a careful analysis of section 630 held that the provisions of the section apply not only to the present officers and employees of the company but also to past officers and employees, and observed: "It is held that the features and deductions which flow logically and inescapably on an analysis of section 630 are that: (i) Clause (a) of the section is self contained and independent of cl. (b) with the capacity of creating penal liability 4 embracing the case of an existing employee or officer of the company. (ii) Clause (b) is equally independent and distinct from cl. (a) as regards penal consequences squarely covering the case of a past employee or officer. (iii) The entitlement of an officer to the property of the company is contingent on the right and capacity of the officer by virtue of his employment which is transformed into the actual possession of the property and the duration of such right would be co terminus with the terms of employment. " In Govind T. Jagtiani vs Sirajuddin section Kazi, (supra), Kanade, J. fol lowed the critical analysis of section 630 made by Kotwal, J. as above, and observed that the entitlement of an officer to the property of the company and the duration of such right would be co terminus with the terms of employment and the right would stand extinguished with the termination to the employment giving rise to an obligation to hand over the property back to the company, and observed: "If the property is held back, the retained possession would amount to wrongful withholding of the property of the company. While the existence of the capacity, right and possession would be during employment, the withholding may be even after the termination of the employment and though the possession as it precedes the act of retention or withholding may be rightful in the past affording an 179 Opportunity to withhold, the withholding may be wrongful as in the present case. " The learned Judge (Ashok Agarwal, J.) observes that that has been the consistent view of the High Court and has referred to the subsequent decisions of Khatri j J. and Kurdukar, J. In our considered opinion, the construction placed by the High Court on the provisions contained in s.630(1) is the only construction possible. We accordingly uphold the view of the High Court of Bombay that the terms 'officer or employee ' of a company applies not only to existing officers or employees but also to past officers or employees if such officer or employee either (a) wrongfully obtains possession of any property, or (b) having obtained such property during the course of his employment, withholds the same after the termination of his employment. The decision to the contrary of the High Court of Calcutta in Amritlal Chum 's case does not lay down good law and is overruled. In the result, the special leave petition must fail and is dismissed with costs. The petitioner is given one month 's time to vacate the premises failing which the respondents will be at liberty to take such proceedings as the law provides. We direct the Additional Chief Metropolitan Magistrate, 37th Court, Esplanade, Bombay to proceed with the trial of Crl. Case No. 76/S/1986 and dispose it of as expeditiously as possible and in any event, not later than four months from today. P.S.S. Petition dismissed.

Sub section ( l ) of section 630 of the provides for launching of prosecution against an officer or employee of a company, who (a) wrongfully obtains possession of any property of a company, or (b) having any such property in his possession wrongfully withholds or knowingly misapplies the same. The petitioner who was given a flat by the company for his residence during the period of his employment did not vacate it on his retirement. He was granted six months time on humanitarian grounds upon his undertaking to comply with. Upon his failure to vacate the premises the company lodged a complaint against him under section 630 of the Act for wrongful withholding of its property. The Magistrate took congnizance of the complaint and directed issue of process. Dismissing the writ petition filed by him under article 227 of the Constitution read with section 482 Cr. P.C. seeking to quash the proceedings, the High Court following its consistent view in a series of cases that the term 'officer or employee ' in sub section (1) of section 630 must be interpreted to mean not only the present officer or employee of company but also to include past officers and employees of the company and that the words 'any such property ' in cl. (b) qualify the words 'any property of a company ' appearing in cl. (a), held that the case does not call for interference. 169 In the special leave petition it was contended for the petitioner that the provision contained in section 630 of the Act is a penal provision and, therefore, must be subject to a strict construction and there is no room for intendment, that the term 'officer or employee ' occurring in sub section (1) of section 630 refers only to the existing officers and employees of a company, and not the past officers, and that cl. (b) of sub section (I) does not stand by itself but is interconnected with cl. (a) thereof and therefore cl. (a) and cl. (b) must be read together and when so read the words 'any such property ' in cl. (b) do not qualify the words 'any property of a company ' in cl. (a) and only relate to the property of company wrongfully taken possession of by a present officer. Dismissing the special leave petition, ^ HELD: 1. Section 630 of the plainly makes it an offence if an officer or employee of the company who was permitted to use any property of the company during his employment, wrongfully retains or occupies the same after the termination of his employment. [176F G] 2.1 The term 'officer or employee ' of a company in section 630(1) applies not only to existing officers or employees but also to past officers or employees if such officer or employee either (a) wrongfully obtains possession of any property, or (b) having obtained such property during the course of his employment, withholds the same after the termination of his employment. [179B C] 2.2 The beneficent provision contained in section 630 of the though penal, has been purposely enacted by the legislature with the object of providing a summary procedure for retrieving the property of the company. It is the duty of the Court to place a broad and liberal construction on the provision in furtherance of the object and purpose of the legislation which would suppress the mischief and advance the remedy. [175C E] 2.3 Sub section (1) of section 630 of the Act by clauses (a) and (b) creates two distinct and separate offences: (1) Where an officer or employee of a company wrongfully obtains possession of any property of the company during the course of his employment, to which he is not entitled. Normally, it is only the present officers and employees who can secure possession of any property of a company. It is also possible for such an officer or employee after termination of his employment to wrongfully take away possession of any such property. This is the function of cl. (a) 170 and although it primarily refers to the existing officers and employees, it may also take in past officers and employees. (2) Where an officer or employee of a company having any property of a company in his possession wrongfully withholds it or knowingly applies it to purposes other than those expressed or directed in the articles and authorized by the Act. It may well be that an officer or employee may have lawfully obtained possession of any such property during the course of his employment but wrongfully withholds it after the termination of his employment. That appears to be one of the functions of cl. Clause (b) also makes it an offence if any officer or employee of a company having any property of the company in his possession knowingly applies it to purposes other than those expressed or directed in the articles and authorized by the Act. That would primarily apply to the present officers and employees and may also include past officers and employees. There is therefore no warrant to give a restrictive meaning to the term 'officer or employee ' appearing in sub section (1) of section 630 of the Act. [175F H; 176A C] 3. It is quite evident that clauses (a) and (b) are separated by the word 'or ' and therefore are clearly disjunctive. The whole object of enacting the provision is the preservation of the property of a company by the creation of two distinct offences by clauses (a) and.(b) which arise under different sets of circumstances, and it would be rendered nugatory by projecting cl. (a) into cl. 1176C, D E] 4. According to the plain construction, the words 'any such property ' in cl. (b) relate to 'any property of a company ' as mentioned in cl. It is wrongful with holding of such property meaning the property of the company after termination of the employment, which is an offence under section 630(l)(b) of the Act. [176F; 177E F] 5. The petitioner given one month 's time to vacate the premises failing which the respondents to take such proceedings as the law provides. The Additional Chief Metropolitan Magistrate to proceed with the trial and dispose it of expeditiously. [179D E] Harkishan Lakhimal Gidwani vs Achyat Kashinath Wagh & Anr., , and Govind T. Jagtiani vs Sirajuddin section Kazi & Anr., , approved. Amritlal Chum vs Devi Ranjan Jha & Anr., , overruled. 171

Civil Appeal No. 1377 of 1982. From the Judgment and Order dated 17.11.1980 of the Bombay High Court in Special Civil Appeal No. 251 of 1977. F.R. Nariman, E.K. Jose, P.H. Parekh and Miss Sunita Sharma for the Appellant. Y.H. Muchhala, B.R. Aggarwala and Miss. section Manchanda for the Respondent. The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J. This appeal by special leave arises from the judgment and order of the High Court of Bombay dated 17th of November, 1980. The main question involved in this appeal is whether the appellant was a licensee or a tenant and also incidentally the question whether the Court of Small Causes, Bombay had jurisdiction to deal with the eviction petition in this case. The premises in question belongs to the Bombay City Weavers Cooperative Limited. They filed ejectment proceedings against one 1060 Sugrabhai Mohammed Husain, their tenant and obtained a decree. It is stated that the appellant was a monthly tenant of the suit premises since about 2nd February, 1965. On or about 9th of February, 1965 a fresh document of that date, was executed and it is alleged that the appellant continued by virtue of that agreement. It is alleged that this agreement was entered into between the parties since the respondent wanted to charge more rent or mesne profits. This agreement is in writing and this was for a period of five years, i.e., from 1st September, 1965 to 31st of August, 1970. The main contention involved in this appeal is whether the appellant was a tenant or a licensee? The answer would be dependent upon the construction of the aforesaid document. It is necessary, therefore, to refer to the said agreement in little detail. The agreement is described as an agreement of 'leave and licence ' entered into between the respondent on the one hand and the appellant on the other wherein the respondent had been described as the 'licensor and the appellant had been described as the licensee ' and the recitals therein recite that the licensor was seized and possessed of and was otherwise well entitled as the monthly tenant of the workshop premises situated at 231, Ripon Road, Cooperative Building, Bombay, being the premises in dispute, and whereas the licensee had approached the licensor to allow him to occupy and use the said premises for the purpose of carrying out his business of workshop for a period of five years and whereas the licensor had agreed to allow the licensee to use the premises under the said leave and licence of the licensor for a period of five years from 1st of September, 1965 till 31st of August, 1970, that agreement was being executed. it was stated that the licensor gave and granted his 'leave and licence ' to the licensee to use and occupy the said premises for the period of five years. Clause 2 of the said agreement recites that the licensee had agreed to use the premises as above and merely for the purpose of workshop business. It further goes on to state that the "licensee shall not under any circumstances be allowed to use the premises for the residential purposes or any other purpose save and except specified therein". The period of leave and licence was to commence from 1st of September, 1965 to 31st of August, 1970 and it was further submitted that the licensee and the licensor shall not terminate the said agreement earlier save and except on the ground of breach of any of the terms and conditions written therein. The licensor was entitled to terminate the agreement earlier notwithstanding the fact that the period of the agreement might not have expired. It further stipulated that the licensee should deposit a sum of Rs.2,500 for the due performance of the terms and conditions of the agreement. The said deposit was to be kept free of interest and the same was to be refunded to the 1061 licensee on the licensee surrendering possession of the said premises by removing himself and his belongings on the expiry of the period of the agreement or sooner termination or determination thereof after deducting all the dues if any for payment of compensation. It further stipulated that the licensee shall pay to the licensor a monthly compensation of Rs.225 per month. It is further stipulated that the licensee would be entitled to keep the keys of the said premises with him and shall be at liberty to work in the said premises for twenty hours subject to restriction of rules and regulations imposed by the Municipal or any other local authority or authorities. It is further provided that the licensee shall be alone responsible and liable for any breach or contravention of any rule or regulation of the said authorities and he shall indemnify the licensor therefor. The document further stipulated that the licensee shall be at liberty to construct loft and electric fittings and apparatus and tools and shall be entitled to the ownership thereof and shall be free to carry away such articles and the licensor agreed and undertook that he shall not obstruct the removing of such articles at the time of the delivery of the possession of the said workshop. It is further mentioned in the said agreement that it was agreed by the licensee that if he commits any default of any terms and conditions or fails to pay the compensation for two months or if the licensee at any time puts up false or adverse claim of tenancy or sub tenancy the licensor shall be entitled to terminate the agreement and cancel and revoke and withdraw the leave and licence granted earlier and shall be entitled to take possession forthwith of the said premises. It is further stipulated that the licensee shall pay the electric charges in respect of consumption of electricity and the rent of the said premises should be paid by the licensor only. The agreement recited that the licensee shall not allow any other person to use and occupy the said premises and shall not do any unlawful or illegal business therein. The agreement further recited that the licensor shall have the full right to enter upon the premises and inspect the same at any time. In setting out the terms of the agreement the emphasis has been supplied to the relevant clauses to highlight the points in controversy. On or about 9th November, 1970, the respondent herein filed an ejectment proceeding against the appellant under section 41 of the . It is well to refer to section 41 of the said Act which is in Chapter VII and deals with summons against person occupying property without leave and provides that when any person has had possession of any immovable property situate within the local limits of the Small Cause Court 's jurisdiction and of which the annual value at rack rent did not exceed two 1062 thousand rupees, as the tenant, or by permission, of another person, or of some person through whom such other person claims, and such tenancy or permission has been determined or withdrawn then a suit can be filed by a summons against the occupant calling upon him to show cause therein. It was only when the person was in occupation by permission of the grantor that after the recovery of the permission a suit for possession could have been instituted under section 41 of the said Act. On or about 9th of November, 1970 the owner of the premises filed an ejectment proceeding against one Sugrabhai Mohammed Husain and obtained a decree. The trial Judge in the instant case passed a decree in ejectment petition filed by the respondent and ordered the appellant to vacate the premises before 31st of January, 1975. Before the Judge, Court of Small Causes the points of defences were filed in which the appellant had stated that the application was not maintainable and the plaintiff was himself occupying the premises under one Sugrabhai Mohammed Husain who himself had adopted ejectment proceedings against the respondent. The appellant was contending that he was a direct tenant of the respondent. Without prejudice to the above contention it was contended by the appellant that the respondent was not the owner of the workshop and also denied that he had given the workshop to respondent for conducting business. The submission was that there was sub tenancy by the respondent in favour of the appellant as a monthly tenant of the business with the articles and machinery belonging to the appellant and not to the respondent. On those grounds it was contended that ejectment proceedings was liable to be rejected. It was recorded by the court with the expression "B.C", a term of some ambiguity as explained later, that the appellant was not claiming protection as a sub tenant under the Rent Act but only the subtenancy as such and therefore, it was recorded that as agreed 'B.C '. no preliminary issue was to be framed. The learned Judge, noted that the only point that arose for consideration was whether the appellant proved that he was a sub tenant as such or not. It is interesting to note that in the judgment of the Small Cause Court and also of the High Court at several places the expression "B.C." was used; this is intriguing as we find that it intrigued Vaidya, J. because he stated in his judgment dated 9th of December, 1975 what the expression "B.C." was meant by Court. He recorded further that he thought that "B.C." meant 'by consent '. The learned Judge recorded further that it was practice in the Court of Small Causes, Bombay of using the expression 1063 "B.C.". The said learned Judge, however, observed that the use of the words in the paragraph which we have stated hereinbefore made the entire paragraph meaningless. We could not agree more. In order to go back to the findings of the learned Judge of the Court of Small Cause and the learned High Court Judge found that the appellant had failed to prove that he was a sub tenant of the respondent and the learned Judge found him to be a licensee. On an analysis and examination of evidence recorded and in the background of the documents in question the learned Judge came to the conclusion factually that it was an agreement for leave and licence and the appellant was a licensee and not a sub tenant. It was an agreed position as the learned Judge noted that the respondent therein was a tenant of the entire suit premises and had produced a rent receipt for the month of April, 1971 for a monthly rent of Rs.56.25 p.m. inclusive of municipal taxes and had also produced light bill for the period 20.10.65 and 19.11.65. The learned Judge observed that from the evidence it would be seen that it was not the case of the appellant even that he had gone to occupy the suit premises any time before that date and the dispute started only from the date of the agreement. In the light of the legal position and also the fact that the rent, light bill stood in the name of the respondent showed that there was no desire to create any lease by the document mentioned hereinbefore and the appellant regarded him as a mere licensee. There was no error of fact as such on that. To this finding our attention was drawn and great reliance was placed. To go back to the narration of events, the appellant filed special civil application in the High Court of Bombay under Article 227 of the Constitution. The High Court of Bombay allowed the special civil application on 9th December, 1975. Thereafter in 1977 a special leave petition to this Court under Article 136 of the Constitution was filed being S.L.P. No. 274/77 and an order was passed in Civil Appeal No. 2181 of 1977 by which the case was sent back to the High Court for a fresh decision, keeping in view the decision of this Court in D.H. Maniar and others vs Waman Laxman Kudav; , Thereafter the High Court disallowed the special civil application by its order dated 17th of November, 1980. That decision was a case where the appellants therein had granted a licence in respect of certain shop premises in Bombay to the respondent under a Leave and Licence Agreement which expired on 31st March, 1966. Thereafter the appellants had served a notice upon the respondent calling upon him to remove himself from the said premises. The respondent refused to do so. In July, 1967 the appellants 1064 filed an application for eviction under section 41 of the . The contention of the respondent that he was a tenant was negatived by the Small Cause Court, Bombay. The respondent approached the High Court under Article 227 of the Constitution. The High Court refused to interfere with the finding of the Small Cause Court that the respondent was a licensee and not a tenant. The Bombay Rent Act was amended by Maharashtra Act 17 of 1973. By the amending Act, sections 5(4A) and 15A were introduced in the parent Act to confer on the licensee, who had a subsisting agreement on February 1, 1973, the status and protection of a tenant under the Bombay Rent Act. The respondent in that case by an amendment had taken the plea of protection under the Maharashtra Amendment Act 17 of 1973 on the ground that he was in occupation of the premises on 1st February, 1973 under a subsisting agreement for licence. The Small Cause Court, Bombay negatived the plea on the ground that there was no subsisting agreement for licence on the 1st of February, 1973 as there was nothing on record to show that after 31st March, 1966 the leave and licence agreement between the parties was renewed or any fresh agreement was entered into. The respondent had filed a revision petition under section 115 of C.P.C. in the High Court. The High Court allowed the revision on the ground that the licence was not put an end to by the appellants and that in any event by filing the application for eviction the appellant licensor had granted an implied licence to the respondent licensee to continue in possession till a decree of eviction was passed in his favour. This Court allowing the appeal held that in order to get the advantage of section 15A of the Bombay Rent Act, the occupant must be in occupation of the premises as a licensee as defined in section 5(4A) on the 1st of February, 1973. If he was such a licensee, the non obstante clause of section 15A(1) give him the status and protection of a tenant in spite of there being anything to the contrary in any other law or in contract. But if he was not a licensee under a subsisting agreement on the 1st of February, 1973, then he did not get the advantage of the amended provision of the Bombay Rent Act. It was further held that a person continuing in possession of the premises after termination, withdrawal or revocation of the licence continued to occupy it was a trespasser or a person who had no semblance of any right to continue in occupation of the premises. Such a person could not be called a licensee at all. It was futher held that a person continuing in occupation of such premises after revocation of the licence was still liable to pay compensation or damages for its use and occupation. It was further held that filing an application under section 41 of the 1065 might in certain circumstances have the effect of putting an end to the licence if it was subsisting on the date of its filing. But that cannot possibly have the effect of reviving the licence as opined by the learned Judges. Such a proposition of law, it was further concluded by this Court, was both novel and incomprehensible. It was further held that it was right that the Court should act in consonance with the spirit of the Maharashtra Amending Act 17 of 1973, but the Court cannot and should not cast the law to the winds or twist or stretch it to a breaking point amounting to almost an absurdity. It was observed that the finding of the High Court that the respondent was in occupation of the premises under a subsisting licence was wholly wrong and suffered from serious infirmities of law and fact and deserved to be set aside. The High Court disallowed the special civil application under Article 227 of the Constitution on 17th of November, 1980 and that is the judgment impugned in this appeal. The High Court in the judgment under appeal noted that if it was held that the document created a lease rather than a licence than the tenant would be entitled to protection. The Bombay High Court in Miss Mani J. Desai vs M/s. Gayson & Co. Pvt. Ltd., 73 Bombay Law Reporter 394 had held that the Court of Small Causes would have no jurisdiction to proceed with the application filed under section 41 of the . The learned Judge rejected the contention of the appellant that he was a tenant and having found that the period of licence had come to an end, he passed an order of eviction against the appellant. The High Court in the judgment under appeal noted the facts mentioned hereinbefore by this Court in the decision of D.H. Maniar and allowed the appeal. This decision was remanded back to the High Court and it was directed that the appellant should be heard afresh in accordance with law because in a previous decision Vaidya, J. by the judgment dated 9th of December, 1975 as mentioned hereinbefore had allowed the appellant 's appeal. The learned Judge referred to the several decisions and background of the facts and affirmed the decision of the learned trial judge that the payment to be made to the respondent for the use and occupation was compensation and not rent. The High Court affirmed the decision of this Court and upheld the order of the Court of Small Causes and ordered eviction. In support of this appeal Sree R.F. Nariman very laboriously took us through the documents. He submitted that the document in question in the instant case read as a whole was lease and not a licence. He referred us to the decision of this Court in the case of Associated 1066 Hotels of India Ltd. vs R.N. Kapoor, ; where at page 383 this Court noted that there was a marked distinction between a lease and a licence. Section 105 of the defined a lease of immovable property as a transfer of a right to enjoy such property made for a certain time in consideration of a price paid or promised. Under section 108 of the said Act, the lessee is entitled to be put in possession of the property. A lease involves a transfer of an interest in land, Subba Rao, J. as the learned Chief Justice then was, observed in that case. This Court referred to the well known decision in the case of Errington vs Errington, ; where Lord Denning reviewing the case law on the subject summarized the position as follows: "The result of all these cases is that, although a person who is let into exclusive possession is, prima facie, to be considered to be tenant, nevertheless he will not be held to be so if the circumstances negative any intention to create a tenancy." The Court of Appeal in England again in Cobb vs Lane, considered the legal position and laid down that the intention of the parties was the real test for ascertaining the character of a document. Somervell, L.J., had observed: ". The solution that would seem to have been found is, as one would expect, that it must depend on the intention of the parties. " Denning, L.J. also reiterated the same decision. Reviewing these decisions Denning, L.J. had observed at page 384 of the report (1) that to ascertain whether a document created a licence or lease, the substance of the document must be preferred to the form; (2) the real test was the intention of the parties whether they intended to create a lease or a licence; (3) if the document created an interest in the property, it is a lease; but if it only permitted another to make use of the property, of which the legal possession continued with the owner, it was a licence; and (4) if under the document a party got exclusive possession of the property, prima facie, he was considered to be a tenant; but circumstances might be established which negative the intention to create a lease. Mr. R.F. Nariman very strenuously relied on the decision of this Court in Mrs. M.N. Clubwala and another vs Fida Hussain Saheb and 1067 others; , at page 653. This Court emphasised the if the exclusive possession to which a person was entitled under an agreement with a landlord was coupled with an interest in the property, the agreement would be construed not as a mere licence but as a lease. Mr. Nariman 's point was that the facts of the case were identical to the facts of the present case. Our attention was drawn to a decision of the Bombay High Court in the case of Sohanlal Naraindas vs Laxmidas Raghunath Gadit, (68 Bombay Law Reporter 400) where Tarkunde, J. Observed that the intention of the parties and exclusive possession were important elements. This decision was approved in appeal by this Court in Sohan Lal Naraindas vs Laxmidas Raghunath Gadit, where this Court reiterated that the test of exclusive possession was important point. He drew our attention to the observations of Shah, C.J. at page 321 of the Report. Reliance was also placed on the observations of Krishna Iyer, J. in the decision of Qudrat Ullah vs Municipal Board, Bareilly, ; where at page 533 of the report Krishna Iyer, J. Observed that there is no simple litmus test to distinguish a lease as defined in section 105, from licence as defined in section 52 of the Easements Act, but the character of the transaction turns on the operative intent of the parties. To put precisely if an interest in immovable property entitling the transferee to enjoyment was created, it was a lease; if permission to use land without exclusive possession was alone granted, a licence was the legal result. we are of the opinion that this was a licence and not a lease as we discover the intent. For this purpose reference may be made to the language used and the restrictions put upon the use of the premises in question by the appellant. In the document in question the expression "licence" was introduced and clause (2) said that it was only for the business purposes. The licence fee was fixed. It permitted user only for 20 hours. Restriction in the hours of work negates the case for a lease. Clause (12) is significant which gave to the licensor the right to enter upon the premises and inspect the same at any time. In our opinion the background of the facts of this case and the background of the entire document negate the contention of the appellant that it was a lease and not a licence. good deal of submission was made before us that if it was a lease and not a licence, then this point could be taken in aid of the submission that the Court had to jurisdiction, and there was no estoppel. It was contended that estoppel was a plea in equity and that there was no equity in favour of the respondent. We were invited to embark upon the traded field of estoppel and equity and very many learned passages from judgments of eminent Judges of Calcutta, Bombay and 1068 of this Court were cited. But in this case we had not been tempted. Our attention was drawn to several decisions but in the view we have taken we cannot say that the view taken by the High Court or the Court of Small Causes was incorrect. It was a possible view. That is sufficient for us. The distinction between leave and licence has been well summarised in Halsbury 's Laws of England, Fourth Edition, Volume 27 page 13. In determining whether an agreement creates between the parties the relationship of landlord and tenant or merely that of licensor and licensee the decisive consideration is the intention of the parties. Lord Greene MR had observed this in Booker vs Palmer, at 676,677. This is a salutary test. The intention here is manifest. In any event this is a possible view that could be taken. This Court in Venkatlal G. Pittie & Anr. vs M/s. Bright Bros. (Pvt). Ltd., ; and M/s. Beopar Sahayak (P) Ltd. & others vs Shri Vishwa Nath & 5 others, [1987] 2 scale 27, held that where it cannot be said that there was no error apparent on the face of the record, the error if any has to be discovered by long process of reasoning, and the High Court should not exercise jurisdiction under Article 227 of the Constitution. See in this connection the observations of this Court in Satyanarayan Laxaminarayan Hegde and others vs Mallikarjun Bhavanappa Tirumale, A.I.R. 1960 S.C. 137. Where two views are possible and the trial court has taken one view which is a possible and plausible view merely because another view is attractive, the High Court should not interfere and would be in error in interfering with the finding of the trial court or interfering under Article 227 of the Constitution over such decision. In the aforesaid view of the matter, we are clearly of the opinion that in view of the intention of the parties in the document and the facts and circumstances of this case, it was a licence and not a lease. We need not detain ourselves with the question of estoppel upon which very interesting arguments were advanced before us by Mr. Nariman is noted above. In the aforesaid view of the matter this appeal must fail as we find no ground to interfere with the decision of the High Court. The appeal fails and is dismissed. In the facts and circumstances, there will be no order as to costs. 1069 In view of the fact that the appellant has been carrying on business for some time, we give the appellant time upto 31st March, 1988 to give up and deliver vacant possession provided the appellant files the usual undertaking with the Registrar of the Court of Small Causes, Bombay within three weeks from this date. N.P.V. Appeal dismissed.

% The appellant, who was stated to be a monthly tenant of the suit premises, entered into an agreement, which was described as an agreement of 'leave and licence ', with the respondent on 9th February, 1965 and the respondent and the appellant were described therein as licensor and licensee respectively. It was stated in the agreement that the licensor was seized of the premises in dispute as a monthly tenant and gave and granted 'leave and license ' to the licensee to use and occupy the said premises for a period of five years, merely for the purpose of workshop business, at a monthly compensation of Rs.225 that the licensor shall be entitled to terminate the agreement and cancel and revoke and withdraw the leave and licence granted earlier and to take possession forthwith of the said premises if the licensee committed any default of any terms and conditions or failed to pay the compensation for two months or if the licensee at any time put up false or adverse claim of tenancy or sub tenancy, that the licensee shall pay the electric charges in respect of consumption of electricity and the rent of the said premises should be paid by the licensor only, and that the licensor shall have the full right to enter upon the premises and inspect the same at any time. 1058 In November 1970, the respondent filed an ejectment proceedings against the appellant under section 41 of the . It was contended by the appellant that there was sub tenancy by the respondent in his favour as monthly tenant. The trial court passed a decree and ordered the appellant to vacate the premises holding that the agreement was for leave and licence and that the appellant was a licensee and not a subtenant. On the case being remanded by the Supreme Court in a Special Leave Petition filed by the respondent against the earlier decision of the High Court, allowing the appellant 's special civil application, the High Court upheld the order of the Court of Small Causes, and ordered eviction of the appellant. In the Special Leave Petition against the aforesaid decision, it was contended that the document in question read as a whole was a lease and not a license. Dismissing the appeal by special leave, ^ HELD: 1.1 If an interest in immovable property entitling the transferee to enjoyment was created, it was lease; if permission to use land without exclusive possession was alone granted, a licence was the legal result. [1067D E] 1.2 In determining whether an agreement creates between the parties the relationship of landlord and tenant or merely that of licensor and licensee, decisive consideration is the intention of the parties. [1068B C] In view of the intention of the parties in the document and the facts and circumstances of the instant case, it was a licence and not a lease. This is clear from the language used and the restrictions put upon the use of the premises in question by the appellant. In the document in question the expression "licence" was introduced and clause (2) said that it was only for the business purposes. The licence fee was fixed. It permitted user only for 20 hours. Restriction in the hours of work negates the case for lease. Clause (12) gives to the licensor right to enter upon the premises and inspect the same at any time. [1067E F] 1059 1.3 Where two views are possible and the trial court has taken one view which is a possible and plausible view merely because another view is attractive, the High Court should not interfere and would be in error in interfering with the finding of the trial court or interfering under Article 227 of the Constitution over such decision. [1068E F] H. Maniar and others vs Woman Laxman Kudav, ; ; Miss Mani J. Desai vs M/s. Gayson & Co. Pvt. Ltd. 73 Bombay Law Reporter 394; Associated Hotels of India Ltd. vs R.N. Kapoor, ; ; Mrs. M.N. Clubwala and another vs Fida Hussain Saheb and others; , at page 653; Sohanlal Naraindas vs Laxmidas Raghunath Gadit, 68 Bombay Law Reporter 400; Sohan Lal Naraindas vs Laximdas Raghunath Gadit, ; Qudrat Ullah vs Municipal Board, Bareilly, [1974] 2 S.C.R. 530; Booker vs Palmer, at 676, 677; Venkatlal G. Pittie & Anr. vs M/s. Bright Bros. (Pvt) Ltd., [1987] 2 scale 115; M/s. Beopar Sahayak (P) Ltd. & others vs Shri Vishwa Nath & 5 others, [1987]2 scale 27; Satyanaryan Laxminarayan Hegde and others vs Mallikarjun Bhavanappa Tirumale, A.I.R. 1960 S.C. 137 and Halsbury 's Laws of England. , Fourth Edition, Volume 27 page 13, referred to.

Civil Appeal No. 3909 of 1986. From the Judgment and order dated 29.9.1986 of the Allahabad High Court in C.R. No. 83 of 1986. Shanker Ghosh and P K. Jain for the Appellants. Y.S. Chitale. Madan Lokur, Prashant Bhushan, Beni Parshad, Rajinder Dhawan and Jitendra Sharma for the Respondents. This appeal arises out of a judgment passed by the High Court of Allahabad in Civil Revision No. 83 of 1986 wherein the learned Judge of the High Court allowed the revision petition set aside the judgment and decree of the Trial Judge and decreed the plaintiff suit for ejectment of the appellant. The disputed property was let out on June 25, 1976. The accommodation was for the first time assessed for house tax by the Nagar Palika Ghaziabad with effect from October 1, 1976. The suit was filed for eviction after termination of tenancy before the trial court and objection was raised that as the shop and the basement were separately let out the tenancy could not be terminated by a single notice that would be invalid. The trial court therefore dismissed the suit. The High Court set aside this conclusion of the trial court. The main ground which was before the High Court was as to whether the provisions of U.P. Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972 ( 'Act ' for short) will be applicable to these proceedings in view of the fact that although the premises were let out in June 1976 but as the assessment was made on October 1, 1976 the provisions of the Act referred to above will not apply for 10 years from October 1, 1976 and therefore the suit could be decreed as the protection available under this Act will not be available to the tenant. High Court after discussing various decisions came to the conclusion that in view of the language of Section 2 sub clause 2 Explanation 1, it could not be doubted that period of 10 years will commence from 160 the date of assessment i.e. October 1, 1976 that it is in that view of the matter that the learned Judge of the High Court decreed the suit and hence the present appeal. Learned counsel for the appellant contended that apart from the controversy about the date which should be the starting point for computing the period of 10 years in view of the language of Sections 39 and 40 of the Act, provisions of this Act will be applicable to the present case and therefore a decree for eviction could only be passed. If it could be passed on anyone of the grounds mentioned in Section 20 clause 2 of this Act in support of this contention the learned counsel placed reliance on decisions in Om Prakash Gupta etc. vs Dig Vijendrapal Gupta etc. , 11982] 3 SCR 491 and Vineet Kumar vs Mangal Sain Wadhera, [ On the other hand learned counsel for the respondent contended that the rights of parties will be governed on the basis of the date on which the suit was filed and it was contended that if on the date on which the suit was filed by the respondent the provisions of this Act were not applicable then merely because the proceedings have been pending for all these years it could not be contended that as now 10 years elapsed the decree could not be passed. Learned counsel placed reliance on a decision in Firms Amar Nath Basheshar Dass vs Tek Chand, 11972] 3 SCR 922 and contended that this is a decision of three Judges Bench which clearly hold that if the suit was filed within a period of exemption then the suit could be decreed and the provisions of the Act will not be applicable. Learned counsel further contended that in the decision in Vineet Kumar 's case (supra) on which reliance has been placed by learned counsel for the appellant the Firms Amar Naath Basheshar Dass 's case (supra) has not been referred to and decision in Vineet Kumar 's case (supra) is a judgment by a Bench of two Judges. It was also contended by learned counsel that as till the matter was pending in the High Court 10 years have not been completed and therefore the High Court passed the decree Now it could not be contended that as during the pendency of the proceedings in this Court 10 years have elapsed and therefore the appellant tenant will be entitled to protection of the provisions of Section 20 It was contended that it is well settled that if the right to file a suit accrues on the date of tiling of the suit then the rights will have to be determined on the basis of the law applicable on the date of the suit and not subsequently. Learned counsel for the appellant contended that the decision in 161 Firms Amar Nath Basheshar Dass 's case (supra) will not be applicable to the present case as in that case this Court was considering the language of a notification issued under the East Punjab Act exempting buildings from the operation of the Act for five years and the view taken by this Court in that decision is based on the language of the notification issued whereas in view of the language of Sections 39 and 40 of the Act which is applicable to the present case that view is not possible and it is because of this that in Vineet Kumar 's case (supra) this Court took the view that if during the pendency of the proceedings 10 years have elapsed the tenant will be entitled to the benefit of the provisions of the Act. It was contended that in this decision the Court was concerned with the provisions of Section 2 of the Act itself. Before this Court also the only question that was raised on behalf of the parties was as to whether the provisions of the Act will be applicable or not and as to whether the protection granted to the tenants under this Act will be available to the present appellant Learned counsel for the appellant contended that as during the pendency of this matter in this Court 10 years have elapsed even if the date of completion is taken to be 1. 10.76 which is the date on which the first assessment of this property was made and during the pendency of this matter 1. 10.86 has been crossed now the period of exemption has come to an end and therefore the appellant is entitled to the benefits thereof. In the alternative it was contended that even if it is held that the rights of parties have to be determined in respect of the date on which the suit was filed still because of the language of Sections 39 and 40 of this Act the appellant tenant will be entitled to protection under this Act Sub clause (2) Sec. 2 of the Act reads as under: "(2) Except as provided in sub section (5) of Section 12, sub section (1 A) of Section 21, sub section (2) of Section 84, Sections 24 A, 24 B, 24 C or sub section (3) of Section 29, nothing in this Act shall apply to a building during a period of ten years from the date on which its construction is completed: Provided that where any building is constructed substantially out of funds obtained by way of loan or advance from the State Government or the Life Insurance Corporation of India or a bank or a co operative society or the Uttar Pradesh Avas Evam Vikas Parishad, and the period of repayment of such loan or advance exceeds the aforesaid 162 period of ten years then the reference in this sub section to the period of ten years shall be deemed to be a reference to the period of fifteen years or the period ending with the date of actual repayment of such loan or advance (including interest), whichever is shorter: Explanation I For the purposes of this sub section, (a) the construction of a building shall be deemed to have been completed on the date on which the completion thereof is reported to or otherwise recorded by the local authority having jurisdiction, and in the case of a building subject to assessment, the date on which the first assessment thereof comes into effect, and where the said dates are different, the earliest of the said dates and in the absence of any such report, record or assessment, the date on which it is actually occupied (not including occupation merely for the purposes of supervising the construction or guarding the building under construction) for the first time: Provided that there may be different dates of completion of construction in respect of different parts of a building which are either designed as separate units or are occupied separately by the landlord and one or more tenants or by different tenants: (b)"construction" includes any new construction in place of an existing building which has been wholly or substantially demolished; (c) where such substantial addition is made to an existing building that the existing building becomes only a minor part thereof the whole of the building including the existing building shall be deemed to be constructed on the date of completion of the said addition. " A perusal of this provision will clearly indicate that the new buildings constructed have been exempted from the operation of this Act for a period of 10 years. This period of 10 years have to be computed in the manner from the date as indicated in Explanation 1 and it was contended by learned counsel for the respondents that it will be the date on which the first assessment was made and so far as this question is concerned, it is also concluded by a decision of this Court in Om 163 Prakash Gupta 's case (supra) where it has been clearly held while interpreting Sec. 2 Explanation I of this Act that if there is an assessment made then the date of completion of the building, the date from which 10 years are to be computed will be the date on which the first assessment was made. In this view of the matter therefore it is clear that 10 years have to be computed from 1. 10.76, and it is because of this that even the learned counsel for the appellant did not seriously contend that the 10 years commence from 1.10.76. It is true that the decision reported in Firms Amar Nath Basheshar Dass 's case (supra) is a decision on the Punjab Act where the question before this Court was about the language of the notification which was issued under the Act exempting the buildings from operation of the Act for a period of S years and it is true that the language of the notification was not identical with the language of Sec. 2 sub clause 2 quoted above. But apart from it the contention advanced by the learned counsel for the appellant was that because of the language of Section 39 and 40 even if the matter is pending in this Court and 10 years have elapsed, appellant will be entitled to the benefit of the provisions of this Act because according to him the appeal will be a continuation of the suit and therefore the advantage will be available. It is no doubt true that the appeal is the continuation of the suit and if within the language of Section 39 the appellant is entitled to the advantage of the Section even if the matter is pending in this Court the protection will be available to the appellant but looking to the language of Section 39 it appears that the contention of the learned counsel could not be accepted. Pending suits for eviction relating to buildings brought under regulation for the first time In any suit for eviction of a tenant from any building to which the old Act did not apply, pending on the date of commencement of this Act, where the tenant within one month from such date of commencement or from the date of his knowledge of the pendency of the suit, whichever be later, deposits in the court before which the suit is pending, the entire amount of rent and damages for use and occupation (such damages for use and occupation being calculated at the same rate as rent) together with interest thereon at the rate of nine cent per annum and the landlord 's full cost of the suit, no decree for eviction shall be passed except on any of the grounds 164 mentioned in the proviso to sub section (1) or in clauses (b) A to (g) of sub section (2) of Section 20, and the parties shall be entitled to make necessary amendment in their pleadings and to adduce additional evidence where necessary: Provided that a tenant the rent payable by whom does not exceed twenty five rupees per month need not deposit any interest as aforesaid:" It is pertinent to note that this Section applies to those suits which were pending on the date of the commencement of this Act. Admittedly this Act came into force on 15th July, 1972 and therefore if the suit was pending on that date it is only then that the provisions of Section 39 will come to the assistance of the tenant appellant. Admittedly this suit was not pending on the date on which this Act came into force. An attempt was made to contend that so far as the present property is concerned the Act will be deemed to have come into force on the expiry of 10 years i.e. 1.10.86 but this contention could not be accepted as it is very clear from the language of this Act that it applied I only to a suit pending on the date of the commencement of this Act and this is the view taken in the Om Prakash Gupta 's case wherein it was observed: "Further, in order to attract section 39 the suit must be pending on the date of commencement of the Act which is 15th of July, 1972 but the suit giving rise to the present appeal was filed on 23rd of March, 1974 long after the commencement of the Act. There is yet another reason why section 39 will have no application to the present case. It is therefore clear that so far as the present appeal is concerned, the provisions of Section 39 will be of no avail. Section 40 of the Act reads as under: "40. Pending appeals or revisions in suits for eviction relating to buildings brought under regulation for the first time Where an appeal or revision arising out of a suit for eviction of a tenant from any building to which the old Act did not apply is pending on the date of commencement of this Act, it shall be disposed of in accordance with the provisions of Section 39, which shall mutatis mutandis apply." 165 This Section talks of the pendency of a revision or an appeal arising out of a suit pending on the day on which this Act came into force. It is clear that provisions of Section 40 will come to the rescue of the appellant tenant only if the suit from which revision or appeal arose was pending on the date of commencement of this Act i.e. 15.7.1972 and therefore it could not be contended that the present revision petition or the appeal either to the High Court or the appellate authority arose out of suit which was pending on the date on which this Act came into force. Admittedly the suit itself was filed much after the coming into force of this Act. In this view of the matter therefore, in our opinion, even this contention of learned counsel for the appellant could not be accepted. It is well settled that the rights of the parties will be determined on the basis of the rights available to them on the date of the suit, but in Vineet Kumar 's case (supra) this Court took the view that if during the pendency of the proceedings 10 years have elapsed the tenant is entitled to the protection under the Act and in coming to this conclusion the Court also considered the language of Section 39 of the Act and it observed: "The appellant in the present case only seeks the protection of the new Rent Act which became applicable to the premises in question during the pendency c.f the litigation. We see no reason why the benefit of the new Rent Act be not given to the appellant. Section 20 of the new Rent Act provides a bar to a suit for eviction of a tenant except on the specified grounds as provided in the section. Subsection (4) of section 20 stipulated that in any suit for eviction on the grounds mentioned in Cl. (a) to sub section (2) viz. the arrears of rent, if at the first hearing of the suit the tenant in default pays all arrears of rent to the landlord or deposits in court the entire amount of rent and damages for the use and occupation of the building due from him, such damages for use and occupation being calculated at the same rate as rent together with interest thereon at the rate of nine per cent per annum and the landlord 's cost of the suit in respect thereof after deducting therefrom any amount already deposited by the tenant under sub section (1) of section 30, the court may, in lieu of passing a decree for eviction on that ground, pass an order relieving the tenant against his liability for eviction on that ground. Section 39 and 40 of the new Rent Act also indicate that the benefit of new Act will be given 166 to the tenant if the conditions contemplated in those sections are satisfied. Section 39 also indicates that the parties are entitled to make necessary amendment in their pleadings and to adduce additional evidence where necessary. " But unfortunately attention of the Court was not drawn to the Om Prakash Gupta 's case (supra) which specifically considered this Act and the language of Section 39 in particular and is a decision of a Bench of three Judges which is binding on us. The restriction on the right of a landlord to evict a tenant has been provided for in this Act under Section 20 and the language of Section 20 is also significant. Bar of suit for eviction of tenant except on specified grounds (1) Save as provided in sub section (2) no suit shall be instituted for the eviction of a tenant from a building, notwithstanding the determination of his tenancy by efflux of time or on the expiration of a notice to quit or in any other manner: Provided that nothing in this sub section shall bar a suit for the eviction of a tenant on the determination of his tenancy by efflux of time where the tenancy for a fixed term was entered into by or in pursuance of a compromise or adjustment arrived at with reference to a suit, appeal, revision or execution proceedings, which is either recorded in court or otherwise reduced to writing and signed by the tenant. " This is put in Chapter IV with the heading "Regulation and Eviction" and the section starts with title which is printed in bold "Bar of suit for eviction of tenant except on specified grounds" and again in the wording of the section itself it provides: "No suit shall be instituted for eviction. " This clearly indicates that the restriction put under Section 20 is to the institution of the suit itself and therefore it is clear that if the provisions of this Act applies then no suit for eviction can be instituted except on the grounds specified in the sub sections of this Section. Keeping in view the language of this Section if we examine the provisions contained in sub section (2) of Section 2 it will be clear that for a newly constructed building the provisions of this Act will not apply for 10 years and therefore so far as the restriction under Section 20 is concerned they will not apply and therefore it is clear that within 10 years as provided for in clause (2) of Section 2 restriction of the 167 institution of suit as provided for in Section 20 clause (1) quoted above will not be applicable and it is thus clear that during the pendency of the litigation even of 10 years expired the restriction will not be attracted as the suit has been instituted within 10 years and therefore restriction as provided for in Section 20 can not be attracted. In the light of the discussions above therefore, in our opinion, the contention advanced by learned counsel for the appellant can not be accepted. The appellant tenant could not be given the advantage of the provisions contained ' in this Act. In this view of the matter therefore the appeal is without any substance and is dismissed. It is true that we maintained the decree for eviction passed by the High Court but in view of the fact that as the appellant has been carrying out the business in the premises for a long time for it would be proper to permit the appellant time to make their arrangements for shifting. We therefore direct that the decree for eviction shall not be executed upto 3 1st March, 1988 on the appellant filing a usual undertaking within four weeks. In default the respondent shall be entitled to execute the decree forthwith. In the circumstances of the case parties are directed to bear their own costs. S.L. Appeal dismissed.

The appellants are the tenants of the disputed property. Respondent plaintiff 's suit for eviction of the appellants was dismissed by the trial court. The High Court in revision set aside the judgment and order of the trial court and decreed the suit for ejectment of the tenants appellants. The tenants appealed to this Court. Dismissing the appeal, the Court, HELD: Under the provisions of sub section (2) of Section 2 of the U.P. Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972, newly constructed buildings stand exempted from the operation of the Act for a period of ten years, which has to be computed from a date to be determined in the manner indicated in Explanation I to section 2(2), which in this case is the date on which first assessment of the premises in dispute was made for house tax by the Nagar Palika, i.e. October 1, 1976. Provisions of Sections 39 and 40 are of no avail to the appellants as the suit for their eviction was not pending on July 15, 1972, when the Act came into force; the suit being filed much later after coming into force of the Act. Provisions of the Act are not applicable to the appellants ' case and the protection thereunder granted to the tenants is not available to them. [166G H; 164C, F] In view of the fact that the appellants had been carrying on business in the premises in question for a long time, the decree for eviction directed not to be executed till March 31, 1988, subject to the appellants ' filing usual undertaking (within four weeks). [167C D] Om Prakash Gupta, etc. vs Dig Vijendrapal Gupta, etc., [19821 3 S.C.R. 491 and Vineet Kumar vs Mangal Sain Wadhera, [1985] A.l. R. S.C. 817, relied upon by the appellants. 159 Firm Amar Nath Basheshar Das vs Tek Chand, [19721 3 S.C.R. 922, relied upon by the respondent.

Civil Appeal No. 8440 of 1983. From the Judgment and Order dated 22.4.83 of the High Court of Bombay in Writ Petition No. 2388/82. M.K. Ramamurthy and A.K. Sanghi for the Appellant. Dr. Y.S. Chitale, P.H. Parekh, R.K. Dhillon, Ms. Sunita Sharma and Dr. D. Chandrachud for the Respondents. The Judgment of the Court was delivered by VENKATARAMIAH, J. The question which arises for consideration in this case is whether the law reports namely, All India Reporter, Criminal Law Journal, Labour and Industrial Cases, Taxation Law Reports, Allahabad Law Journal and U.P. Law Tribune published by the 1st respondent, All India Reporter Limited, are newspapers as defined in the Working Journalists and Other Newspaper Employees (Conditions of Service) and Miscellaneous Provisions Act, 1955 (Act No. 45 of 1955) (hereinafter referred to as 'the Act ') and whether the employees of the 1st respondent engaged in the production or publication of the said law reports are entitled to the benefits conferred upon the employees of newspaper establishments by the Act. The Act was enacted on 20th December, 1955 with the object of regulating certain conditions of service of working journalists and other employees employed in the newspaper establishments. The expression "newspaper" is defined by section 2(b) of the Act as follows: " "Newspaper" means any printed periodical work containing public news or comments on public news and includes such other class of printed periodical work as may, from time to time, be notified in this behalf by the Central Government in the Official Gazette." 779 A "newspaper employee" is defined by section 2(c) of the Act as any working journalist, and includes any other person employed to do any work in, or in relation to, any newspaper establishment. "Newspaper establishment" is defined by section 2(d) of the Act as an establishment under the control of any person or body of persons, whether incorporated or not, for the production or publication of one or more newspapers or for conducting any news agency or syndicate. The expression "working journalist" is defined by section 2(f) of the Act as a person whose principal avocation is that of a journalist and who is employed as such, either whole time or part time, in or in relation to, one or more newspaper establishments and includes an editor, a leader writer, news editor, sub editor, feature writer, copy tester, reporter, correspondent, cartoonist, news photographer and proof reader, but does not include any such person who is employed mainly in a managerial or administrative capacity, or being employed in a supervisory capacity, performs, either by the nature of the duties attached to his office or by reason of the powers vested in him, functions mainly of a managerial nature. A "non journalist newspaper employee" means any person employed to do any work in, or in relation to, any newspaper establishment, but does not include any such person who is a working journalist, or is employed mainly in a managerial or administrative capacity or being employed in a supervisory capacity, performs, either by the nature of the duties attached to his office or by reason of the powers vested in him, functions mainly of a managerial nature as stated in section 2(dd) of the Act. Chapter II of the Act deals with certain conditions of service of the working journalists. Those provisions relate to the retrenchment, payment of gratuity, hours of work, leave, fixation or revision of wages etc. Chapter IIA of the Act deals with similar conditions of service of non journalist newspaper employees. Section 9 of the Act authorises the Central Government to appoint a Wage Board consisting of two persons representing employers in relation to newspaper establishments; two persons representing working journalists; and three independent persons, one of whom shall be a person who is, or has been, a Judge of a High Court or of the Supreme Court and who shall be appointed by that Government as the Chairman thereof for the purpose of making recommendations with regard to fixation or revision of wages of working journalists. Similarly, section 13C of the Act provides for the constitution of a Wage Board for the purpose of making recommendations regarding the fixation or revision of the rates of wages in respect of non journalist news 780 paper employees. Section 13AA which was inserted by Act 6 of 1979 provides for the constitution of a Tribunal for fixing or revising rates of wages in respect of working journalists where the Central Government is of opinion that the Board constituted under section 9 for the purpose of fixing or revising rates of wages in respect of working journalists under the Act has not been able to function effectively. That Tribunal has to consist of a Judge of the High Court or of the Supreme Court. Similarly section 13DD of the Act empowers the Central Government to constitute a Tribunal where it is of opinion that the Board constituted under section 13C of the Act has not been able to function effectively. Section 13AA and section 13DD of the Act came into force with effect from January 31, 1979. In exercise of the powers conferred by section 13AA and section 13DD of the Act the Central Government constituted under two separate notifications two Tribunals on 9.2.1979 with Justice Palekar, a former Judge of the Supreme Court, as the member of each of the two Tribunals to make recommendations in respect of fixing or revising wages of working journalists as well as non working journalists. Justice Palekar made his recommendations on 12.8.1980. In exercise of its powers under section 12 of the Act the Central Government accepted a part of the recommendations and made an order thereon on 26.12.1980 and accepted the remaining part of the recommendations and made another order thereon on 20.7.1981. The 1st respondent, All India Reporter Limited, was not served with any individual notice by the Tribunal before it passed its award. The 1st respondent also did not send a reply to the questionnaire issued by the Tribunal nor it gave any evidence before the Tribunal in respect of the matters referred to therein. However on 15.7.1981 and 3.8.1981 the Deputy Labour Commissioner, Nagpur wrote to the 1st respondent asking it to file its written statements in the matter of non implementation of the Palekar Award as the orders of the Central Government made under section 12 of the Act were popularly called. The first respondent submitted its reply in October, 1981 inter alia contending that it was not running a newspaper establishment and publications published by the company were not the newspapers and as such the Palekar Award was not applicable to it. Again on 18th November, 1982 the Deputy Labour Commissioner, Nagpur wrote a letter to the Manager of the 1st respondent informing him that the 1st respondent was liable to implement the order of the Central Government made on the recommendations of the Palekar Tribunal in respect of its employees since the Ist respondent was a newspaper establishment. Immediately after the service of the said notice the Ist respon 781 dent filed a writ petition on the file of the High Court of Judicature at Bombay, Nagpur Bench in Writ Petition No. 2388 of 1982 questioning the validity of the notice served on it by the Deputy Labour Commissioner, Nagpur calling upon it to implement the orders of the Central Government on the basis of the award of the Palekar Tribunal. Initially the State of Maharashtra, the Commissioner of Labour and the Deputy Labour Commissioner, Nagpur had been impleaded as respondents. Thereafter during the pendency of the Writ Petition the Indian Federation of Working Journalists and the All India Reporter Karamachari Sangh were impleaded as respondents in the writ petition. It was urged before the High Court on behalf of the Ist respondent, All India Reporter Limited, that the law reports publised by it were not newspapers as defined in the Act and therefore the order made by the Central Government on the basis of the recommendations of Justice Palekar were not applicable to its establishment. The High Court accepted the plea of the Ist respondent and declared that the law reports were not newspapers within the meaning of section 2(b) of the Act and that the demand made by the Deputy Labour Commissioner to comply with the order made by the Central Government on the basis of the recommendations of Justice Palekar was unsustainable by its judgment dated 22nd April, 1983. Aggrieved by the decision of the High Court the appellants have filed this appeal by special leave. The Ist respondent, All India Reporter Limited, publishes in addition to the law reports referred in the first paragraph of this judgment several other books commentaries, digests and manuals. But we are concerned in this case with the narrow question whether the six law reports which are being published by the Ist respondent are newspapers within the meaning of the Act and whether the employees engaged in their production or distribution are entitled to the benefit of the orders made by the Central Government on the basis of the recommendations of the Palekar Tribunal. The definition of the expression "newspaper" has already been set out above. In order to be a newspaper a work must be a (i) printed work; (ii) a periodical; and (iii) should contain public news or comments on public news. Any other class of printed periodical work as may, from time to time, be notified in this behalf by the Central Government in the Official Gazette may also be a newspaper. There is no dispute in the present case that the law reports are printed works and that they are periodicals. The only question which remains to be 782 considered is whether they contain public news or comments on public news. Entry 39 of List III of the Seventh Schedule to the Constitution reads thus: "Newspapers, books and printing presses. " Newspapers and books are no doubt shown as separate items but the distinction between them sometimes becomes very thin or totally vanishes. In this connection it is necessary to reproduce a passage from the Report of the Royal Commission on the Press (1947 49) appointed by the British Government and presided over by Sir William David Ross. It reads thus: "The newspaper and periodical Press of Great Britain consists of over 4,000 publications ranging from newspapers famous throughout the world to the journals of obscure societies. Its limits are ill defined, for there is no definition of either `newspaper ' or `periodical ' which enables each to be infallibly distinguished from the other and from publications which are properly speaking neither. The term `newspaper ' is usually applied (except so far as concerns the important class of trade newspapers) to publications devoted mainly to recording current events, and `periodicals ' to magazines, reviews, and journals which, in so far as they are concerned with current events at all, are concerned to comment rather than to report; but newspapers merge into advertising sheets, periodicals into books and pamphlets, and both into one another; . ." The expression "news" is not defined in the Act. Several definitions of the expression "news" collected from the different dictionaries and digests have been cited before us. It is enough if we refer to the meaning of the word "news" given in the Shorter Oxford English Dictionary for purposes of this case. It says that "news" means tidings, new information of recent events; new occurrences as a subject of report or talk. The law reports which are being published by the Ist respondent are reports of recent decisions of the Supreme Court of India and of the High Courts in India which are supplied to it by its agents appointed at New Delhi and other places where High Courts are situated. It cannot be disputed that these decisions are of public importance. Article 141 of the Constitution provides that the law declared by Supreme Court shall be binding on all courts within the territory of India. Even apart from Article 141 of the Constitution the decisions of the Supreme Court, which is a court of record, constitute a 783 source of law as they are the judicial precedents of the highest court of the land. They are binding on all the courts throughout India. Similarly the decisions of every High Court being judicial precedents are binding on all courts situated in the territory over which the High Court exercises jurisdiction. Those decisions also carry persuasive value before courts which are not situated within its territory. The decisions of the Supreme Court and of the High Courts are almost as important as statutes, rules and regulations passed by the competent legislatures and other bodies since they affect the public generally. It is well known that the decisions of the superior courts while they settle the disputes between the parties to the proceedings in which they are given they are the sources of law in so far as all others are concerned. As soon as a decision is rendered the members of the public would be interested in knowing it. At any rate lawyers and others connected with courts and judicial proceedings who constitute a substantial section of the public are interested in knowing the contents and the effect of the decisions. The Ist respondent, All India Reporter Limited, and other publishers of law reports in the interests of their own business vie with each other to publish the judgments of the Supreme Court or of the High Courts as early as possible in their law reports which are published periodically either weekly, fortnightly or monthly. They believe that faster the decisions are published in their reports, larger will be the number of subscribers. Infact we have a law report which is published from Delhi which publishes the judgments rendered by the Supreme Court within a day or two. The contents of these law reports constitute news insofar as the subscribers and the readers of these reports are concerned. It is by reading these law reports they come to know of the latest legal position prevailing in the country on any question decided in the decisions reported in the said reports. Hence it is difficult to agree with the submission made on behalf of the Ist respondent that the law reports do not carry any news and that the public is not interested in them. We are of the view that any decision published in the law reports of the Ist respondent contain information about the recent events which have taken place in the Supreme Court or in the High Courts which are public bodies and these are matters in which the public is interested. We find it also difficult to agree with the submission made on behalf of the Ist respondent that since the law reports are going to be preserved by the lawyers as reference books after getting them rebound subsequently they should be treated as books. It may be that the decisions contained in these law reports may cease to be items of news after some time but when they are received by the subscribers they do possess the character of works containing news. 784 Strong reliance was placed on behalf of the Ist respondent on the decision of the High Court of Orissa in P.S.V. Iyer vs Commissioner of Sales Tax, Orissa, AIR 1960 Orissa 221 in which the question that arose for consideration was whether a law journal Cuttack Law Times, which was a non official monthly journal containing the decisions of the Orissa High Court, the Orissa Board of Revenue and also of the Supreme Court was a newspaper and if it was a newspaper whether it was competent for the Legislature of the State of Orissa to levy sales tax on the sale of the said journal. The said question arose in that form in view of the language of Entry 54 of List II of the Seventh Schedule to the Constitution which read as follows: "54. Taxes on the sale or purchase of goods other than newspapers, subject to Entry 92 A of List I." The language of Entry 92 of List I of the Seventh Schedule to the Constitution which conferred on Parliament alone the power to tax sale or purchase of newspapers was in the following terms: "92. Tax on the sale or purchase of newspapers and on advertisements published therein. " After referring to the definition of the expression `newspaper ' in the Press and Registration of Books Act, 1867, the Indian Post Offices Act, 1898, the Parliamentary Proceedings (Protection of Publication) Act, 1956, the Delivery of Books and Newspapers Act, 1956 the , etc. the High Court of Orissa held that the Cuttack Law Times was not a newspaper because according to it the necessary pre requisite of a periodical in order to make it a newspaper was that it should contain mainly publicnews or comments on public news and that books containing authoritative reports for future reference could, by no means, be said to contain news so as to become newspaper. Accordingly, the High Court of Orissa held that the sale of Cuttack Law Times, which according to it was not a newspaper, could be taxed by the State Legislature under Entry 54 of List II of the Seventh Schedule to the Constitution of India. We find it difficult to agree with the above decision since the High Court of Orissa omitted to take into consideration that information about recent decisions of courts of record could be news in which the public was interested. The fact that a law report could be used as a reference book at later stage was not sufficient to hold that the law report did not contain public news when it was received by the subscriber. 785 The High Court of Madras declined to follow the above decision of the Orissa High Court in its decision in T.V. Ramnath and Another vs Union of India and Others, [1975] Labour and Industrial Cases 488 in which the Madras Law Journal, a law report published from Madras, was held to be a newspaper and the establishment in which the said law report was being published was a newspaper establishment which attracted the provisions of that Act. We agree with the following observations made in the said decision by Ismail, J. (as he then was): "Similarly, the publications of the petitioner in the second writ petition can be said to contain `public news ' or `comments on public news ' since it contains reports of the judgments of the Courts as well as comments on such judgments. Even though, the same may be primarily intended for that section of the public which is concerned with law and the administration of law, in the present days, nothing prevents any educated individual taking interest in such publications and the news themselves being of interest to such persons. Therefore I am clearly of the opinion that the expression `public news ' is of sufficiently wide amplitude to cover the publications of both the petitioners in question. " It is seen that the editor of the law report containing the above decision has appended an editorial comment on this stating that this decision is wrong and that the Orissa High Court 's decision was right. Justice A.N. Grover, who later became a Judge of the Supreme Court of India and the Chairman of the Press Council, as a Judge of the Punjab & Haryana High Court held in L.D. Jain vs General Manager, Government of India Press and Others, I.L.R. 1967 Punjab and Haryana 193 that the Gazette of India which was the official publication of all kinds of news and information was a newspaper within the meaning of section 2(b) of the Working Journalists (Conditions of Service) and Miscellaneous Provisions Act, 1955 and that it was not essential for a newspaper to conform strictly to the usual pattern of a daily or weekly or monthly newspaper or a magazine containing news which members of the public ordinarily read in order to get reports of recent events, comments on them etc. In doing so, he distinguished the decision of the Australian Court in Ex Parte Stillwell, in which the Bradshaw 's Guide was held to be a book of reference which lacked every element of what could be called a newspaper on which the Orissa High Court had relied. The Ist respondent cannot derive any assistance from the deci 786 sion of the High Court of Bombay in Commissoner of Sales Tax vs M/s. Express Printing Press, AIR 1983 Bombay 191 in which the Bombay High Court held that the two publications by name `Jocker ' and `Jabara ' which contained predictions or forecasts of lucky numbers were not newspapers since those publications had nothing to do with any recent event which had taken place. In the Annual Report of the Registrar of Newspapers for India, 1957 there is an interesting discussion of certain specific cases in which the question whether the publications involved were newspapers or not. In the course of the said report it is obversed thus: "In this connection the Press Registrar scrutinised reports published in certain foreign countries regarding their own Press and it was noticed that in the catalogues prepared by them specialised newspapers such as the one under consideration were not excluded from the list of newspapers. Even technical journals such as medical periodicals, journals related to sciences, arts etc., were included. A catalogue of Yugoslav newspapers and magazines, for instance, includes publications relating to the following subjects: Political information; economics; law and states administration; education; philology; natural sciences; medicine; agriculture; technology; geography; ethnography history; archives; archaeology; literature; music; applied art; film; chess; photography; tourism; stamp collecting; physical culture and sport; humour and religion. In a catalogue of Russian papers for 1958 all the above categories of newspapers and periodicals have been included in addition to many others which deal exclusively with party affairs. " It is significant that the expression `newspaper ' as defined in the Act includes not merely `public news ' but also `comments on public news '. Every law report contains the editorial note at the commencement of the decisions printed therein and also comments on some of the recent decisions. Law reports also contain, newly enacts Acts, Rules and Regulations, book reviews and advertisements relating to law books handwriting and finger print experts etc. , speeches made at conferences in which the legal fraternity is interested etc. Though the 787 publication of these items by itself may not occupy a substantial part of a law report to make it a newspaper, the publication of the recent judgments itself is sufficient to make a law report a newspaper which may after some time cease to be a newspaper and become a book of reference. The Act in question is a beneficent legislation which is enacted for the purpose of improving the conditions of service of the employees of the newspaper establishments and hence even if it is possible to have two opinions on the construction of the provisions of the Act the one which advances the object of the Act and is in favour of the employees for whose benefit the Act is passed has to be accepted. We are of the view that the law reports published by the Ist respondent are newspapers and the employees employed by the Ist respondent in their production or publication of the said law reports should be extended the benefit of the orders passed by the Central Government on the basis of the recommendations made by the Palekar Award. We, accordingly, allow the appeal, set aside the judgment of the High Court and dismiss the writ petition filed by the Ist respondent before the High Court. There will, however, be no order as to costs. S.L. Appeal allowed.

HELD: The Court was concerned with the narrow question whether the six law reports aforementioned being published by the 1st respondent were newspapers within the meaning of the Act and whether the employees engaged in their production or distribution were entitled to the benefit of the orders made by the Central Government on the basis of the Palekar Award. [781F] In order to be a newspaper, a work must be (i) a printed work, (ii) a periodical, and (iii) should contain public news or comments on public news. Any other class of printed periodical work as may, from time to time, be notified in this behalf by the Central Government in the official Gazette, may also be a newspaper. There was no dispute in this case that the law reports are printed works and that they are periodicals. The only question which remained to be considered was whether they contained public news or comments on public news, Newspapers and 776 books are no doubt shown as separate items in Entry 39 of List III of the Seventh Schedule to the Constitution, but the distinction between them sometimes becomes very thin or totally vanishes. [781G H;782A B] The law reports being published by the 1st respondent are reports of recent decisions of the Supreme Court of India and the High Courts in India, which are supplied to it by its agents appointed at New Delhi and other places where the High Courts are situated. These decisions are of public importance. The law declared by the Supreme Court is binding on all the Courts in India, as provided by Article 141 of the Constitution. The decisions of the Supreme Court a court of record constitute a source of law as they are judicial precedents of the highest court of the land. They are binding on all the courts throughout India. The decisions of every High Court being judicial precedents are binding on all the Courts situated in the territory under the jurisdiction of the High Court. The decisions of the Supreme Court and High Courts are almost as important as statutes, rules and regulations passed by the competent legislatures and other bodies. The decisions of the superior courts, while they settle the disputes between the parties to the proceedings, are sources of law in so far as all others are concerned. As soon as a decision is rendered, the members of the public would be interested in knowing it; lawyers and others connected with the courts and judicial proceedings are interested in knowing the contents and effects of the decisions. The 1st respondent and other publishers of law reports, in the interests of their own business, vie with each other to publish the judgments of the Supreme Court or the High Courts as early as possible in their law reports, published periodically weekly, fortnightly or monthly. They believe the faster the decisions are published in their reports, the larger will be the number of subscribers. The contents of these law reports constitute news in so far as the subscribers and readers of these reports are concerned. By reading these law reports, they come to know of the latest legal position prevailing in the country on any question decided in the decisions reported in the said reports. Hence, it was difficult to agree with the submission of the 1st respondent that the law reports did not carry any news and that the public was not interested in them. Any decision published in the law reports of the 1st respondent contains information about the recent events which have taken place in the Supreme Court or the High Courts which are public bodies and these are matters in which public is interested. The Court found it also difficult to agree with the submission of the 1st respondent that since the law reports are going to be preserved by the lawyers as reference books after getting them rebound subsequently, they should be treated as books. The decisions contained in these law reports may 777 cease to be items of news after some time, but when they are received by the subscribers, they do possess the character of works containing news. [782G H; 783A H] Strong reliance was placed by the 1st respondent on the decision of the High Court of Orissa in P.S.V. Iyer vs Commissioner of Sales Tax, Orissa, AIR 1960 Orissa 221, but the Court found it difficult to agree with that decision since the High Court had omitted to take into consideration that information about recent decisions of the Courts of record could be news in which the public was interested. The fact that a law book could be used as a reference book at a later stage was not sufficient to hold that the law report did not contain public news when it was received by the subscriber. [784A, G H] It is sufficient that the expression 'newspaper ' as defined in the Act includes not merely 'public news ' but also 'comments on public news '. Every law report contains the editorial note and also comments on some of the recent decisions. The law Reports also contain newly enacted Acts, Rules and Regulations, book reviews and advertisements relating to law books, handwriting and finger print experts, etc., speeches made at conferences in which the legal fraternity is interested, etc. Though the publication of these items by itself may not occupy a substantial part of a law report to make it a newspaper, the publication of the recent judgments itself is sufficient to make a law report a newspaper which may after some time cease to be a newspaper and become a book of reference. [786G H; 787A B] The Act is a beneficient legislation which is enacted for improving the conditions of service of the employees of the newspaper establishments, and even if it is possible to have two opinions on the construction of the provisions of the Act, the one which advances the object of the Act and is in favour of the employees for whose benefit the Act is passed has to be accepted. [787B C] The Law Reports published by the 1st respondent are newspapers and the employees employed by the 1st respondent in their production or publication should be extended the benefit of the orders passed by the Central Government on the basis of the recommendations made by the Palekar Award.[787C D] The judgment of the High Court was set aside and the writ petition filed by the 1st respondent before the High Court was dismissed. [787D] 778 P.S.V. Iyer vs Commissioner of Sales Tax, Orissa, AIR 1960 Orissa 221; T.V. Ramanath & Anr. vs Union of India & Ors. , [1975] Labour and Industrial Cases 488; L.D. Jain vs General Manager, Government of India Press and Others, ILR 1967 Punjab and Haryana 193; Ex Parte Stillwell, and Commissioner of Sales Tax vs M/s. Express Printing Press, AIR 1983 Bombay 191, referred to.

Civil Appeal No. 56 of 1987. From the Judgment and Order dated 6.11.85 of the Allahabad .RM60 PG NO 290 PG NO 291 High Court in W.P. (C) No. 4211 of 1983. Gopal Subramanium and Mrs. section Dikshit for the Appellants. Vijay Hansaria and Sunil K. Jain for the Respondents. The Judgment of the Court was delivered by JAGANNATHA SHETTY, J. This appeal by special leave is from a judgment of the High Court of Allahabad dated November 6, 1985 passed in Civil Misc. Writ Petition No. 4211 of 1983. The appeal raises a question of considerable importance. The question is whether it is permissible to have two pay scales in the same cadre for persons having same duties and having same responsibilities. The High Court has answered the question in the negative. It is said that it would be violative of the Constitutional right of "equal pay for equal work". The facts are not in dispute. They will be found correctly stated in the judgment under appeal and may briefly be stated thus: Prior to 1965, in the High Court of Allahabad, Bench Secretaries were on a higher pay scale than that of Section Officers. They were in the pay scale of Rs. 160 320 as against the pay scale of Rs. 120 300 to Section Officers. In 1965 the State Government appointed a Pay Rationalisation Committee with wide ranging reference. The Committee was asked to consider the duties and responsibilities of different categories of posts. It was required to consider and recommend changes to reduce the number of then existing pay scales. It was also asked to recommend as far as possible equal emoluments for identical duties and responsibilities. The Committee submitted a detailed report, in which Bench Secretaries became casualties. The Committee recommended for them a pay scale slightly lower than that of Section Officers. Rs. 150 350 was recommended for Bench Secretaries as against Rs.200 400 for Section Officers. The State Government accepted the recommendations. Subsequently, these pay scales were raised to Rs. 200 450 and Rs.5 15 715 respectively. Being dissatisfied with the down grading, the Bench Secretaries made representation to the Government. They demanded that they should at least be put at par with Section Officers if not on higher scale. The High Court supported their case but half heartedly. The High Court suggested "that in view of financial exigencies the Government may grant for the time being pay scale to 10 PG NO 292 Bench Secretaries as admissible to Section Officers. " When this matter was pending consideration, the Government appointed the Pay Commission (1971 72) headed by Shri Ali Zahir. On February 1, 1973, the Pay Commission submitted its report. The report did not accept the claim of Bench Secretaries for giving them pay scale equal to Section Officers or Private Secretaries. The report was in fact very much against them. The following remarks of the Pay Commission would be pertinent: "9 Bench Secretaries (Sakna Suchiv) A memorandum from the Bench Secretaries given to us states that the post which are at present in the scale of Rs. 100 450 are of a great responsibility for which experience and special qualifications are required. They have claimed that their duties are equivalent to Private Secretaries of Hon 'ble Judges and have demanded the same pay scale which is given to Private Secretaries and the Section Officers. The Registrar of the High Court while forwarding the memorandum has suggested that they should also be given the same pay scale which is given to Superintendents i.e. Rs.515 40 715 or to the Section Officers i.e. Rs.350 750. It is not necessary to emphasise that in comparison to Bench Secretaries, the Section Officers of the secretariat has to bear more responsibilities in their Section and have to control over its subordinates. Section Officers have to prepare a lengthy and original notes in complicated and important matters. Therefore, the responsibilities of the two posts cannot be said to be equal. Keeping in view the present scale of pay. the pay scale recommended by the Pay Rationalisation Committee, the nature of duties and responsibilities and the fact that every Hon 'ble Judge will have one Private Secretary in the scale of Rs.500 1,000 we feel that the Bench Secretaries cannot be given the same scale of pay which is being given to Superintendents or the Section Officers. Since the Bench Secretaries are promoted from Upper Division Assistants, they should feel satisfied if they are placed in a scale of pay a little above the Upper Division Assistants. Therefore, we have recommended for them a pay scale of Rs.400 15 475 20 575 25 750. " It will be seen that the Pay Commission refused to equate Bench Secretaries with Section Officers in view of their differential duties. It was found that the nature PG NO 293 of work of Section Officers was quite different and more onerous than that of Bench Secretaries. Section Officers have to bear more responsibilities in their Sections. They have to exercise control over their subordinate. They have to prepare lengthy original notes in complicated matters. The Commission, therefore, recommended Rs.400 750 for Bench Secretaries and Rs.500 1,000 to Section Officers. The Bench Secretaries again moved the Government reiterating their demand. The Government appears to have received several such representations against the report of Ali Zahir Commission. To consider all such grievances. a Committee called the "Anomalies Committee was constituted. As the name itself suggests, the Committee was required to examine and remove anomalies in the recommendations of Pay Commission. The Committee appears to have made some patch work. So far as Bench Secretaries are concerned, the Committee suggested: "(1) For this post the recommendations made by the Pay Commission need not have any amendments. (2) It should be appropriate for the Bench Secre taries to accept 10 promotional posts in the pay scale of Rs.500 1,000 as recommended by the Pay Commission. " The Anomalies Committee also thus rejected the claim of Bench Secretaries for placing them at par with Section Officers. It however, suggested that ten posts of Bench Secretaries should be upgraded and placed in the pay scale of Rs.500 1,000 The Government accepted that recommendation and issued an order dated July 2,1976 The order inter alia states: Judicial (High Court) Section, Lucknow dated 2nd July, 1976. Sub: Implementation of decision and proposals of Sub Committee of the Cabinet constituted to consider the anomalies pointed out in the pay scales recommended by the U.P. Pay Commission ( 1971 73) and its way of removal and other connected matters PG NO 294 Sir, In continuation of office memorandum No. P.C. 395 x 89(M)/74 dated 18th March, 1976 of the Finance (Pay Commission) Section on the above subject, I have been directed to say that the Governor has been pleased to sanc tion the pay scales mentioned in Column 3 to 10 post holders under you mentioned in column 2 in the table given below w.e.f. 1st October, 1975 with this condition that as a result of sanction of this scale, the number of total posts in the concerned cadre will not increase: Sl. Name Pay No. of No. of No. of Pay No. Of Scale Permanent Temporary Posts Scale Post Post Posts in higher scale 1. 2. 3. Bench Rs.400 15 48 3 10 Rs.500 25 Secre 475 EB 20 700 EB 40 tary 575 EB 25 900 EB 50 750 1000 2. The basic pay in the pay scale mentioned in aforesaid column 7 of the concerned employee will be fixed according to the guiding principles of para 4 under fundamental rule 22 of the Financial Handbook Part II Volume 2 4 and the appointments in the pay scale of Rs.500 1000 will be made according to seniority subject to unfit. In this connection, I have also been directed to say that the nomenclature of posts of 10 Bench Secretaries appearing in column 5 of the said table shall be Bench Secretaries Grade I and the nomenclature of rest Bench Secretaries of equal pay scale will be Bench Secretaries Grade II and the posts of Bench Secretaries Grade I and Grade II will be of the same duties and responsibilities. Sd/ (Ramesh Chandra Deo Sharma) PG NO 295 Joint Secretary" It was then the turn of Bench Secretaries Grade II, They complained that there was no valid reason to give higher pay scale only to ten Bench Secretaries and step motherly treatment to the rest of their colleagues. The High Court as usual supported their claim, but the Government did not. In order to give effect to the said Government order the Chief Justice framed rules called the Allahabad High Court Officers and Staff (Conditions of Service and Conduct) Rules, 1976 ("The Rules ). The Rules were framed in exercise of the powers conferred by Article 229(2) of the Constitution and brought into force from July 13,1976. Thereunder Bench Secretaries Grade I and Grade II were classified as Class II and Class III posts respectively. Rule 8(E) provides procedure for appointment of Bench Secretaries Grade II. It is by selection through competitive examination to be conducted by appointing authority. Permanent Upper Division Assistants and permanent Lower Division Assistants having not less than ten years service are made eligible for selection. Preference shall however, be given to candidates possession a Law Degree. Rule 16 provides that the posts of Bench Secretaries Grade I shall be filled up by promotion from amongst permanent Bench Secretaries Grade II. Rule 18 deals with method of selection for all promotional posts. It shall be made by selection committee appointed by the Chief Justice. The criterion of selection shall be merit with due regard to seniority. The entitlement to higher pay scale of Grade I Bench Secretary was therefore, not on the basis of seniority alone, but on the basis of selection by merit cum seniority. In 1979, the State Government appointed another Pay Commission. That Pay Commission also did not disturb the categorisation of Bench Secretaries into Grade I and Grade II.It however, gave marginal benefits by increasing the number of posts of Grade I from 10 per cent to 30 per cent of the total cadre strength. The reason given by the Pay Commission is as follows: "Bench Secretary 26.38 Fifty two posts of Bench Secretaries are in the pay scale of Rs.400 750 and ten posts in the scale of Rs.500 1,000. For appointment on these posts a limited competitive examination is held from amongst Upper Division Assistants, PG NO 296 Lower Division Assistants with ten years of service preferably Law Graduates. We have received a representation stating that the Bench Secretaries play a very important role in smooth running of the proceedings of the Court. The minimum pay scales of the Bench Secretaries is comparatively higher than the pay scale of Upper Division Assistants though they are appointed through a competitive examination. It is limited to only Upper Division Lower Division Assistants of the High Court. Keeping in view the fact that vacancies in Upper Division/Lower Division Assistants are filled up by promotion from Routine Grade Assistants, it is clear that this is a second promotion for those who come directly from Lower Division Assistants and a third promotion for those who are promoted first to Upper Division Assistant and then a Bench Secretary. Even then we give importance to the fact that only best from Upper Division/Lower Division Assistants are preferred for the post. The work of the Bench Secretary is of a great importance. We, therefore, recommend: "(1) 30% of the total posts of Bench Secretaries in the pay scale of Rs.770 1000;and (2) Two posts in the scale of Rs.1420 1900 as is admissible to Assistant Secretaries of the Secretariat." Finally the Bench Secretaries Grade I moved the High Court on judicial side with an application under Article 226 of the Constitution. They challenged the validity of bifurcation of one cadre into Grade I and Grade II. The sheet anchor of their case was that in the same category of posts with similar duties and responsibilities there cannot be two grades with different pay scales. It would be violative of principles of equal pay for equal work. It was also contended that Bench Secretaries was a well recognised class that existed over the years and indeed superior to Section Officers. Rejection of their demand for equating at least with Section Officers would be ignoring that historical fact. The High Court accepted all these contentions and granted the relief prayed for. As to the Pay Commission recommendations the High observed: "Rejection of petitioner 's demand for equating them PG NO 297 at least with Section Officers by comparing them with absence of administrative control exercised by Section Officer in the Secretariat was ignoring history of Bench Secretaries being a different class both before and after independence and the nature of duties performed by them . " As to the decision of the Anomalies Committee the High Court remarked: "Curiously enough when Anomaly Committee redressed the wrong by granting pay scale equivalent to Section Officers, it created an artificial division by drawing a line between first ten and others. A Bench Secretary or for that matter any officer who puts in longer years of service gets more salary than his juniors but if a senior performing the same duty as his juniors is put in different higher scale then it results in invidious classification in the same group. And that violates the concept of equality which visualises that whatever condition are guaranteed and secured by law to one shall be guaranteed to owners who are of the same group or class. It only denies enactment of a rule or law which attempts to deal differently with persons situated similarly. The Government order by which the classification was done itself provided that duty and responsibility of Bench Secretary of Grade II be the same as of Grade I shall be seniority. No other basic or qualification or test or be it was laid down. The effect of the order was that those who were senior entered into an altogether different Grade. That is senior Bench Secretary although doing the same work as his junior became entitled to higher grade. And that clearly violated the principle of equal pay for equal work. " In support of these conclusions the High Court relied upon two decisions of this Court: [i] Randhir Singh vs Union of India; , and [ii] P. Savita vs Union of India, [1985] Suppl. 1 SCR 101. With regard to rule framed by the Chief Justice for the purpose of promotion to Bench Secretary Grade I, thee High Court said: "Rules were made not because the Court agreed with the classification of Bench Secretaries in Group I and Group II PG NO 298 but because of the Government order dated July 2, 1976. The vice is not in the method of selection but in creation of two different groups without any intelligible differentia. If Bench Secretaries of Group I would have been required to do any work different than Bench Secretaries Grade II, it could be described as promotional avenue. Promotion from one post to another is associated with advancing to a higher office, climbing one more ladder in service career. But the different grade for persons of same even on seniority cum merit with same work and responsibility cannot amount to promotion. " With these conclusions, the High Court quashed a part of the notification dated July 4, 1976 which created Bench Secretaries Grade I. The High Court did not quash the Rules relating to promotion to that cadre. The High Court directed that all Bench Secretaries irrespective of their grades should be given the pay scale admissible to Bench Secretaries Grade I with effect from October 1, 1975. The State of U.P. being aggrieved by the decision has appealed to this Court. On the submissions made by counsel on both sides, two questions arise for our consideration: (i) Whether Bench Secretaries in the High Court of Allahabad are entitled to pay scale admissible to Section Officers?; and (ii) Whether the creation of two Grades with different pay scales in the cadre of Bench Secretaries who are doing the same or similar work is violative of the right to have "equal pay for equal work"? The first question regarding entitlement to the pay scale admissible to Section Officers should not detain us longer. The answer to the question depends upon several factors. It does not just depend upon either the nature of work or volume of work done by Bench Secre taries. Primarily it requires among others. evaluation of duties and responsibilities of the respective posts. More often functions of two posts may appear to be the same or similar, but there may be difference in degrees in the performance. The quantity of work may be the same, but quality may be different that cannot be determined by PG NO 299 relying upon averments in affidavits of interested parties. The equation of posts or equation of pay must be left to the Executive Government. It must be determined by expert bodies like Pay Commission. They would be the best judge to evaluate the nature of duties and responsibilities of posts. If there is any such determination by a Commission or Committee, the court should normally accept it. The court should not try to tinker with such equivalence unless it is shown that it was made with extraneous consideration. In the present case, it is true that at one time, Bench Secretaries were paid more emoluments than Section Officers. But it is not known on what basis they were paid in the higher pay scale and treated as a superior class to Section Officers. The Successive Pay Commissions and even Pay Rationalisation Committee, however, found no support to their superior claim. The Commissions and Committee have evaluated the respective duties and responsibilities of the two posts. It was found that the Section Officers perform onerous duties and bear greater responsibilities than Bench Secretaries. We cannot go against that opinion and indeed, we must accept that opinion. The Bench Secretaries, therefore, cannot claim as of right the pay scale admissible to Section Officers. The second question formulated earlier needs careful examination. The question is not particular to the present case. It is pertinent to all such cases. It is a matter affecting the civil services in general. The question is whether there could be two scales of pay in the same cadre of persons performing the same or similar work or duties. All Bench Secretaries in the High Court of Allahabad are undisputedly having same duties. But they have been bifurcated into two grades with different pay scale. The Bench Secretaries Grade 1 are in a higher pay scale than Bench Secretaries Grade II. The entitlement to higher pay scale depends upon selection based on merit cum seniority. Can it be said that it would be violative of the right to equality guaranteed under the Connstitution? It was argued for the respondents that it offends the constitutional principle of "equal pay for equal work". Several decisions of this Court were relied upon in support of the proposition. "Equal pay for equal work for both men and women" has been accepted as a "constitutional goal" capable of being achieved through constitutional remedies. In Randhir Singh vs Union of India & Others [I982] 3 SCR 298 Chinnappa Reddy, J. said (at 304): PG NO 300 "It is true that the principle of `equal pay for equal work ' is not expressly declared by our Constitution to be a fundamental right. But it certainly is a constitutional goal. Art.39(d) of the Constitution proclaims `equal pay for equal work for both men and women ' as a Directive Principle of State Policy. `Equal pay for equal work for both men and women ' means equal pay for equal work for every one and as beween the sexes. Directive Principles,as has been pointed out in some of the judgments of this Court have to be read into the fundamental rights as a matter of interpretation. article 14 of the Constitution enjoins the State not to deny any person equality before the law or the equal protection of the laws and article 16 declares that there shall be equality of opportunity for all citizens in matters relating to employment or appointments to any office under the State. These equality clauses of the Constitution must mean something to every one. To the vast majority of the people the equality clauses of the Constitution would mean nothing if they are unconcerned with the work they do and the pay they get. To them the equality clauses will have some substance if equal work means equal pay." The learned Judge however, observed that a differential treatment in appropriate cases can be justified when there are two grades based on reasonable grounds: "It is well known that there can be and there are different grades in a service, with varying qualification for entry into a particular grade, the higher grade often being a promotional avenue for officers of the lower grade. The higher qualifications for the higher grade, which may be either academic qualifications or experience based on length of service reasonably sustain the classification of the officers into two grades with different scales of pay. The principle of equal pay for equal work would be an abstract doctrine not attracting article 14 if sought to be applied to them. " In Randhir Singh, the petitioner was a driver constable in the Delhi Police Force under the Delhi Administration. It was found that the petitioner and the other drivers in the Delhi Police Force per formed the same functions and duties as other drivers in the service of the Delhi Administration and the Central Government. Indeed, by reason of their investiture with the 'powers, functions and privileges of PG NO 301 a police officer ', their duties and responsibilities were found to be more arduous. It was also admitted by the Delhi Administration in that case that the duties of driver constable of the Delhi Police Force were onerous. Therefore, learned Judge said that there was no reason for giving them lower scale of pay than other drivers. It was directed that the driver constables of Delhi Police Force should be given the scale of pay at least on par with that of drivers of the Railway Protection Force. The principle enunciated in Randhir Singh was followed in Ramachandra vs Union of India, ; and P. Savita vs Union of India, [ 1985] Supp. I SCR 10l. In the former, the arbitrary differential treatment in the pay scale accorded to some professors was struck down. The petitioners therein were holding the posts of Professors in the Indian Veterinary Research Institute under the Indian Council of Medical Research. The pay scale of professors underwent revision. The new recruits got the benefit of revision of scales, but not the petitioner. He was allowed to continue in the old scale. He challenged that discrimination in this Court as being violative of the right to have equal pay for equal work. This Court accepted the contention and observed (page 163): "The case in hand is a glaring example of discriminat tory treatment accorded to old, experienced and highly qualified hands with an evil eye and unequal hand and the guarantee of equality in all its pervasive character must enable this Court to remove discrimination and to restore fair play in action. No attempt was made to sustain the scales of pay for the post of Professor on the doctrine of classification because the classification of existing incum bents as being distinct and separate from newly recruited hand with flimsy change in essential qualification would be wholly irrational and arbitrary. The case of the petitioners for being put in the revised scale of Rs. 1100 1600 from the date on which newly created posts of Professors in sister disciplines in IVRI and other institutes were created and filled up in revised scale is unanswerable and must be cunceded " In P. Savita vs Union of lndia, the artificial division of senior draftsmen in the Ministry of Defence Production with unequal scales of pay for the same work was struck down. In Dhirendra Chamoli and Anr. vs State of U.P., , this Court found fault with the Central Government for not giving the casual workers engaged in Nehru Yuvak the same salary and conditions of service as enjoyed by class IV employees regularly appointed against sanctioned posts. It was observed (at 628): PG NO 302 "It must be remembered that in this country where there is so much unemployment,the choice for the majority of people is to starve or to take employment on whatever exploitative terms are offered by the employer. The fact that these employees accepted employment with full knowledge that they will be paid only daily wages and they will not get the same salary and conditions of service as other class IV employees, cannot provide an escape to the Central Government to avoid the mandate of equality enshrined in article 14 of the Constitution. This article declares that there shall be equality before law and equal protection of the law and implicit in it is the further principle that there must be equal pay for work of equal value. These employees who are in the service of the different Nehru Yuvak Kendras in the country and who are admittedly performing the same duties as Class IV employees, must therefore get the same salary and conditions of service as Class IV employees. It makes no difference whether they are appointed in sanctioned posts or not. So long as they are performing the same duties, they must receive the same salary and conditions of service as class IV employees. " In Surinder Singh vs Engineer in Chief, CPWD, , the case of poor daily wage workers employed for serveral years by the Central Public Works Department CPWD came up for consideration before this Court. They demanded parity in their wages, and allowances with those of regular and permanent employees of the Department on the basis of performing similar work. This Court while granting relief to the workmen observed (at 642) : "The Central Government, the State Government and likewise, all public sector undertakings are expected to function like model and enlightened employers and arguments such as those which were advanced before us that the principle of equal pay for equal work is an abstract doctrine which cannot be enforced in a court of law should ill come from the mouths of the State and State Undertakings. " PG NO 303 The right to have equal pay for equal work was also accepted by this Court in R. D. Gupta and Others vs Lt. Governor of Delhi, ; Bhagwan Dass and Others vs State of Haryana, [1987] 4 SCC 634; National Museum Non Gazetted Employees Association and Anr. vs UOI, WP No. 1230 of 1987 disposed of dt. 10.2.1988; Jaipal and Ors. vs State of Haryana, WP No. 455 and connected petitions of 1987 of DD 2.6.1988 and Y.K. Mehta vs UOI, WP No. 1239 of 1979 and connected petitions DD 26.8.1988. Article 39(d) of the Constitution proclaims "equal pay for equal work" . This article and other like provisions in the Directive Principles are "conscience of our Constitution. " They are rooted in social justice. They were intended to bring about a socio economic transformation in our society. As observed by Hegde and Mukherjee, JJ. in Keshavananda Bharati vs State of Kerala, [1973] 4 SCC 225 at para 712: "The Constitution seeks to fulfil the basic needs of the common man and to change the structure of society. " In the words of Shelat and Grover, JJ (at para 596): "The dominent objective in view was to ameliorate and improve the lot of the common man and to bring about a socio economic justice." In matters of employment the Government of a socialist State must protect the weaker sections. It must be ensured that there is no exploitation of poor and ignorant. It is the duty of the State to see that the under privileged or weaker sections get their dues. Even if they have voluntarily accepted the employment on unequal terms, the State should not deny their basic rights of equal treatment. It is against this background that the principle of "equal pay for equal work has to be construed in the first place. Second, this principle has no mechanical application in every case of similar work. It has to be read into article l4 of the Constitution. article l4 permits reasonable classification founded on different basis. It is now well established that the classification can be based on some qualities or characteristics of persons grouped together and not in others who are left out. Those qualities or charcteristics must, of course, have a reasonable relation to the object sought to be achieved. In service matters, merit or experience could be the proper basis for classification to promote efficiency in administration. He or she learns also by experience as much as by other means. It cannot be denied that the quality of work performed by persons of longer experience is superior than the work of newcomers. Even in Randhir Singh 's case, this principle has been recognised. O. Chinnappa Reddy, J. observed that the classification of officers into two grades with different scales of pay based either on academic qualification or experience on length of service is sustainable. Apart from that, higher pay scale to avoid stag PG NO 304 nation or resultant frustration for lack of promotional avenues is very common in career service. There is selection grade for District Judges. There is senior time scale in Indian Administrative Service. There is super time scale in other like services. The entitlement to these higher pay scales depends upon seniority cum merit or merit cum seniority. The differentiation so made in the same cadre will not amount to discrimination. The classification based on experience is a reasonable classification. It has a rational nexus with the object thereof. To hold otherwise, it would be detrimental to the interest of the service itself. In All lndia Customs and Central Excise Stenographers Recognised) and Others vs Union of India and Others, [1988] 2 Judgments Today SC p. 5 19, Sabyasachi Mukherjee, J. said: "There may be qualitative difference as regards relia bility and responsibility. Functions may be the same but the responsibilities make a difference. One cannot deny that often the difference is a matter of degree and that there is an element of value judgment by those who are charged with the administration in fixing the scales of pay and other conditions of service. So long as such value judgment emphasise that equal pay for equal work is a concomitant of Article 14 of the Constitution. But it follows naturally that equal pay for unequal work will be a negation of that right." And said: "The same amount of physical work may entail different quality of work, some more sensitive. some requiring more tact, some less it varies from nature and culture of employment. The problem about equal pay cannot always be translated into a mathematical formula. If it has a rational nexus with the object to be sought for, as reiterated before a certain amount of value judgment of the administrative authorities who are charged with fixing the pay scales has to be left with them and it cannot be interfered with by the Court unless it is demonstrated that either it is irrational or based on no basis or arrived mala fide either in law or in fact. " PG NO 305 In the present case, all Bench Secretaries may do the same work, but their quality of work may differ. Under the rules framed by the Chief Justice of the High Court, Bench Secretaries Grade I are selected by a Selection Committee. The selection is based on merit with due regard to seniority. They are selected among the lot of Bench Secretaries Grade II. When Bench Secretaries Grade II acquire experience and also display more merit, they are appointed as Bench Secretaries Grade I. The rules thus make a proper classification for the purpose of entitlement to higher pay scale. The High Court has completely overlooked the criterion provided under the Rules The merit governs the grant of higher pay scale and that merit will be evaluated by a competent authority. The classification made under the Rules, therefore, cannot be said to be violative of the right to have equal pay for equal work. After the argument was concluded in this appeal, counsel on both sides brought to our attention that the State Government has granted uniform pay scale of Rs.1600 2950 to both the grades of Bench Secretaries with effect from January 1, 1986. We may make it clear that this decision of ours shall not affect the Bench Secretaries to get that pay scale accordingly with effect from January 1, 1986. In the result, we allow the appeal and set aside the judgment of the High Court. S.L. Appeal allowed.

Prior to 1955, the Bench Secretaries in the Allahabad High Court were on a higher pay scale than that of the Section Officers. In 1965, the State Government appointed a Pay Rationalisation Committee to consider the duties and responsibilities of different categories of posts and recommend changes. The Committee recommended for the Bench Secretaries a pay scale lower than that of the Section Officers. The Bench Secretaries made a representation to the Government that they be put at par with the Section Officers if not on a higher scale. The Government appointed Pay Commission (l971 72). The Pay Commission did not accept the claim of the Bench Secretaries. The Bench Secretaries again moved the Government reiterating their demand, whereupon an "Anomalies Committee" was constituted. The Committee rejected the claim of the Bench Secretaries for placing them at par with the Section Officers, but suggested that ten posts of Bench Secretaries be upgraded. The Government accepted the recommendation and issued orders upgrading ten posts of Bench Secretaries to be called Bench Secretaries grade I, giving the nomenclature of Bench Secretaries grade Il to the rest of Secretaries. The Bench Secretaries grade II moved the High Court under Article 226 of the Constitution, challenging the bifurcation of their cadre into grade I & grade 11. The High Court quashed the notification which created Bench Secretaries grade 1. The State of l, '.P., aggrieved by the decision of the High Court, appealed to this Court. PG NO 288 PG NO 289 Two questions arose for consideration (i) whether the Bench Secretaries were entitled to pay scales admissible to Section officers, and (11) whether the creation of two grades with different pay scales in the cadre of Bench Secretaries doing the same or similar work was violative of the "equal pay for equal work". Allowing the appeal, the Court, HELD:(I) It requires of duties and responsibilities of the respective posts. Functions of two posts may appear to be the same or similar, but there may be a difference in the performance. Quantity of work may be the same but quality may be different. The equation of posts of equation of pay must be determined by expert bodies, like pay commissions. If there is any determination by a Commission or Committee, the Court should normally accept it and not tinker with it unless it is shown to be made with extraneous consideration. [298G H;299A B] The Bench Secretaries were paid more emoluments than the section Officers, but it was not known on what basis and how they were treated superior to Section Officers. The Successive Pay Commission and the Pay Rationalisation Committee found no support to their superior claim. The Court could not go against that opinion. The Bench Secretaries could as of right the pay scale admissible to the Section Officers. [299C D] (2) The second question formulated affected the civil services in general. All the Bench Secretaries concerned were indisputably having the same duties. They had been bifurcated into two grades with different pay scales grade I with higher pay scale and grade II which was said to offend the constitutional principle of "equal pay for equal work". [299E G] Article 39(d) of the Constitution, which proclaims "equal pay for equal work" and other like provisions in the Directive Principles, are rooted in Social Justice, intended to bring about a socio economic trans formation in society. In matters of employment, it must be ensured that there is no exploitation of the poor and ignorant. It is the duty of the State to see that the under privileged or weaker section get their dues. Against this background the principle of "equal pay for equal work" has to be construed. This principle has no mechanical application in every ca8e of similar work. It has to be read into Article 14 of the Constitution, which permits reasonable classification founded on different basis. [303C E] PG NO 290 The classification can be based on some qualities or characteristics of persons grouped together and not in others left out. Those qualities or characteristics must have a reasonable relation to the object to be achieved. In service matters, merit or experience could be the proper basis for classification to promote efficiency. It cannot be denied that the quality of work performed by persons of longer experience is Superior to the work of new comers. Higher pay scale to avoid stagnation or resultant frustration for lack of promotional evenues is common in career service. Entitlement to higher pay scales depends upon seniority cum merit or merit cum seniority. The differentiation so made in the same cadre will not amount to discrimination. Classification based on experience is a reasonable classification having a rational nexus with the object thereof. To hold otherwise, would be detrimental to the interest of the Service itself. [303F H; 304A B] The Bench Secretaries might do the same work, but their quality of work might differ. The Rule framed by the Chief Justice of the High Court make a proper classification for the purpose of entitlement to higher pay scale. The High Court overlooked the criterion provided under the Rules. Merit governs the grant of higher pay scale. Classification made under the Rules could not be said to be violative of the right to have equal pay for equal work. [305A C] Randhir Singh vs Union of India & Ors. , ; ;Ram Chandra vs Union of lndia; , ; P. Savita vs Union of India, [1985] Suppl. (1) SCR 101; Dhirendra Chamoli & Anr. vs State of U.P., ; Surinder Singh vs Engineer in Chief, CPWD, ; R.D. Gupta & Ors. vs Lt. Governor of Delhi, ; ; Bhagwan Das & Ors. vs State of Haryana, [1987] 4 SCC 634; National Museum Non Gazetted Employees Association & Anr. vs Union of India, (WP No. 1230 of 1987 disposed of by the Supreme Court on 10.2.1988); Jaipal & Ors. vs State of Haryana, (WP No. 455 and connected petitions of 1987 disposed of by the Supreme Court on 2.6.1988); Y.K. Mehta vs Union of India, (W P No. 1239 of 1979 and connected petitions disposed of bay supreme Court on 26.8.1988); Keshavananda Bharati vs State of Kerala, [1973] 4 SCC 225 at para 712; All India Customs and Central Excise Stenographers (Recognised) and Others vs Union of India & Ors., [1988] (2) Judgments Today SC p. 519, referred to.

ivil Appeal No. 4031 of 1988. From the Judgment and Order dated 14.4.1988 of the Patna High PG NO 867 PG NO 868 Court in C.W.J.C. No. 1923 of 1988. R.K. Jain, R.P.Singh and Y.D.Chandrachud for the Appellant. U.S. Prasad for the Respondents. The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J. Special leave granted. The order dated 25th March, 1988 of the Collector is under challenge in this appeal. The same reads as follows: "Shri Raghu Nath Thakur S/o Late Gorakh Thakur, Village Repura, P.S. Puksha, District Samastipur had bid for Rs.11,900 (Rupees eleven thousands only) per month Dak in an auction of Beni Country liquor shop held on 27.3.88 and he as given the shop of Beni Country liquor but after signing in Bandobasti Register he did not deposit dak amount. The name of Shri Raghu Nath Thakur S/o Late Gorakh Nath Village Repura, P.S. Pusa, Distt. Samastipur is therefore placed in the black list for future under the orders passed by the Collector, Samastipur. " This order was passed pursuant to the order of the Collector. The letter dated 25th March, 1988, states as follows: "The Collector of the district after perusal of the said office note passed order on 25.3.88 which is produced in verbatim below: Ist bidder chunki defaulter hai atah security prapt kar len tatha bhavishya ke liae Black list karen. " Indisputably, no notice had been given to the appellant of the proposal of black listing the appellant. It was contended on behalf of the State Government that there was no requirement in the rule of giving any prior notice before black listing any person. In so far as the contention that there is no requirement specifically of giving any notice is concerned, the respondent is right. But it is an implied principle of the rule of law that any order having civil consequence should be passed only after following the PG NO 869 principles of natural justice. It has to be realised that black listing any person in respect of business ventures has civil consequence for the future business of the person concerned in any event. Even if the rules do not express so, it is an elementary principle of natural justice that parties affected by any order should have right of being heard and making representations against the order. In that view of the matter, the last portion of the order in so far as it directs black listing of the appellant in respect of future contracts, cannot be sustained in law. In the premises, that portion of the order directing that the appellant be placed in the black list in respect of future contracts under the Collector is set aside. So far as the cancellation of the bid of the appellant is concerned, that is not affected. This order will, however, not prevent the State Government or the appropriate authorities from taking any future steps for blacklisting the appellant if the Government is so entitled to do so in accordance with law, i.e. giving the appellant due notice and an opportunity of making representation. After hearing the appellant, the State Government will be at liberty to pass any order in accordance with law indicating the reasons therefor. We, however, make it quite clear that we are not expressing any opinion on the correctness or otherwise of the allegations made against the appellant. The appeal is thus disposed of. Appeal disposed of.

The appellant has bid in an auction of Beni Country Liquor Shop in the District of Samastipur and was given the shop being the highest bidder but he failed to deposit the bid money in time. The Collector, Samastipur by an order cancelled the bid and black listed the appellant. He then moved the High Court against the order of the Collector. The High Court upheld the order of the Collector. The appellant appealed to this Court by special leave. Disposing of the appeal, the Court, HELD: 1. It is an implied principle of the rule of law that any order having civil consequences should be passed only after following the principles of natural justice. Black listing any person in respect of business ventures has civil consequences for the future business of the person concerned in any event. [868H; 869A] 2. Even if the rules do not express so, it is an elementary principle of natural justice that parties affected by any order should have right of being heard and making representations against the order. [869B] In the instant case, that portion of the order directing that the appellant be placed in the black list in respect of future contracts under the Collector is set aside. So far as the cancellation of the bid of the appellant is concerned, that is not affected. [869B C]

cellaneous Petition No. 32937 of 1988. 345 IN Writ Petition No. 12 183 of 1985. (Under Article 32 of the Constitution of India). K.K. Venugopal, Mrs. Jayashree Wad and Mrs. Aruna Mathur for the Petitioners. K. Parasaran, Attorney General, A.K. Ganguli, P. Parmes waran and K. Swamy for the Respondents. The following Order of the Court was delivered: ORDER In respect of the civil miscellaneous petition for clarification of this Court 's judgment dated 4th November, 1988, it is made clear that the assessable value of the processed fabric would be the value of the grey cloth in the hands of the processor plus the value of the job work done plus manufacturing profit and manufacturing expenses whatev er these may be, which will either be included in the price at the factory gate or deemed to be the price at the factory gate for the processed fabric. The factory gate here means the "deemed" factory gate as if the processed fabric was sold by the processor. In order to explain the position it is made clear by the following illustration: if the value of the grey cloth in the hands of the processor is Rs.20 and the value of the job work done is Rs.5 and the manufacturing profit and expenses for the processing be Rs.5, then in such a case the value would be Rs.30, being the value of the grey cloth plus the value of the job work done plus manufac turing profit and expenses. That would be the correct as sessable value. If the trader, who entrusts cotton or man made fabric to the processor for processing on job work basis, would give a declaration to the processor as to what would be the price at which he would be selling the processed goods in the market, that would be taken by the Excise authorities as the assessable value of the processed fabric and excise duty would be charged to the processor on that basis provided that the declaration as to the price at which he would be selling the processed goods in the market, would include only the price or deemed price at which the processed fabric would leave the processor 's factory plus his profit. Rule 174 of the Central Excise Rules, 1944 346 enjoins that when goods owned by one person are manufactured by another the information is required relating to the price at which the said manufacturer is selling the said goods and the person so authorised agrees to discharge all the liabil ities under the said Act and the rules made thereunder. The price at which he is selling the goods must be the value of the grey cloth or fabric plus the value of the job work done plus the manufacturing profit and the manufacturing expenses but not any other subsequent profit or expenses. It is necessary to include the processor 's expenses, costs and charges plus profit, but it is not necessary to include the trader 's profits who gets the fabrics processed, because those would be post manufacturing profits.

On a civil miscellaneous petition for clarification of this Court 's judgment dated 4th November, 1988, the Court. HELD: The assessable value of the processed fabric would be the value of the grey cloth in the hands of the processor plus the value of the job work done plus manufacturing profit and manufacturing expenses whatever these may be, which will either be included in the price at the factory gate or deemed to be the price at the factory gate for the processed fabric. [345D E] The factory gate means the "deemed" factory gate as if the processed fabric was sold by the processor. [345E] If the trader. who entrusts cotton or man made fabric to the processor for processing on job work basis, would give a declaration to the processor as to what would be the price at which he would be selling the processed goods in the market, that would be taken by the Excise authorities as the assessable value of the processed fabric and excise duty would be charged to the processor on that basis. Such a declaration would include only the price or deemed price at which the processed fabric would leave the processor 's factory plus his profit. It is necessary to include the processor 's expenses, costs and charges plus profit, but not the trader 's profits who gets the fabrics processed, because those would be post manufacturing profits. [345G H; 346B C]

Civil Appeal No. 1709 of 1988. From the Judgment and Order dated 9.10.1987 of t he Central Administrative Tribunal Chandigarh in Appln. T. 1055 of 1986. WITH (SLP (Civil) No. 6998 of 1988) V.C. Mahajan, Mrs. Indu Goswami, C.V. Subba Rao, P. Parmeshwaran for the Appellant in C.A. No. 1709 of 1988. M.K.D. Namboodary for the Petitioner in SLP (Civil) N o. 6998 of 1988. S.M. Ashri and Mahabir Singh for the Respondents. The Judgment of the Court was delivered by K. JAGANNATHA SHETTY, J. The civil appeal, by speci al leave, and the connected SLP raise an important issue as to the power of the Central Administration Tribun al ("Tribunal") to examine the adequacy of penalty awarded by the competent authority to a Government servant in discipl i nary proceedings. Short factual background is this: Parmanand Respondent in the appeal was a Time Keeper in Beas Sutlej Link Project, Sundernagar. He was incharge of preparing the pay bills and other bills of the work charg ed employees of the project. It was alleged that he maSte r minded and prepared the pay roll pertaining to 'T ' Token of Central Survey Division, Sundernagar for the month of M ay 1969 and entered the name of one Shri Ashok Kumar, Token N o. 59 T at serial No. 10 on page 2 of the relevant pay roll. He made this entry with ulterior motive to withdraw the pay of Ashok Kumar for the month of May 1969, even though Ash ok Kumar was not working in that Division. A bogus identi ty card in the name of Ashok Kumar T.No. 59 T with the sign a tures of the issuing officer was also prepared by the r e spondent although it was not his duty to prepare the ident i ty card. The said fictitious identity card was used by o ne Suraj Singh, cleaner T. No. 210 K of Beggi Tunnelling Div i sion for the purpose of withdrawing the pay of Ashok Kuma r. While Suraj Singh by impersonation was receiving the pay of Ashok Kumar, he was recognised by the Cashier since he kn ew him personally. There then started an enquiry followed by departmental proceedings against three persons includi ng the respondent herein. The Personnel Officer of the 23 BSL Project was appointed as Inquiry Officer. The enqui ry was conducted under the Punjab Government Servants Condu ct Rules, 1966. The Inquiry Officer framed charge against the responde nt in the following terms: "That the said Shri Parma Nand, while working as Time Keeper in Time Keeping Sub Division of Beas Sutlej Li nk Project, Sundernagar during the month of May 1969 failed to maintain absolute integrity and devotion to duty in as mu ch as he falsely marked the attendance of Shri Ashok Kuma r, Token No. 59 T in the Pay Roll of Control Survey Divisi on for the month of May 1969, which resulted in fictitio us drawal of Rs.238 90 as pay of the said Shri Ashok Kumar. He also prepared a bogus identity card in the name of the abo ve Shri Ashok Kumar and initiated it below the signatures of issuing officer and this identity card Was used by Sh ri Suraj Singh, Cleaner (Token No. 210 K), Boggi Tunnelli ng Division, at the time of attempting to receive the pay of Shri Ashok Kumar from the Cashier. " After a detailed enquiry against the respondent and t wo others, the Inquiry Officer found all the three guilty of the charge framed against each of them. The report of e n quiry was forwarded to the competent authority who aft er giving an opportunity of being heard dismissed the respon d ent from service. The other two persons were let off wi th minor punishments of withholding two or three future incr e ments in their pay scales. The respondent moved the High Court of Himachal Prade sh under Article 226 challenging the findings of Inquiry off i cer as well as the order of dismissal passed by the comp e tent authority. During the pendency of the writ petition, a Bench of the Central Tribunal at Chandigarh was constitut ed under the Administrative Tribunal Act, 1985. Consequentl y, the said writ petition stood transferred to the Tribunal by operation of section 29 of that Act. The Tribunal upon consideration of the matter agre ed with the findings recorded by the Inquiry Officer that t he respondent was the master mind behind the scheme to defra ud the project. The Tribunal observed: "Since the applicant had. access to the records which 24 were fabricated at the relevant time the Inquiry Officer h ad come to the conclusion that the applicant was the mast er mind behind the scheme to defraud the Project. In view of the foregoing, it cannot be termed th at the finding returned by the Inquiry Officer is without a ny evidence. " It was also observed that there was no denial of a reasonable opportunity for the respondent to set up prop er defence. After reaching this conclusion, the Tribunal pr o ceeded to examine the adequacy of penalty awarded to t he respondent. This is how the Tribunal dealt with that que s tion: "Lastly, it was argued on behalf of the applicant that t he punishment awarded to him is disproportionate to the gravi ty of the charge proved against him and is in stark contrast to the punishment awarded to his other three colleagues in whose cases, only future increments were stopped, the max i mum being for three years in respect of Shri Sain Ditt a, Clerk. The finding regarding the applicant being t he master mind behind the attempt to defraud the Project a p pears to have weighed. with the disciplinary authority whi le dismissing the applicant from service. An appreciation of the evidence, as done in the preceding pages, would sh ow that the applicant had entered the name of Shri Ashok Kum ar in the pay roll for May 1969 and so far as other eviden ce against him is concerned, it is mostly of a circumstanti al nature. There is no direct or expert evidence that it was he who had marked the attendance of Shri Ashok Kumar in the p ay roll for May 1969 or that it was he who had initiated t he identity card. The evidence against him is circumstantial in as much as the pay roll was under his custody and he cou ld have access to the identity cards. Under these circu m stances, the evidence that the applicant was the only mast er mind who sought to defraud the project of the funds cann ot be termed to be direct. " The Tribunal concluded: "As such it is a case where the applicant shou ld not be measured with a different yardstick than the other s, who have been punished along with applicant. In the intere st of 25 justice, it is necessary to modify the punishment awarded to the applicant. We, therefore, direct that the punishment of dismissal awarded to the applicant be reduced to that of stopping of his five increments which he had earned for a period of five years, in terms of clause (iv) of Rule 11 of the Central Civil Services (Classification, Control a nd Appeal) Rules, 1965. There will be no order as to costs. T he respondents shah comply with this order within four mont hs from its receipt and pay all consequential benefits to t he applicant. " The Tribunal seems to suggest that the respondent w as not the only master mind to commit the fraudulent act a nd there were others too, and as such, he should not be mea s ured with a different yardstick. The Tribunal however, h as held that the respondent was guilty of entering the name of Ashok Kumar in the pay roll of May 4969. Yet it modified t he punishment to fall in line with that of others whose pa rt inthe fraudulent act was evidently not similar in nature. Being aggrieved by the reduction of penalty, the Uni on of India has preferred the Civil Appeal No. 1709 of 198 8. Parma Nanda seeking a complete exoneration from the char ge has preferred the SLP No. 6998 of 1988. The question which has to be decided, therefore, is whether the Tribunal has power to modify the penalty award ed to the respondent when the findings recorded as to h is misdemeanour is supported by legal evidence. To put in oth er words, whether the Tribunal could interfere with the penal ty awarded by the Competent authority on the ground that it is excessive or disproportionate to the misconduct proved? T he answer to the question cannot be determined without refe r ence to the scope of judicial review in the pre Tribun al period. It is also necessary to remember the purpose f or which the Tribunal came to be established. Before the Trib u nal was constituted, the Courts were exercising judici al review of administrative decisions in public services. Th is judicial review was sought to be taken awary by the Const i tution (42nd Amendment Act, 1976). By this amendment, Art i cles 323A and 323B were introduced in the Constitutio n, thereby opening altogether a new chapter in our Administr a tive law. Article 323A(1) which is relevant for our purpo se is confined to matters relating to the public services. It provides power to Parliament to enact law for establishme nt of Administrative Tribunals for adjudication of disput es with regard to service matters. The service matters are of 26 persons appointed to the public service and posts. T he public service and posts may be in connection with t he affairs of the union or of any State. The law to be enact ed by Parliament may also cover persons appointed in the loc al or other authority or of any corporation owned or controll ed by the Government. There should be only one Tribunal for t he Union of India and one for each State or for two or mo re States put together. The law cannot provide for hierarchy of Tribunals. In pursuance of Articles 323A(1) the Parliame nt enacted the Administrative Tribunal Act, 1985 ("The Act"). We may briefly examine the statutory framework. Secti on 4 of the Act provides for establishment of Central Admini s trative Tribunal as well as State Administrative Tribuna l. It also provides power to constitute Benches of the Centr al Administrative Tribunal. Sections 5 to 11 deal with t he composition of Tribunals and Benches thereof and terms of office of the Chairman, Vice Chairman and other member section Section 14 provides powers and authority to the Centr al Administrative Tribunal. Section 15 deals with the simil ar power and authority of the State Administrative Tribuna l. Section 16 refers to the powers of a Joint Administrati ve Tribunal. Section 22 states that the Tribunal shall not be bound by the procedure laid down in Code of Civil Procedur e, 1908, but shall be guided by the principles of natur al justice and subject to other provisions of the Act and of any Rules made thereunder. The Tribunal could also regula te its own procedure including the fixing of places and time of enquiry and deciding whether to sit in public or in privat e. Sub section 2 of sec. 22 requires the Tribunal to deci de every application made to it as expeditiously as possibl e. Ordinarily, the Tribunal shall decide every application on a perusal of documents and written representations and aft er heating such oral arguments as may be advanced. Section 27 provides for execution of orders. Section 28 excludes t he jurisdiction of all Courts except the Supreme Court. Secti on 29 directs transfer of cases pending in courts to the Trib u nal for adjudication. In pursuance of the provisions of the Act, the Centr al Government has established the Central Administrative Trib u nal with a Bench at Chandigarh whose order has been cha l lenged before us. It is now necessary to examine in detail the amplitu de of powers of the Tribunal. Section 14, so far materia l, provides: "14. Jurisdiction, powers and authority of t he Central Administrative Tribunal: 27 (1) Save as otherwise expressly provided in th is Act, the Central Administrative Tribunal shall exercise, on and from the appointed day, all the jurisdiction, powers a nd authority exercisable immediately before that day by a ll courts (except Supreme Court) in relation to: (a) recruitment, and matters concerning recrui t ment, to any All India Service or to any civil service of the Union or a civil post under the Union or to a po st connected with defence or in the defence services, being in either case, a post filled by a civilian; (b) all service matters concerning Similar are the powers and authority of the State Ser v ice Tribunal under sec. 15 and Joint Administrative Tribun al under sec. 16. ' The expression "all courts" in this connection includ es civil courts and High Court but not the Supreme Court. T he powers of the Supreme Court for obvious reasons have be en expressly kept undisturbed. The powers of the High Cour ts under Article 226, in so far as they are exercisable in relation to service matters stand conferred on the Tribun al established under the Act. The powers of other ordina ry civil courts in relation to service matters to try all sui ts of a civil nature excepting suits of which their cognizan ce either expressly or impliedly barred also stand conferred on the Tribunal. This position becomes further clear by secs. 27, 28 a nd 29 of the Act. Section 27 provides for finality of t he orders of the Tribunal. Section 28 excludes the jurisdicti on of courts except the Supreme Court, or any Industrial Trib u nal, Labour Court, concerning service matters. Section 29 provides for automatic transfer of all pending proceedin gs in the High Court under Articles 226 and 227, relating to service matters (except appeals) to the Tribunal for adjud i cation. Likewise, suits and other proceedings pending befo re a Court or other authority relating to service matters al so stand transferred to the Tribunal for determination. The Act thus excludes the jurisdiction, power and a u thority of all Courts except the Supreme Court and confe rs the same on the Tribunal in relation to recruitment a nd service matters. Section 3(2) 28 comprehensively defines 'service matters ' to mean all ma t ters relating to conditions of service including the disc i plinary matters. From an analysis of secs. 14, 15, 16, 27, 28 and 29, it becomes apparent that in the case of proceedings transferr ed to the Tribunal from a civil court or High Court, the Trib u nal has the jurisdiction to exercise all the powers whi ch the civil court could in a suit or the High Court in a wr it proceeding could have respectively exercised. In an origin al proceedings instituted before the Tribunal under sec. 1 9, the Tribunal can exercise any of the powers of a civ il court, or High Court. The Tribunal thus could exercise on ly such powers which the Civil Court or the High Court cou ld have exercised by way of judicial review. It is neither le ss nor more. Because, the Tribunal is just a substitute to t he civil court and High Court. That has been put beyond t he pale of controversy by this Court while upholding constit u tional validity of the Act in S.P. Sampat Kumar vs Union of India & Ors., ; In this backdrop, we may consider the main question th at we have set out at the beginning of the judgment. Mr. Mah a jan, learned counsel for the Central Government urged th at the Tribunal has no powers to interfere with the punishme nt imposed by the disciplinary authority on the ground that it is disproportionate to the proved misdemeanour. He al so urged that if the enquiry held against the delinquent off i cer was proper with the findings supported by evidence the n, the Tribunal cannot substitute its own judgment to modi fy the punishment awarded. Mr. Ashri, learned counsel for t he respondent, however, justified the discretion exercised by the Tribunal in awarding the lesser punishment. We do n ot think that we could accept so bold a submission made for t he respondent, nor can it be sustained by other consideratio n. Indeed, the contention for the respondent is unsustainab le in view of the decisions of this Court. In State of Orissa vs Bidyabhushan, [1963] Suppl 1 S CR 648 the enquiry was conducted against the petitioner on several charges and eventually he was dismissed from ser v ice. The Orissa High Court found that the findings on two of the charges were bad being in violation of the principles of natural justice. The findings on the remaining charges we re however, found to be justified. The High Court remitted t he matter to the Government for fresh consideration for awar d ing a proper punishment. The High Court observed: "That the findings in respect of charges l(a) and l(e) 29 should be set aside as being opposed to the rules of natur al justice, but the findings in respect of charges l(c) a nd l(d) and charge 2 need not be disturbed. It will be th en left to Government to decide whether, on the basis of the se charges, the punishment of dismissal should be maintain ed 'or else whether a lesser punishment would suffice." The Supreme Court reversed this order on the ground th at if the dismissal could be supported on any finding as to substantial misdemeanour for which the punishment cou ld lawfully be imposed, it was not for the. Court to consid er whether that ground alone would have weighed with the a u thority dismissing the public servant. Shah, J. observed ( at 665 666): " . . in our view the High Court had no pow er to direct the Governor of Orissa to reconsider the order of dismissal. The constitutional guarantee afforded to a publ ic servant is that he shall not be dismissed or removed by an authority subordinate to that by which he was appointed, a nd that he shall not be dismissed or removed or reduced in ra nk until he has been given a reasonable opportunity of showi ng cause against the action proposed to be taken in regard to him. The reasonable opportunity contemplated has manifest ly to be in accordance with the rules framed under Article 3 09 of the Constitution. But the Court in a case in which an order of dismissal of a public servant is impugned, is n ot concerned to decide whether the sentence imposed, provid ed it is justified by the rules, is appropriate having rega rd to the gravity of misdemeanour established. The reaso ns which induce the punishing authority, if there has been an enquiry consistent with the prescribed rules, is not just i fiable; nor is the penalty open to review by the court. If the High Court is satisfied that if some but not all of t he findings of the Tribunal were "unreasonable", the order of the Governor on whose powers by the rules no restrictions in determining the appropriate punishment are placed, w as final, and the High Court had no jursidiction to direct t he Governor to review the penalty, for as we have alrea dy observed the order of dismissal passed by a competent a u thority on a public servant, if the conditions of the co n stitutional protection have been complied with, is n ot justifiable. Therefore if the order may be supported on a ny finding as to substantial misdemeanour for which the 30 punishment can lawfully be imposed, it is not for the cou rt to consider whether that ground alone would have weigh ed with the authority in dismissing the public servant. T he court has no jurisdiction if the findings of the enqui ry officer or the Tribunal prima facie make out a case of misdemeanour, to direct the authority to reconsider th at order because in respect of some of the findings but not a ll it appears that there had been violation of the rules of natural justice. The High Court was, in our judgment, in error in directing the Governor of Orissa to reconsider t he question." In Dhirajlal Girdharilal vs Commissioner of Income ta x, AIR 1956 SC 271, Mehar Chand Mahajan, C.J., while deali ng with a reference application against an order of Income T ax Tribunal under the Indian Income Tax Act had struck slight ly a different note (at 273): "The learned Attorney General frankly conced ed that it could not be denied that to a certain extent t he Tribunal had drawn upon its own imagination and had made u se of a number of surmises and conjectures in reaching i ts result. He however, contended that eliminating the irrel e vant material employed by the Tribunal in arriving at i ts conclusion, there was sufficient material on which t he finding of fact could be supported. In our opinion, th is contention is not well founded. It is well established th at when a court of facts acts on material, partly relevant a nd partly irrelevant, it is impossible to say to what exte nt the mind of the court was affected by the irrelevant mater i al used by it in arriving at its finding. Such a finding is vitiated because of the use of inadmissible material a nd thereby an issue of law arises. " This proposition in Dhirajlal 's case was explained a nd the statement of law in Bidyabhushan 's case was affirmed in State of Maharashtra vs B.K. Takkamore & Ors., ; It was case of supersession of the Corporation. T he show cause notice issued to the corporation mentioned t wo grounds for supersession. One of the grounds was held to be irrelevant. This Court, however, upheld the order of supe r session stating that the order cannot be set aside f or reason that one of the grounds is found to be non existe nt or irrelevant if another ground by itself was serious enou gh to supersede the Corporation. Bachawat, J., said (at 594): 31 "The principle underlying these decisions appea rs to be this. An administrative or quasi judicial order bas ed on several grounds, all taken together, cannot be sustain ed if it be found that some of the grounds are non existent or irrelevant, and there is nothing to show that the authori ty would have passed the order on the basis of the other rel e vant and existing grounds. On the other hand, an order bas ed on several grounds some of which are found to be non exis t ent or irrelevant, can be sustained if the court is sati s fied that the authority would have passed the order on t he basis of the other relevant and existing grounds, and t he exclusion of the irrelevant or non existent grounds cou ld not have affected the ultimate opinion or decision. " This principle again receives support from the decisi on of in Zora Singh vs J.M. Tandon, AIR 1971 SC 1537. The re the Chief Settlement Commissioner cancelled the allotment of land made to a person but the High Court allowed the wr it petition quashing the order of the Chief Settlement Commi s sioner and directing him to proceed to decide the case on merits. The Commissioner re heard the entire case as direc t ed by the Court but came to the same conclusion as befo re and reaffirmed his earlier decision canceling the allotmen t. The person unsuccessfully moved the High Court with a wr it petition challenging the order of the Commissioner a nd finally appealed to the Supreme Court. In dismissing th at appeal, Shalat, J., made inter alia, the following observ a tions (at 1540): "The High Court was right in holding that even if there were amongst the reasons given by the Commissione r, some which were extraneous, if the rest were relevant a nd could be considered sufficient, the Commissioner 's concl u sions would not be vitiated. The principle that if some of the reasons relied on by a Tribunal for its conclusion tu rn out to be extraneous or otherwise unsustainable, its dec i sion would be vitiated, applies to cases in which the co n clusion is arived at not on assessment of objective sati s faction. The reason is that whereas in cases where t he decision is based on subjective satisfaction if some of t he reasons turn out to be irrelevant or invalid, it would be impossible for a superior court to find out which of t he reasons, relevant or irrelevant, valid or invalid, h ad brought about such satisfaction. But in a case where t he conclusion is based on objective facts and evidence, such a difficult 32 would not arise. If it is found that there was legal ev i dence before the Tribunal even if some of it was irrelevan t, a superior court would not interfere if the finding can be sustained on the rest of the evidence. The reason is that in a writ petition for certiorari, the superior court does n ot sit in appeal, but exercises only supervisory jurisdictio n, and therefore, does not enter into the question of suff i ciency of evidence. There was, in our view, legal eviden ce before the Commissioner upon which he was entitled to re st his finding that the copies relied on by the appellant we re not genuine." The view taken in Bidyabhushan case has been repeated ly affirmed and reiterated in Railway Board vs Niranjan Sing h; , at 552; O.P. Gupta case AIR 1970 SC 679 a nd Union of India vs Sardar Bahadur, A ny doubts as to the incapacity of the Court to review t he merits of the penalty must vanish when we read the remar ks of Mathew, J., in Sardar Bahadur 's case (at 225): "A disciplinary proceeding is not a criminal tria l. The standard of proof required is that of preponderance of probability and not proof beyond reasonable doubt. If t he inference that Nand Kumar was a person likely to have off i cial dealings, with the respondent was one which reasonab le person would draw from the proved facts of the case, t he High Court cannot sit as a court of appeal over a decisi on based on it. Where there are some relevant materials whi ch the authority has accepted and which materials may reason a bly support the conclusion that the officer is guilty, it is not the function of the High Court exercising its jurisdi c tion under article 226 to review the materials and to arrive at an independent finding on the materials. If the enquiry h as been properly held the question of adequacy or reliabili ty of the evidence cannot be convassed before the High Court. " The learned Judge also said (at 227): "Now it is settled by the decision of this Court in State of Orissa vs Bidyabhushan Mohapatra, that if the ord er of a punishing authority can be supported on any finding as to substantial misdemeanour for which the punishment can be imposed, it is not for the Court to consider whether the 33 charge proved alone would have weighed with the authority in imposing the punishment. The Court is not concerned to decide whether the punishment imposed, provided it is just i fied by the rules, is appropriate having regard to t he misdemeanour established." So much is, we think, established law on the scope of jurisdiction and the amplitude of powers of the Tribuna l. However, of late we have been receiving a large number of appeals from the orders of Tribunals Central a nd States complaining about the interference with the penal ty awarded in the disciplinary proceedings. The Tribunals se em to take it within their discretion to interfere with t he penalty on the ground that it is not commensurate with t he delinquency of the official. The law already declared by this Court, which we reiterate, makes it clear that t he Tribunals have no such discretion or power. We must unequivocally state that the jurisdiction of t he Tribunal to interfere with the disciplinary matters or punishment cannot be equated with an appellate jurisdictio n. The Tribunal cannot interfere with the findings of t he Inquiry Officer or competent authority where they are n ot arbitrary or utterly perverse. It is appropriate to rememb er that the power to impose penalty on a delinquent officer is conferred on the competent authority either by an Act of legislature or rules made under the provisoto Article 309 of the Constitution. If there has been an enquiry consiste nt with the rules and in accordance with principles of natur al justice what punishment would meet the ends of justice is a matter exclusively within the jurisdiction of the compete nt authority. If the penalty can lawfully be imposed and is imposed on the proved misconduct, the Tribunal has no pow er to substitute its own discretion for that of the authorit y. The adequacy of penalty unless it is malafide is certain ly not a matter for the Tribunal to concern with. The Tribun al also cannot interfere with the penalty if the conclusion of the Inquiry Officer or the competent authority is based on evidence even if some of it is found to be irrelevant or extraneous to the matter. Our attention was drawn to the decision of this Court in Bhagat Ram vs State of Himachal Pradesh, 2. We do not consider that this decision is of any assistan ce to support the contention urged for the respondent. The re the facts found were entirely different. This Court, aft er considering the matter was of opinion that the appella nt therein was not offered a reasonable opportunity to defe nd himself and accordingly the enquiry and consequential ord er of 34 removal from service were found to be bad. Ordinarily, whe re the disciplinary enquiry is shown to have been held in violation of principles of natural justice, the enqui ry would be vitiated and the order based on such enquiry wou ld be quashed with liberty to hold fresh enquiry. But th at procedure was not adopted by this Court since the char ge against appellant was found to be a very minor infraction of duty in checking hammer marks of trees. That negligence, if any, caused no loss to the Government, for, the man w ho resorted unauthorised felling of trees, had compensated t he Department. The appellant was a low paid class IV Governme nt servant. Considering all these facts this Court felt that it would not be fair to direct a low paid class IV employee to face the hazards of a fresh enquiry. This Court in t he interest of justice and fair play thought that a min or penalty would be sufficient. Accordingly, two incremen ts with future effect, of the appellant were ordered to be withheld. This decision is, therefore, no authority for t he proposition that the High Court or the Tribunal has juri s diction to impose any punishment to meet the ends of ju s tice. It may be noted that this Court exercised the equit a ble jurisdiction under Article 136 and the High Court or Tribunal has no such power or jurisdiction. We may however, carve out one exception to this propos i tion. There may be cases where the penalty is imposed und er clause (a) of the second proviso to Article 311(2) of t he Constitution. Where the person, without enquiry is di s missed, removed or reduced in rank solely on the basis of conviction by a criminal court, the Tribunal may examine t he adequacy of the penalty imposed in the light of the convi c tion and sentence inflicted on the person. If the penal ty impugned is apparently unreasonable or uncalled for, havi ng regard to the nature of the criminal charge, the Tribun al may step in to render substantial justice. The Tribunal m ay remit the matter to the competent authority for reconsider a tion or by itself substitute one of the penalties provid ed under clause (a). This power has been conceded to the cou rt in Union of India vs Tulsiram Patel, ; whe re Madon, J., observed (at 501 502): "Where a disciplinary authority comes to know th at a government servant has been convicted on a crimin al charge, it must consider whether his conduct which has l ed to his conviction was such as warrants the imposition of a penalty and, if so, what that penalty should be . . 35 "The disciplinary authority must, however, bear in mind th at a conviction on a criminal charge does not automatical ly entail dismissal, removed or reduction in rank of the co n cerned government servant. Having decided which of the se three penalties is required to be imposed, he has to pa ss the requisite order. A government servant who is aggriev ed by the penalty imposed can agitate in appeal, revision or review, as the case may be, that the penalty was too seve re or excessive and not warranted by the facts and circu m stances of the case. If it is his case that he is not t he government servant who has been in fact convicted, he c an also agitate this question in appeal, revision or review. If he fails in the departmental remedies and still wants to pursue the matter, he can invoke the court 's power of jud i cial review subject to the court permitting it. If the cou rt finds that he was not in fact the person convicted, it wi ll strike down the impugned order and order him to be reinsta t ed in service. Where the court finds that the penalty i m posed by the impugned order is arbitrary or grossly exce s sive or out of all proportion to the offence committed or not warranted by the facts and circumstances of the case or the requirements of that particular government service t he court will also strike down the impugned order. Thus, in Shankar Dass vs Union of India this Court set aside t he impugned order of penalty on the ground that the penalty of dismissal from service imposed upon the appellant was whi m sical and ordered his reinstatement in service with fu ll back wages. It is, however, not necessary that the cou rt should always order reinstatement. The court can inste ad substitute a penalty which in its opinion would be just a nd proper in the circumstances of the case. " The last contention that the respondent fails into t he category of a workman and the Tribunal could exercise t he powers of an industrial court for giving appropriate reli ef is unavailable in this case, since the respondent had ma de his choice of forum and was even otherwise dealt with und er the Government Servants (Conduct) Rules which are undispu t edly applicable to him. In the light of the principles to which we have call ed attention and in view of the aforesaid discussion, the ord er of the Tribunal imposing a lesser penalty on the responde nt cannot, therefore, be sustained. He was found guilty of t he charge framed against him. He 36 was a party to the fraudulent act for self aggrandisemen t. He prepared bogus documents for withdrawal of salary in t he name of Ashok Kumar who was not working in his Division. He has thus proved himself unbecoming and unworthy to hold a ny post. Any sympathy or charitable view on such officials wi ll not be conducive to keep the streams of administration pu re which is so vital for the success of our democrary. In the result, we allow the appeal and set aside t he order of the Tribunal. Consequently, the SLP of the respon d ent is dismissed. In the circumstances of the case howeve r, we make no order as to costs. T.N.A. Appeal allowed and Petition dismissed.

The respondent, in the appeal, was in charge of prepa r ing the pay bills of the employees of the Beas Sutlej Li nk Project. He, along with other two employees, was charg ed with the fraudulent act of withdrawal of Rs.238.90 by pr e paring a bogus pay bill and identity card in the name of a fictitious person. An enquiry was conducted against all t he three employees under the Punjab Government Servants Condu ct Rules, 1966 and the Inquiry Officer found all the thr ee guilty of the charge framed against each of them. The comp e tent authority accepted the findings of the Inquiry Offic er and after giving an opportunity of being heard imposed t he penalty of dismissal on the respondent. Minor penalty of with holding two or three future increments was imposed on each of the other two employees. The respondent challeng ed the finding of the Inquiry Officer as well as the order of dismissal by filing a writ petition in the High Court of Himachal Pradesh. Subsequently the writ stood transferred to the Central Administrative Tribunal under the 20 provisions of the Administrative Tribunal Act, 1985. T he Tribunal agreed with the findings recorded by the Inqui ry Officer to the effect that the respondent was guilty of t he charge but modified the punishment by reducing the punis h ment of dismissal imposed to that of stopping his fi ve increments on the ground that the respondent was measur ed with a different yardstick than the other two employee section Against the aforesaid order of the Tribunal appeals we re filed before this Court; (a) by the Union of India conten d ing that the tribunal has no powers to interfere with t he punishment imposed by the disciplinary authority on t he ground that it is disproportionate to the proved misdeme a nour, and (b) by the respondent seeking a complete exoner a tion from the charge. While allowing the appeal of the Union and dismissi ng the Special Leave Petition of the respondent the Court s et aside the order of the Tribunal, and, HELD: 1. Under the provisions of the Administrati ve Tribunal Act, 1985 the powers of the High Courts und er Article 226, in so far as they are exercisable in relati on to service matters stand conferred on the Tribunal esta b lished under the Act. The powers of other ordinary civ il Courts in relation to service matters to try all suits of a civil nature excepting suits of which their cognisan ce either expressly or impliedly barred also stand conferred on the Tribunal. The Act thus excludes the jurisdiction, pow er and authority of all Courts except the Supreme Court a nd confers the same on the Tribunal in relation to recruitme nt and service matters. The Tribunal is just a substitute to the civil Court and High Court. The Tribunal thus cou ld exercise only such powers which the civil Court or the Hi gh Court could have exercised by way of judicial review. It is neither less nor more. [27D E; 28B C1 S.P. Sampat Kumar vs Union of India & Ors., ; referred to; 2. The jurisdiction of the Tribunal to interfere wi th the disciplinary matters or punishment cannot be equat ed with an appellate jurisdiction. The Tribunal cannot inte r fere with the findings of the Inquiry Officer or compete nt authority where they are not arbitrary or utterly pervers e. The power to impose penalty on a delinquent officer is conferred on the competent authority either by an Act of legislature or rules made under the proviso to Article 3 09 of the Constitution. If there has been an enquiry consiste nt with the rules and in accordance with principles of natur al justice what punishment would meet the 21 ends of justice is a matter exclusively within the jurisdi c tion of the competent authority. If the penalty can lawful ly be imposed and is imposed on the proved misconduct, t he Tribunal has no power to substitute its own discretion f or that of the authority. The adequacy of penalty unless it is malafide is certainly not a matter for the Tribunal to concern with. The Tribunal also cannot interfere with t he penalty if the conclusion of the Inquiry Officer or t he competent authority is based on evidence even if some of it is found to be irrelevant or extraneous to the matte r. [33D F] State of Orissa vs Bidyabhushan, [1963] (Suppl.) 1 S.C.R. 648; Dhirajlal Girdharilal vs Commissioner of Income Tax, A.I.R. 1955 S.C. 271; State of Maharashtra vs B.K. Takkamore & Ors. , ; ; Zora Singh vs J.M. Tandon, A.I.R. 1971 S.C. 1537; Railway Board vs Nira n jan Singh; , ; State of U.P. vs O. P. Gupta, A.I.R. 1970 S.C. 679 and Union of India vs Sarda rr Bahadur, , applied. Bhagat Ram vs State of Himachal Pradesh, [1983] 2 S.C. C. 442, distinguished. There is one exception to this proposition. There m ay be cases where the penalty is imposed under clause (a) of the second proviso to Article 311(2) of the Constitutio n. Where the person, without enquiry is dismissed, removed or reduced in rank solely on the basis of conviction by a criminal court, the Tribunal may examine the adequacy of t he penalty imposed in the light of the conviction and senten ce inflicted on the person. If the penalty impugned is appa r ently unreasonable or uncalled for, having regard to t he nature of the criminal charge, the Tribunal may step in to render substantial justice. The Tribunal may remit t he matter to the competent authority for reconsideration or by itself substitute one of the penalities provided und er clause (a). [35E F] Union of India vs Tulsiram PateI, 8, applied. Since the respondent had made his choice of forum a nd was even otherwise dealt with under the Government Serva nt (Conduct) Rules which are applicable to him it cannot be held that he falls into the category of a workman empoweri ng the Central Administrative Tribunal to exercise the powe rs of an Industrial Court for giving appropriate relief. [35 F G] 22

it case for initiating any procee d ings for contempt against the respondents. [109F] & ORIGINAL JURISDICTION: Writ Petition (Civil) No. 530 of 1983 etc. (Under Article 32 of the Constitution of India). V.A. Bobde, Shyam Mudaliar, V.M. Tarkunde, G.L. Sangh i, A.K. Sanghi, Mrs. R. Karanjawala, Mrs. Meenakshi Karanjawa la N.M. Popli and V.J. Francis for the Petitioners. Ms. A. Subhashini, D.N. Dwivedi, Girish Chandra, C.V. section Rao, M.C. Dhingra and N.K. Sharma for the Respondents. The Judgment of the Court was delivered by OJHA, J. The petitioners in the aforementioned wr it petitions claim to have been appointed as Supervisors Gra de 'A ' in various ordnance factories between 1962 to 1966 a nd have filed these writ petitions with the prayer that t he same relief may be granted to them also as was granted by this Court to 75 appellants in Civil Appeal No. 441 of 19 81 vide its order dated 2nd February, 1981. The three civ il miscellaneous petitions referred to above on the other ha nd have been made by the appellants of Civil Appeal No. 441 of 1981 asserting that the direction given by this Court on 2 nd February, 1981 has not been complied with in the manner as it ought to have been by the respondents and they should be consequently required to comply with the said direction. T he exact nature of the prayer made in these miscellaneo us applications shall be indicated after referring to t he relief granted on 2nd February, 1981 in Civil Appeal No. 4 41 of 1981. The 75 appellants of Civil Appeal No. 441 of 1981 fil ed a writ petition in the Allahabad High Court in 1972 asser t ing that they had been appointed as Supervisors Grade 'A ' on various dates in pursuance of a circular dated 6th Novembe r, 1962 issued by the Director General of Ordnance Factorie s, the relevant portion whereof reads as hereunder: "Subject: NON INDUSTRIAL ESTABLISHMENT PROMOTION D.G.O.F. has decided that Diploma holders serving as 97 Supervisor 'A ' (Tech)/Supervisor 'B '/(Tech) and in equiv a lent grades should be treated as follows (i) All those Diploma holders who have been appointed as Supervisor 'B ' (Tech) (and in equivalent grades) should on completion of one year 's satisfactory service in ordnan ce factories be promoted to Supervisor 'A ' (Tech) and in equi v alent grades.) (ii) All those Diploma holders who work satisfactorily as Supervisor 'A ' (Tech) or in equivalent grades for 2 years in Ordnance Factory should be promoted to Chargeman. Kindly acknowledge receipt. Sd/ K.G. Bijlani ADGOF/Est. for D.G.O.F. Their grievance in the writ petition was that ev en though quite a large number of Supervisors Grade 'A ' h ad been promoted to the post of Chargeman grade II on compl e tion of two years ' satisfactory work they had been discrim i nated against and had not been so promoted immediately on the expiry of two years ' in pursuance of the aforesa id circular even though their work was satisfactory. The reli ef prayed for in the said writ petition was for the issue of a writ of mandamus directing the Union of India through t he Director General of Ordnance Factories to promote the appe l lants to the post of Chargeman II. The writ petition w as contested by the respondents thereto inter alia on t he ground that under the rules of promotion from Supervisor ' A ' to Chargeman II first Departmental Promotion Commit.tee at the factory level and then a Departmental Committee at t he Central level screens the service record of each of t he Supervisors 'A ' who comes within the range of eligibili ty and then finally the Director General of Ordnance Factori es draws up a list and sanctions promotions. It was furth er asserted that in accordance with the said rule the cases of all the appellants were screened by the Promotion Committ ee at the factory level and then at the Central level and th ey not having been found fit were not promoted. It appears th at the criterion of promotion is seniority cum merit. T he learned Single Judge, however, did not go into the merits of the controversy and dismissed the writ petition on t he ground of unexplained laches and also on the ground that a previous petition for similar relief had not been presse d. Against the 98 judgment of the learned Single Judge the appellants pr e ferred a special appeal before a Division Bench of th at Court. The learned Judges who decided the special appeal d id not consider it appropriate to uphold the dismissal of t he writ petition on the technical ground which found favo ur with the learned Single Judge and they went into the meri ts of the respective contentions of the parties. They, howeve r, did not find any substance in the submission made on beha lf of the appellants and accordingly dismissed the speci al appeal on 8th February, 1977. The learned Judges pointed o ut that it was admitted that the conditions of service applic a ble to the case of the appellants were governed by t he Indian Ordnance Factories (Recruitment and Conditions of Service of Class III Personnel) Rules, 1956 (hereinaft er referred to as the Rules) framed by the President of Ind ia under Article 309 of the Constitution. It was further poin t ed out that Rule 8 contemplated that appointments by prom o tion were to be made on the basis of a selection list pr e pared for the different grades by duly constituted Depar t mental Promotion Committees laid down in the said ru le whereas Rule 12 provided that no appointment to the posts to which these rules apply shall be made otherwise than as specified therein. With regard to the circular dated 6 th November, 1962 the learned Judges took the view that it w as difficult to read in that circular any intention or delibe r ation on the part of the Director General of Ordnance Fact o ries that as soon as two years were completed by a diplo ma holder in the Grade of Supervisor 'A ' there would be an automatic promotion to the post of Chargeman Il. Accordi ng to the learned Judges such a view would militate again st Rule 12 of the Rules mentioned above. It was further he ld that even if it was to be assumed that the Director Gener al of Ordnance Factories automatically promoted some Superv i sors 'A ' immediately on the completion of 2 years of servi ce to the post of Chargeman II without the recommendation aft er screening by the Promotion Committee no right would accr ue in favour of the appellants inasmuch as such promotio ns would be in the teeth of Rule 12 and could not confer a legal right on the appellants to be likewise promoted in breach of Rule 12. With regard to the plea based on Artic le 16 of the Constitution. it was held "A half hearted argume nt was raised at the end of the hearing on behalf of the appe l lant petitioners that they have been discriminated again st by depriving them the benefit of automatic promotion in violation of constitutional guarantee under Article 16 of the Constitution. This was an argument, neither pleaded as a ground for the petition nor was raised before the learn ed Single Judge. Moreover, we do not think any case, on t he basis of violation of Article 16 of the Constitution can be found in favour of the appellant petitioners only becau se some 99 supervisors, equally placed, were promoted against the rul es of service. No formal foundation has been raised in t he pleadings in the writ petition in support of the grou nd based on Article 16 of the Constitution. " It is against this judgment that Civil Appeal No. 441 of 1981 was preferred in this Court. Since the order dated 2 nd February, 1981 passed in Civil Appeal No. 441 of 1981, so to speak, constitutes the basis for the writ petitions me n tioned above, it is in our opinion expedient to reprodu ce the said order. It reads: "Heard counsel. Special leave granted. "Our attention has been invited by learned counsel for bo th the sides to the relevant rules which govern promotion to the post of Chargeman Grade II. It appears that a lar ge number of persons have been promoted to those posts thou gh they have completed only two years of service. The Gover n ment now appears to insist that in so far as the appellan ts are concerned they cannot be considered for promotion unle ss they complete three years of service. We see no justific a tion for any such differential treatment being given to t he appellants. If a large number of other persons similar ly situated have been promoted as Chargeman Grade II aft er completing two years of service, there is no reason why t he appellants should also not be similarly promoted aft er completing the same period of service. We are not suggesti ng that the appellants are entitled to be promoted to t he aforesaid posts even if they are found unfit to be promote d. We Therefore direct that the concerned authoriti es will consider the cases of the appellants for promotion as Chargeman Grade II and promote them to the said posts unle ss they are found to be unfit. If the appellants are promote d, they will naturally have to be promoted with effect from t he date on which they ought to have been promoted. This order will dispose of the appeal. There will be no order as to costs. " As already pointed above the petitioners in the writ pet i tions refer 100 red to above have prayed for the same relief which w as granted in Civil Appeal No. 441 of 1981. Now we shall rev rt to the exact prayers made in the three miscellaneous pet i tions aforesaid. The prayer made in Civil Miscellaneo us Petition No. 3325 of 1987 is for the issue of an inter im order restraining the respondents from making any furth er promotions during the pendency and final heating of t he miscellaneous petition and for initiating contempt procee d ings. Almost analogous prayer had been made in Miscellaneo us Petition No. 9357 of 1983 also namely that the responden ts may be restrained from promoting officers to the next high er posts on the basis of recommendations of certain Departme n tal Promotion Committees without complying with the dire c tions of this Court in its order dated 2nd February, 198 1. The reliefs prayed for in the above two civil miscellaneo us petitions are thus of an interim nature. The main relie fs which have been prayed for apart from for initiating pr o ceedings for contempt for disobedience of the order of th is Court dated 2nd February, 1981 are reliefs (i), (ii) a nd (iii) contained in Civil Miscellaneous Petition No. 9356 of 1983. They are as hereunder: "(i) pass appropriate orders directing the respondents to implement in true letter and spirit, the judgment of th is Hon 'ble Court dated 2.2.1981 in Civil Appeal No. 441 of 1 98 1; (ii) issue appropriate directions commanding the responden ts to promote the appellants to the next higher posts of Chargeman Grade I, Assistant Foreman, and Foreman, wi th effect from the date they are entitled to, after giving th em the benefit of the directions of this Hon 'ble Court dat ed 2.2.1981; (iii) issue appropriate directions to the respondents to give all consequential benefits to the appellants, includi ng payment of arrears. " The aforesaid writ petitions came up for hearing befo re a bench of two learned Judges of this Court on 9th Septe m ber, 1987. On the view that the judgment of this Court dat ed 2nd February, 1981 in Civil Appeal No. 441 of 1981 in t he case of Virendra Kumar and Others vs Union of India & Ors ., [1981] 3 SCC Page 30 may require reconsideration, the pet i tions were directed to be placed before a three Judge Ben ch "where inter alia the correctness of the judgment could be looked into and the nature of relief available to the pet i tioners on the 101 facts now stated would also be considered. " It is in view of this order that these matters have been listed before us. Learned counsel for the petitioners contended that t he reason which weighed with this Court in allowing Civ il Appeal No. 441 of 1981 applies to these writ petitions al so and the same relief may accordingly be granted to the pet i tioners. It was also brought to our notice that similar ly placed 125 employees got the benefit of the circular dat ed 6th November, 1962 in pursuance of an order passed by t he Madhya Pradesh High Court on 4th April, 1983 in writ pet i tions filed by them. It was urged that in case the sa me relief is not granted to the petitioners they are likely to become juniors to some of the appellants in Civil Appeal N o. 441 of 1981 and the petitioners in the writ petitions deci d ed by the Madhya Pradesh High Court on 4th April, 1983. For the respondents on the other hand it was urged th at service conditions including promotion of employees inclu d ing Supervisors 'A ' in the Indian Ordnance Factories we re governed by the Rules and in view of Rule 12 no appointme nt to the various posts to which the Rules applied could be made otherwise than as specified therein; According to learned counsel since Rule 8 of the Rules contemplated th at appointments by promotion were to be made on the basis of selection list prepared in the manner provided therei n, there was no scope for automatic promotion merely aft er expiry of 2 years of continuous service on the basis of t he circular dated 6th November, 1962. According to learn ed counsel the Rules did not prescribe the minimum number of years of service as Supervisors 'A ' which would make th em eligible for promotion as Chargeman II and the circul ar dated 6th November, 1962 which was in the nature of an executive instruction prescribed 2 years ' service as Supe r visor 'A ' to make him eligible for promotion. Howeve r, merely on completion of two years ' service a Supervisor ' A ' could not claim automatic promotion. On the other han d, promotion depended, inter alia, on availability of posts a nd the incumbent being found fit by the Departmental Promoti on Committee for being included in the selection list. It w as only such a Supervisor Grade 'A ' whose name found place in the selection list who could be promoted to the post of Chargeman II as and when vacancies were available. It w as further urged that the petitioners of these writ petitio ns were on the basis of the Rules considered for promotion a nd it is not disputed that all of them have in due course be en promoted as Chargeman II and some of them have even be en promoted to higher posts. Our attention was further invit ed by learned counsel for the respondents to an order commun i cated among others to the Director 102 General of Ordnance Factories, vide letter dated 28th Dece m ber, 1965 of the Government of India, Ministry of Defenc e, saying inter alia that a minimum period of service of thr ee years in the lower grade should be fixed for promotion to the next higher grade. It was pointed out that this had be en found necessary not only because it would be in conformi ty with the practice obtaining in other Ministries but al so because on merits this period is necessary to judge t he performance in the lower post and the potentialities f or promotion to a higher post. He also brought to our notice a subsequent circular dated 20th January, 1966 by the Direct or General of Ordnance Factories who had issued. the earli er circular dated 6th November, 1962 which provides: "Sub: N.G. Establishment Treatment of Diplo ma Holders and ex apprentices serving as Supr. or in equivalent grades in the matter of promotion. Ref: This office confidential No. 673/A/NG dt. 62 and 4416/A/NG dt. 29.6.65. The question of promotion of Diploma holders in Mech/Elec. Engineering and Ex apprentices serving as Sup r. 'A ' Gr. or in equivalent grades has received further consi d eration of the D.G.O.F. who has decided that in futu re promotions of all such individuals will be effected in accordance with the normal rules i.e. on the basis of the ir listing by the relevant D.P.C. and not merely on completi on of 2 years satisfactory continuous service as Supr. or equivalent grades. " It was urged that after the issue of the subseque nt order dated 28th December, 1965 and circular dated 20 th January, 1966 no Supervisor 'A ' could claim to have beco me eligible for promotion merely on completion of 2 year s ' satisfactory service and his promotion thereafter could be effected only in accordance with the normal Rules. Having heard learned counsel for the parties we fi nd substance in the submission made by the learned counsel f or the respondents. Relying on two earlier decisions in B. N. Nagarajan & Ors. vs State of Mysore & Ors., 82 and Sant Ram Sharma vs State of Rajasthan & Anr. , ; it was held by a Constitution Bench of this Court in Ramachandra Shankar Deodhar and Ors. vs The State of Mah a rashtra & Ors.; , that in the absence of legislative Rules it was competent to the State Governme nt to take a 103 decision in the exercise of its executive power under Art i cle 162 of the Constitution. The matter has been consider ed in a recent decision of this Court in the case of Union of India & Ors. vs Sh. Soraasundararn Viswanath & Ors., [198 8] 3 S.C. Judgments Today 724 wherein it has been held: "It is well settled that the norms regarding recruitment a nd promotion of officers belonging to the Civil Services can be laid down either by a law made by the appropriate Legisl a ture or by rules made under the proviso to Article 309 of the Constitution of India or by means of executive instru c tions issued under Article 73 of the Constitution of Ind ia in the case of Civil Services under the Union of India a nd under Article 162 of the Constitution of India in the ca se of Civil Services under the State Governments. If there is a conflict between the executive instructions and the rul es made under the proviso to Article 309 of the Constitution of India, the rules made under the proviso to Article 309 of the Constitution of India prevail, and if there is a co n flict between the rules made under the proviso to Artic le 309 of the Constitution of India and the law made by t he appropriate Legislature, the law made by the appropria te Legislature prevails. " It is thus apparent that an executive instruction cou ld make a provision only with regard to a matter which was n ot covered by the Rules and that such executive instructi on could not override any provision of the Rule. Notwithstan d ing the issue of instruction dated 6th November, 1962 ther e fore, the procedure for making promotion as laid down in Rule 8 of the Rules had to be followed. Since Rule 8 in t he instant case prescribed a procedure for making promotion t he said procedure could not be abrogated by the executi ve instruction dated 6th November, 1962. The only effect of t he circular dated 6th November, 1962 was that Supervisors ' A ' on completion of 2 years ' satisfactory service could be promoted by following the procedure contemplated by Rule 8. This circular had indeed the effect of accelerating t he chance of promotion. The right to promotion on the oth er hand was to be governed by the Rules. This right was co n ferred by Rule 7 which inter alia provides that subject to the exception contained in Rule 11, vacancies in the pos ts enumerated therein will normally be filled by promotion of employees in the grade immediately below in accordance wi th the provisions of Rule 8. The requirements of rule 8 in brief have already been indicated above. Rule 12 provides 104 that no appointment to the posts to which these rules app ly shall be made otherwise than, as specified in these rule section This right of promotion as provided by the Rules was neith er affected nor could be affected by the circular. The ord er dated 28th December, 1965 which provided a minimum period of service of three years in the lower grade for promotion to the next higher grade and the circular dated 20th Janua ry 1966 which provided that promotions in future will be e f fected in accordance with the normal rules and not merely on completion of 2 years ' satisfactory continuous service h ad the effect of doing away with the accelerated chance of promotion and relegating Supervisors 'A ' in the matter of promotion to the normal position as it obtained under t he Rules. In the case of Ramchandra Shankar Deodhar & Ors ., (supra) the petitioners and other allocated Tehsildars fr om ex Hyderabad State had under the Notification of the R aj Pramukh dated September 15, 1955 all the vacancies in t he posts of Deputy Collector in the ex Hyderabad State avai l able to them for promotion but under subsequent rules of July 30, 1959 fifty per cent of the vacancies were to be filled by direct recruitment and only the remaining fif ty per cent were available for promotion and that too on div i sional basis. The effect of this change obviously was th at now only fifty per cent vacancis in the post of Depu ty Collector being available in place of all the vacancies it was to take almost double the time for many other allocat ed Tehsildars to get promoted as Deputy Collectors. In oth er words it resulted in delayed chance of promotion. It wa s, inter alia, urged on behalf of the petitioners that t he situation brought about by the rules of July 30, 1959 co n stituted variation to their prejudice in the conditions of service applicable to them immediately prior to the reorga n isation of the State and the Rules were consequently i n valid. While repelling this submission the Constituti on Bench held: "All that happened as a result of making promotions to t he posts of Deputy Collectors divisionwise and limiting su ch promotions to 50 per cent of the total number of vacanci es in the posts of Deputy Collector was to reduce the chanc es of promotion available to the petitioners. It is now we ll settled by the decision of this Court in State of Mysore vs G.B. Purohit that though a right to be considered for prom o tion is a condition of service, mere chances of promoti on are not. A rule which merely affects chances of promoti on cannot be regarded as varying a condition of service. In Purohit 's case the districtwise seniority of sanitary in 105 spectors was changed to Statewise seniority, and as a resu lt of this change the respondents went down in seniority a nd became very junior. This, it was urged, affected the ir chances of promotion which were protected under the provi so to Section 115, sub section (7). This contention was neg a tived and Wanchoo, J., (as he then was), speaking on beha lf of this Court observed: "It is said on behalf of the r e spondents that as their chances of promotion have be en affected their conditions of service have been changed to their disadvantage. We see no force in this argument becau se chances of promotion are not conditions or service. " It i s, therefore, clear that neither the Rules of July '30, 195 9, nor the procedure for making promotions to the posts of Deputy Collector divisionwise varies the conditions of service of the petitioners to their disadvantage. " The same view was reiterated in Mohammad Shujat Ali a nd Ors. vs Union of India & Ors. , ; In the bri ef written submission filed on behalf of the petitioners in Writ Petition Nos. 9522 27 of 1983 it has been pointed o ut that employees who had joined much later than 20th Januar y, 1966, namely, the date of the subsequent circular of t he Director General of Ordnance Factories superseding h is earlier circular dated 6th November, 1962, have also g ot benefit under the orders of this Court dated 2nd Februar y, 1981 aforesaid as also under the orders of the Madhya Pr a desh High Court dated 4th April, 1983 in the writ petiti on filed before that Court. This circumstance by itself is sufficient to indicate that when Civil Appeal No. 441 of 1981 was heard by this Court either the subsequent ord er dated 28th December, 1965 as well as the circular dated 20 th January, 1966 and the legal consequences flowing therefr om were not brought to the notice of the learned Judges by t he learned counsel for the respondents, or the same was n ot properly emphasised, the judgment dated 2nd February, 19 81 being completely silent on the point and the appeal w as allowed only on the ground that some Supervisors having be en promoted as Chargeman II on expiry of 2 years of the ir service in view of the circular dated 6th November, 1962 t he non promotion of the appellants was discriminatory being in violation of Article 16. As regards the order of the Madh ya Pradesh High Court dated 4th April, 1983 .it may be point ed out that the said High Court in an earlier writ petiti on being Misc. Petition No. 596 of 1978 had disallowed t he relief for the petitioners of that writ petition bei ng treated as Chargeman II on completion of two years ' servi ce as Supervisor 'A ' by its order dated 16th April, 1979 as is apparent from the said judgment dated 4th April, 1983 b ut the subse 106 quent writ petitions which seem to have been filed after t he decision of this Court dated 2nd February, 1981 in Civ il Appeal No. 441 of 1981 were allowed in view of the aforesa id decision of this Court. In this connection it is also of significance to noti ce that it does not seem to have been the case of the appe l lants in Civil Appeal No. 44 1 of 198 1 that those w ho according to them had been promoted in pursuance of t he circular dated 6th/November, 1962 on completing two year s ' service were junior to them. At this place it will be usef ul to refer to an affidavit dated 19th November, 1983 of D. P. Gupta, who is one of the appellants in Civil Appeal No. 4 41 of 1981, filed in C.M.P. Nos. 9356 57 of 1983. Annexure I to the said affidavit gives a break up of the total diplo ma holders recruited in the Department due to acute need of Ordnance Department following the chinese aggression. It indicates that approximately 125 diploma holders were r e cruited in 1962, 550 in 1963, 250 in 1964, 150 in 1965 a nd 100 in 1966, the total number of such recruits being appro x imately 1175. The said Annexure further indicates that o ut of the 1175 recruits about 625 were promoted to the post of Chargeman II in 1965 66 under the 2 year policy contained in circular dated 6th November, 1962 and that approximately 5 50 diploma holders were denied promotion which resulted in discrimination. From this break up it is apparent that a ll the diploma holders recruited in 1962 whereas 500 out of 5 50 recruited in 1963 were promoted on expiry of 2 years of service. It appears that the remaining 50 diploma holde rs recruited in 1963 and those who had been recruited in t he begning of 1964 or thereafter could not be promoted inasmu ch as by the time their cases could be considered for promoti on the subsequent order dated 28th December, 1965 had come in to force and had also come into force the circular dated 20 th January, 1966 which had superseded the circular dated 6 th November, 1962 and had provided that in future promotions of all such individuals will be effected in accordance with t he normal rules and not merely on the completion of two yea rs satisfactory continuous service. It cannot be disputed that the Director General of Ordnance Factories who had issued the circular dated 6 th November, 1962 had the power to issue the subsequent circ u lar dated 20th January, 1966 also. In view of. the leg al position pointed out above the aforesaid circular could n ot be treated to be one affecting adversely any condition of service of the Supervisors 'A '. Its only effect was that t he chance of promotion which had been accelerated by the circ u lar dated 6th November, 1962 was deferred and made depende nt on selection according to the Rules. Apparently, after t he coming into force of the 107 order dated 28th December, 1965 and the circular dated 20 th January, 1966 promotions could not be made just on compl e tion of 2 years ' satisfactory service under the earli er circular dated 6th November, 1962 the same having be en superseded by the later circular. It is further obvious th at in this view of the matter Supervisors 'A ' who had be en promoted before the coming into force of the order dat ed 28th December, 1965 and the circular dated 20th Januar y, 1966 stood in a class separate from those whose promotio ns were to be made thereafter. The fact that some Superviso rs 'A ' had been promoted before the coming into force of t he order dated 28th December, 1965 and the circular dated 20 th January, 1966 could not, therefore, constitute the basis f or an argument that those Supervisors 'A ' whose cases came up for consideration for promotion thereafter and who we re promoted in due course in accordance with the rules we re discriminated against. They apparently did not fall in t he same category. It may also be noticed that even though the petitione rs on their completion of 2 years ' service as Supervisor ' A ' were not promoted as Chargeman 11 in or about the year 19 66 they chose to wait for about 17 years to file these wr it petitions which were filed in 1983, and nearly 2 years ev en after the decision dated 2nd February, 1981 in Civil Appe al No. 441 of 1981, which indicates that but for the decisi on in Civil Appeal No. 441 of 1981 they would perhaps not ha ve even thought of filing these writ petitions inasmuch as in the meantime they had not only been promoted in the norm al course as Chargeman 1I but some of them had been promot ed even to higher posts in the hierarchy. For aught we know if the effect of the order dated 28 th December, 1965 and the circular dated 20th January, 1966 h ad been properly emphasised at the time of hearing of Civ il Appeal No. 441 of 198 1 its result may have been differen t. In this connection, reference may also be made to the cou n ter affidavit of Sobha Ramanand, Deputy Director, Ordnan ce Factory Cells G. Block, Ministry of Defence, filed in Wr it Petition (Civil) Nos. 3812 19 of 1983 with regard to a matter relevant for promotion. In paragraph 2(i) it has be en stated that during 1962 63 due to sudden expansion of Or d nance Factories Organisation in the wake of Chinese aggre s sion a large number of posts of Chargeman 11 and other pos ts were created and as a result thereof persons already in service as Supervisors 'A ' were promoted to the posts of Chargeman II on completion of 2 years ' service. It h as further been stated therein that after the newly creat ed posts were thus filled by promotion, chances of promotion of those who were appointed subsequently diminished and f or want of sufficient number of 108 vacancies as Chargeman II they could not be promoted to th at post soon after the completion of 2 years ' service. There is a further averment in the said counter affidavit that pet i tioners were duly considered in their turn and their nam es were brought on the approved panel. They were thereaft er promoted as soon as vacancies became available and th at during the period that they were on the approved panel no person junior to them or of equal seniority superseded the m. Nothing substantial has been brought to our notice on beha lf of the petitioners on the basis of which the aforesa id statements made in the counter affidavit may be doubted. In view of the foregoing discussion, we find it diff i cult to grant the reliefs prayed for in the aforesaid 'wr it petitions simply on the basis of the judgment of this Cou rt dated 2nd February, 1981 in Civil Appeal No. 441 of 198 1. These writ petitions, therefore, deserve to be dismissed. Since, however, the judgment of this Court dated 2 nd February, 1981 in Civil Appeal No. 441 of 1981 has not be en challenged and has become final, the next question whi ch falls for consideration is as to what further relief, if any, are the appellants in Civil Appeal No. 44 1 of 19 81 entitled in pursuance of the Civil Miscellaneous Petitio ns referred to above filed by them. The reliefs which they ha ve claimed have already been indicated above. It is now n ot disputed that the appellants of this appeal have in purs u ance of the order of this Court dated 2nd February, 19 81 been given a back date promotion to the post of Chargeman II synchronising with the dates of completion of their 2 yea rs of service as Supervisor 'A '. The grievance of the petitio n ers, however, is that this promotion tantamounts to impl e mentation of the order of this Court dated 2nd Februar y, 1981 only on paper inasmuch as they have not been grant ed the difference of back wages and promotion to higher pos ts on the basis of their back date promotion as Chargeman I I. As already noticed earlier certain writ petitions filed in Madhya Pradesh High Court were allowed by that Court on 4 th April, 1983 relying on the judgment of this Court dated 2 nd February, 1981 in Civil Appeal No. 441 of 1981. Against t he aforesaid judgment of the Madhya Pradesh High Court dat ed 4th April, 1983 Special Leave Petitions (Civil) Nos. 5987 92 of 1986 were filed in this Court by the Union of India a nd were dismissed on 28th July, 1986. The findings of t he Madhya Pradesh High Court in its judgment dated 4th Apri l, 1983 thus stand approved by this Court. In this view of t he matter to put them at par it would be appropriate that t he appellants in Civil Appeal No. 441 of 1981 may also be granted the same relief which was granted to the 109 petitioners in the writ petitions before the Madhya Prade sh High Court. As regards back wages the Madhya Pradesh Hi gh Court held: "It is the settled service rule that there has to be no p ay for no work i.e. a person will not be entitled to any p ay and allowance during the period for which he did not perfo rm the duties of a higher post although after due considerati on he was given a proper place in the gradation list havi ng deemed to be promoted to the higher post with effect fr om the date his junior was promoted. So the petitioners are n ot entitled to claim any financial benefit retrospectively. At the most they would be entitled to refixation of the ir present salary on the basis of the notional seniority gran t ed to them in different grades so that their present sala ry is not less than those who are immediately below them. " In so far as Supervisors 'A ' who claimed promotion as Chargeman 11 the following direction was accordingly giv en by the Madhya Pradesh High Court in its judgment dated 4 th April, 1983 aforesaid: "All these petitioners are also entitled to be treated as Chargeman Grade II on completion of two years satisfacto ry service as Supervisor Grade A. Consequently, notion al seniority of these persons have to be refixed in Supervis or Grade A, Chargeman Grade II, Grade I and Assistant Forem an in cases of those who are holding that post . . T he petitioners are also entitled to get their present sala ry re fixed after giving them notional seniority so that t he same is not lower than those who are immediately bel ow them. " In our opinion, therefore, the appellants in Civ il Appeal No. 441 of 1981 deserve to be granted the same limi t ed relief. We are further of the opinion that it is not a fit case for initiating any proceedings for contempt again st the respondents. In the result, the writ petitions fail and are di s missed. The Civil Miscellaneous Petitions in Civil Appe al No. 441 of 1981 are disposed of by issuing a direction to the respondents to give the appellants in the said Civ il Appeal the same benefits as were given by the Madhya Prade sh High Court to such of the petitioners before that Court w ho were Supervisors 'A ' and were granted promotion as Chargem an II by its judgment dated 4th April, 1983. In the circu m stances of the case, however, there shall be no order as to costs. R.S.S. Petitions dismissed.

The petitioners in the writ petitions were appointed as Supervisors Grade 'A ' in various ordnance factories betwe en 1962 and 1966, in pursuance of circular dated 6th Novembe r, 1962 issued by the Director General of Ordnance Factorie section The circular further provided for promotion from Supervis or 'A ' to Chargeman I1, on completion of two years ' satisfact o ry service. 75 Supervisors Grade 'A ' had moved a writ petition in the Allahabad High Court in 1972. Their grievance was th at even though quite a large number of Supervisors Grade ' A ' had been promoted to the post of Chargeman Grade II on completion of two years ' satisfactory work, in pursuance of the circular dated 6th November, 1962, they had been di s criminated against and had not been so promoted immediate ly on the expiry of two years ' service. The writ petition was contested on the ground that t he promotion from Supervisor Grade 'A ' to Chargeman II we re governed by the Indian Ordnance Factories (Recruitment a nd Conditions of Service of Grade III Personnel) Rules, 19 56 and such promotions could be made only in accordance wi th the procedure prescribed by Rule 8 of these Rules. The learned Single Judge dismissed the writ petition on the ground of unexplained laches. The Division Bench did n ot find any substance in the submission made on behalf of t he petitioners and dis 93 missed their special appeal. According to the Divisi on Bench, it was difficult to read in the circular that aft er two years of satisfactory service there would be automat ic promotion from Supervisor Grade 'A ' to Chargeman II as su ch a view would militate against Rule 12 of the Rules, whi ch provided that no appointment shall be made otherwise than as specified in the Rules. It was further held by the Divisi on Bench that even assuming that some Supervisors Grade 'A ' h ad been automatically promoted on completion of two year s ' service, without the recommendation after screening by t he Promotion Committee, as provided in Rule 8, no right wou ld accrue in favour of the appellants inasmuch as such prom o tions would be in the teeth of Rule 12. Against the judgment of the Division Bench, Civil Appe al No. 441 of 1981 (Virendra Kumar and Others vs Union of Ind ia and Others, was preferred and this Court by its order dated 2.2.1981 directed that the cases of the 75 appellants in Civil Appeal No. 441 of 1981 be considered f or promotion as Chargeman Grade II and they be so promot ed unless found to be unfit. Another group of 125 Supervisors Grade 'A ' got t he benefit of the Circular dated 6.11.1962 in pursuance of an order passed by the Madhya Pradesh High Court on 4th Apr il 1983 on the basis of the judgment of this Court in Civ il Appeal No. 441 of 1981. Special Leave Petitions against t he judgment of the Madhya Pradesh High Court were dismissed by this Court. The petitioners in the present writ petitions pray th at the same relief may be granted to them as had been grant ed in Civil Appeal No. 441 of 1981. In the Civil Miscellaneous petitions now filed in Civ il Appeal No. 441 of 1981, the petitioners, apart from t he prayer for initiating proceedings for contempt against t he respondents for disobedience of the order of this Cou rt dated 2.2.1981, have prayed for orders directing the r e spondents to implement in true letter and spirit the sa id order and to promote the petitioners to the next high er posts after giving them the benefit of the directions of that order. Their grievance is that their promotion tant a mounts to implementation of the order of this Court dat ed 2.2.1981 only on paper inasmuch as they have not been gran t ed the difference of back wages and promotion to high er posts on the basis of their back date promotion as Chargem an II. Before this Court it has been urged on behalf of the r e spondents 94 that (i) promotions of employees including Supervisor ' A ' were governed by the Rules and in view of Rule 12 no a p pointment could be made otherwise than as specified therei n; (ii) appointments by promotion were to be made according to Rule 8 on the basis of selection list prepared in the mann er provided there in and there was no scope for automat ic promotion merely after expiry of 2 years of continuo us service on the basis of the circular dated 6th Novembe r, 1962; (iii) the circular which was in the nature of an executive instruction prescribed 2 years ' service as Supe r visor 'A ' to make them only eligible for promotion; and (i v) after the issue of the subsequent order dated 28th Decembe r, 1965 and circular dated 20th January, 1966 no Supervis or could claim to have become eligible for promotion merely on completion of 2 years ' satisfactory service and his prom o tion thereafter could be effected only in accordance wi th the normal Rules. Dismissing the writ petitions and disposing of t he miscellaneous petitions, it was, HELD: (1) An executive instruction could make a prov i sion only with regard to a matter which was not covered by the Rules and such executive instruction could not overri de any provision of the Rule. [103E] B.N. Nagarajan vs State of Mysore, ; 2; Sant Ram Sharma vs State of Rajasthan, 1; Ramchandra Shenkar Deoghar vs The State of Maharashtr a; , ; Union of India vs Somasundaram Viswanat h, [1988] 3 SC. Judgments Today 724, referred to. (2) Notwithstanding the issue of instructions dated 6 th November, 1962 the procedure for making promotion as la id down in Rule 8 of the Rules had to be followed, and the sa id procedure could not be abrogated by the executive instru c tions dated 6th November 1962. [103F] (3) The only effect of the circular dated 6th Novemb er 1962 was that Supervisors 'A ' on completion of 2 year s ' satisfactory service could be promoted by following t he procedure contemplated by Rule 8. This circular had inde ed the effect of accelerating the chance of promotion. T he right to promotion on the other hand was to be governed by the Rules. This right of promotion as provided by the Rul es was neither affected nor could be affected by the circula r. [103F G] 95 (4) After the coming into force of the order dated 28 th December, 1965 and the circular dated 20th January, 19 66 promotions could not be made just on completion of 2 year s ' satisfactory service under the earlier circular dated 6 th November, 1962, the same having been superseded by the lat er circular. [106H; 107A B] (5) Circular dated 20th January, 1966 could not be treated to be one affecting adversely any condition of service of Supervisors 'A '. Its only effect was that t he chance of promotion which had been accelerated by the circ u lar dated 6th November, 1962 was deferred and made depende nt on selection according to the Rules. Though a right to be considered for promotion was a condition of service, me re chances of promotion were not. [106G H] Ramchandra Shankar Deodhar vs The State of Maharashtr a, (supra) and Mohammad Shujat Ali & Ors. vs Union of India Ors. ; , , referred to. (6) Supervisors 'A ' who had been promoted before t he coming into force of the order dated 28th December, 1965 a nd the circular dated 20th January, 1966 stood in a cla ss separate from those whose promotions were to be made ther e after. The fact that some Supervisors 'A ' had been promot ed before the coming into force of the order dated 20th Jan u ary, 1966 could not, therefore, constitute the basis for an argument that those Supervisors 'A ' whose cases came up f or consideration thereafter and who were promoted in due cour se in accordance with the Rules, were discriminated agains t. [107B C] (7) There were sufficient indications that when Civ il Appeal No. 441 of 1981 was heard by this Court either t he subsequent order dated 28th December, 1965 as well as t he circular dated 20th January, 1966 and the legal consequenc es flowing therefrom were not brought to the notice of t he learned Judges by the learned counsel for the respondent s, or the same was not properly emphasized. [105E F] (8) The findings of the Madhya Pradesh High Court in i ts judgment dated 4th April stood approved by this Court wh en the Court dismissed the special leave petition against th at judgment. The appellants in Civil Appeal No. 441 of 19 81 therefore deserved to be granted the same benefit as regar ds back wages and further promotion as were given by the Madh ya Pradesh High Court to such of the petitioners before th at Court who were Supervisors 'A ' and were granted promotion as Chargeman I1 by its judgment dated 4th April, 1983. [108 H;

(Civil) No. 548 of 1987. (Under Article 32 of the Constitution of India). M.C. Dhingra for the Petitioners. Kapil Sibal, K.G. Bhagat, A.K. Ganguli, Ms. Kamini Jaiswal, 664 Ms. Aruna Mathur, A. Mariarputham, Harminder Lal and Naresh K. Sharma for the Respondents. The Judgment of the Court was delivered by K. JAGANNATHA SHETTY, J. The petitioners are carpenters 1st and 2nd grade employed at the Wood Working Centre of the Himachal Pradesh State Handicrafts Corporation (the "Corpo ration"). They are termed as daily rated employees. In this petition under Article 32 of the Constitution, they are seeking enforcement of their fundamental right to have "equal pay for equal work". They demand payment in terms paid to their counterparts in regular services. They want the same pay of the regular employees as carpenters or in the alternative, the minimum wages prescribed by the Deputy Commissioner for like categories of workmen. They also seek regularisation of their services with the benefits of pen sion, gratuity etc. The Corporation has resisted the petitioners ' claim. The case of the Corporation is that the unit where the petition ers are working is a factory registered under the Factories Act. The petitioners are treated as industrial workmen and .are given all benefits due to them under the various labour legislations. The Government has not fixed the mini mum wages payable to the petitioners engaged in the Corpora tion or other like industries, but the Corporation has adopted the minimum wages payable for similar work in the construction industry. They are being paid the same wages as are payable to carpenters, painters and carpenters ' helpers engaged in the construction industry. They are given bonus under the Bonus Act and provident fund benefits under the Employees ' Provident Fund Act. It is also stated that the petitioners are supplied with the necessary tools for carry ing out their work and also working uniforms like aprons and overalls. The Corporation has clearly stated that there are no regular employees of the petitioners ' categories in its establishment and, as such, the question of payment to the petitioners, the pay admissible to regular employees does not arise. A little more information about the purpose and object of the Corporation would be useful for proper understanding of the case. The Corporation is a company which has been incorporated under the . The main object of the Corporation as seen from the Memorandum of Associa tion is to preserve the traditional arts and crafts and also to popularise handicrafts and handloom items 665 in the State of Himachal Pradesh and other parts of the country and abroad. In order to achieve this primary objec tive, the Corporation gives training to artisans, weavers and craftsmen in various traditional arts and crafts. During the period of training, the trainees are paid a stipend by the Corporation. Upto 31st March, 1987, the Corporation has imparted training to as many as 1662 persons in different areas like carpet weaving, handloom weaving, painting, metal crafts, wood carving, etc. Apart from giving training, the Corporation also ensures marketing support to the artisans and craftsmen by purchasing their products at remunerative prices and sell them through the marketing network of the Corporation. It is thus a service oriented organisation helping the village artisans and craftsmen to produce and market their products on remunerative prices. It is said that the village artisans and craftsmen make different items on a piece rate basis and in some cases, they execute the work in their own homes. The financial aspect of the Corporation is stated to be not encouraging, and indeed, it is disappointing. It has suffered huge loss and the total losses accumulated hitherto is Rs.69.77 lakhs. Nonetheless, for the purpose of preserv ing and promoting traditional arts and crafts, the Corpora tion has been kept alive. But to avoid or minimise further loss, it is stated that the Corporation has reduced its overheads and maintained only the administrative staff in the production centers at different parts of the State and no permanent craftsmen are employed. With these facts, we may now turn to the principle upon which the petitioners ' case is rested. The principle of "equal pay for equal work" is not one of the fundamental rights expressly guaranteed by our Constitution. The princi ple was incorporated only under Article 39(d) of the Consti tution as a Directive Principle of State Policy. Perhaps, for the first time, this Court in Randhir Singh vs Union of India, ; has innovated that it is a constitu tional goal capable of being achieved through constitutional remedies. There the Court pointed out that that principle has to be read into Article 14 of the Constitution which enjoins the State not to deny any person equality before the law or the equal protection of the law and also to Article 16 which declares that there should be equality of opportu nity for all citizens in matters relating to employment or appointment to any office under the State. Randhir Singh case was concerned with a driver constable in the Delhi Police Force under the Delhi Administration. He claimed equal salary for equal work at that of other drivers. The Court found that the petitioner therein performed the same func 666 tions and duties as other drivers in the service of Delhi Administration. The Court, therefore, directed the Central Government to fix the pay scale of the petitioner on par with his counterparts doing identical work under the same employer. In the immediate aftermath of the decision in Randhir Singh case, there were bumper cases filed in this Court for enforcement of the right to "equal pay for equal work", perhaps little realising the in built restrictions in that principle. It may not be necessary here to refer to all those decisions since almost all of them have been consid ered and explained in the recent two decisions to which one of us was a party (K. Jagannatha Shetty, J.). Reference may be made to: (i) State of U.P. vs J.P. Chaurasia, ; and (ii) Meva Ram Kanojia vs All India Institute of Medical Sciences and Anr., ; In Chaurasia case the question arose whether it was permissible to have two different pay scales in the same cadre of Bench Secre taries of the Allahabad High Court who were for all practi cal purposes performing similar duties and having same responsibilities. The Court held that the principle of "equal pay for equal work" has no mechanical application in every case of similar work. Article 14 permits reasonable classification rounded on rational basis. It is, therefore, not impermissible to provide two different pay scales in the same cadre on the basis of selection based on merit with due regard to experience and seniority. It was pointed out that in service, merit or experience could be the proper basis for classification to promote efficiency in administration and he or she learns also by experience as much as by other means. Apart from that, the Court has expressly observed that the higher pay scale to avoid stagnation or resultant frustration for lack of promotional avenues may also be allowed. Meva Ram Kanojia is the most recent decision which has exhaustively dealt with all the principles bearing on the question of equal pay for equal work in the light of all the previous decisions of this Court. There the petitioner was a "Hearing Therapist" in the All India Institute of Medical Sciences. He claimed pay scale admissible to "Senior Speech Pathologist", "Senior Physiotherapist", "Senior Occupational Therapist", "Audiologist", and "Speech Pathologist". His case was based on the allegations that he was discharging same duties and performing similar functions as "Senior Speech Therapist", "Senior Physiotherapist", "Senior Occupa tional Therapist", "Audiologist" and "Speech Pathologist". But the Court held that the principle of equal pay for equal work cannot be invoked invariably in every kind of service particularly in the area of professional services. It was also held 667 that it is open to the State to classify employees on the basis of qualifications, duties and responsibilities of the posts concerned. If the classification has reasonable nexus with the objective sought to be achieved, efficiency in the administration, the State would be justified in prescribing different pay scales. Reference may also be made to the decision in Federation of All India Customs and Central Excise Stenographers (Recognised) vs Union of India, ; There the Personal Assistants and Stenographers attached to the Heads of Department in Customs and Central Excise Department of the Ministry of Finance made a claim for parity of wages with the Personal Assistants and Stenographers attached to Joint Secretaries and Officers above them in Ministry of Finance. The Court while rejecting the claim expressed the view (at 100): "But equal pay must depend upon the nature of the work done, it cannot be judged by the mere volume of work, there may be qualitative difference as regards reliability and responsibility. Functions may be the same but the responsibilities make a difference. One cannot deny that often the difference is a matter of degree and that there is an element of value judgment by those who are charged with the administration in fixing the scales of pay and other conditions of service. So long as such value judgment is made bona fide, reasonably on an intelligible criterion which has a rational nexus with the object of dif ferentiation, such differentiation will not amount to discrimination. It is important to emphasize that equal pay for equal work is a concomitant of Article 14 of the Constitution. But it follows naturally that equal pay for unequal work will be a negation of that right." Thus the law relating to equal pay for equal work has been practically hammered out and very little remains for further innovation. In the light of the aforesaid principles, we may now consider whether the equality claims of the petitioners could be allowed. We have carefully perused the material on record and gave our anxious consideration to the question urged. From the averments in the pleadings of the parties it will be clear that the Corporation has no regularly employed carpenters. Evidently the petitioners are claiming wages payable to the carpenters in Government service. We do not think that 668 we could accept their claim. In the first place, even assum ing that the petitioners ' jobs are comparable with the counterparts in the government service, the petitioners cannot enforce the right to "equal pay for equal work". The discrimination complained of must be within the same estab lishment owned by the same management. A comparison cannot be made with counterparts in other establishments with different management, or even in establishments in different geographical locations though owned by the same master. Unless it is shown that there is a discrimination amongst the same set of employees by the same master in the same establishment, the principle of "equal pay for equal work" cannot be enforced. This was also the view expressed in Meva Ram Kanojia vs A.I.I.M.S., ; at 245. In the instant case, the petitioners are employed by a company incorporated under the . They cannot claim wages payable to their counterparts in government service. Secondly, it may be noted that the petitioners are carpenters; better called as craftsmen. By the general description of their job, one cannot come to the conclusion that every carpenter or craftsmen is equal to the other in the performance of his work. The two jobs by the mere nomen clature or by the volume of work performed cannot be rated as equal. It is not just a comparison of physical activity. It requires the consideration of various dimensions of the job. The accuracy required by the job and the dexterity it entails may differ from job to job. It cannot be evaluated by the mere averments in the self serving affidavits or counter affidavits of the parties. It must be left to be evaluated and determined by expert body. The principal claim of the petitioners therefore fails and is rejected. The next contention that the petitioners should be paid at least the minimum wages prescribed by the Deputy Commis sioner under Exhibit P. 2 dated March 20, 1986 cannot also be accepted. exhibit P. 2 was issued by the Deputy Commissioner in the exercise of his powers under the H.P. Financial Rules. It is applicable only to skilled and unskilled work ers in class IV employees in Government service. It has not been extended to employees of the Corporation. The petition ers have been treated as construction workers and they are being paid the minimum wages admissible to such workmen. The Court, therefore, cannot direct the Corporation to apply the rates prescribed under exhibit P. 2 unless the Government makes it applicable to employees of the Corporation. As to the claim for regularisation of services of the peti tioners, 669 we express no opinion, since the factual data is disputed and is insufficient. We leave the petitioners to work out their rights elsewhere in accordance with law applicable to them. In the result, the petition fails and is dismissed. In the circumstances of the case, we make no order as to costs. P.S.S. Petition dismissed.

The petitioners employed as daily rated carpenters at the Wood Working Centre of the Himachal Pradesh State Handi crafts Corporation sought enforcement of their fundamental right to have "equal pay for equal work" in terms paid to their counterparts in regular services, or in the alterna tive, the minimum wages prescribed by the Deputy Commission er for like categories of workmen. The petitioners ' claim was resisted by the respondents. Their case was that the unit where the petitioners were working was a factory registered under the Factories Act, that they were treated as industrial workmen and given all benefits due to them under the various labour legislations, that the Government had not fixed the minimum wages payable to the workmen engaged in the Corporation or other like industries but the Corporation had adopted for its workmen the minimum wages payable for similar work in the construc tion industry, and that there were no regular employees of the petitioners ' categories in its establishment and, as such, the question of payment to them the pay admissible to regular employees does not arise. Dismissing the writ petition, HELD: 1. Unless it is shown that there is a discrimina tion amongst the same set of employees by the same master in the same establishment, the principle of "equal pay for equal work" cannot be enforced. A comparison cannot be made with counterparts in other establishments with different management, or even in establishments in different geograph ical location though owned by the same master. [668B] In the instant case, the petitioners were employed by a company incorporated under the Companies Act. They cannot claim wages pay 663 able to their counterparts in government service. [668C] Meva Ram Kanojia vs All India Institute of Medical Sciences & Anr., ; , referred to. Randhir Singh vs Union of India, ; , ex plained. The principle of 'equal pay for equal work ' has no mechanical application in every case of similar work. No two jobs by the mere nomenclature or by the volume of work performed can be rated as equal. It is not just a comparison of physical activity. It requires the consideration of various dimensions of the job. The accuracy required by the job and the dexterity it entails may differ from job to job. It cannot be evaluated by the mere averments in the self serving affidavits or counter affidavits of the parties. It must be left to be evaluated and determined by expert body. [666D, 668D E] In the instant case, however, the Corporation had no regularly employed carpenters. Even assuming that the peti tioners ' jobs were comparable with the counterparts in Government service they could not enforce the right to equal pay for equal work. [667G, 668A] State of U.P. vs J.P. Chaurasia, ; ; Meva Ram Kanojia vs All India Institute of Medical Sciences & Anr., ; and Federation of All India Customs and Central Excise Stenographers (Recognised) vs Union of India, ; , referred to. The order issued by the Deputy Commissioner on March 20, 1986 in exercise of his powers under the H.P. Financial Rules prescribing minimum wages was applicable only to skilled and unskilled workers in Class IV employees in Government service. The benefit of the rates prescribed under that order cannot be extended to the petitioners unless the Government makes it applicable to the employees of the Corporation. [668F G]

ivil Appeal Nos. 4339 41/86 & 4176 77 of 1984. From the Judgment and Order dated 4.7.85 & 21.6.84 of the Customs Excise and Gold (Control) Appellate Tribunal, New Delhi in Appeal Nos. ED(SB)(T) A. Nos. 513 514, & 544 of 1985(A) & ED(SB) 329 & 324/84 A in Order Nos. 450 452/85 A, 473 & 474/84 A. Harish Salve, Ravinder Narain, P.K. Ram and D.N. Mishra for the Appellant. K. Parasaran, Attorney General, A.K. Ganguli, and P. Parmeshwaran for the Respondents. The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J. These appeals under Section 35L(b) of the Central Excises & Salt Act, 1944 (hereinafter called 'the 979 Act ') are against the order Nos. 450 452 of 1985A dated 4th July, 1985, 473/184A and 474/84A both dated 21st June, 1984 passed by the Customs, Excise & Gold (Control) Appellate Tribunal (hereinafter referred to as 'the Tribunal '). The appellant is a division of McDowell & Co. Ltd. It has its factory at, inter alia, Visakhapatnam. There it manufactures and sells fusel oil/Styrene Monomer falling under Tariff Item No. 68 of the Ist Schedule to the Act. The case of the appellant is that the said fusel oil is a com pletely manufactured article and after completion of its manufacture, it is stored in storage tanks duly approved for this purpose. It is at this stage that the quantity of fusel oil/Styrene Monomer manufactured, according to the appel lant, is entered in the RG 1 Register maintained for goods manufactured by the appellant. It is also the case of the appellant that the said fusel oil/Styrene Monomer manufac tured by it is sold in bulk and delivered to the customers at the appellant 's factory. The fusel oil/Styrene Monomer is also capable of being supplied in road tankers to customers. The appellant had filed its price lists in respect of the same. In the said price lists, which were duly approved by the Asstt. Collector, the appellant had shown the value of fusel oil/Styrene Monomer at the rate at which those were sold in wholesale as "naked Ex Works and in bulk". According to the appellant, the manufacture of fusel oil is complete and it is the fully manufactured fusel oil/Styrene Monomer which is stored in the storage tank. On 2nd July, 1983, a notice in respect of a consignment was issued to show cause as to why value of the drums should not be included in the value of the goods. There the drums had been supplied by the buyer. Another show cause notice as to why value of the drums should not be included in the assessable value of the goods, was issued to the appellant on the 5th April, 1983 pertaining to Gate Pass No. 773 whereunder the appellant had cleared 2.4 KI of fusel oil in drums supplied by the buyer. Replies were duly filed to the said show cause notices by the appellant contending, inter alia, that as the drums were supplied by the buyer, value thereof could not be included in the assessable value. On the 11th August, 1983, two orders were passed by the Assist ant Collector one in relation to each of the aforesaid show cause notices. The Assistant Collector included the value of the drums in the assessable value of the said fusel oil/Styrene Monomer. Appeals were filed by the assessee. The same were allowed by the Collector (Appeals). He held that the appellant had not collected any amount in excess of the amount indicated in the price lists. Therefore, in addition 980 to this amount, according to the Collector (Appeals), it was not open to the Asstt. Collector to inflate the assessable value without establishing the receipt of the additional consideration by the appellant apart from what had been shown in the invoice. There was a further appeal to the Tribunal. The Tribunal held that at the time of removal the goods were delivered from the factory in packed condition and the containers were not returnable by the buyer, there fore, the value had to be included in the assessable value. The Tribunal, therefore, accepted the revenue 's contention and restored the order of the Asst. Collector. Aggrieved therefrom, the appellant has come up in these appeals to this Court. On behalf of the appellant, Shri Salve contended that the Tribunal had failed to appreciate the admitted factual position that the fusel oil/Styrene Monomer manufactured by the appellant is sold in bulk and is capable of being so sold. Hence, according to the appellant, it is not necessary for the said fusel oil/Styrene Monomer to be supplied to the customers in drums in the aforesaid situation. The Tribunal, therefore, it was urged, ought to have held that the value could not be included in the assessable value of the fusel oil/Styrene Monomer. It was contended that in any event under the Act and the Rules, the duty of excise is payable by the manufacturer on the manufactured goods. The appellant was not a manufacturer of drums. The said drums were sup plied by the customers for the purpose of filling the fusel oil/Styrene Monomer. No duty of excise, therefore, could be collected from the appellant on such drums which were nei ther manufactured nor purchased by the appellant. It was further urged that on a correct and true interpretation of Section 4(4)(d)(i) of the Act, the cost of packing could be included in the assessable value only when the packing is either manufactured by the assessee or is purchased by the assessee. The said sub section does not contemplate, accord ing to the appellant, the inclusion of the cost of packing in the value of goods when the packing is supplied by a customer to a manufacturer on its own cost. It was contended by Shri Salve, appearing on behalf of the appellant, that on a correct analysis of section 4(4)(d), the duty being on the activity of manufacture whatever is necessary to bring the goods into existence alone can be taken into account for duty purposes. Reliance was placed by Shri Salve as well as by the learned Attorney General, appearing on behalf of the revenue, on the relevant provisions of the Act and the position as explained by this Court in Union of India & Ors. vs Bombay Tyre International Ltd., ; 981 Shri Salve has, however, contended that so far as this Court is concerned, this question is concluded by the deci sion of this Court in Collector of Central Excise vs Indian Oxygen Ltd., Learned Attorney General, however, contended that this decision did not deal with the present controversy. The said decision, according to learned Attorney General, was concerned with the rentals of certain oxygen gas cylinders supplied by the assessee. Reference was made to the decision of this Court in K. Radha Krishaiah vs Inspector of Central Excise, Gooty & Ors., Shri Salve referred to and relied on the decision of tile High Court of Bombay in the case of Govind Pay Oxygen Ltd. vs Asstt. Collector of Central Excise, Panaji & Ors., as also the decision of the Karnataka High Court in Alembic Glass Industries Ltd. vs Union of India & Ors., Learned Attorney General urged before us that the question whether for determining the assessable value of the excisable goods sold by the assessee in drums or containers provided by its customers (the asses see itself provided such drums/containers on payment of price in Civil Appeals Nos. 4339 41 of 1986) the value of such drums/containers would also have to be included on a correct interpretation of charging sections, namely, sec tions 3 and 4 of the Act. It was submitted that while deter mining the scope and nature of levy, as contemplated under section 3 of the Act, of central excise and the measure of such levy as provided in section 4 of the Act the principles laid .down in Union of India vs Bombay Tyre International Ltd., (supra), should be followed and reliance was placed on the several decisions of this Court which we will refer to later. Learned Attorney General emphasised that it is a well settled principle of construction that in taxing statutes one has only to look merely at what is clearly stated. There is no room, he contended, for any intendment. There is no equity about a tax, it was submitted. There is no presump tion as to tax. Reliance was placed for this proposition by the learned Attorney General on the observations of this Court in Gur Sahai Sehgal vs Commissioner of Income Tax, Punjab, ; at 898. Learned Attorney General also drew attention to the decision of this Court in A.K. Roy vs Voltas Ltd., and also to Atic Industries Ltd. vs H.H. Dave, Assistant Collector of Central Excise, ; at 568 to emphasise the point that percentages of sales do not in any manner affect determination of the assessable value of the excisable goods. In this connection, it may be rele vant to mention that in C.A. 4339 41/86, in respect of which show notice was issued as to why value of drums should not be included in the assessable value of fusel oil and Styrene Monomer, 90% of Styrene Mono 982 mer had been sold directly in tanks and only 10% of Styrene Monomer had been sold in drums and the show cause notice on 20th October, 1983 had been issued relating to clearance of fusel oil in 45 drums but the said drums had been supplied by the buyer. The Asstt. Collector in those appeals had included the costs of such drums in the value of styrene monomer. Relying on the two decisions referred to hereinbe fore, learned Attorney General emphasised that percentages of sales would not in any manner affect determination of the assessable value of the excisable goods. In A.K. Roy 's case (supra), it was held by this Court that though in that case that the fact that the assessee had effected sales to whole sale dealers only to the extent of 5 to 10% of its produc tion and that 90 95% of its production were only retail sales would not affect the question of determination of the assessable value of the excisable goods with reference to its value in the wholesale market. Therefore, the learned Attorney General submitted, the mere fact that the assessee in C.A. No. 4339 of 1986 sold only 10% of the excisable goods to its buyer where drums were supplied by the buyers themselves and that 90% of the sales were through tankers belonging to the customers would not in any manner affect the question or determination of the assessable value of the excisable goods inasmuch as the 10% of its sales to whole sale buyers were in drums supplied by the buyers at the time of removal. According to the learned Attorney General, the fact that 90% of the goods were supplied in tankers and not in containers had no relevance at all and the 10% represent ed the entire quantity of excisable goods delivered in packed condition. Learned Attorney General contended that the decision of Indian Oxygen Ltd. 's case (supra) cannot be relied on in view of the facts of this case. In that case, the learned Attorney General contended the only question which arose was whether the rental charges received by the assessee for the gas cylinders lent by it to its customers could be included in the assessable value and whether inter est earned on deposits made by the customers for the securi ty of the cylinders supplied by the assessee could also be included in the assessable value of the excisable goods. This Court clarified in the said decision that the said charges could not be included in the value of the goods since these were only ancillary and not incidental to the activities for the manufacture of gases. Learned Attorney General submitted that this Court had no occasion in that decision to consider the question which arises in the present case, namely whether the cost of packing materials would have to be included in the assessable value of the goods when goods are delivered in packed conditions. Learned Attorney General submitted that the decisions of the Bombay and Karnataka High Courts were wrong as they are contrary to the decision of this 983 Court in Bombay Tyre International 's case (supra). Reference was made both by the learned Attorney General and Shri Salve to the observations of this Court in Union of India vs Godfrey Phillips India Ltd., [1985] Supp. 3 SCR 123. In order to appreciate the controversy in this case, it is necessary to refer to the relevant provisions. Section 2(f) of the Act provides the definition of the term "manufacture". It states, inter alia, that manufacture includes any process incidental or ancillary to the comple tion of manufactured product. It is, therefore, necessary to bear in mind that a process which is ancillary or incidental to the completion of the manufactured product, that is to say, to make the manufacture complete would be "manufacture". It is relevant and important to bear this aspect in mind. Section 3 of the Act provides that there shall be levied and collected in such manner as maybe pre scribed duties of excise on all excisable goods other than salt which are produced or manufactured in India. "Excisable goods", under section 2(d) of the Act, means goods specified in the Schedule to the as being subject to duty of excise and includes salt. Section 4 of the Act provides for the valuation of excisable goods for purposes of charging of duty of excise. The relevant provi sion of section 4 of the Act deals with the manner as to how the value is to be computed and section 4(4)(d) stipulates as follows: ""value" in relation to any excisable goods, (i) where the goods are delivered at the time of removal in a packed condition, includes the cost of such packing except the cost of the packing which is of a durable nature and is returnable by the buyer to the assessee. Explanation. In this sub clause "packing" means the wrapper, container, bobbin, pirn, spool, reel or warp beam or any other thing in which or on which the excisable goods are wrapped, contained or wound; (ii) does not include the amount of the duty of excise, sales tax and other taxes, if any, payable on such goods and, subject t9 such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of 984 the wholesale trade at the time of removal in respect of such goods sold or contracted for sale; (Explanation. For the purposes of this sub clause, the amount of the duty of excise payable on any excisable goods shall be the sum total of (a) the effective duty of excise payable on such goods under this Act; and (b) the aggregate of the effective duties of excise payable under other Central Acts, if any, providing for the levy of duties of excise on such goods , and the effective duty of excise on such goods under each Act referred to in clause (a) or clause (b) shall be, (i) in a case where a notification or order providing for any exemption (not being an exemption for giving credit with respect to, for reduction or duty of excise under such Act on such goods equal to, any duty of excise under such Act, or the additional duty under Section 3 of the (51 of 1975), already paid] on the raw material or component parts used in the production or manufacture of such goods) from the duty of excise under such Act is for the time being in force, the duty of excise computed with refer ence to the rate specified in such Act in respect of such goods as reduced so as to give full and complete effect to such exemption; and (ii) in any other case, the duty of excise computed with reference to the rate specified in such Act in respect of such goods. " The expression "place of removal" has been defined under section 4(4)(b) of the Act to mean a factory or any other place or premises of production or manufacture of the excisable goods; or a warehouse or any other place or prem ises wherein the excisable goods have been permitted to be deposited without payment of duty, from where such goods are removed. It is in relation to Section 4(4)(d) that it is contended that except the cost of packing which is of a durable nature and is returnable by the buyer to the asses see to the buyer, in respect of all other costs of packing, the costs should be included in the value of the 985 excisable goods. The explanation to the said sub section defines the expression "packing" as the wrapper, container, bobbin, pirn, spool, reel or warp beam or any other thing in which or on which the excisable goods are wrapped, contained or wound. The provisions of these two sections must be judged in the light of the principles laid down by this Court in Union of India vs Bombay Tyre International, (supra). In that decision, it has been recognized that the measure employed for assessing a tax must not be confused with the nature of the tax, while the measure of the tax may be assessed by its own standard to serve as a standard for assessing the levy the Legislature need not contonour it along lines which spell out the character of the levy it self. Reliance may be placed to the observations of this Court at pp. 365 367 of the Report. This Court rejected the contention of the assessee in that case that because the levy of excise is a levy on goods manufactured or produced, the value of an excisable article must be limited to the manufacturing cost plus manufacturing profit. This Court reiterated that section 4 of the Act provides the measure by reference to which the charge is to be levied. Therefore, the charge is to be determined by the terms of section 4 of the Act. But it has to be borne in mind that the duty of excise is chargeable with reference to the value of the excisable goods and the value is defined in express terms in that section. Though the learned Attorney General referred to the fact that in taxing statutes, one must look merely at what is clearly stated, yet such a construction must be made in the context of the entire scheme of the Act. Learned Attorney General emphasised that the language of clause (d) of sub section (4) of section 4 of the Act made it clear beyond doubt that in cases where the Act provides for excise duty with reference to value of the excisable goods, while determining the value of such goods, the cost of packing where the excisable goods are delivered at the time of removal in packed condition, would have to be included in the assessable value of the excisable goods. According to the learned Attorney General, since the Act provides for only one exception to this measure, namely, non inclusion of the cost of such packing where the packing is durable in nature and is returnable by the buyer to the assessee, in all other cases the cost of the packing would have to be included in the assessable value of the excisable goods where such goods are delivered at the time of removal in packed condition. According to him, the plain language of the Statute does not permit of any further exceptions being read into the Act. To hold otherwise, it was contended, would make the provision of the measure of the levy unworka ble inasmuch as in every case the measure would have to differ in the light of the contentions as may be raised by the assessees depending upon the business arrangement of each assessee. 986 It was contended that it is not correct to equate the meas ure of tax with the levy itself which is the basis of the contentions of the appellant. In my opinion, however, the correct position must be found out bearing in mind the essential nature of excise duty. Excise duty, as has been reiterated and explained, is a duty on the act of manufacture. Manufacture under the excise law, is the process or activity which brings into being articles which are known in the market as goods and to be goods these must be different, identifiable and distinct articles known to the market as such. It is then and then only that manufacture takes place attracting duty. In order to be goods, it was essential that as a result of the activ ity, goods must come into existence. For articles to be goods, these must be known in the market as such and these must be capable of being sold or being sold in the market as such. See the observations of this Court in Union of India vs Delhi Cloth & General Mills Ltd., [1963] Supp. 1 SCR 586; South Bihar Sugar Mills Ltd., etc. vs Union of India & Ors., ; and Bhor Industries Ltd., Bombay vs Collec tor of Central Excise, Bombay; , In order, therefore, to be manufacture, there must be activity which brings transformation to the article in such a manner that different and distinct article comes into being which is known as such in the market. If in order to be able to put it on the market, a certain amount of packing or user of containers or wrappers or putting them either in drums or containers, are required, then the value or the cost of such wrapper or container or drum must be included in the assess able value and if the price at which the goods are sold does not include that value then it must be so included by the very force of the terms of the Section. The question, there fore, that has to be examined in this case is whether these drums, containers or packing, by whatever name they are called, are necessary to make fusel oil or styrene monomer marketable as such or can these goods be sold without the containers or drums or packing? In my opinion, the facts established that these could be. The fact that 90% of the goods in C.A. No. 4339 of 1986 were delivered in tankers belonging to the assessee and only 10% of the goods were in packed condition at the time of removal clearly establish that the goods were marketable without being packed or contained in drums or containers. These were in the storage tanks of the assessee and were as such marketable. In this connection, it is necessary to refer to the observations of this Court in Collector of Central Excise vs Indian Oxygen Ltd., (supra). In that case, as mentioned hereinbefore, the respondent Indian Oxygen Ltd. was manufacturer of dissolved acetylene gas and compressed oxygen gas, called therein 'the gases '. The respondent supplied these gases in cylinders at their factory gate. 987 For taking delivery of these gases, some consumers/customers used to bring their own cylinders and take the delivery, while others used to have the delivery in the cylinders supplied by the respondent. For the purpose of such supply of cylinders, certain rentals were charged by the respondent and also to ensure that these cylinders were returned prop erly, certain amounts of deposit used to be taken from the customers. On these deposits, notional interest @ 18% p.a. was calculated. The two amounts with which this Court was concerned were rentals of the cylinders and the notional interest earned on the deposit of cylinders whether these two amounts were includible in the value under section 4 of the Act was the question. The revenue 's case was that the no tional value of deposit was rental and hence should be included in computing the assessable value. The respondent, however, disputed this. Analysing the scope of section 4 of the Act, it was held by this Court that supply of gas cylinders might be ancillary activity to the supply of gases but this was not ancillary or incidental to the manufacture of gases. The goods were manufactured without these cylinders. There fore, the rental of the same though income of ancillary activity, was not the value incidental to the manufacture and could not be included in the assessable value. Similar ly, in my opinion, drums even though these were ancillary or incidental to the supply of fusel oil and styrene monomer, these were not necessary to complete the manufacture of fusel oil or styrene monomer; the cost of such drums cannot, therefore, be included in the assessable value thereof. Furthermore, no cost was, in fact, incurred by the assessee. Drums had been supplied by the buyers. This position, in my opinion, was correctly approached in the decision of the Bombay High Court in Govind Pay Oxygen Ltd. vs Assistant Collector of Central Excise, Panaji & Ors., (supra), where it was held that section 4(4)(d)(i) of the Act does not make any provision for including the cost of packing which was supplied by the buyer to the assessee for the obvious reason that the assessee did not spend for such packing. It was for this simple reason that the legislature had not thought it fit to exempt such pack ing from the value of excisable goods. In my opinion, that is the correct approach to the problem. Similarly, Karnataka High Court in Alembic Glass Industries vs Union of India & Ors., (supra) held that the term "value" defined in section 4(4)(d)(i) provides for exclusion of cost of packing materi al which was of durable nature and was returnable by the buyer to the assessee. Hence, there was no logic or reason for not excluding the value of packing material supplied by the buyer himself which is of durable nature and is return able by the assessee to the buyer. Furthermore, in my opin ion, in 988 terms of section, it is not includible. The contention that the value of packing materials including those supplied by the buyer, has to be included in the value of the goods, is repugnant to the very scheme of section 4. It overlooks the use of the expression "cost" in relation to packing in the clause (i) of section 4(4)(d) of the Act. The word "cost" has a definite connotation, and is used generally in contra distinction of the expression "value". Thus, the clear implication of the use of the word "cost" is that only packing cost of which is incurred by the assessee, i.e., the seller, is to be included. The use of the expression "cost" could not obviously be by way of reference to packing for which the cost is incurred by the buyer. It has to be borne in mind that such a provision would make the provision really unworkable, since in making the assessment of the seller, there is no machinery for ascertaining the "cost" of the packing which might be supplied by the buyer. Such a contention further overlooks the scheme of clause (i) where under durable packing returnable by the buyer has to be excluded. It would create an absurd situation if durable packing supplied by the assessee and returnable to the assessee is not to be included in the assessable value but a durable packing supplied by the buyer to the assessee and returnable to the buyer is made a part of the assessable value. One has to bear in mind the scheme of clause (d) of section 4(4) of the Act. The two sub clauses of this clause deal with abatements or deductions in respect of actual burdens, either by way of an expenditure or discount, borne by the assessee. Clause (ii) deals with duties of excise, sales tax and other taxes, if any, payable on such goods. Here also obviously, the reference is not generally to the taxes payable on such goods by either the assessee or the buyer but is obviously to the taxes payable by the assessee. The trade discount is referable to that allowed by the assessee. Therefore, in the same sense, clause (i) would only be referable to the packing in respect to which "cost" is incurred by the assessee. It has to be borne in mind that the scheme of old section 4 of the Act and new section 4 is the same as was held by this Court in the case of Bombay Tyre International, (supra) at pages 376 E F, 377 H and 378 A B, H of the Report. The scheme of the old section 4 is indisputedly to determine the assessable value of the goods on the basis of the price charged by the assessee, less certain abatements. There was no question of making any additions to the price charged by the assessee. The essen tial basis of the "assessable value" of old section 4 was the wholesale cash price charged by the assessee. To con strue new section 4 as now suggested would amount to depart ing from this concept and replacing it with the concept of a notional value comprising of the wholesale cash price plus certain notional charges. This would be a radical departure from old section 4 and cannot be said to be on the 989 same basis. It has to be borne in mind that the measure of excise duty is price and not value. It has been so held by this Court in Bombay Tyre International 's case (supra). See in this connection, the observations of this Court in Bombay Tyre 's case at pages 368,377,379,382 and 383, where this Court emphasised that in both the old section 4 and the new section 4, the price charged by the manufacturer on a sale by him represents the measure. Price and sale are related concepts and price has a definite connotation. Therefore, it was held that the "value" of the excisable article has to be computed with reference to the price charged by the manufacturer, the computation being made in accordance with the terms of section 4. This Court rejected the contention on behalf of the assessee in that case, that section 4 also levied excise on the basis of a conceptual value which must exclude post manufacturing expenses and post manufacturing profit by observing that the contention proceeded on the assumption that a conceptual value governed the assessment of the levy. It was reiterated that the old section 4 and new section 4 determine the value on the basis of price charged or chargeable by the particular assessee. See in this connection, the observations of this Court at p. 388 F & G of the report. It has also to be borne in mind that in any event in so far as Styrene Monomer Oil is concerned, the value of the drums in which it is packed is not includible in the assess able value of the goods. It is not all packing which is liable to be included under clause 4(4)(d)(i) in the assess able value of the goods. It is only that degree of secondary packing which is necessary for assessable articles to be in the condition in which it is generally sold in the wholesale market which can be included at the factory gate which should be included in the value of the article. See the observations of this Court in Bombay Tyre International 's case (supra) at page 393 D & E. In the case of Union of India vs Godfrey Phillips Ltd., , this position was clarified by the majority judgment. In that case, the respondent therein manufactured cigarettes in their factories. The cigarettes so manufactured were packed initially in paper/cardboard packets of 10 and 20 and these packets were then packed together in paper/cardboard car tons/outers. These cartons/outers were then placed in corru gated fibreboard containers and delivered by the respondents to the wholesale dealers at the factory gate. There was no dispute that the cost of primary packing into packets of 10 and 20 and the cost of secondary packing in cartons/ outers must be included in determining the value of the cigarettes for the purpose of assessment of excise duty, since such packing would fall under section 4(4)(d)(i) of the Act. The question that arose was whether the cost of final packing in corrugated fibreboard containers 990 would be liable to be included in the value of the ciga rettes for the purpose of assessment to excise duty. The question was answered in negative by a majority of 2:1 of this Court. Chief Justice Bhagwati dissented. It was held by Pathak, J. (as the learned Chief Justice then was) that such cost of corrugated fibreboard containers could not be in cluded in the determination of "value" in section 4(4)(d)(i) of the Act for the purposes of excise duty. For the purpose of measure of levy on cigarettes, the statute has given an extended meaning to the expression "value in section 4(4)(d) of the Act. Plainly, the extension must be strictly con strued, for what is being included in the value now is something beyond the value of the manufactured commodity itself. The corrugated fibreboard containers could be re garded as secondary packing. These were not necessary, it was emphasised by the majority of the Judges, for selling the cigarettes in the wholesale market at the factory gate. These were only employed, it was emphasised by the majority of the Judges, for the purpose of avoiding damage or injury during transit. It was perfectly conceivable that the whole sale dealer who took delivery might have his depot at a very short distance only from the factory gate or might have such transport arrangements available that damage or injury to the cigarettes could be avoided. A.N. Sen, J., who agreed with Pathak, J., observed that on a proper construction of section 4(4)(d)(i), it was clear that any secondary packing done for the purpose of facilitating transport and smooth transit of the goods to be delivered to the buyer in the wholesale trade could not be included in the value for the purpose of assessment of excise duty. Chief Justice Bhag wati, on the other hand, held that corrugated fibreboard containers in which the cigarettes were contained fell within the definition of 'packing ' in the Explanation to section 4(4)(d)(i) and if these formed part of the packing in which the goods were packed when delivered at the time of removal, then under section 4(4)(d)(i) read with the Expla nation, the cost of such corrugated fibreboard containers would be liable to be included in the value of cigarettes. It is apparent from the wide language, according to the learned Chief Justice, of Explanation to section 4(4)(d)(i) that every kind of container in which it can be said that the excisable goods are contained would be 'packing ' within the meaning of the Explanation. Even secondary packing would be within the terms of the Explanation, because such second ary packing would also constitute a wrapper or a container in which the excisable goods are wrapped or contained. But the test to determine whether the cost of any particular kind of secondary packing is liable to be included in the value of the article is whether a particular kind of packing is done in order to put the goods in the condition in which they are generally sold in the wholesale 991 market at the factory gate. If they are generally sold in the wholesale market at the factory gate in a certain packed condition, whatever may be the reason for such packing, the cost of such packing would be includible in the value of the goods for assessment to excise duty. According to learned Chief Justice, it makes no difference to the applicability of the definition in section 4(4)(d)(i) read with Explana tion that the packing of the goods ordinarily sold by the manufacturer in the wholesale trade is packing for the purpose of protecting the goods against damage during trans portation or in the warehouse. However, if any special secondary packing is provided by the assessee at the in stance of a wholesale buyer which is not generally provided as a normal feature of the wholesale trade, the cost of such special packing would not be includible in the value of the goods. It may be necessary in this connection to refer to the observations of this Court in Union of India & Ors. vs Bombay Tyre International Ltd., (supra) dealing with the aspect of secondary packing, where this Court reiterated that the degree of secondary packing which is necessary for putting the excisable article in which it is sold in the wholesale market at the factory was the degree of packing where the cost would be included in the value of the goods for the purpose of excise duty. Pathak, J., as the Hon 'ble Chief Justice was then, observed whether it is necessary for putting the cigarettes in the conditions in which they were sold in the wholesale market or at the factory gate. He answered that it is not. It was found that these corrugated fibreboard containers are employed for the purpose of avoid ing damage or injury during the transit. It was conceivable that the wholesale dealer who takes delivery might have its depot at a very short distance only from the factory gate or may have such transport arrangements available that damage or injury to the cigarettes could be avoided. In those cases, the corrugated fibreboard containers, according to Pathak, J., were not necessary for selling the cigarettes in the wholesale market. I am of the opinion that the views expressed by the majority of the learned Judges were correct and it appears, with respect, that the observations of Chief Justice Bhag wati were not consistent with the judgment of this Court in Bombay Tyre International (supra) at p. 379. The learned Attorney General sought to suggest that the decision of this Court in Union of India vs Godfrey Phillips Ltd. (supra) perhaps might require reconsideration. I am unable to accept this suggestion. The ratio of the decision in Godfrey Phil lips ' case (supra) is in consonance with the decision of Union of India vs Bombay Tyre International (supra) and further in consonance with the true basis of excise as explained in several decisions mentioned before. In the premises, on 992 the facts of this case, it is clear that the goods were not sold in drums generally in the course of the wholesale trade. There was evidence that 90% of the goods were deliv ered at the time of removal without being put in drums. There was no evidence that there was any necessity of pack ing or putting these in drums prior to their sale. It was not necessary that the articles were to be placed in drums for these to be able to generally to enter the stream of wholesale trade or to be marketable. On the other hand, there was evidence that in the wholesale trade, these goods were delivered directly in tankers and deliverable as such. But as a matter of fact, delivery in drums was only to facilitate their transport in small quantities. The manufac ture of the goods was complete before these were placed in drums. The completely manufactured product was stored in tanks. From these tanks the goods were removed directly and placed in vehicles for their movement for 90% of the sales, the vehicle of removal was tankers and 10% of the sales, the vehicle of removals was drums. In the premises, the value of the drums with regard to the fusel oil/styrene monomer irrespective of whether these were supplied by the assessee or not, are not includible in the assessable value of the Styrene Monomer. In the aforesaid view of the matter, I am of the opinion that these appeals have to be allowed and the orders of the Tribunal set aside. The Tribunal was in error in holding that as at the time of removal, goods were delivered from the factory in packed condition and the containers were not returnable to by the buyer, the value of the drums is to be included. It is reiterated that in order to be deliverable, it is not necessary that the goods should be delivered in packed condition and that the containers were not necessary to make the goods marketable. In the aforesaid view of the matter, the appeals are allowed and the orders of the Tribunal are set aside. The value of the aforesaid drums should, therefore, be excluded from the assessable value for the purpose of excise duty. In the facts and the circumstances, however, there will be no order as to costs. RANGANATHAN, J I have perused the judgment proposed to be delivered by my learned brother Sabyasachi Mukharji, J. I agree with the conclusion arrived at by him but I would like to rest it entirely on the language of section 4(4)(d)(i) of the Central Excises & Salt Act, 1944, without going into the larger questions raised by counsel and dealt with by my learned brother. The assessee company is manufacturing and selling fusel oil. 993 It also manufactures and sells another liquid known as styrene monomer. The fusel oil and monomer are supplied generally in tankers brought by the customers Sometimes it is supplied in drums provided by the customers who are not charged anything for those drums. In the case of styrene monomer, the finding is that the supply is in tankers to the extent of 90% and only 10% of the sales were made in drums. The issue before us is whether the costoat of the drums supplied by the customer for which he is not charged should be included in the assessable value of the goods in ques tion: in other words, whether a notional amount representing the cost of the drums should be added to the sale price charged by the assessee to its constituents. Shri Harish Salve, arguing for the appellants, con tended that the cost of packing referred to in section 4(4)(d)(i) is such cost incurred by a manufacturer and not the cost of packing borne by the buyer. In the alternative, he contended that atleast so far as styrene monomer sales are concerned, the cost of drums cannot enter into the picture. Citing several previous authorities of this Court he contended on the following lines: "It is not all packing that is liable to be included under section 4(4)(d)(i). It is only that degree of secondary packing which is necessary for the assessable article to be placed in the condition in which it is sold in the wholesale market at the factory gate which can be in cluded in the assessable value of the article. On the facts of this case, there is evidence that 90% of the monomer was delivered at the time of removal without being put in drums. There was no evidence that there was any necessity of packing or putting them in drums prior to their sale. Delivery in drums was only to facilitate their transport in small quantities. The manufacture of the monomer was complete when it was stored in tanks. From these tanks, the goods were, to the extent of 90%, removed directly and placed in tankers. In 10% of the sales, the "vehicle" of removal was drums. In the premises, the value of the drums irrespective of whether these where supplied by the assessee or not, is not inclu dible in the assessable value of the goods. The learned Attorney General, on the other hand, contended that the terms of section 4(4)(d)(i) are very clear and specific. He pointed out though "manufacture" is the taxable event, the measure of the levy need not be and is not to be restricted to the cost of 994 manufacture. So it is open to Parliament to prescribe any measure by reference to which the charge is to be levied and this is what is done under section 4. In construing section 4(4)(d)(i), all that has to be seen is whether the goods are delivered in packed condition. If this question is answered in the affirmative, then, in respect of the goods so sold, the cost of packing, whether incurred by the manufacturer or by the supplier, has to be automatically included in the assessable value if necessary, by addition to the sale price, except only where the packing is of durable nature and returnable to the manufacturer. He reminded us of the oft quoted truism that, in tax matters, one has to look at what is said and that there is no question of any intend ment, implication, equity or liberality in construing the taxing provision. I agree with Mukharji, J. that this con tention cannot be accepted. The principle referred to by the learned Attorney General is unexceptionable but the words of a statute have to be read in the context and setting in which they occur. The proper interpretation to be placed on the words of section 4(4)(d)(i) has been explained in the judg ment of my learned brother and I am in full agreement with him on this point. There is ample internal indication in the statute to show that the cost of packing referred to in the above clause is the cost of packing incurred by the manufac turer and recovered by him from the purchaser whether as part of the sale price or separately. The object and purpose of the levy, the meaning of the expression 'assessable value ' as interpreted in section before its amendment cou pled with the now well established position that the amend ment intended to make no change in this position, the use of the word "cost" rather than "value", the nature of the other payments referred to in sub clause (ii) all these show beyond doubt that, while generally the normal price for which the goods are sold at the factory gate is to be taken as the assessable value, an addition thereto has to be made where, in addition to the price, the manufacturer levies a charge for the packing which is intrinsically and inevitably incidental to placing the manufactured goods on the market. It will indeed be anomalous if the cost of an item of pack ing charged for from the customer is to be excluded from the assessable value where the packing, though durable, is returnable to the manufacturer but the cost of an item of durable packing supplied by the customer and taken back by him is liable to be included in the assessable value. This conclusion, in my opinion, is sufficient to dispose of the present appeals. In this view of the matter, I consider it unnecessary to discuss wider questions as to the circumstances in which the cost of packing (primary or secondary) can at all enter into the determination of the 995 assessable value under section 4(4)(d)(i) canvassed by the counsel for the assessee or as to the correctness or other wise of the decision of this Court in Union of India vs Godfrey Phillips, by the learned Attorney General. My conclusion is that the answer to the question whether the cost of the container should be includ ed in the assessable value or not would depend upon whether the goods in question are supplied in a packed condition or not. If the answer is yes, three kinds of situation may arise. Where the manufacturer supplies his own container or drum but does not charge the customer therefore, then the price of the goods will also include the cost of the con tainer. There will be no question of separate addition to the sale price nor can the assessee claim a deduction of the cost of packing from the sale price except where the con tainer is a durable one and is returnable to the manufactur er. If the manufacturer supplies the drums and charges the customers separately therefore, then, under section 4(4)(d)(i), the cost of the drums to the buyer has to be added to the price except where the packing is of durable nature and is to be returned to the manufacturer. If on the other hand, the manufacturer asks the customer to bring his own container and does not charge anything therefore then the cost (or value) of the packing cannot be "notionally" added to, or subtracted from, the price at which the goods have been sold by the manufacturer. VERMA, J. I have the benefit of perusing the judgments prepared separately by my learned Brothers Mukharji, J. and Ranganathan, J. both of whom have arrived at the same con clusion. My conclusion also is the same. However, I append this short note only to emphasize that in my opinion also the view taken by all of us on the construction of section 4(4)(d)(i) of the (here inafter referred to as "the Act") is alone sufficient, in the present matters, to support the conclusion we have reached and it does not appear necessary to consider the wider propositions canvassed by the two sides. I agree that the cost of packing envisaged in section 4(4)(d)(i) of the Act for determining the "value" in rela tion to any excisable goods is only the "cost of such pack ing" incurred by the manufacturer and recovered from the buyer except where the packing is of a durable nature and is returnable by the buyer to the manufacturer. The "cost of such packing" referred in section 4(4)(d)(i) does not in clude within its ambit the cost of packing not incurred by the manufacturer when the packing is supplied by the buyer and not the manufacturer. This construction of the expres sion "cost of such packing" in section 996 4(4)(d)(i) of the Act clearly excludes in these matters the question of its addition to the price of goods recovered by the manufacturer from the buyer for determining the "value" in relation to the excisable goods for computing the duty payable on it. In my opinion also, the above conclusion reached on the language of section 4(4)(d)(i) of the Act is sufficient to allow these appeals. For this reason, I agree with Rangana than, J. that the wider propositions canvassed by the two sides including the question of correctness of the view relating to secondary packing taken in Union of India vs Godfrey Phillips India Ltd., raised by the learned Attorney General need not be considered and decided in these matters. I agree with my learned Brothers that both these appeals be allowed. R.S.S. Appeals allowed.

The appellant company/assessee manufactures and sells fusel oil/ styrene Monomer falling under Tariff Item No. 68 of the 1st Schedule to the . The said fusel oil/styrene Monomer is sold in bulk and generally delivered to the customers at the appellant 's factory in road tankers. Some times it is supplied in drums brought by the customers who are not charged anything for those drums. In the case of Styrene Monomer, the finding is that the supply was in tankers to the extent of 90% and only 10% of the sales were made in drums. Two notices were issued to the appellant to show cause as to why the value of the drums should not be included in the assessable value of the goods. In reply, the appellant contended that as the drums were supplied by the buyer the value thereof could not be included in the assessable value. The Assistant Collector however included the value of the drums in the assessable value of the said fusel oil/Styrene Monomer. The Collector (Appeals) allowed the appellant 's appeal and held that it was not open to the Assistant Col lector to inflate the assessable value without establishing the receipt of the additional consideration by the appellant apart from what had been shown in the invoice. The Customs, Excise and Gold (Control) Appellate Tribunal allowed the further appeal filed by the Revenue and held that at the time of removal the goods were delivered from the factory in packed condition and the containers were not returnable by the buyer, therefore, the value had to be included in the assessable value. Before this Court it was contended on behalf of the appellant that it was not all packing that was liable to be included under section 4(4)(d)(i) of the Customs and Central Excises Act, it was only that degree of secon 975 dary packing which was necessary for the assessable article to be placed in the condition in which it was sold in the wholesale market at the factory. gate which could be includ ed in the assessable value of the article; fusel oil/Styrene Monomer was sold in bulk and was capable of being so sold, hence it was not necessary for the said fusel oil/Styrene Monomer to be supplied to the customer in drums; the duty of excise was payable on manufactured goods and no duty of excise could be collected from the appellant on such drums which were neither manufactured nor purchased by the appel lant; the duty being on the activity of manufacture whatever was necessary to bring the goods into existence alone could be taken into account for duty purposes; and the sub section did not contemplate the inclusion of the cost of packing in the value of goods when the packing was supplied by a cus tomer to a manufacturer on its own cost. On behalf of the Revenue the learned Attorney General contended that the value of drums/containers would also have to be included on a correct interpretation of charging sections, namely, sections 3 and 4 of the Act; the terms of section 4(4)(d)(i) were very clear and specific; it was a well settled principle of construction that in taxing stat utes one had only to look at what was clearly stated, and there was no room for any intendment; percentages of sales did not in any manner affect determination of the assessable value of the excisable goods; though "manufacture" was the taxable event, the measure of the levy need not be and was not to be restricted to the cost of manufacture; it is open to Parliament to prescribe any measure by reference to which the charge was to be levied and this is what was done under section 4; and in construing section 4(4)(d)(i). all that had to be seen was whether the goods were delivered in packed conditions and if this question was answerable in the af firmative, then, in respect of the goods so sold, the cost of packing, whether incurred by the manufacturer or by the supplier, had to be automatically included in the assessable value, if necessary, by addition to the sale price, except only where the packing was of durable nature and returnable to the manufacturer. Allowing the appeals, this Court, HELD: (1) The correct position must be found out bearing in mind the essential nature of excise duty. Excise duty is a duty on the act of manufacture. Manufacture under the excise law is the process of activity which brings into being articles which are known in the market as goods and to be goods these must be different, identifiable and distinct articles known to the market as such. It is then and then only that 976 manufacture takes place attracting duty. [986B] (2) Section 2(f) of the Central Excises & Salt Act provides the definition of the term "manufacture". It states, inter alia, that manufacture includes any process incidental or ancillary to the completion of manufactured product. In the instant case, the drums even though these were ancillary or incidental to the supply of fusel oil and styrene monomer, these were not necessary to complete the manufacture of fusel oil or styrene monomer. [983B C, 987D] (3) In order to be 'manufacture ', there must be activity which brings transformation to the article in such a manner that different and distinct article comes into being which is known as such in the market. 'If in order to be able to put it on the market, a certain amount of packing or user of containers or wrappers or putting them either in drums or containers, are required, then the value or the cost of such wrapper or container or drum must be included in the assess able value and if the price at which the goods are sold does not include that value then it must be so included by the very force of the terms of the section. [986C E] (4) The clear implication of the use of the word "cost" in relation to packing in the clause (i) of section 4(4)(d) of the Act is that only packing cost of which is incurred by the assessee, i.e. the seller, is to be included. The use of the expression "cost" could not obviously be by way of reference to packing for which the cost is incurred by the buyer. [988B] Union of India & Ors. vs Bombay Tyre International Ltd., ; ; Collector of Central Excise vs Indian Oxygen Ltd., ; K. Radha Krishaiah vs In spector of Central Excise, Gooty & Ors., ; Govind Pay Oxygen Ltd. vs Asstt. Collector of Central Ex cise, Panaji & Ors., ; Alembic Glass Indus tries Ltd. vs Union of India & Ors., ; Gur Sahai Sehgal vs Commissioner of Income Tax, Punjab, ; ; A.K. Roy vs Voltas Ltd., ; Atic Industries Ltd. vs H.H. Dave Assistant Collector of Central Excise, ; Union of India vs Godfrey Phillips India Ltd., [1985] Supp. 3 SCR 123; Union of India vs Delhi Cloth & General Mills Ltd., [1963] Supp. 1 SCR 586; South Bihar Sugar Mills Ltd., etc. vs Union of India & Ors. , ; ; Bhor Industries Ltd., Bombay vs Collector of Central Excise, Bombay, ; and Union of India vs Godfrey Phillips Ltd., , referred to. 977 (5) On the facts of this case, it is clear that the goods were not sold in drums generally in the course of the wholesale trade. There was no evidence that there was any necessity of packing or putting these in drums prior to their sale, or to be able to generally to enter the stream of wholesale trade or to be marketable. On the other hand, there was evidence that in the wholesale trade, these goods were delivered directly in tankers and deliverable as such. But as a matter of fact, delivery in drums was only to facilitate their transport in small quantities. The manufac ture of the goods was complete before these were placed in drums. The completely manufactured product was stored in tanks. From these tanks the goods were removed directly and placed in vehicles for their movement for 90% of the sales, the vehicle of removal was tankers and for 10% of the sales, the vehicle or removal was drums. In the premises, the value of the drums with regard to the fusel oil/ styrene monomer irrespective of whether these were supplied by the assessee or not. are not includible in the assessable value of the Styrene Monomer. [992A D] Per section Ranganathan, J. (agreeing with the conclusion but resting it entirely on the language of section 4(4)(d)(i) of the Central Excises & Salt Act) (1) There is ample internal indication in the statute to show that the cost of packing referred to in section 4(4)(d)(i) of the Central Excises & Salt Act, 1944 is the cost of packing incurred by the manufacturer and recovered by him from the purchaser whether as part of the said price or separately. [994D] (2) While generally the normal price for which the goods are sold at the factory gate is to be taken as assessable value, an addition thereto has to be made where, in addition to the price, the manufacturer levies a charge for the packing which is intrinsically and inevitably incidental to placing the manufactured goods on the market. [994F] (3) The answer to the question whether the cost of the container should be included in the assessable value or not would depend upon whether the goods in question are supplied in a packed condition or not. If the answer is yes, three kinds of situation may arise. Where the manufacturer sup plies his own container or drum but does not charge the customer therefore, then the price of the goods will also include the cost of the ' container. There will be no ques tion of separate addition to the sale price nor can the assessee claim a deduction of the cost of packing from the sale price except where the container is a durable one 978 and is returnable to the manufacturer. If the manufacturer supplies the drums and charges the customer separately therefore, then, under section 4(4)(d)(i), the cost of the drums to the buyer has to be added to the price except where the packing is of durable nature and is to be returned to the manufacturer. If on the other hand, the manufacturer asks the customer to bring his own container and does not charge anything therefore then the cost (or value) of the packing cannot be "notionally" added to, or subtracted from, the price at which the goods have been sold by the manufac turer. [995B D] Per J.S. Verma, J. (agreeing with Ranganathan, J. that the conclusion reached on the language of section 4(4)(d)(i) of the Act is sufficient to allow these appeals). (1) The cost of packing envisaged in section 4(4)(d)(i) of the Act for determining the "value" in relation to any excisable goods is only the "cost of such packing" incurred by the manufacturer and recovered from the buyer except where the packing is of a durable nature and is returnable by the buyer to the manufacturer. [995G] (2) The "cost of such packing" referred to in section 4(4)(d)(i) does not include within its ambit the cost of packing not incurred by the manufacturer when the packing is supplied by the buyer and not the manufacturer. [995H]

ivil Appeals Nos. 4582 4585 of 1989. 125 From the Judgment and Order dated 29.7.1988 of the Allahabad High Court in C.M.W.P. No. 11933 & 16493/1987. 1573 1/1987 & 12373/1987. R.K. Garg, S.P. Singh, N.M. Popli, R.B. Misra, Uma Nath Misra and R.C. Kaushik for the Appellants. R.B. Mehrotra for the Respondent. The Judgment of the Court was delivered by MISRA, J. Special leave granted. The short question in these appeals is as to whether the High Court was right in upholding the decision of the Uttar Pradesh Public Service Commission to re hold the recruitment examination. On the requisition of the State Government the State Public Service Commission had undertaken the recruitment to the post of Upper Zila Basic Shiksha Adhikari (Women), District Inspectress of Girls Schools/Associate Regional Inspectress of Girls Schools in Uttar Pradesh Educational Service Junior Scale (Women 's Branch) The advertisement inviting applications from eligible candidates was published on May 5, 1985 and a corrigendum was published on June 8, 1985. The recruitment examination was in two stages written and interview/personality test. After the written examina tion was over, on the basis of the results thereof success ful candidates upto a base limit have to be called to be interviewed. On account of improper feeding into the comput er some of the candidates who had better performance in the written examination were not called and candidates securing lesser marks in the written examination were not only called for interview but were also finally selected. When this position was known and upon an inquiry was factually estab lished, the Public Service Commission decided to cancel the entire recruitment examination and asked for re holding of it. The High Court has upheld the action of the Public Service Commission and has dismissed the writ petitions. We have heard counsel for the parties and are of the view that when no defect was pointed out in regard to the written examination and the sole objection was confined to exclusion of a group of successful candidates in the written examination from the interview, there was no justification for cancelling the written part of the recruitment examina tion. On the other hand, the situation could have been appropriately met by setting aside the recruitment and asking for a 126 fresh interview of all eligible candidates on the basis of the written examination and select those who on the basis of the written and the freshly held interview became eligible for selection. We allow the appeals, set aside the judgment of the High Court and direct that the order of the Public Service Com mission cancelling the written examination shall stand vacated. In lieu thereof we direct that the results of the written examination shall stand sustained and shall form the basis for the interview part of the recruitment and on the basis of the two examinations and in terms of the recruit ment rules fresh selections shall be made. We would clarify that with the dismissal of the special leave petitions the selection of the two Scheduled Caste candidates and five Backward Class candidates has become final and would not be disturbed. The State Public Service Commission should have been more careful in dealing with the matter so that four years in the process of recruitment would not have been lost and the public cause would not have suffered; public time would not have been wasted in requiring re doing of what had once been done and the litigation could have been avoided. We have also not been able to appreciate the justification for cancellation of the written part of the recruitment examina tion and drive the candidates to litigation. On the facts alleged we direct that the recruitment which is now to be re done by completing the interview examination should be finalised within four months hence. There shall be no order as to costs. T.N.A. Appeals allowed.

The Uttar Pradesh Public Service Commission conducted recruitment examination to the post of Upper Zila Basic Shiksha Adhikari (Women) in two stages written test and interview. The Commission cancelled the entire recruitment examination for re holding it, after it was found that due to improper feeding into the computer candidates who secured lesser marks in the written examination were interviewed and finally selected while candidates who had better performance were not called for interview. Writ petitions challenging the action of the Commission were dismissed by the High Court. Hence these appeals. Allowing the appeals and setting aside the judgment of the High Court, this Court, HELD: When no defect was pointed out in regard to the written examination and the sole objection was confined to exclusion of a group of successful candidates in the written examination from the interview, there was no justification for cancelling the written part of the recruitment examina tion. [125G] The situation on the other hand could have been appro priately met by setting aside the recruitment and asking for a fresh interview of all eligible candidates on the basis of the written examination and selection of those who on the basis of the written and the freshly held interview became eligible for selection. [125H; 126A]

ivil Appeal No. 4649 of 1989. From the Judgment and Order dated 26.7.1988 of the Allahabad High Court in Review Application No. 27(W) of 1988. Anil Dev Singh and Mrs. section Dikshit for the Appellants. Yogeshwar Prasad, Vijay Hansaria, Sunil K. Jain, S.K. Jain for the Respondents. The Judgment of the Court was delivered by VENKATARAMIAH, CJ. The Respondent, Arun Govil had been granted a permanent commission in the Indian Air Force and was working as a Pilot Officer. In the year 1972 he was declared unfit by a Medical Board and was, therefore, inval idated from I.A.F. The Government of India issued a scheme for the benefit of ex military officials. The State of Uttar Pradesh also adopted the same scheme. Under that scheme the ex military officials were appointed on Contract basis for a fixed term which could be extended from time to time subject to the suitability of the official concerned but not beyond 58 years of age. Pursuant to the said scheme the State of Uttar Pradesh appointed the respondent as the Secretary, Zila Sainik Board, Unnao on 20th of August, 1979. Paragraph 2 of the said order of appointment issued on 20th August, 1979 reads thus: "The appointment shah be on contract for a period of one 241 year w.e.f. the date of assumption if it is not terminated earlier by giving a one month 's notice by the Hon 'ble Gover nor or on paying one month 's salary in lieu thereof or by giving one month 's notice, by the Officer. " The respondent was required to furnish his acceptance of the terms and conditions contained in the said order includ ing the above term relating to the period of appointment and on his accepting the terms and conditions he was appointed as the Secretary in the District Soldiers Board in the district of Unnao in the State of Uttar Pradesh '. The said term was extended retrospectively, first upto 20th August, 1982 by an order passed in September, 1981 and it 'was again extended upto 31st March, 1983 by an order made in February, 1983. Again the term was extended upto 30th of August, 1985 by an order dated 1st June, 1983. All these orders of exten sion were couched almost in the same language. The relevant part of the last of such orders, namely, the order dated 1st June, 1983 reads as follows: "Sir, With reference to your letter No. 1020/Sa. A.D.M./141, Dated 31.3.1982 on the above subject I am directed to say that the terms of the officers mentioned under para 2 who were appointed w.e.f. the date mentioned in para 4 (has expired). The Governor is therefore pleased to accord his sanction to extend the period of the contract upto the period mentioned under para 5 subject to the condi tion that their service tenure shall expire on completion of 58 years of age in case the same is completing earlier during the extended period. No. Name and Date of Date of Recommen place of appoint expiry dation appoint ment of con extend ment tract the contract 1to 12 13 Ex Pilot 21.8.79 31.3.83 1.4.83 Arun Govil, 30.8.85 Unnao 14 to 21 242 2. During the extended period of the contract conditions of service of officers shall remain same as are mentioned under their Appointment Order. Letters of accept ance of relevant conditions of service to be obtained from these officers must be submitted to the Government at an early date. " It is thus seen that the appointment of the respondent was indisputably in the nature of contract and under the last order of appointment refened to above he was entitled to continue in office in the post in question till 30th of August, 1985 and not beyond that date unless there was a further extension. But on 29.3.1985 the service of the 1st Respondent was terminated by the issue of a notice and payment of one month 's salary. The order was to be effective from the date of receipt of termination order and no charges were men tioned therein against the 1st respondent. The respondent aggrieved by the said order of termina tion filed a Writ Petition on the file of the High Court of Allahabad in Writ Petition No. 3 164 of 1985. A Division Bench of the High Court found that the order of termination that had been served on the respondent was an invalid one since it had been issued on the basis of Vigilance Report and no opportunity had been given to the respondent to show cause why such action should not be taken against him. It is not necessary to set out all the reasons given by the High Court for setting aside the order of termination. The High Court, however, held that the termination order could not be sustained and the Writ Petition was liable to be allowed. The High Court further issued a direction to the effect that the respondent was entitled to salary upto the period he was entitled to remain in service. In the instant case the respondent was entitled to be in service till 30th of Au guSt, 1985 unless there was a further extention. In the Penultimate paragraph of the judgment the High Court further stated: "It is open for the opposite parties to con sider the claim of the petitioner for continu ation in service or of fresh appointment and no observations in this regard are being made by this Court. " The judgment was delivered on 24.3.1988. 243 The respondent who was not satisfied by the order allow ing the Writ Petition as stated above preferred a Review Petition before the High Court contending that he was enti tled to be reinstated in service on the pronouncement of the Judgment on 24.3. 1988 notwithstanding the fact that his term of office had come to an end on 30th of August, 1985 as stated above and no further order of extention had been passed by the Governor. In support of the Review Petition the respondent relied on an interim order which had been passed by the High Court during the pendency of the Writ Petition on 10th of July, 1986 which reads thus: "The post will be kept vacant and in case the petitioner succeeds in his Petition it would be made available forthwith to the petitioner by way of an appointment. " The contention of the respondent was that the said interim order entitled him to be reinstated in service irrespective of the fact whether the Governor had extended the period of his appointment beyond 30th of August, 1985. The High Court allowed the Review PetitiOn on 26.7.1988 and made an order reinstating the Respondent in service which reads as follows: "This is an application for review of our Judgment dated 24.3.1988 by which we allowed the Writ Petition filed by the Petitioner with certain directions. It seems that when the writ petition was decided, our attention was not drawn towards the interim order dated 10.7.1986 passed by learned single Judge in which it was provided that one post will be kept vacant and in case the petitioner suc ceeds in his petition it would be made avail able forthwith to the petitioner by way of his appointment. The petitioner has pointed out inaccuracy in the second paragraph of the operative part of the judgment which says that: "It is open for the opposite parties to consider the claim of the petitioner for continuation in service or of fresh appoint ment and no observations in this regard are being made by this Court."" Aggrieved by the above order made on review which di rected the State of Uttar Pradesh, the appellant herein, to reinstate the respondent in service, the State Government has filed this apeal by special leave. It is not disputed that the scheme under which the respond ent 244 had been appointed provided for an appointment by contract for a specified term which could be extended from time to time and that the term of the respondent had been extended on different occasions after his first appointment and he was not entitled to continue in service beyond 30th August, 1985 unless there was a further extension. Clauses 6 & 7 of the first order of appointment stated that the respondent was entitled to the leave admissible for temporary employees and for other matters he was to be treated as a temporary Government employee during the tenure of his office. The appellant government never accepted the position that the respondent was entitled to be treated as a regular employee who had a vested right to continue to hold the post till he attained 58 years of age. The true position that emerges from the material on record is that the respondent was employed only under a contract which specified the term of his appointment which extended only Upto 30th of August, 1985. Since it is admitted that no order of 'extension had been sanctioned by the Governor beyond 30th August, 1985, the respondent was entitled to the salary and allowances due to him till 30th of August, 1985 if the order of termination of service served on him on 29.3. 1985 was found to be an invalid one. It is on this basis that the High court had while setting aside the order of termination by its order dated 24.3.1988 directed that the respondent was entitled to salary upto the period he was entitled to remain in service and further observed that it was open for the opposite parties to consider the claim of the respondent for continu ation in service or of fresh appointment and no observations in this regard were made by the Court. A reading of the Judgment of the High Court dated 24.3.1988 shows that the respondent had not urged before the High Court that the order of appointment issued in his case was not in the nature of a contract and the subsequent orders extending his period of appointment till 30th of August, 1985 were liable to be ignored and that he should be treated as a person regularly appointed in Government service entitled to con tinue till he completed the age of 58 years. Even the order passed on Review on 26.7.1988 does not make out that the respondent had put forward at that stage such a case. His only case was that the interim order that had been passed on 10.7.86 entitled him to be reinstated in service even though there was no order of extension of service. If the respond ent was really aggrieved by the Judgment dated 24.3.1988 he should have preferred an appeal before this Court and that he did not do but on the other hand he proceeded to file a Review Petition claiming to be reinstated in service on the slender ground that the interim order conferred on him a right to continue in service beyond 30th of August, 1985 even though his service had not been extended by the Gover nor of Uttar Pradesh. 245 In the circumstances, we feel that while the High Court was right in disposing of the Writ Petition on 24.3. 1988 declaring that the respondent was entitled to salary upto the period he was entitled to remain in service, i.e., 30th August, 1985 it was not right in making an order on Review on 26.7.1988 relying upon the interim order dated 10.7.1986 which in the circumstances could not have the effect of controlling the jurisdiction of the High Court to dispose of the Writ Petition on merits as it did on 24.3.1988. We, therefore, set aside the order dated 26.7.1988 passed by the High Court on review and restore the Judgment dated 24.3.1988 passed in the Writ Petition. The interim order did not and could not amount to a direction that the respondent was entitled to be reinstated in service irrespective of the merits of the case and the extent of his right. The order passed on review is wholly unsustainable. We, however, make it clear that what we have stated above does not affect in any way what the High Court has stated in the penultimate paragraph of the Judgment dated 24.3.1988 which reads thus: "It is open for the opposite parties to con sider the claim of the petitioner for continu ation in service or the fresh appointment and no observations in this regard are being made by this Court. " The appeal is accordingly allowed. No costs. T.N.A. Appeal allowed.

Pursuant to a scheme enacted for the benefit of ex military officials the appellant State appointed the re spondent on 20.8.1979 as Secretary Zila Sainik Board on contract basis for a specified period which was further extended upto 30.8.1985. On 29.3.1985 the services of the respondent were terminated. The respondent filed a writ petition before the High Court challenging the termination order. By an order dated 24.3.1988 the High Court set aside the termination order holding that the respondent was entitled to salary upto the period he was entitled to remain in service i.e. upto 30.8.1985. The respondent preferred a Review Petition before the High Court contending that pursuant to the interim order dated 10.7.1986 passed by the High Court he was entitled to be reinstated in service even though there was no order of extension of service. By an order dated 26.7.1988, the High Court allowed the Review Petition directing the appellant State to reinstate the respondent in service. Hence this appeal by the State. Allowing the appeal and setting aside the order passed on Review, this Court, HELD: 1. In the instant case, the appointment of the respondent was indisputably in the nature of contract and under tile order of appointment he was entitled to continue in office in the post in question till 30th of August, 1985 and not beyond that date unless there was a further exten sion. Since no order of extension had been sanctioned by 240 the Governor beyond 30th August, 1985 the respondent was entitled to the salary and allowances due to him till 30th of August, 1985 if tile order of termination of service was found to be an invalid one. [242B; 244C] 1.1 The High Court was right in disposing of the Writ Petition on 24.3.1988 declaring that the respondent was entitled to salary upto the period he was entitled to remain in service, i.e. 30th August, 1985. But it was not right in making an order on Review on 26.7.1988 relying upon the interim order dated 10.7.1986 which ' in the circumstances could not have the effect of controlling the jurisdiction of the High Court to dispose of the Writ Petition on merits as it did on 24.3.1988. [245A B] 2. The interim order passed by the High Court did not and could not amount to a direction that the respondent was entitled to be reinstated in service irrespective of the merits of the case and the extent of his right. The order passed on review is wholly unsustainable. [245C]

etition (Civil) Nos. 12676 77 of 1985 etc. (Under Article 32 of the Constitution of India) R.F. Nariman, P.H. Parekh, N.N. Keshwani, Mrs. H. Wahi and R.N. Keshwani for the Petitioners. 408 G.A. Shah, M.N. Shroff, K.M.M. Khan and T.U. Mehta for the Respondents. The Judgment of the Court was delivered by VENKATARAMIAH, CJ. The petitioners in these petitions have questioned the validity of a notification issued by the Government of Gujarat on June 26, 1985 in exercise of its powers conferred by Section 15 of the (67 of 1957), herein after referred to as the Act, amending the Gujarat Minor Mineral Rules 1966, hereinafter referred to as the Rules, with effect from 1 7 1985 substituting the original rule 21 of the Rules by a new rule which reads as follows: "21. Rate of Royality: The holder of a quarry lease or any other mineral concession granted under these rules shall pay royalty in respect of minor minerals, specified in column 2 of the schedule, removed or consumed by him or by his agent, manager, employee, contractor or sub lessee from the leased area at the rates respectively specified against them in column 3 of the said schedule. Provided that: (i) the holder of a Parwana granted under these rules shall pay royalty at the rate of fifty percent of the rate of royalty specified in the said schedule. (ii) no royalty shall be charged from Nimbha das of village potters who manufacture upto one lakh bricks per year. (iii) no royalty shall be charged from Nimbha das of village potters if their annual produc tion is not exceeding two lakhs bricks and they supply at least one lakh bricks to the Rural Housing Board or Panchayats. (iv) Royalty shall be recoverable in whole rupees, fraction fifty paise and above to be rounded upwards to a whole rupee and fraction below fifty paise shall be ignored" and fixing the royalty payable by the lessees in respect of minor minerals known as Black Trap and Hard Murrum at Rs.7 per metric tonne by amending schedule of the Rules which was being levied at Rs. 4 till the date of the said amendment. 409 In order to understand the case of the petitioners it is necessary to set out some other provisions of law governing the case. The Act was passed in the year 1957 by Parliament to provide for the regulation of mines and development of minerals under the control of the Union and it was made applicable to the whole of India. Under section 3A of the Act the word 'minerals ' is defined as including all minerals except mineral oils. Clause (e) of the said section defines 'minor minerals ' as building stones, gravel, ordinary clay, ordinary sand other than sand used for prescribed purposes and any other mineral which the Central Government may. by notification in the Official Gazette, declare to be a minor mineral. It is not disputed that Black Trap and Hard Murrum are notified as minor minerals. The Act has made provision with regard to the issue of prospecting licences and mining leases in respect of various kinds of minerals other than minor minerals and the procedure to be followed in that connection in the matter of issue of prospecting licences and mining leases. Section 9 of the act empowers the Central Government to levy royalty in respect of the minerals which are won by the mining lease holders under the Act at the rates prescribed in the Second Schedule to the Act. It empowers the Central Government to enhance or reduce the rate of royalty prescribed by the Second Schedule in respect of any mineral subject to the condition that the Central Government shall not enhance the rate of royalty in respect of any mineral more than once during any period of three years. Section 14 of the Act provides that sections 5 to 13 (inclusive) shall not apply to quarry leases, mining leases or other mineral concessions in respect of minor minerals. Section 15 as it stood during the relevant time read thus: "15. (1) The State Government may, by notifi cation in the Official Gazette, make rules for regulating the grant of (quarry leases, mining leases or other mineral concessions) in re spect of minor minerals and for purposes connected therewith. (2) Until rules are made under sub section (1), my rules made by a State Government regulating the grant of (quarry leases, mining leases or other mineral concessions) in re spect of minor minerals which are in force immediately before the commencement of this Act shall continue in force. (3) The holder of a mining lease or any other mineral concession granted under any rule made under sub section (1) 410 shall pay royalty or dead rent, whichever is more in respect of minor minerals removed or consumed by him or by his agent, manager, employee, contractor or sub lessee at the rate prescribed for the time being in the rules framed by the State Government in respect of minor minerals; Provided that the State Government shall not enhance the rate of royalty in respect of any minor mineral for more than once during any period of three years. " It is seen from section 15 that the State Government is empowered to make rules for regulating the grant of quarry leases, mining leases or other mineral concessions in re spect of minor minerals and for purposes connected there with. In exercise of the said power under section 15 the Government of Gujarat promulgated the Gujarat Minor Minerals Rules, 1966 which are referred to as the Rules as stated above. Rule 21 of the Rules provides for the determination of the rate of royalty payable in respect of minor minerals. The original rule 21 was substituted by new rule 21 by the issue of impugned notification on 26 6 1985 which provides that a holder of a quarry lease or any other mineral conces sion granted under the Rules shall pay royalty in respect of minor minerals provided in column 2 of the Schedule, removed or consumed by him or by his agent, manager, employee, contractor or sub lessee from the leased area at the rates specified in column 3 of the said Schedule. It is under this notification the rate of royalty in respect of black trap and Hard Murrum was increased from Rs. 4 to Rs.7 per metric tonne. The rule also provides that the holder of a Parwana granted under the Rules shall pay royalty at the rate of 50 per cent of the rate of royalty specified in the said Sched ule and that no royalty shall be charged from Nimbhadas of village Potters who manufacture upto one lakh bricks per year. It further provides that no royalty shall be charged from Nimbhadas of villages potters if the annual production is not exceeding two lakh bricks and they supply at least one lakh bricks to the Rural Housing Board or Panchayats. The validity of rule 21 as it existed prior to the issue of the impugned notification was considered in B.K. Trivedi & Sons and Ors. vs State of Gujarat and Ors. , ; as under the said rule the royalty payable in respect of some of the minor minerals had been enhanced. Originally all lessees had to pay a minimum dead rent in respect of the area covered by a minor mineral lease issued in respect of any minor mineral or the royalty prescribed in respect of quantity of minor minerals owned by him, which ever was higher. The history of the legislation of the Rule from the year 1986 is set out in detail in the said 411 decision. Hence it is not necessary to refer to it in detail here. By the said decision the constitutionality of section 15 of the Act and the validity of a notification issued on June 18, 1981 under which the rate of royalty had been raised was upheld and the writ petitions in which the said validity had been questioned were dismissed. That decision was rendered on March 5, 1986. During the pendency of the said petitions in the High Court the impugned notification was issued increasing the royalty payable in respect of Black Trap and Hard Murrum from Rs.4 to Rs.7. In these petitions the impugned notification issued in the year 1985 is questioned. Since many of the contentions raised by the parties in respect of the constitutionality of section 15 of the Act and the validity of Rules made thereunder had been considered and the contentions urged by the petitioners against the said rule in those petitions had been rejected, in the present case the petitioners have confined their case only to the following points which according to them had not been considered in the said decision. Shri R.F. Nariman, learned counsel for the petitioners in some of the petitions had two contentions: 1. that the royalty levied and covered under the Rules should be applied only for mineral development and since the said royalty is being treated as part of the consolidated fund of the State and used for other purposes by the State the levy was bad; and 2. that the impugned notification in question was in contravention of clause (b) of Article 304 of the Constitution. The contention of the learned counsel was that under Entry 50 of List II of the 7th Schedule to the Constitution, the royalty recovered by the State Government had to be used only for mineral development and could not be used for any other purpose. According to him the Act had been passed for purposes of regulation and development of minerals. He depended upon the language of Entry 50 which reads thus: "taxes on mineral rights subject to any limitations imposed by Parliament by law relating to mineral development" We do not find much substance in this contention. Re cently a Constitution Bench of this Court has held in The India Cement Ltd. etc. vs The State of Tamil Nadu etc., [1989] 4 S.C. Judgments Today 190 that the royalty levied on the extracted mineral was in the nature of a tax and it was not in the nature of a fee which could be used 412 only for specific purposes. Any tax realised by the State Government forms part of the consolidated fund of the State and the said tax can be used by the State Government for any of the purposes to which its executive powers extend subject to any law made by the State Legislature in that regard. We do not, therefore, find any substance in the above conten tion. It is no doubt true that the Act is passed for devel opment of minerals, but while discharging its functions relating to development, if the State incidentally allows mining to be carried on in the public interest and levies in that connection a tax, it does not mean that the said tax should be used only for development of minerals and not for other purposes sanctioned by law. In support of the second contention the learned counsel Shri Nariman argued that notwithstanding anything contained in Article 301 or Article 303 the Legislature of a State may by law impose such reasonable restrictions on the freedom of trade, commerce or intercourse with or within that State as required in the public interest. Provided that no Bill or amendment for the purpose of sub clause (b) shall be intro duced or moved in the legislature of a State without the previous sanction of the president. We do not find that clause (b) of Article 304 has any relevance on the point in question. No restriction is being imposed on the freedom of trade of the petitioners by the levy of royalty. The minerals belong to the Government and if anybody wants to have the right as a lessee to exploit the mines in question to the exclusion of all others and to remove the minerals with a view to making profit, he has to pay a royalty imposed in accordance with law. In the instant case the levy is made under a law made by the Central Gov ernment. It is not an imposition made by a law made by the State Legislature on which alone the restriction contemplat ed under Article 304(b) applies. We do not also find much substance in the contention that the levy in question is unreasonably heavy and has been imposed in an arbitrary manner. The burden of establishing that the levy is unreasonably heavy, is on the petitioners. It is urged that in the other States the royalty is being levied at the rate of Re. 1 per metric tonne of Black Trap and Hard Murrum and Rs.7 levied in the notification is excessive. The fact that in other States the royalty is fixed at Re. 1 is not by itself sufficient to hold that Rs.7 per metric tonne is unreasonably high rate of royalty. In Trivedi 's case (supra) this Court had upheld the levy of Rs.4 per metric tonne which had been fixed in 1981 and in 1985 it was increased to Rs.7. Having regard to the depreci ation in the value of 413 the rupee and the increase in the cost of ' administration of the State, which is ever increasing, as a welfare State we cannot say that Rs.7 is an unreasonably high rate. We have taken this view after going through the observations made by this Court in Trivedi 's case (supra) at page 544 where this Court has observed that where a statute confers discretion ary powers upon the executive or an administrative authori ty, the validity or constitutionality of such power cannot be judged on the assumption that the executive or such authority will act in an arbitrary manner in the exercise of the discretion conferred upon it. If the executive or the administrative authority acts in an arbitrary manner, its action would be bad in law and liable to be struck down by the courts but the possibility of abuse of power or arbi trary exercise of power cannot invalidate the statute con ferring the power or the power which has been conferred by it. We do not find that the levy is arbitrarily imposed. It is obvious that the petitioners are lessees who are exploiting the mining areas for purposes of business and that the royalty in question is ultimately passed on to the consumers. It is not shown that the business ,of the peti tioners has been adversely affected in such a way that it is liable to be struck down on the ground of arbitrariness. We do not, therefore, find any substance in the contention urged by Shri Nariman. In Civil Writ Petition No. 618 of 1987 filed by Jai Sholanath Quarry Works and another, Mr. Keswani, learned counsel for the petitioners contended that the impugned rule 21 which was substituted in the place of the former rule 21 was invalid as it was discriminatory in character. He con tended that the concession shown in favour of Parwana hold ers was discriminatory and violative of Article 14. Under clause 1 of the proviso to the impugned rule 21, a holder of a Parwana granted under the Rules has to pay royalty at the rate of 50 per cent of the royalty payable by the lessees and no royalty is payable by village potters who manufacture upto one lakh bricks per year and by the village potters whose annual production was not exceeding two lakh bricks and who supply at least one lakh bricks to the Rural Housing Board or Panchayats. His contention was that section 15 of the Act which authorised the State Government to make rules in respect of minor minerals does not specifically authorise the State Government to make such discrimination. We find no substance in this contention too. It is obvious that a valid classification of persons and things for 414 purposes of imposing any obligation on them would not be violative of Article 14 provided the classification is a reasonable one. It is well settled that a classification to be valid has to satisfy two conditions: (1) that there is an intelligible differentia between those who are included in the class which is affected by any law or rule and those who are placed outside the said rule; and (2) that there is a reasonable nexus between the classification and the object to be achieved by the rule or law in question. The Act under the Rules was made for purposes of regu lation and development and conservation of minerals. It is equally clear that while levying a tax the authority con cerned is entitled to grant concessions and exemptions wherever necessary having regard to the purpose of the Act, the levy of royalty is incidental to the regulation and development of minerals. Many a time absence of such classi fication may itself result in the invalidation of the law or rule. Whoever is given an exclusive right to exploit a mine will have to pay some amount by way of return to the Govern ment of India as authorised by entry 50 of List II of the 7th Schedule to the Constitution. Having regard to the broad policy underlying the Constitution if a concession is shown in favour of the poor and the down trodden, it cannot be said that the exemption or concession is invalid. According to rule 2(vi)(a) of the Rules a "quarrying Parwana" means a quarrying Parwana granted under these rules to extract and remove any minor mineral from land not exceeding a specified area. Rule 33 A provides that the competent officer may notify areas of limestone, Black Trap, sand stone and build ing stones for the purpose of grant of quarrying parawana, as he deems fit. When any area is so notified, no quarry lease shall be granted for such notified area. Rule 33 B of the Rules reads thus: "33.B. Grant of quarrying Parwana On an application made to the competent officer, he may grant a quarrying Parwana to extract and remove from the specified area within his jurisdiction the minor mineral from a plot not exceeding 2,000 square meters, as may be specified by the competent officer. The compe tent officer may grant such Parwana in the following priorities: (a) Individual families to Khanias belonging to the Scheduled Castes or the Scheduled Tribes, who do physical work I of excavating minor mineral in the area applied for. 415 (b) Individual families of 'Khanias ' who do physical work in excavating minor minerals in the area applied for. (c) New individual Khanias who do physical work in excavating minor minerals in any other areas. " Rule 33 C provides that the lease shall be granted for one year ending 31st December on a payment of a fee of Rs.50 for an area upto 1,000 square meters and Rs. 100 for an area above 1,000 square meters and upto 2,000 square meters. Thus it is seen that a Parwana can be given only respect of plots not exceeding 2,000 square meters and for a limited period of one year. It is only in the case of such people who are described in the Rules and who invariably belong to the weaker sections of society the concession is shown under rule 21, whereas the mining lease may be given to persons mentioned in rule 9. Under rule 18 of the Rules the period of lease in the case of the minor minerals can be for a much longer period, it can be upto 10 years in respect of minor minerals except in the case of ordinary sand, Kankar, Mur ram, Gravel and in the case of Kankar, Murram and gravel a lease can be granted upto three years, and the area or land covered by a mining lease is governed by rule 15 which says that no quarry lease shall be granted for an area exceeding 10 hectares in case of specified minor mineral and 20 hec tares in the case of other minerals. So a comparison of the relevant rules would show that a larger restriction is imposed both on the area in respect of which a Parwana could be issued and the duration of the Parwana right and as also stated that the persons who take quarrying Parwana are persons belonging to the weaker sections of society and if under rule 21 a concession is shown in their favour it cannot be said that there is no reasonable nexus between the classification for purposes of the proviso to rule 21 to show concession in the matter of payment of royalty and the social policy underlying the Constitution, the statute and the Rules. The fact that section 15 of the Act does no authorise the State Government to show such concession while promulgating the Rules which are in the nature of subordi nate legislation is also of no consequence. Since the power exercised is legislative in character the authority which is exercising the said power has the power to make rules equi table by necessary implication. No express power need to conferred on such subordinate authority in order to make a classification for purposes of implementing the policy of the Act under which the Rules are made. We do not also agree with the contention that levying of royalty in the State of Gujarat on the minor minerals would impose in any way 416 the freedom guaranteed under Article 301 of the Constitution regarding movement of goods from one State to another for the activity of quarrying does not involve any movement as such. The mineral may be consumed inside the State and in some cases may latter on be taken outside the State. But the movement outside the State is not the direct consequence of quarrying. We do not, therefore, find any substance in any of the contentions urged before us. These petitions are dismissed with costs. Each of the petitioners shall pay a sum of Rs.2,000 by way of costs to the State of Gujarat. Y. Lal Petitions dis missed.

The Petitioners in these petitions have challenged the validity of a Notification issued by the Government of Gujarat on June 25, 1985 whereby the Gujarat Minor Mineral Rules were amended with effect from 1.7.1985. By the said notification, original Rule 21 of the Rules was substituted by a new Rule 21 which provided that a holder of a quarry lease or any other mineral concession granted under the Rules shall pay royalty in respect of minor minerals provid ed in column 2 of the Schedule. It is under this Notifica tion that the rate of royalty in respect of Black trap and Hard Murrum was increased from Rs.4 to Rs. 7 per metric tonne. The validity of Rule 21 as it stood prior to its amend ment by the aforesaid impugned notification was considered and upheld by this Court on March 6, 1986 in D.K. Trivedi & Sons & Ors. vs State of Gujarat & Ors. , ; The impugned notification was issued at a time when the Writ Petitions in the aforesaid case were pending in the High Court. The increase in the levy of royalty effected by the impugned notification is now questioned in these petitions. The Petitioners raised the following contentions viz; (1) That the royalty levied and covered under the Rules should be applied only for mineral development and since the royalty is being treated as part of the consolidated fund of the State and used for other purposes by the State, the levy was bad; and (2) That the impugned notification in question was in contravention of clause (c) of article 304 of the constitution. (3) That the impugned notification is discriminatory in character. 407 Dismissing the Writ Petitions, this Court, HELD: That Act is no doubt passed for development of minerals but while discharging its functions relating to development, if the State incidentally allows mining to be carried on in the public interest and levies in that connec tion a tax, it does not mean that the said tax should be used only for development of minerals and not for other purposes sanctioned by law. [412B] The India Cement Ltd. etc. vs The State of Tamil Nadu etc., [1989] 4 SC Judgment Today 190. No restriction is being imposed on the freedom of trade of the petitioners by the levy of royalty. The minerals belong to the Government and if anybody wants to have the right as a lessee to exploit the mines to the exclusion of others and to remove the minerals with a view to making profit, he has to pay a royalty imposed in accordance with law. [412E] In the instant case, the levy is made under a law made by the Central Government. It is not an imposition made by a law made by the State Legislature on which alone, the re striction contemplated under article 304(b) applies. [412F] If the Executive or the administrative authority acts in an arbitrary manner, its action would be bad in law and liable to be struck down by the Courts but the possibility of abuse of power or arbitrary exercise of power cannot invalidate the statute conferring the power or the power which has been conferred by it. [413B C] Since the power exercised is legislative in character, the authority which is exercising the said power has the power to make Rules equitable by necessary implication. No express power need be conferred on such subordinate authori ty in order to make a classification for purposes of imple menting the policy of the Act under which the Rules are made. [415G]

: Criminal Appeal No. 8 18 of 1979. From the Judgment & Order dated the 27.10.1979 of the Madras High Court in Crl. A. No. 4 of 1977. A.S. Nambiar and K.R. Nambiar for the Appellant. V. Krishnamurthy for the Respondent. The Judgment of the Court was delivered by FATHIMA BEEVI, J. This appeal is directed against the judgment dated 27.10.1979 of the High Court of Madras con firming the conviction of the appellant under section 161, I .P.C. and under section 336 5(2) read with section 5(1)(d) of the Prevention of Corrup tion Act. The appellant had been sentenced to undergo R.I. for 15 months under section 5(2) read with section 5(1)(d) of the Prevention of Corruption Act with no separate sen tence under section 161 I.P.C. The brief facts of the case are as under. The appellant, Sunderamoorthy was an Accountant cum Headclerk in the Tamil Nadu Forest Training School at Vaigai Dam. He took charge of the office on 6.10.1975 and had been residing in a house opposite the training school. PW 3, the Principal of the training school issued exhibit P 2 show cause notice to the PW 1, Venkataswamy, the canteen contractor, as to why his licence for running the canteen should not be cancelled. This was on the basis of a complaint made by the appellant that the food served in the canteen was substand ard. The appellant had taken food in the canteen for two days and being dissatisfied discontinued the practice before the notice was issued. The prosecution case is that the accused thereafter sent for PW 1, informed him that he would help him in restoring the licence and demanded a bribe of Rs. 100. On 21.10.1975, the appellant is stated to have pressed the demand to PW 1. The latter made a complaint to PW 6 who thereupon arranged a trap. As instructed, PW 1 was ready with ten rupees currency notes. PW 6 after drawing up a mahazar in the presence of PW 2, Jaganathan, Assistant of the Office of the Special Tehsildar, Usilampatti directed PW 1 to give the notes to the appellant. PW 1 handed over the money to the appellant who received the same. When PW 1 emerged, PW 6 along with PW 2 confronted the appellant. The appellant produced the currency notes. PW 6 conducted the phenolphthalein test with reference to the fingers of the appellant. The test was positive, the currency notes were seized and the appellant arrested. PW 3, the Principal produced the concerned file relating to show cause notice, from the house of the appellant on the same day. Finally, the appellant was chargesheeted. At the trial, the prosecution witnesses supported the case. PW 1 affirmed the fact that the appellant made the demand and had also received the amount on 22.10. The recovery of the currency notes from the appellant was not challenged. The plea of the appellant was that PW 1 had returned the amount due to him and there had been no demand for a bribe as there had been no occasion for doing so. The Trial Court accepted the prosecution evidence, rejected the plea of the appellant and recorded the conviction. Before the High Court, the .contentions of the appellant were that there was no independent evidence regarding the demand, the messenger who had contacted PW 1 at the 337 behest of the appellant had not been examined, the solitary evidence of PW 1 is insufficient, the explanation offered by the appellant was probable and there is no conclusive evi dence to hold that the appellant. was guilty. It was also urged that the appellant being new in the office could exert little influence on the Principal and the whole story is, therefore improbable. These contentions did not find favour with the High Court. It took the view that the evidence of PW 1 find corroboration in the testimony of PW 2 and 6 and the contemporary records. The recovery of the currency notes from the appellant proves the guilty conduct of the appel lant in view of the presumption arising under section 4(1) of the Prevention of Corruption Act which has not been rebutted. The decisions of the Court in State of Rajasthan vs Mohamed Habeeb, ; C.I. Ernden vs State of Uttar Pradesh; , and Lohana Kantilal vs State, AIR 1954 Saurashtra 12 1 were referred to. The High Court thought that though the conviction under section 161 I.P.C. and section 5(2) of the Prevention of Corruption Act is to be maintained, no separate sentence need be award ed under section 161 I.P.C. The appellant has reiterated the contentions before us. The learned counsel appearing for the appellant, however, maintained that the appellant had a consistent case even from the earliest opportunity that the currency notes found in his possession was the money returned by PW 1, the cir cumstances of the case would probabalise this case of the appellant and the presumption, if any, arising under section 4 is rebutted and the conviction cannot therefore be sus tained. PW 6 has stated at the time of the seizure the explanation offered by the appellant was that PW 1 had returned the loan and that he had given the money for the Dipawali. The case that has been developed in the course of the trial is not that of a loan transaction but payment of an advance of Rs. 125 in the canteen when the appellant started to take food there. The case of Dipawali gift or return of a loan given to PW 1 has not been even suggested. It cannot, therefore, be said that there had been consistent explanation for the appellant. PW 3, the Principal has averred in unequivocal terms that Ex. P 2 memo had been issued on the basis of the complaint received from the appellant that on getting the explanation from PW 1 he on 18.10.1975 itself passed orders and closed the file. The order made was not disclosed to PW 1 and till 22.10.1975, the file itself was kept by the appellant in his personal custody. He had thereafter received the amount of Rs. 100 from PW 1. This conduct of the appellant is clearly incon sistent with the transaction of loan or return of money by PW 1. 338 This Court observed in Dhanvantrai Balwantrai Desai vs State of Maharashtra, AIR 1964 SC 575 as under: "Where any gratification (other than legal gratification) or any valuable thing is proved to have been received by an accused person the court is required to draw a presumption that the person received that thing as a motive of reward such as is mentioned in section 161, I.P.C. Therefore, the Court has no choice in the matter, once it is established that the accused person has received a sum of money which was not due to him as a legal remuneration. Of course, it is open to that person to show that though that money was not due to him as legal remuneration it was legally due to him in some other manner or that he had received it under a transaction or an arrangement which was lawful. The burden resting on the accused person in such a case would not be as light as it is where a presumption is raised under section 114 of Evidence Act and cannot be held to be discharged merely by reason of the fact that the explanation offered by the accused is reasonable and probable. it must further be shown that the explanation is a true one. The words 'unless the contrary is proved ' which occur in this provision make it clear that the presumption has to be rebutted by 'proof ' and not by a bare explanation which is merely plausible. A fact is said to be proved when its existence is directly established or when upon the material before it the Court finds its existence to be so probable that a reasonable man would act on the supposition that it exists. Unless, there fore, the explanation is supported by proof, the presumption created by the provision cannot be said to be rebutted. " On a careful consideration of the facts and circum stances, we are not satisfied that the appellant had even by preponderance of probability succeeded in rebutting the presumption. The argument that clause (d) of section 5(1) of the Prevention of Corruption Act is not attracted on the proved facts is also not impressive. We find no merit in the appeal. It is accordingly dismissed. N.V.K. Appeal dismissed.

The appellant was an Accountant cum Headclerk in the Forest Training School, PW 3 the Principal of the training school, and PW I the canteen contractor. The prosecution alleged that on the basis of a complaint made by the appel lant that the food served in the canteen was substandard, PW 3 issued a show cause notice to PW I, as to why the licence for the canteen should not be cancelled and that thereafter the appellant sent for PW I and demanded a bribe of Rs. I00. As the appellant pressed the demand from PW 1, the latter made a complaint to PW 6, the inspector, who arranged a trap. The trap was arranged. PW I handed over the money to the appellant, who received the same. PW 6 conducted the phe nolphthalein test with reference to the fingers of the appellant. The test was positive. The currency notes were seized, and the appellant arrested chargesheeted. The Trial Judge accepted the prosecution evidence, rejected the pleas of the appellant that PW 1 had returned the amount of Rs. 100 due to him, that there had been no demand for a bribe as there had been no occasion for doing so, and recorded conviction. The appellant appealed to the High Court and contended that there was no independent evidence regarding the demand, the messenger who had contacted PW 1 at the behest of the appellant had not been examined, the solitary evidence of PW I is insufficient and that the explanation offered by the appellant was probable and that there is no conclusive evidence to hold that the appellant was guilty. The High Court took the view that the recovery of the currency notes from the appellant prove his guilty conduct, in view of the presumption arising under section 4(1) 01 ' the Prevention of Corruption Act and that the same has not been rebutted and held that though the conviction under 335 section 161 I.P.C. and section 5(2) of the Prevention of Corruption Act, 1947 is to be maintained, no separate sen tence need be awarded under section 161 I.P.C. It, accord ingly, confirmed the conviction of the appellant and sen tenced him to undergo rigorous imprisonment for 15 months. In the appeal to this court, it was contended that the appellant had a consistent case even from the earliest opportunity, that the currency notes found in his possession was the money returned by PW I, and that the presumption, if any, arising under section 4 was rebutted, and the convic tion cannot therefore be sustained. Dismissing the appeal, this Court HELD: 1. The appellant has not even by preponderance of probability succeeded in rebutting the presumption under section 4(1) of the Prevention of Corruption Act. [338C] 2. The Court has no choice once it is established that the accused person has received a sum of money which was not due to him as a legal remuneration, but to draw a presump tion that the person received the money as a motive of reward. However, it is open to that person to show that though that money was not due to him as legal remuneration, it was legally due to him in some other manner or that he received it under a transaction or an arrangement which was lawful. The explanation offered by the person should be a true one and not one which is merely plausible. [339B C; F] Dhanvantrai Balwantrai Desai vs State of Maharashtra, AIR 1964 SC 575, referred to.

Appeals Nos. 169 171 of 1955. Appeals from the judgment and order dated July 10, 1953, of the Madras High Court in Writ Petitions Nos. 75, 87 and 135 of 1953. R. Ganapathy Iyer and Shanmugavel, for the appellants. V. K. T. Chari, Advocate General for the State of Madras, V. V. Raghavan and R. H. Dhebar, for the respondents. 93 H. N. Sanyal, Additional Solicitor General of India and R. H. Dhebar, for Intervener No. 1 T. M. Sen, for Interveners Nos. 2 and 3. section B. Sen, Additional Government Advocate for the State of Madhya Pradesh and I. N. Shroff, for Intervener No. 4. 1958. October 6. The Judgment of the Court was delivered by SUBBA RAO J. These three appeals by certificate granted by the High Court are directed against the common order of the High Court of Judicature at Madras, dated July 10, 1953, dismissing three writ petitions filed by the appellants impugning the validity of the provisions of the Madras Commercial Crops Markets Act (Mad XX of 1933), hereinafter referred to as the Act, and the Rules framed thereunder, and certain notifications issued by the first respondent herein in pursuance thereof. The Act was passed to provide for the better regulation of the buying and selling of commercial crops in the State of Madras and for that purpose to establish markets and make Rules for their proper administration. On May 18, 1951, the State Government issued G. 0. No. 1049 (Food & Agriculture Department) extending the provisions of the Act to Ramanathapuram and Tirunelveli Districts in respect of cotton and groundnuts. On February 25, 1952, the State Government issued G. 0. No. 251 (Food & Agriculture Department) ordering the constitution of a Market Committee at Koilpatti and Sankarankoil in Tirunelveli District. By a similar G. O., viz., G. 0. No. 356 (Food & Agriculture Department) dated March 8,1952, the Government directed the constitution of a Market Committee at Virudhunagar and markets at (1) Virudhunagar; (2) Rajapalayan and (3) Sattur in Ramanathapuram District. The Market Committees. were duly constituted, and, on January 9, 1953, the Market Committee at Virudhunagar issued a notice stating that the Act and the Rules had come into force in Ramanathapuram District on January 1, 1953, and requiring persons who did business in cotton 94 and groundnut to take out licences as provided therein. A further notice dated January 17, 1953, stated that all the traders in cotton and groundnut, who failed to take out licences on or before February 15, 1953, were liable to prosecution. Similar notices dated January 22, 1953, and February 14, 1953, were issued by the Chairman, Tirunelveli Market Committee at Koilpatti calling upon all traders, producers and weighmen dealing in cotton to take out licences before February 28, 1953, and threatening prosecution for failure to comply therewith. The appellants in the above three appeals and others filed writ petitions in the High Court of Madras against (1) the State of Madras; (2) the Collectors of the concerned Districts and (3) the Chairmen of the Market Committees, for the issue of a Writ of Mandamus directing the respondents to forbear from enforcing any or all the provisions of the Act as amended and the Rules and Bylaws framed thereunder. A Bench of the Madras High Court, consisting of Rajamanna C. J. and Venkatarama Aiyar J. by an order dated July 10, 1953, dismissed the applications. The learned Judges held that section 5(4)(a) of the Act was void to the extent it conferred on the Collector authority to refuse a licence at his own discretion and rule 37 was void in so far as it prohibited persons whose names had not yet been registered as buyers and sellers, from carrying on business in the notified area. Subject to that, the impugned Act and the Rules were upheld under article 19(6) of the Constitution as a valid piece of marketing legislation. In the result, the applications were dismissed. The aforesaid three appellants have filed these appeals against the order of the High Court in so far as it dismissed their applications. Learned counsel for the appellants contends that the provisions of the Act and the Rules framed thereunder constitute an unreasonable restriction upon the appellants ' fundamental right to do business and that they not only do not achieve the object for which they are enacted but defeat their purpose. Elaborating this argument, he took us through some of the provisions 95 of the Act and the Rules made thereunder in an attempt to establish that the provisions cripple the business of the appellants, restrict the rights of the small traders, cause unnecessary and unintentional hardship to the growers and thereby exceed the purpose of the enactment and defeat its object. Before we scrutinize the provisions of the Act, the law on the subject may be briefly noticed. Under article 19 (1)(g) of the Constitution of India all persons have the right to practice any profession, or to carry on any occupation, trade or business. Clause (6) of that Article enables the State to make any law imposing in the interest of general public reasonable restrictions on the exercise of the right conferred by sub cl. (g) of el. It has been held that in order to be reasonable, a restriction must have a rational relation to the object which the legislature seeks to achieve and must not go in excees of that object (See Chintaman Rao vs The State of Madhya Pradesh) (1). The mode of approach to ascertain the reasonableness of a restriction has been succinctly stated by Patanjali Sastry C. J., in State of Madras vs V. G. ROW (2) thus: It is important in this context to bear in mind that the test of reasonableness, wherever prescribed, should be applied to each individual statute impugned, and no abstract standard, or general pattern, of reasonableness can be laid down as applicable to all cases. The nature of the right alleged to have been infringed, the underlying purpose of the restrictions imposed, the extent and urgency of the evil sought to be remedied thereby, the disproportion of the imposition, the prevailing conditions at the time, should all enter into the judicial verdict. " Bearing the aforesaid principles in mind, we shall ascertain the object of the Act, from the circumstances under which it was passed, and its provisions, and see whether the provisions have any reasonable relation to the object which the legislature seeks to achieve. There is a historical background for this Act. Marketing legislation is now a well settled feature of (1) ; (2) ; , 607. 96 all commercial countries. The object of such legislation is to protect the producers of commercial crops from being exploited by the middlemen and profiteers and to enable them to secure a fair return for their produce. In Madras State, as in other parts of the country, various Commissions and Committees have been appointed to investigate the problem, to suggest ways and means of providing a fair deal to the growers of crops, particularly commercial crops, and find a market for selling their produce at proper rates. Several Committees, in their reports, considered this question and suggested that a satisfactory system of agricultural marketing should be introduced to achieve the object of helping the agriculturists to secure a proper return for the produce grown by them. The Royal Commission on Agriculture in India appointed in 1928, observed: "That cultivator suffers from many handicaps: to begin with he is illiterate and in general ignorant of prevailing prices in the markets, especially in regard to commercial crops. The most hopeful solution of the cultivator 's marketing difficulties seems to lie in the improvement of communications and the establishment of regulated markets and we recommend for the consideration of other Provinces the establishment of regulated markets on the Berar system as modified by the Bombay legislation. The establishment of regulated markets must form an essential part of any ordered plan of agricultural development in this country. The Bombay Act is, however, definitely limited to cotton markets and the bulk of the transactions in Berar market is also in that crop. We consider that the system can conveniently be extended to other crops and, with a view to avoiding difficulties, would suggest that regulated markets should only be established under Provincial legislation. " The Royal Commission further pointed out in its report: " The keynote to the system of marketing agricultural produce in the State is the predominant part played by middlemen. " It is the cultivator 's chronic shortage of money 97 that has allowed the intermediary to achieve the prominent position he now occupies. " The necessity for marketing legislation was stressed by other bodies also like the Indian Central Banking enquiry Committee, the All India Rural Credit and Survey Committee, etc. Recently the Government of Madras appointed an expert Committee to review the Act. In its report the Committee graphically described the difficulties of the cultivators and their dependence upon the middlemen thus: " The middleman plays a prominent part in sale transactions and his terms and methods vary according to the nature of the crop and the status of the cultivator. The rich ryot who is unencumbered by debt and who has comparatively large stocks to dispose of, brings his produce to the taluk or district centre and entrusts it to a commission agent for sale. If it is not sold on the day on which it is brought, it is stored in the commission agent 's godown at the cultivators ' expense and as the latter generally cannot afford to wait about until the sale is effected he leaves his produce to be sold by the commission agent at the best possible price, and it is doubtful whether eventually he receives the best price. The middle class ryot invariably disposes of his produce through the same agency but, unlike the rich ryot he is not free to choose his commission agent, because he generally takes advances from a particular commission agent on the condition that he will hand over his produce to him for sale. Not only, therefore, he places himself in a position where he cannot dictate and insist on the sale being effected for the highest price but he loses by being compelled to pay heavy interest on the advance taken from the commission agent. His relations with middlemen are more akin to those between a creditor and a debtor, than of a selling agent and producer. In almost all cases of the poor ryots, the major portion of their produce finds its way into the hands of the village money lender and whatever remains is sold to petty traders who tour the villages and the price at which it changes hands is governed not so much by the 13 98 market rates, but by the urgent needs of the ryot which are generally taken advantage of by the purchaser. The dominating position which the middleman occupies and his methods of sale and the terms of his dealings have long ago been realized. " The aforesaid observations describe the pitiable 'dependence of the middle class and poor ryots on the middlemen and petty traders, with the result that the cultivators are not able to find markets for their produce wherein they can expect reasonable price for them. With a view to provide satisfactory conditions for the growers of commercial crops to sell their produce on equal terms and at reasonable prices, the Act was passed on July 25, 1933. The preamble introduces the Act with the recital that it is expedient to provide for the better regulation of the buying and selling of commercial crops in the Presidency of Madras and for that purpose to establish markets and make rules for their proper administration. The Act, therefore, was the result of a long exploratory investigation by ex perts in the field, conceived and enacted to regulate the buying and selling of commercial crops by providing suitable and regulated markets by eliminating middlemen and bringing face to face the producer and the buyer so that they may meet on equal terms, thereby eradicating or at any rate reducing the scope for exploitation in dealings. Such a statute cannot be said to create unreasonable restrictions on the citizens ' right to do business unless it is clearly established that the provisions are too drastic, unnecessarily harsh and overreach the scope of the object to achieve which it is enacted. It is therefore necessary to scrutinize the provisions of the Act and the Rules made thereunder to ascertain whether the restrictions imposed are not reasonable. The said provisions fall under two groups: the first group provides the machinery for controlling the trade in commercial crops and the second group of provisions imposes restrictions On the carrying on of the said trade. Section 2(1 a) defines I commercial crop ' to mean cotton, groundnut or tobacco and includes any 99 other crop or product notified by the State Government in the Fort St. George Gazette as a commercial crop for the purposes of this Act. Under section 3, the State Government issues a notification declaring their intention to exercise control over the purchase and sale of such commercial crop or crops in a particular area and calls for objections and suggestions to be made within a prescribed time. After the objections are received, the State Government considers them and declares the areas to be specified in the notification or any portion thereof to be a notified area for the purpose of the Act in respect of commercial crop or crops specified in the notification. Under section 4 A, the State Government has to establish a market committee for every notified area and it shall be the duty of the market committee to enforce the provisions of the Act. Sections 6 to 10 provide for the constitution of Market Committees and section 16 for their supersession for the reasons mentioned therein. In exercise of the powers conferred by section 18 of the Act the State Government made Rules which provide for the manner in which the members of Market Committees should be elected, and also for the constitution of sub Committees. In exercise of the powers conferred by section 19 of the Act and also subject to the Madras Commercial Crops Markets Rules, 1948, the Committees for the various districts made, bye laws for regulating their meetings and for the discharge of their duties by the various subordinate bodies. The said provisions which bring into existence a machinery for regulating the trade are not attacked by the learned counsel for the appellants. Under the second group, there are provisions providing for matters which are succinctly stated in the 'Report of the Expert Committee on the review of the Madras Commercial Crops Markets Act, 1933 at p. 7 as under: "(1) A common place is provided for seller and buyer to meet and facilities are offered by way of space, buildings and storage accommodation. (2) Market practices are regularized and Market 100 charges clearly defined and unwarranted ones prohibited. (3) Correct weighment is ensured by licensed weighmen and all weights are checked and stamped. (4) Payment on hand is ensured. (5) Provision is made for settlement of disputes. (6) Daily prevailing prices are made available to the grower and reliable market information provided regarding arrivals, stocks, prices, etc. (7) Quality standards are fixed when necessary and contract forms standardized for purchase and sale. " Section 5 says: 'No person shall, within a notified area, set up, establish or use, or continue or allow to be continued, any place for the purchase or sale of a notified commercial crop, except under and in accordance with the conditions of a licence granted to him by the Collector. The first proviso to that section provides that after the establishment in such area of a market for the purchase and sale of a notified commercial crop, no licence for the purchase or sale of such commercial crop shall be granted or renewed in respect of any place situated within such distance of the market as may from time to time be fixed by the State Government. The second proviso enables the Market Committee to exempt from the provisions of the above sub section any person who carries on the business of purchasing or selling any commercial crop in quantities not exceeding those prescribed by Rules made under the Act. The third proviso authorizes the said Committee to exempt a person selling commercial crop which has been grown by him, or a cooperative society registered or deemed to be registered under the Madras Co operative Societies Act, 1932, selling a commercial crop which has been grown by any of its members, and also empowers it to withdraw the exemption. Sub section (2) of section 5 gives exemption to a person purchasing for his private use a commercial crop in quantities not exceeding those prescribed by Rules made under the Act. Sub section (3) prohibits any person within a notified area from setting up, 101 establishing or using, continuing or allowing to be continued, any place for the storage, weighment, pressing or processing of any notified commercial crop except under and in accordance with the conditions of a licence granted to him by the Collector. Under proviso to sub section (3) a person is exempted from the operation of that Rule in respect of any notified commercial crop grown by him. Sub section (4) enables the Collector, on the report of the Market Committee and after such inquiry as he deems fit, to cancel or suspend any licence granted under the said section. There are provisions providing for penalties for infringement of the statutory regulations and for referring disputes to compulsory arbitration. The bye laws framed by the Committees prescribe graded scales of licence fees in respect of various licences required under the Act; these show that a trader has to take separate licences under section 5(1) and section 5(3). The licence fee payable for additional premises is comparatively smaller than the amount payable for the main premises. Licence fee is also fixed for brokers, weighmen, etc. Rule 28(3) (iii) of the Rules states that it shall not be necessary for a poison to obtain more than one licence for setting up, establishing or continuing or allowing to be continued more than one place in the same notified area for the purchase, sale, storage, weighment, pressing or processing of the same commercial crop. A combined reading Of the Rule and the bye laws shows that though different licences may have to be obtained under section 5(1) and section 5(3), one licence is sufficient for different places and only small payments have to be made for every additional premises for the same purpose. It is not necessary to notice the other provisions as nothing turns upon them in the present ease. Shortly stated, the Act, Rules and the Bye laws framed thereunder have a long term target of providing a net work of markets wherein facilities for correct weigbment are ensured, storage accommodation is provided, and equal powers of bargaining ensured, so that the growers may bring their commercial crops to the market and sell them at reasonable prices. Till such markets are 102 established, the said provisions, by imposing licensing restrictions, enable the buyers and sellers to meet in licensed premises, ensure correct weighment, make available to them reliable market information and provide for them a simple machinery for settlement of disputes. After the markets are built or opened by the marketing committees, within a reasonable radius from the market, as prescribed by the Rules, no licence is issued ; thereafter all growers will have to resort to the market for vending their goods. The result of the implementation of the Act would be to eliminate, as far as possible, the middlemen and to give reasonable facilities for the growers of commercial crops to secure best prices for their commodities. Learned counsel for the appellants contends that the restrictions imposed by the provisions of section 5 are not only unreasonable but tend to defeat the very purpose of the legislation. Elaborating this argument, the learned counsel says that they are unreasonable from the standpoint of the big trader, the small trader and also the grower of crops. The trader, his argument proceeds, can only buy or sell in the licensed premises paying heavy licensing fees under different beads and paying also heavy overhead charges, with the inevitable consequence that he will not be able to run his business with profit. It is also said that he cannot go wherever he likes to buy the produce at cheap rates and can negotiate for or enter into contracts of sale only in the licensed premises, with the result that be has to pay higher prices to the sellers. The first argument rather exaggerates the situation; for, the rates of licence fees shown in the bye laws framed by the Marketing Committee at Virudhunagar do not appear to be so high as to cripple the trader 's business. No material has been placed before us to establish that the rates are so high and the burden is so unbearable that a trader, who is otherwise making profit, cannot carry on his business. The second objection of the learned Counsel in itself affords a reasonable basis for the legislation ; for, what the learned counsel in effect says is that the trader is exploiting the small growers 103 and that he is prevented from doing so under the licensing regulations. From the standpoint of the seller it is said that though he may be exempted from the operation of the said Act under the second proviso to section 5 (1) he is prevented from selling his produce by insisting that he should trade only with the licensed trader and in the licensed premises. Assuming that that is the legal position under the Rules, nothing prevents the grower from selling his produce to another grower whose requirements are greater than what he produces or to a smaller trader exempted under the third proviso to section 5 (1). After the market is established, it is contended, a grower will be obliged to carry the goods to a centralised place if he is to dispose of the goods, which can hardly be described as increasing the facilities for marketing the goods. It is true that the growers may be under some difficulties in this regard, but that is counter balanced by the marketing facilities provided for them under the Act. It is also said that when a market is established, no licence to purchase, or sell, commercial crops will be granted or renewed in respect of any place situated within such distance from the market as may from time to time be fixed by the State Government and that nothing under the Act prevents the Government from fixing a long distance as a prohibited area; with the result that a person, who is having a licence to trade ,in and about the place where the market is fixed, is deprived of his livelihood, which is an unreasonable restriction upon his right to do business. But in our view, such a provision is necessary for preventing the local business being diverted to other places and the object of the scheme being defeated. Further, ,in practice, it is seen that the Government fixes by notification under section 5 (1) a radius of five miles around the building and occasionally ten miles. It is also not likely that it would fix a longer distance in the present circumstances, having regard to the inadequate facilities for transporting commodities. That apart, the establishment of a market does not prevent a trader from carrying on the business in the market established, 104 but he could not run a market for himself in respect only of the commodities declared to be commercial crops within the radius prescribed. While the object of the Act is to protect the growers, the argument proceeds, the small traders are compelled to resort to distant markets, with the result that some of them would be forced to give up their business and others would have to incur unnecessary expenditure which they could not afford. The Act is an integrated one, and it regulates the buying and selling of commercial crops. If the small traders are exempted, it creates loopholes in the scheme through which the big trader may operate, and thereby the object itself would be defeated. That apart, the second proviso enables the Committee to exempt small traders in appropriate cases. The constitution of the Committee, in which there will be representatives of the traders and the buyers, is a sufficient guarantee against the implementation of the provisions of the Act to the detriment of all concerned. If a packed Committee abuses its powers, there is a further provision to enable the Government to supersede it. We, therefore, hold that, having regard to the entire scheme of the Act, the impugned provisions of the Act constitute reasonable restrictions on a citizen 's right to do business, and therefore, they are valid. The next contention of the learned counsel for the appellants is that the G. 0. No. 356 dated 8 3 1952 directing the establishment of a market at Virudhunagar is an unreasonable restriction on the appellants ' right to do business, and is, therefore, invalid. In Viradhunagar, there is already a well established market which provides facilities for the purchase and sale of cotton and other goods. It is stated that the said market has been functioning for over fifty years, that it has been largely used by the merchants of the community, and that it contains stalls for effecting sales, godowns for stockina goods, halls, parks and other amenities. Certain charges called I mahimai ' are collected on all transactions that take place within the market; and they are constituted into a trust fund which is utilised for the maintenance of schools 105 and for religious purposes. The argument is that the appellants in C. A. No. 169 of 1955 are running the market as an occupation or business with high standards and that the notification directing the constitution of a market in the same locality, when admittedly the entire scheme of building a net work of markets could not be finished within a, predictable time, is not a reasonable restriction on their right to do business. It is also said that the same advantages could be given to the growers by continuing the said market with suitable restrictions and controls as the market established by the Market Committee would conceivably provide for them, and in those circumstances, when two alternative methods would equally achieve the objects, the notification directing the constitution of a market to the exclusion of the existing one would be an unreasonable restriction. The learned Advocate General of Madras contends that the appellants have really two fundamental rights: one is to carry on trade or business and the other is to hold their property, i.e., the market; that by reason of the notification they are not prevented from doing their business, for they can still do business in the market established subject to the regulations and also do business outside the prescribed area ; and that they are not prohibited from holding the market as property, for they could still utilise it for commodities other than the notified crops. In respect of the contention that holding the market is only an incident of ownership of the property, reliance is placed upon the decisions in T. B. Ibrahim vs Regional Transport Authority, Tanjore (1); Ramunni Kurup vs The Panchayat Board, Badagara (2); Captain Ganpati Singhji vs The State of Ajmer (3) ; and Valia Raja of Edappally vs The Commissioner for Hindu Religious Charitable Endowments, Madras (4). It is unnecessary to express an opinion on the question whether the right of the appellants falls under article 19(1)(f) or (g) of the Constitution of India, or under both the sub clauses; for, the (1) ; (3) ; (2) I.L R. (4) I.L.R. [1955] mad. 14 106 question whether the notification imposes an unreasonable restriction on the appellants ' right cannot be decided on the material placed before us. That question may conveniently be left open to be decided at the time when the market is established at Virudhunagar, pursuant to the notification issued by the Government. It does not appear from the record that there is any early prospect of such a market being established in that place. The reasonableness of the restrictions would depend upon the circumstances obtaining at the time the market is established. It depends upon the conditions then obtaining in the trade in commercial crops, the standards that will be maintained in the present market at that time, the comparative merits of the existing market and the market to be built up and other relevant considerations which cannot now be visualized. We would, therefore, leave open that question to be decided at the proper time by the authorities concerned when a market is sought to be established in the manner provided by law. The next argument relates to I mahimai ' allowances collected by the appellants from the sellers and buyers of the crops in the market. The learned judges of the High Court held that the question relating to this allowance did not arise for decision at that stage, but having heard full arguments on the question, they expressed the view that 'mahimai ' could not be claimed as a trade allowance. They concluded their discussion on the subject in the following words: " It has nothing to do with the transaction as such and is really a contribution levied at the time of the transaction for a purpose unconnected with it. It cannot therefore be properly regarded as a trade allowance, and bye law 25(b) is perfectly valid. " We cannot share the opinion of the learned judges that the question does not arise for decision at this stage. The appellants prayed for issue of a writ of mandamus directing the respondents to forbear from enforcing any or all the provisions of the Act as amended and the Rules and bye laws framed thereunder by the Ramanathapuram Committee; and, the provisions of 107 the Act read with the bye laws prohibited the collection of 'mahimai ' by the appellants. The question whether the bye law prohibiting the collection off I mahimai ' allowance is valid or not does directly arise for consideration in this case. There is also some ambiguity in the conclusion arrived at by the learned judges of the High Court. They stated that the allowance had nothing to do with the transaction as such and could not therefore be properly regarded as a trade allowance. The learned counsel for the appellants contends that if it is not a trade allowance, it is not covered either by section 14 of the Act or by bye laws framed thereunder, as section 14 prohibits the deduction of trade allowance and does not operate upon any other payments made which are not trade allowances. There is considerable force in this argument, but we think that the learned judges meant only that the said allowance is not an admissible or a permissible trade allowance prescribed by the bye law. The question, therefore, is whether the allowance described as I mahimai ' is a trade allowance and if so, whether the allowance is permitted to be received by the rules or bye laws made under that section. The relevant provisions may be noticed at this stage. Section 14 says "No trade allowance, other than an allowance prescribed by rules or by laws made under this Act, shall be made or received in a notified area by any person in any transaction in respect of the commercial crop or crops concerned and no Civil Court shall, in any suit or proceeding arising out of any such transaction, have regard to any trade allowance not so prescribed. Explanation:Every deduction other than deduction on account of deviation from sample, when the purchase is made by sample, or of deviation from standard, when the purchase is made by reference to a known standard, or on account of difference between the actual weight of the sacking and the standard weight, or on account of the admixture of foreign matter, shall be regarded as a trade allowance for the purposes of this Act ". 108 Section 19: " (1) Subject to any rules made by the State Government under section 18 and with the previous sanction of the Director of Agriculture, Madras, a market committee may in respect of the notified area for which it was established make bylaws for the regulation of the business and the conditions of trading therein. " By law 25: Trade allowance applying to the market and the notified area: (a). . . . . . . . . " (b) Deductions such as I mahimai ' are prohibited. The weight of alien substance such as mud and stone, if any, contained in the lint or kapas borahs or in the bags of groundnut pods or kernels shall be deducted. " The gist of the aforesaid provisions may be stated thus: Trade allowance cannot be received in any notified area by any person in any transaction in respect of commercial crop or crops. Every deduction in any transaction in respect of the said crop other than those specified in the explanation is trade allowance for the purpose of the Act. A market committee generally may make bye laws for the regulation of the business and conditions of trading therein and particularly it can make bye laws prescribing what are permissible trade allowances under the section. Such allowances as are prescribed by a bye law can be deducted in any transaction notwithstanding the fact that they are trade allowances. The argument of the learned counsel is that that bye law is bad, because the market committee did not name the allowance or allowances taking them out of the pro hibition under section 14 which they are entitled to do under that section, but made the bye law mentioning the ' mahimai ' allowance as one not deductible in any transaction. The validity of that part of the bye law prohibiting the deduction of ' mahimai ' as trade allowance depends upon the nature of that deduction. If ' mahimai ' is not a trade allowance, the said part of the bye law would obviously be invalid as inconsistent with the provisions of section 14. If, on the other hand, mahimai ' is a trade allowance, the said part of the 109 bye law will be superfluous, as the allowance falls within the terms of the section itself This leads us to the question whether ' mahimai ' is a trade allowance, within the meaning of section 14 of the Act. What is a trade allowance? Trade involves exchange of commodities for money, the business of buying and selling and the transaction involves the seller, the buyer, the commodity sold and the price paid for the sale. Allowance means something given as compensation, rebate or deduction. Under the section, the said deduction should be in any transaction in respect of commercial crops. The deduction may be out of the commodity or out of the price. The recipient may be the seller, the buyer or a third party. When A sells a quantity of cotton to B for a hundred rupees, B, the purchaser, may deduct one rupee from the sale price and pay ninety Dine rupees to A; he may keep that amount for himself or pay the same to C. So too, A, the seller, may purport to sell one maund of cotton but in fact deduct a small part of it, retain that part for himself or give it to C; or both A and B may fix the price of the commodity purchased at Rs. 102 but the purchaser pays one rupee to C and the seller retains or pays one rupee to C; or it may be that payments have nothing to do with the price or the transaction, but both the parties pay C a specified amount as consideration for the user of the premises or for the services rendered by him. The question whether a particular payment is a trade allowance or not, depends upon the facts of each case. Firstly, it must be a deduction in any transaction in respect of commercial crops. If it is a deduction out of the price or commodity agreed to be paid or transferred, it would be a trade allowance. On the other hand, if the payment is de hors the terms of the transaction but made towards consideration for the use of the premises or services rendered, it would not be a deduction from the price or in any transaction. No material has been placed before us to arrive at a definite finding in the present case whether 'mahimai ' is a deduction from the price or commodity within the meaning of section 14 of the Act. The learned judges, having expressed the view that the 110 question did not arise for consideration at that stage, did not also consider any material to support their finding. In the circumstances, the only reasonable course is to leave that question open so that it may be decided in appropriate proceedings. In the result, subject to the aforesaid observations, the appeals are dismissed but without costs. Appeals dismissed.

The Madras legislature enacted the Madras Commercial Crops Markets Act for providing satisfactory conditions for the growers of commercial crops to sell their produce on equal terms with the purchasers and at reasonable prices. The Act, Rules and the Bye laws framed thereunder have a long term target of providing a net work of markets wherein facilities for correct weighment are ensured, storage accommodation is provided, and reliable market information is given. Till such markets are established the Act provides for the imposition of licensing restrictions to enable the buyers and sellers to meet in licensed premises. After the establishment of the markets no licenses would be issued within a reasonable radius from the markets and all growers will have to resort to the markets for selling their crops. The result would be to eliminate, as far as possible, the middlemen and to give reasonable facilities for the growers of commercial crops to secure best prices for their commodities. Held, that the impugned provisions of the Act impose reasonable restrictions on the citizen 's right to do business and are valid. Such a statute cannot be said to create unreasonable restrictions on the citizen 's right to do business unless it is clearly established that the provisions are too drastic, unnecessarily harsh and over reach the object for which they were made. Chintaman Rao vs The State of Madhya Pradesh, [1950] S.C.R. 759 and State of Madras vs V. G. Rao, ; , referred to.

ivil Appeal No 1514 of 1979. From the Judgment and Order dated 17.6.1977 of the Madras High Court in O.S.A. 62 of 1973. T.S. Krishnamurthy lyer, M.J. Paul and Kailash Vasudev for the Appellant. K. Parasaran, P.D. Sharma, T.K. Seshadri and K. Swami for the Respondents. 549 The Judgment of the Court was delivered by RANGANATHAN, J. A very interesting question comes up for consideration in this appeal. The question to be ultimately decided falls within a very narrow compass but it is neces sary to set out the facts leading to the present appeal at some length. The property, which is the subject matter of the present dispute, originally formed part of an extent of land situat ed on Mount Road, Madras, bearing door Nos. 2 and 3 and measuring 41 grounds and 2005 sq. It belonged to several co owners. These co owners had leased out the properties under two lease deeds in favour of M/s. India Automobiles, which was then the sole proprietary concern of one of them selves, Ganshyamdas Girdhardas (G.G.), but was converted subsequently, in 1961, into a partnership concern of G.G. and his four sons. The firm and its partners arc hereinafter compendiously referred to as 'the tenants '. The first lease (Ext. P 1) was dated 22.9. 1947 and related to Door No. 2 (Item No.1 in Schedule A to the plaint). This was a property comprising of an area of 4 grounds and 151 square feet with certain buildings thereon. The rent for the premises was Rs. 150 per month. The second lease deed (Ext. P 2), dated 3.10. 1947 relating to Door No. 3 (Item 2 in Schedule A to the plaint) covered an area of 8700 sq. and some building thereon. The rent as per lease deed was Rs.200 per month. On 30.7.1953, all the co owners of the property (includ ing G.G.) sold the property to the United India Life Assur ance Company and the New Guardian of India Life Insurance Company Ltd. In 1956, the Life Insurance Corporation of India (LIC) stepped into the shoes of these two insurance companies and became the owner of the property. On 20.7.65, the LIC moved two applications (being HRC Nos. 3310 and 3311 of 1965) in the court of the Rent Con troller (Sri A. Varadarajan who later became a Judge of the this Court) for fixation of a "fair rent" for each of the premises. The fair rent claimed was computed at Rs.2,399.03 per month in respect of item No. 1 as against the rent of Rs. 150 p.m. fixed under the lease deed. In respect of item 2 the fair rent claimed was Rs.3266.50 as against Rs.200 p.m. payable under the lease deed. The defendants (G.G. and his sons) filed their objections to the above applications. They claimed that, under both the lease deeds, what had been leased out to them was only a vacant land and that the superstructure had been built by them. They claimed, there fore, that they were entitled to relief under the Madras 550 City Tenants ' Protection Act and that the Rent Controller Court had no jurisdiction to fix a fair rent. The Rent Controller accepted the .above argument so far as item was concerned. So far as item 2 was concerned, it appears that, at the time of the hearing, it was conceded before the Rent Controller that the respondents were tenants of the entire properties covered by the lease deed and that they had not constructed any of the premises thereupon. In view of this the Rent Controller dismissed H.R.C. 3310/ 65 relating to item No. 1 and, in H.R.C. 3311/65, fixed the fair rent in respect of item No. 2 at Rs. 1451 p.m. The order of the Rent Controller was dated 9.3. There were appeals to the Court of Small Causes. In respect of item No. 1, in H.R.A. 534/66, the Court, on a perusal of the sale deed dated 30.7.53 filed by the LIC before it, came to the conclusion that the buildings on the land leased under exhibit P 1 had also been conveyed to the LIC and that the LIC was entitled to seek fixation of fair rent in respect of this premises also. The fair rent fixed by the Rent Controller at Rs.994 p.m. was upheld. The order of the Rent Controller in respect of item 2 was also upheld. It may be mentioned here that, even in certain earlier proceedings for fixation of fair rent and eviction (H.R.C. 867/73 and H.R.C. 2557/64), it had been held by the Rent Controller that item No. 1 (door No. 2) belonged to the LIC but his order of eviction had been set aside by the appellate court on some other ground. In the circumstances, the Court of Small Causes, in the appeals now being referred to (H.RA. 534/66), did not treat the earlier decision as res judicata but came independently to the same conclusion that item No. 1 belonged to the LIC. This was on 19th April, 1967. The tenants filed revision petitions against the order of the Court of Small Causes but these were dismissed on 20.11.1968. After the Civil Revision Petitions by the tenant were dismissed, the LIC filed C.S. 64/1969 on the original side of the Madras High Court against the tenants for recovery of arrears of rent on the basis of the fair rents fixed, which were computed at Rs.98,250.97 in respect of the two items of property. Further interest at the rate of 12% thereon from date of plaint to the date of decree and at 6% thereafter till the date of realisation was also claimed. It may be mentioned here that the tenant filed C.S. 87 of 1972 claiming protection under the Madras City Tenants ' Protection Act but this suit and further appeals therefrom have been dismissed. Turn 551 ing now to C.S. No. 54 of 1969 (which was disposed of along with C.S. No. 87 of 72 by a common judgment dated 23.10.1972), the contention urged on behalf of the tenants was that, since the subject matter of the lease under exhibit P 1 was only a vacant site, the Rent Controller had no juris diction to fix the fair rent in respect thereof and that, therefore, the claim in the suit for arrears of rent, based on the Rent Controller 's order in respect of the premises covered by exhibit P 1 had to fail. The Court addressed itself to this question. It came to the conclusion that exhibit P 1 did not, in law, create a valid lease between the co owners and the tenants. After referring to the terms of the sale deed (exhibit P 3), the superstructure constructed on the land was held to have been conveyed to the vendee under the sale deed dated 30 7. 1953 and to have thus vested in the LIC. The Rent Controller was, therefore, held to have had juris diction to fix the fair rent in respect of the premises. It was, therefore, held that the plantiff 's claim in the suit should succeed. The suit was decreed accordingly. The tenants filed an appeal being O.S.A. No. 62 of 1973. The Appellate Bench confirmed the decree in respect of item No. 2 subject to certain modifications which are not here relevant. However, so far as item No. 1 was concerned, the Appellate Bench vacated the decree passed by the trial court. It held that there was a valid tease between the quondam owners and the tenants under Exts. P 1 & P 2. Having regard to the express recitals in exhibit P 3, the Appellate Bench held that it was impossible to hold that the build ings, which admittedly belonged to the defendants and had been constructed by them on the vacant land taken on lease under exhibit P 1, ever were or could be the subject matter of the sale under exhibit p 3. In view of this finding, it was held that the Rent Controller had no jurisdiction to entertain the application for fixation of fair rent in respect of the property which was only a vacant piece of land. In conse quence, it was held, the LIC could not maintain the suit for recovery of rent based on the order made by the statutory tribunal under the Rent Control Act and claim the difference between the so called fair rent and the contract rent. The claim of the LIC for recovery of Rs.39,224.71, as arrears of rent, in respect of item 1 was thus held to be not maintain able. O.S.A. 62 of 1973 was, therefore, allowed to that extent. The present appeal, by Special Leave granted on 3.7. 1979, is from the order of the Division Bench rejecting the appellant 's claim for arrears of rent in respect of item No. 1 of the property set out in Schedule A to the plaint based on the difference between the fair rent fixed by the Rent Controller and the rent payable therefore under exhibit P 1. 552 The questions to be decided in this appeal, on the above facts, boil down to these: (1) Was the LIC the vendee only of a vacant piece of land with no title to the buildings standing on the site in item 17 (2) It is open for the tenants to contend that the order of the Court of Small Causes in the earlier rent control proceedings deciding to the contrary and fixing the fair rent of item 1 at Rs.994 p.m. should be completely ignored as an order passed totally without jurisdiction, although it has become final as be tween the parties? Two interesting aspects may be pointed out in regard to these two questions. The first is that if either question is answered in the negative, the other will not arise for consideration and the appeal will have to be allowed. But an affirmative answer to either question will necessitate an answer to the other. The second is that, though the claim in issue before us is only a money claim for arrears of rent, any decision given by us, based, as it will have to be, on the issue whether the LIC owns the superstructure or not and whether the tenants are the les sees only of vacant land or of both land and buildings, will have repercussions not only on the claim in this suit (which by now has accummulated to more than Rs.3 lakhs) but also on any other proceedings by way of ejectment or otherwise which the LIC may have in contemplation against the tenants. The decision in this appeal will, therefore, be of great moment for the L.I .C. So far as the first question is concerned, we have no doubt that the Division Bench of the High Court has come to the correct conclusion. In our view, the conclusion of the learned Single Judge that the lease exhibit P 1, executed by the co owners of the property in favour of one of them, was invalid, was erroneous. S.5 of the , clearly envisages transfers of property by a person to "one or more living persons or to himself, or to himself and one or more other living persons". Whatever may be the position, in spite of this provision, in respect of a pur ported transfer by a person to himself alone (which is very often the position in the case of trusts) which was consid ered by the House of Lords in Rye vs Rye, , there is no reason to hold that a contract between a person with himself and other is invalid The Division Bench, we think, has tightly distinguished the decisions in Girish Chandra vs Srinath, (3 C.L.J. 141) and Rye vs Rye, The observations of Lord Denning, extracted by the learned Judges, are quite apposite to the situation in the present case. Once this objection is out of the way, the question is whether the construction put upon the leased land by the lessees formed part of the 553 property conveyed to the L.I.C. Sri Parasaran pointed out that they did not and drew our attention to subsequent correspondence between the parties to show that even the L.I.C. had not claimed at any stage any rent in respect of the superstructures (apart from the contractual rent, which was in respect of the land) and that both parties have all along been proceeding on the footing that the superstructure on item 1 belonged to the lessees. This appears to be cor rect but it cannot be conclusive of the rights of the par ties. We have therefore gone carefully into the terms of exhibit P. 1 and exhibit P 3. They clearly make out that the superstruc tures put up by the lessee under exhibit P 1 were not included in the property conveyed under the terms of exhibit P 3 and that, whatever may be the rights of the LIC to evict the tenant with liberty to demolish the superstructure on the termination of the lease, it had no property in the super structure so long as the lease subsisted. We, therefore, answer the first question posed by us in the affirmative. This brings us, then, to the second, the really crucial, question posed earlier viz. whether, despite the above conclusion, we are precluded, by principles of, or analogous to, res judicata, from going behind the findings to the contrary given in the earlier rent control proceedings by the Court of Small Causes which have become final on the dismissal of the C.R.P. filed thereagainst Sri T.S. Krishnamurthy lyer, learned counsel for the appellant, submitted that the Courts now are precluded from going behind the findings of the Court of Small Causes in the earlier proceedings. He conceded that no legal conse quenes can flow from a totally void order (see, Kiran Singh vs Chaman Paswan, ; @ 121). He also conceded that there may be a difference in principle between a civil court and a court of limited jurisdiction. While the former has an inherent jurisdiction to decide a question raised about its own jurisdiction and such a decision cannot be challenged in another court after it has become final: (See: Bhatia Cooperative Society Ltd. vs Patel, ; and Nageswara vs Canesa, AIR 1942 Mad. 675), the latter is strictly confined to the terms of the statute creating it. But, he submitted, even the decision of a Tribunal or a Court of limited jurisdiction cannot be called in question so long as it acts within the scope of the jurisdiction conferred on it by the relevant statutes. He, therefore, invited us to peruse the provisions of the Tamil Nadu Build ings (Lease and Rent Control) Act, 1960 (hereinafter re ferred to as the Rent Control Act). Under the said Act, he pointed out, a petition for fixation of fair rent under section 4 could be filed by either a landlord or a tenant: (Raval & Co. vs Rarnachandran, ; This is 554 what the LIC purported to do when it filed H.R.C. Nos. 3310 and 33 11/64. When a petition under section 4 is filed, the Rent Controller, on the language of section 4 has to decide: (1) whether the applicant is a tenant in, or landlord of, the building and (2) what the fair rent of the premises should be in accordance with the provisions of the Act. In the present case both the points had been put in issue. The respondents denied that the L.I.C. was the landlord or they the tenants in respect of the property. They claimed to be the owner of the superstructure and admitted tenancy only in respect of the site. The Rent Controller and, on appeal, the Court of Small Causes were therefore, called upon to give their decision on this question which was completely within their statutory jurisdiction and this decision certainly constitutes res judicata between the parties: see also, Explanation VIII to section 11 of the Code of Civil Procedure. At any rate, it is not open to one of the parties to contend that the decision given by the Court of Small Causes, which has become final between the parties, is a total nullity which can be completely ignored. It was, therefore, not open to the High Court to entertain a collateral attack on the validity of binding nature or correctness of the order of the Court of Small Causes and to consider and determine afresh the issue as to whether the L.I.C. is the owner of the premises as claimed or not. In support of his contention, counsel referred to Krish namurthy vs Parthasarathy, AIR 1949 Madras 780 reversing the decision in the same case reported in AIR 1949 Madras 387. The appellant landlord had filed an eviction petition under the Rent Control Act without giving notice under section 111(h) of the (which, in those days, was considered to be a condition precedent even to the filing of an eviction petition under the Rent Control Act) and ob tained an order of eviction. In these proceedings no conten tion had been raised by the tenant on the non issue of the notice under the . An appeal by the tenant also failed but here again the above point was not taken. Thereafter the tenant filed a suit for a declaration that the order of the Rent Controller was ultra vires in that no notice to quit had been given as required by law. This plea was upheld by the learned Single Judge but was rejected in appeal. The Division Bench observed: " . . We agree with the learned Judge that this Court can entertain a suit to set aside an order of the Rent Controller if the Rent Controller exceeded the powers con ferred on him. A Court or tribunal can, however, be said to have no jurisdiction to entertain a suit or application only if it has 555 no jurisdiction with regard to the subject matter of the suit or application . . But even these rules are subject to the qualification that, if the jurisdiction of the Court depends upon the ascertainment of facts and the Court, upon the facts found, holds that it has jurisdiction, then the decree of that Court cannot be ignored or set aside in collateral proceedings. " After reference to certain other decisions of the Court, it was observed: "If a lessor brings a suit for eviction, he is to prove the existence of a lease, the relationship of lessor and lessee between himself and the defendant and the determination of the lease. If he fails to prove this, the plaint is not returned because the suit is one which the Court has no jurisdiction to entertain; but the suit is dismissed as revealing no cause of action . . In a suit by a landlord against his tenant for eviction, the determination of the tenancy is merely one of the constituents of the cause of action that the landlord has to prove against his tenant in order to succeed in the suit. We are of opinion that a tenant can waive notice to quit; but even if he cannot, notice has not to be proved as a condition precedent to the institution of the suit . . Mr. Srinivasa Ayyangar concedes that if a landlord filed a suit in ejectment and failed to say that the tenancy had been determined, the Court would dismiss the suit and not return the plaint. In the same way, the Rent Controller would have to dismiss the application if it were not alleged in the affidavit that notice had been given or if it found, upon hearing the parties and considering the evidence, that notice had not been given. It would follow from this, therefore, that if notice to quit was necessary it would be merely one of the issues to be decided by the Rent Controller and would not in any way affect his jurisdiction to entertain the applica tion. That being so, if the Rent Controller did not decide that question properly, the matter would have to be raised in appeal to the Court of Small Causes and would give this Court no jurisdiction to entertain a suit by the defeated party; for such a suit would be barred by section 12(4) of the Act. Again, in Manibhai Hathibhai vs Arbuthnot, AIR 1947 Bom. 413 556 a writ petition was filed to challenge the validity of an order passed by the Rent Controller on the ground that the circumstances for the invocation of section 13(b) of the Bombay Rent, Hotel .Rates and Lodging House Rates (Control) Act, 1944 had not been fulfilled. It is sufficient for our present purposes to extract the observations in paragraph 16 of the judgment: "16. It was sought to be argued on behalf of the petitioners that the respondent had no jurisdiction to determine the question as to whether the premises were at one time let out as a whole and then let out in parts as was sought to be contended by the applicants . . The jurisdiction of the Rent Controller, (xxx) is a statutory jurisdiction which is vested in the Rent Controller by the terms of the Act it self. A regular tribunal is established by the Act which functions in those cases where. the standard rent of the premises as laid down in section 3 of the Act exceeds Rs.80 per month. The tribunal owes its existence to the Act and not to any act of the parties, and it has, therefore, jurisdiction to determine what are the cases which fail within its juris diction. If there is any dispute which arises between the parties as to whether the particular application falls within the jurisdiction of the tribunal, it is the tribunal which is competent to decide that dispute and determine whether the particular matter falls within its jurisdiction. If the tribunal decided it wrongly, there is an appeal provided against its decision. It cannot, therefore, be contended, as the petitioners have done, that the respondent has no jurisdiction to determine the question as to whether the premises were at one time let out as a whole and then let out in parts as contended by the applicants. " Shri Iyer submits that the appellants ' case here is on a stronger footing than in the two decisions cited above because here, in the earlier proceedings before the Rent controller and the Court of Small Causes, a specific point had been taken that the tenant was only a tenant of the land and not of the premises (which belonged to him) and that this contention had been specifically over ruled by the appellate court after a consideration of the relevant mate rial. Sri Krishnamoorthy Iyer also contended that even if it may be an arguable question as to whether the decision in the earlier petitions constitutes res judicata or not and it may plausibly be argued that it does not constitute res judicata, the question for our consideration really is whether the order passed in the 557 earlier eviction petition can be treated as a nullity being passed by a court totally without jurisdiction. He submitted that if the tenants had filed a suit for declaration that the order passed in the earlier proceedings as a nullity that would have been bound to fail. Shri Iyer also relied on certain observations of this Court in the decisions reported as Rai Brij Raj vs Shaw, ; @ 147, 150; Official Trustee vs Sachindranath, ; @ pp. 99, 100; Antulay vs Nayak, ; at pp. 649, 677 and 700; Trideshwar Dayal vs Maheshwar Dayal, ; at p. 1437 and Shiv Chander Kapoor vs Amar Bose, ; , paras 22 and 23. Shri K. Parasaran, appearing for the respondents, sought to support the High Court 's judgment on various grounds. He contended that, even if the arguments on behalf of the appellant were to be accepted, the appellants were not entitled to succeed, for the following reason. He drew our attention to the reference in the 1967 order of the Court of Small Causes to H.R.C. 867/63, an earlier petition filed by the L.I.C. The Court had said: "7. The Corporation had formerly filed a petition H.R.C. 867/1963 in respect of these two buildings for fixation of fair rent. In that petition the tenant disputed the title of the Corporation in respect of the buildings. So, the Corpo ration immediately filed an application H.R.C. 2557/64 for eviction on the ground of wilful denial of title. The peti tion for fixation of fair rent was dismissed by the learned First Additional Rent Controller on the ground that the lease has been taken under two separate deeds and that a single petition was not maintainable. In the other petition he ordered eviction on the ground that the denial was not bona fide. He gave an express finding that the building No. 2. Mount Road belongs to the Corporation. In the appeal the appellate court set aside the order of eviction on the ground that there was no denial of title prior to the insti tution of the petition. Of course, the finding in that case that the building belongs to the Corporation cannot operate as res judicata because the tenant had no opportunity to file an appeal against that finding since the application for eviction had ultimately been dismissed. On this point I find that the building belongs to the petitioner." (Emphasis added) He submitted that the Court erred in thinking that no fur ther proceed 558 ings had been taken in the earlier matter, The fact was that a Civil Revision Petition (C.R.P. 1839/66) had been filed against the order of the appellate court (H.R.A. 1162/64). The C.R.P. had been allowed and the matter remitted back for fresh disposal. When the matter came back to the Court of Small Causes, the learned Judge, in his order dated 9.4.69, went into the issue at length and came to the conclusion that the superstructure belonged to Indian Automobiles and had not been conveyed to the L.I.C He held, therefore, that the claim by India Automobiles in the eviction petition of title to the superstructure would amount to a denial of title but that the denial was bona fide. He, therefore, allowed the appeal and set aside the order of eviction passed against the tenants. Sri Parasaran, therefore, sub mitted that the question of title had already been decided in these earlier proceedings which we shall briefly refer to as the 'first set of proceedings '. If at all, he says, it was this decision that constituted res judicata and the Court of Small Causes, in H.R.A. 534/66 arising out of H.R.A. 3310/64 (which we shall refer to as the 'second set of proceedings ') could not have considered the issue again or taken a different view. Sri Parasaran also sought to explain the reasons why the respondents did not prefer any appeal or revision from the order of the Court of Small Causes in H.R.A. 534/66 He submitted that the law then prevalent in Tamil Nadu as laid down in the decisions of the Madras High Court in Palaniappa Chettiar and Others vs Vairavan Chettiar, [1963] 76 L.W. 21 and Palaniappa Chettiar vs Babu Sahib alias Sheik Mytheen Sahib and Others, [1964] 77 L.W. 551, was that the Rent Control Act would apply even in cases where the landlord had leased out only a vacant site and the tenant had put up his own construction thereon. It was only in Salay Mohamed Sait etc. vs Jaffer Mohamed sait 's Memorial Dispensary Charity and Others, [1969] 1 Andhra Weekely Reporter (S.C.) 16, that this view was disapproved. At that stage, therefore, the respondents could not have hoped to succeed even if their stand that they were the owners of the superstructure had been accepted. We do not think mat these contentions have any force. So far as the first contention is concerned, it may be pointed out, firstly, that an answer to it is furnished by the terms of section 19 of the Act (set out a little later) which does not contain a reference to section 4. The application under section 4 could not, therefore, have been summarily rejected even assuming that the question of title could be said to have been substantially in issue and decided in the previous proceedings. Secondly, the order now relied upon was passed in April 1969 and was not in exist 559 ence when the Court of Small Causes passed its order in the second set of proceedings. Thirdi.v, even assuming 'the argument of learned counsel to be correct, all that can be said is that, in the second set of proceedings, the tenants could have contended that it was not open to the Court of Small Causes to go into the question of title in view of the decision in the first set of proceedings. But no such plea was taken before it with the result that the court discussed the matter and arrived at a decision. In deciding whether the decision constitutes res judicata or not, we are not entitled to go into the correctness of that decision. Right or wrong, the second decision has become final and the same issue, says the appellant, cannot be gone into again. Last ly, the 1969 decision of the Court of Small Causes was only concerned with the question whether there was denial of the L.I.C. 's title by the tenants and, if so, whether it was bona fide. It was only this limited aspect eviction on the ground of non bona fide denial of title that was under consideration of the Court under section 10(2)(vii) of the Act read with the proviso to section 10(1) and the Court 's observa tions on the question of title were one on a collateral issue. We do not, therefore, think that the 1969 decision can be an effective answer to the appellant 's contention based on the 1967 decision. The second argument, explaining why the respondents did not challenge the 1967 order in further appeal or revision, is also of no avail in consider ing the issue raised by the counsel for the appellant. But we think Sri .Parasaran is right in the third con tention urged by him before us which goes to the root of the matter. His argument is that a Rent Controller and, on appeal from him, the Court of Small Causes, is not competent to go into a question of title to immovable property and that a civil court cannot be barred from examining a claim of title merely because the question may have had to be considered by the Rent tribunals as a collateral issue in deciding certain applications before them. He contended that it is a basic proposition, well settled by authority, that a tribunal of limited jurisdiction like the Rent Controller (this expression will, hereinafter, also include a Court of Small Causes disposing of an appeal from him) cannot be clothed with jurisdiction to decide far reaching questions of title to immovable property. This, he said, is a proposi tion that is borne out on general principles as well as on the provisions of the Rent Control Act. Taking up the provi sions of the Act, he referred us to the provisions of Ss. 10 and 19 which read thus: section 10(1) Eviction of tenants. A tenant shall not be evicted whether in execution of a decree or otherwise except in 560 accordance with the provisions of this section or sections 14 to 16: Provided that nothing contained in the said sec tions shall apply to a tenant whose landlord is the Govern ment: Provided further that where the tenant denies the title of the landlord or claims right of permanent tenancy, the Controller shall decide whether the denial or claim is bona fide and if he records a finding to that effect, the landlord shall be entitled to sue for eviction of the tenant in a Civil Court and the Court may pass a decree for evic tion on any of the grounds mentioned in the said sections, notwithstanding that the Court finds that such denial does not involve forfeiture of the lease or that the claim is unfounded. section 19 Decisions which have become final not to be reo pened Any application under section 3 A or section 12, and any application under sub section (2) or subsection (3) or sub section (3 A) of section 10 or under sections 14, 15 or 16, shall be summarily rejected by the authorized officer or the Controller. as the case may be. if such application raises between the same parties or between parties under whom they or any of them claim. substantially the same issues as have been finally decided or as purport to have been finally decided in a former proceeding (i) under this Act, or (ii) under any other law from time to time in force before the date of the commencement of this Act and relating to matters dealt with in this Act. counsel contended that section 10 makes it clear beyond doubt that the Rent Controller is precluded from deciding any issue regarding title to the property and that, if any such question arises, he should leave it to be decided by ordi nary civil courts in appropriate proceedings. The procedure to be adopted by him in disposing of the applications before him is a summary one hardly conducive to a satisfactory disposal of such complicated questions. Under Rule 12(2) he is required to decide applications by recording a brief note of the evidence of parties and 561 witnesses and decide matters after giving the parties an opportunity to state their case: more or less, in the manner in which a Court of Small Causes decides cases before it. Indeed, in the Presidency Town, he is subordinate to the Court of Small Causes which has been notified as the author ity to hear appeals from his orders and it is a well settled proposition that the Court of Small Causes is not competent to adjudicate on questions of title. For these reasons, learned counsel submits, the decision of the Court of Small Causes in the earlier proceedings cannot fetter a civil court from adjudicating upon all the issues arising before it in a civil suit. We think that this contention is well founded. There are clear indications in the Act and rules that the Rent Con troller does not have the jurisdiction to decide questions of title. In a proceedings under the Act, whether it be for fixation of fair rent or eviction, the tenant may raise several objections. He may, inter alia, take up the point that the opposite party is not the "landlord". The defini tion of "landlord" under the Act is very wide and encompass es not only an owner but also persons "receiving or entitled to receive the rent of the building which has been let out or would be entitled to receive the rent of the building if it were let out to a tenant" in one of several capacities. Denial of title of the landlord is itself one of the grounds on which eviction can be sought [section 10(2)(vii) ]. Sri Krish namurthy Iyer is, therefore, certainly right in contending that the Act requires the Rent Controller to consider this issue, among others, while disposing the applications before him. But, we think, Sri Parasaran is right in saying that, since the Rent Controller has no jurisdiction to entertain an application except by a landlord or a tenant, the ques tion of title to the property is one on which his very jurisdiction depends. It cannot be described as a matter that is squarely and directly in issue in these proceedings to which any finality can be attached, as the Rent Control ler, by deciding the issue wrongly, cannot clothe himself with jurisdiction where none exists. All that the Rent Controller has to do is to satisfy himself that the person seeking eviction or fixation of fair rent is a "landlord" who has, prima facie, ' the right to receive the rents of the property in question. That the Rent Controller 's jurisdic tion on this issue is limited is clear from the proviso to section 10(1) of the Act. In order to decide whether the denial of the landlord 's title by the tenant is bona fide, the Rent Controller may have to go into the tenant 's contentions on the issue but he is not to decide the question finally. He has only to see whether the tenant 's denial of the land lord 's title is bona fide in the circumstances of the case. He may reach a conclusion, on the merits, that the landlord has title; yet he cannot order eviction if the tenant 's action in 562 denying the title was bona fide. Per contra, he may reach the conclusion on the materials before him that the landlord has no title; yet, it seems, if he finds that the applicant is otherwise a landlord and that the grounds on which the tenant 's denial was based were not bona fide, he will have to order eviction. So also, in an application under section 4, the jurisdiction of the Rent Controller is to determine a fair or standard rent for the premises. He has no doubt to ensure that the person applying for the fair rent is the tenant or the landlord. He has also no doubt to satisfy himself as to the extent of the premises qua which the relationship of landlord and tenant exists and in respect of which rent is receivable or payable. For deciding these issues, he may have no doubt also to consider the oral and documentary evidence adduced by the parties. Yet, having regard to the manner in which he is required to come to this conclusion and having regard to the fact that at least in the Presidency Town an appeal from his order goes to the Court of Small Causes, it is difficult to escape the conclu sion that the jurisdiction to be exercised by him is a limited and a prima facie one. It will be anomalous to hold that where an owner of property seeks to evict his tenant under section 10(2)(vii) but the Rent Controller refuses to pass the order of eviction though satisfied about his title because the tenant had acted bona fide, it would be open to the owner to seek eviction by having his title adjudicated upon in a civil court but that the owner cannot have a similar right in the matter of recovery of rent which is basically a relief for which he has to approach a civil court. A question of title may be a complex one involving difficult issues. For instance, the "owner" may claim title under an adoption or a will or a trust deed or a gift deed and there may be contentious claims among several persons which it will not be possible for the Rent Controller to decide. It is important to remember that when an owner files a suit for arrears of rent, it is open to the tenant, under the general law, to plead that no rent is payable in respect of the premises as, indeed, it belongs to him. The right to raise this issue cannot be taken away without a specific statutory provision. The terms of section 11 C.P.C., including Explanation VIII, are not comprehensive enough to cover the case. The limited nature of the jurisdiction of a Tribunal like the Rent Controller and the Court of Small Causes has been considered in a number of cases by this Court as well as other courts: (1) We may start with an early Full Bench decision of the Madras High Court: Venkatarama Rao & Ors. vs Musunuru Venkayya and Ors. , It arose under the Madras Estates Land Act (1 of 1908). In that case, the Revenue Divisional Officer, in 563 certain earlier proceedings, had held that a particular village was not an "estate" and this had been confirmed by the District Collector and the High Court. Later on, the plaintiffs filed suits against the tenants in possession of holdings in the village for an injunction restraining them from removing the paddy heaps standing on the suit lands until a due division was made of the crop and until the rent in kind payable to the plaintiffs was paid by the tenants. The tenants wanted to contend in reply that the village in question was an "estate" within the meaning of the Act and they had occupancy rights therein. The plaintiffs, however, objected that this plea was not open to the tenant in view of the earlier decision of Revenue Divisional Officer. Negativing the plea of the plaintiffs, the Court pointed out: (8) xxx xxx xxx If a particular matter is one which does not fall within the exclusive jurisdiction of the revenue court, then a decision of a revenue court on such a matter, which might be incidentally given by the revenue court, cannot be bind ing on the parties in a civil court. One practical test would be to determine if that particular matter would not be a matter in respect of which the civil court would have jurisdiction. To give an obvious instance, suppose in a suit under section 55 for the grant of a patta instituted by a person claiming to be the adopted son of the ryot who was a patta dar, the landlord raises a plea that he is not entitled to the patta because his adoption is not valid, it may be that the revenue court would have to summarily go into the ques tion whether the person suing is or is not the validly adopted son of the previous ryot. Can it possibly be said that the finding of the revenue court on the issue of adop tion is binding on the parties in a subsequent suit in a civil court in which the validity of the adoption might fall to be decided? There can be no doubt about the answer. That is because the dispute as to the validity of the adoption is not a dispute in respect of which a revenue court has exclusive jurisdiction. Such a dispute is a matter well within the jurisdiction of a civil court. Thereafter, it cannot be within the exclusive jurisdiction of the Reve nue court, and the decision of such a dispute by a revenue court cannot be binding in a civil court. 564 Incidentally it may be pointed out, this decision has been cited with approval by this Court in Bhagwan Dayal vs Reoti Devi, ; (2) Desika Charyulu vs State of Andhra Pradesh and another, AIR 1964 S.C. 807 was a decision under the Madras Estates (Abolition and Conversion into Ryotwari) Act, 1948. In that case it was held, on a construction of section 9(1) of the Act, that the property in question being an "inam village" is assumed as a fact on the existence of which the competence of the Settlement Officer to determine the mat ters within his jurisdiction rests and that, as there are no words in the statute empowering him to decide finally the former, he cannot confer jurisdiction on himself by a wrong decision on this preliminary condition to his jurisdiction. Any determination by him of this question, therefore, is (subject to the result of an appeal to the tribunal) binding on the parties only for the purpose of the proceedings under the Act, but no further. The correctness of that finding may be questioned in any subsequent legal proceeding in the ordinary courts of the land where the question might arise for decision. However, if the property is an inam village, whether the "inam village" is an "inam estate" is, within his exclusive jurisdiction and in regard to it the jurisdic tion of the Civil Courts is clearly barred. (3) Dhulabhai vs State, ; was concerned with the interpretation of the provision in the Madhya Bharat Sales Tax Act barring the jurisdiction of civil courts in matters entrusted to the jurisdiction of the special tribunals created under the Act. It is unnecessary to refer in detail to this case except to set out a passage from pages 682 3 where Hidayatullah, C.J., speaking for the Constitution Bench, reviewed all earlier cases on the sub ject and enunciated the principles emerging therefrom, of which the following are relevant here: "The result of this inquiry into the diverse views expressed in this Court may be stated as follows,: (1) Where the statute gives a finality to the orders of the special tribunals, the Civil Courts ' jurisdic tion must be held to be excluded if there is adequate remedy to do what the Civil Courts would normally do in a suit. Such provision, however, does not exclude those cases where the provisions of the particular Act have not been complied with or the statutory tribunal has not acted in conformity 565 with the fundamental principles of judicial procedure. (2) Where there is an express bar of the jurisdic tion of the court, an examination of the scheme of the particular Act to find the adequacy or the sufficiency of the provided may be relevant but is not decisive to sustain the jurisdiction of the civil court. Where there is no express exclusion the examination of the remedies and the scheme of the particular Act to find out the intendment becomes necessary and the result of the inquiry may be decisive. In the latter case it is necessary to see if the statute creates a special right 0r a liability and provides for the determination of the right or liability and further lays down that all questions about the said right and liability shall be determined by the tribunals so constituted, and whether remedies normally associated with actions in Civil Courts are prescribed by the said statute or not. XXX XXX XXX (4) in Mathura Prasad Bajoo Jaiswal & Ors. vs Dossibai N.B. Jeejeebhoy, ; , the appellant had ob tained lease of an open land for construction of buildings. After putting up the buildings, he applied for determination of standard rent under the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947. The application was rejected holding that the provisions of the Act did not apply to open land let for construction. This view was confirmed by the High Court. Sometime thereafter in another case the High Court held that the question whether the provisions of the Act applied to any particular lease must be determined on its terms and a building lease in respect of an open plot was not excluded from the provisions of the Act solely because open land may be used for residence or educational purposes only after a structure is built thereon. Relying upon this judgment, the appellant filed a fresh application for determining the standard rent. The trial Judge rejected the application holding that question of the applicability of the Act was res judicata since it had been finally decid ed by the High Court between the same parties in respect of the same land in the earlier proceeding for fixation of standard rent. The order was confirmed by the first appel late court and on fur*her appeal by the High Court. The Supreme Court, however, reversed the judgment of the High Court. The Court observed: 566 "A question relating to the jurisdiction of a Court cannot be deemed to have been finally determined by an erroneous decision of the Court. If by an erroneous interpretation of the statute the court holds that it has no jurisdiction, the decision will not, operate as res judicata. Similarly by an erroneous decision if the Court assumes jurisdiction which it does not possess under the statute, the decision will not operate as res judicata between the same parties, whether the cause of action in the subsequent litigation is the same or otherwise." (5) Gangabai vs Chhabubai, ; , related to the jurisdiction of the Court of Small Causes. In that case the respondent, being in need of money, entered into an agreement with the appellant for a loan of Rs.2,000 and it was simultaneously decided that she should execute a nominal document of sale and rent note of her house. These documents were executed on January 7, 1953, but the respondent contin ued in the possession of the house property throughout. The appellant was attempting to enforce the document as a sale deed by filing suit in the Court of Small Causes for recov ery of rent and the said suits had resulted in decrees. The respondent thereupon filed a suit for a declaration that she was and continued to be owner of the house property, alleg ing that the documents executed on 7th January, 1953, were never intended to be acted upon. The appellant in defence maintained that the sale deed represented a genuine transac tion and ownership of the house property had passed to her. It was pleaded that the decrees passed by the Court of Small Causes operated as res judicata barring the respondent from pleading that the sale deed was merely a nominal transac tion. Reliance was also placed on section 92 of the Indian Evidence Act. The High Court held that the sale deed and rent note were sham documents, that the decrees of the Court of Small Causes did not operate as res judicata and that section 92 of the Indian Evidence Act did not preclude the respondent from establishing the true nature of the transac tion. The Supreme Court dismissed the appeal. In regard to this contention it was urged on behalf of the appellant that the High Court erred in applying the statutory provisions of section 11 of the Code of Civil Procedure and that it should have invoked the general principles of res judicata. It was submitted that it was necessary to find out whether the Court of Small Causes was competent to try the two earlier 'suits and decide the issues arising therein. After refer ring to various decisions cited on behalf of the parties, the Court observed: 567 "It seems to us that when a finding as to title to immovable property is rendered by a Court of Small Causes res judicata cannot be pleaded as a bar in a subsequent regular civil suit for the determination or enforcement of any right or interest in immovable property. In order to operate as res judicata the finding must be one disposing of a matter directly and substantially in issue in the former suit and the issue should have been heard and finally decided by the court trying such suit. A matter collaterally or incidental ly in issue for the purposes of deciding the matter which is directly in issue in the case cannot be made the basis of a plea of res judicata. It has long been held that a question of title in a Small Cause suit can be regarded as incidental only to the substantial issue in the suit and cannot operate 8as res judicata in a subsequent suit in which the question of title is directly raised . . Our attention has been drawn to Expla nation VIII to section 11 in the Code of Civil Procedure recently inserted by the Code of Civil Procedure (Amendment) Act, 1976. Section 97(3) of the Amendment Act declares that the new provi sion applies to pending suits, proceeding, appeals and applica tions. In our opinion the Explanation can be of no assistance, because it operates only where an issue has been heard and final ly decided in the earlier suit." (6) We may next refer to Jeeth Kaur and Ors. vs Smt. P. Kondalamma and another, AIR 1983 AP 2 19. In that case, the tenant filed a petition under the relevant Rent Control Act for permission to deposit rents in court. The landlady denied any relationship of tenant and landlord between the applicant and herself. This contention was upheld by the appellate court and the High Court. In a subsequent suit filed by the tenants in the civil court as tenants of the suit building, the landlady contended that the earlier decision operated as res judicata, but this contention was negatived. The Court observed: "The main relief sought for by.the tenants was for deposit ing the rents on the ground that the landlord refused to receive the same. In order to give that relief, the Rent Control Court must first have jurisdiction as it can adjudi cate disputes only between a landlord and a tenant. Since the relationship is denied by the landlord, the Rent Con troller had decided that question incidentally. This is not the main relief for which the application is filed. In fact, it is not a dispute which is exclusively triable by the Tribunals 568 under the Act. The dispute has to be decided as incidental to the granting of the main reliefs. The necessary condition for exercise of jurisdiction by the Rent Controller is the existence of relationship of landlord and tenant. The rent authorities have no power to decide a dispute which is not between a landlord and tenant. Therefore, the decision on the question whether the relationship of landlord and tenant exists is a decision regarding jurisdictional facts and such a decision is neither conclusive nor final. In such circum stances, the jurisdiction of the Civil Court to entertain a suit in which the question of jural relationship of the landlord and tenant arises is not ousted. Since the said decision is not final it can never operate as res judicata between the parties. In fact if we examine the provisions of the Act, there are only five reliefs that can be granted under the Rent Control Act. One is fixation of fair rent and increase thereof under sections 4, 5 and 6; the second is permission to deposit rents in the court under section 8 (5); the third is to order eviction under section 10; the fourth is to direct recovery of possession by the landlord for repairs under section 12; and the fifth is to order restoration of amenities when they are unjustly withheld, under section 14 of the Act. The rent authorities cannot grant the reliefs of declaration of occupancy rights. (7) We may lastly refer to the decision of this Court in State of Tamil Nadu vs Ramalinga Samigal Madam and Ors., [1985] 4 SCC. In that case the plaintiff respondent claimed title to the suit land on the basis of its long and uninter rupted possession since prior to 1938 as also under an order of assignment of 1938 issued in its favour by the Zamindar whereby the right to cultivate in respect of that land was granted to it subject to the payment of certain amounts. In 1953 the plaintiff applied for a ryotwari patta in respect of this land after abolition of the Estate but the Addition al Settlement Officer, by order dated 25th June, 1954, took a decision that land was not a ryoti land but had been registered as a poramboke (village communal land) and, therefore, no one was entitled to ryotwari patta in respect of that land. The plaintiff thereupon filed a suit for a declaration of as title and right to continue in possession and enjoyment of the suit land subject to payment of ryot wari or other cess to be imposed by Government without any interference from the Government. The State Tamil Nadu resisted the suit on merits by contending that the suit land was communal land and that the assignment or grant by the zamindar 569 in favour of plaintiff was invalid. It also took a technical plea that the decision of the Additional Settlement Officer that the suit land was poramboke and not 'ryoti ' land was final and the Civil Court 's jurisdiction to decide that question was barred under section 64 C of the Tamil Nadu Estates (Abolition and Conversion into Ryotwari) Act, 1948, which ran as follows: "64 C. Finality of orders passed under this Act (1) Any order passed by the Government or other authority under this Act in respect of matters to be determined for the purposes of this Act shall, subject only to any appeal or revision provided by or under this Act, be final. (2) No such order shall be liable to be questioned in any court of law. The State Government 's plea was rejected by the High Court. In appeal, the State contended before this Court that every refusal of a ryotwari patta by a Settlement Officer in an inquiry under section 11 involves a decision on his part that either the applicant is not a ryot or the land is not ryoti land; in the instant cases it was the latter and such decision on the nature or character of the land has been given a finality under section 64 C which cannot be ques tioned in a court of law. Therefore, it was urged that the civil court 's jurisdiction to adjudicate upon the nature or character of the suit lands must be held to have been ex cluded or ousted. After discussing several decisions in regard to the exclusion of a civil court 's jurisdiction as well as the provisions of the Act, the Court pointed out that the terms of section 64 C a1one will not be decisive on the point of ouster of the civil court 's jurisdiction. The observations made by the Court in paras 13 and 14 have relevance to the present case and need not be set out here in extenso. We are of opinion, in the light of the decided cases referred to above, that the contention on behalf of the respondents has to be accepted. We are concerned with the jurisdiction of a civil court. The extensive jurisdiction conferred on civil courts under section 9 of the Code of Civil Procedure should not be curtailed without a specific statu tory warrant or except on some clear principle. There is nothing in the Tamil Nadu Rent Control Act which, in any way, takes away, or narrows down, the civil court 's juris diction as, for example, there is in the Delhi Rent Control Act (section 50). As to principle, whether we look at it on the analogy of res judicata or adopt the approach of Sri Iyer as to whether the order in the earlier proceedings is to be treated as an 570 order that is null and void or merely one that is valid until set aside, the answer has to turn on the true nature and scope of the jurisdiction conferred on the Rent Control ler under the Act. It is possible, we have to ask ourselves, having regard to the context, scheme and terms of the legis lation, that the statute could have envisaged the Rent Controller (and the authorities to whom appeal or revision could be preferred from his orders) to be final authorities to adjudicate on issues of title also? The answer, in our opinion, has to be in the negative. Section 4 of the Rent Control Act, as already pointed out, provides only a machin ery for fixation of fair rent in respect of certain prem ises. It is the quantum of fair rent that arises for deter mination by the Rent Controller. There is no doubt that, since an application for this purpose cannot lie except at the instance of a landlord or a tenant, the Rent Controller has to deal with this incidentally but this is not one of the direct issues before the Rent Controller. If, and only if, this relationship exists between the parties, the Rent Controller steps in for a limited purpose to determine what the fair rent is and then fades out of the picture. Where a fair rent is fixed by a Controller, the Rent Control Act does not provide for a machinery for recovery of the amount. The amount has to be recovered by the landlord only by recourse to a civil court. This gives an indication that the determination of the relationship that gives rise to the application is also not conclusive. This is indeed made clear by the provisions relating to eviction. We have al ready referred to the effect of the provisions of section 10 (2)(vii) read with the proviso to section 10(1) and pointed out how jurisdiction to decide questions of title is denied to the Rent Controller. The position cannot be different under section 4. Having regard to the much narrower scope of section 4, it would be anomalous to read a wider jurisdiction to the Rent Controller thereunder than under section 10. In our opinion, on a proper construction of the Rent Control Act, the question on which the jurisdiction of the civil court is excluded is only the determination as to the fair rent of the premises. If the civil court in this case had come to the conclusion that there is a relationship of a landlord and a tenant and that the LIC was entitled to recover the rent from the tenants, it will have to pass a decree in favour of the LIC on the basis of the fair rent fixed by the Rent Controller. It will not be open to the civil court to re determine the rent payable by the tenant to the landlord because that is a matter squarely and exclusively within the jurisdiction of the Rent Controller and, therefore, impliedly excluded from the purview of the civil court. But his decision is not final on the issue that opens up his jurisdiction and cannot preclude an owner from contending, in a civil court, that he should not be asked to pay rent for his own property to some one else. 571 For the reasons mentioned above, we are of the opinion that the High Court reached the correct conclusion and that this appeal has to fail. The appeal is therefore, dismissed. In the circumstances, however, we make no order as to costs. Y. Lal Appeal dismissed.

Two separate properties bearing Door Nos. 2 and 3 ad measuring 41 grounds and 2005 sq. ft., which originally formed part of an extent of land, situate at Mount Road, Madras belonged to several co owners, who leased out the same to the Respondent, by two separate lease deeds (exhibit P 1 and P 2) item 1 and 2 in the Schedule A to the plaint. The property contained in Door No. 2 which comprised an area of 4 grounds and 151 sq ft with certain buildings was given on rent for Rs. 150 p.m., whereas the property contained in Door No. 3 which also had some buildings thereon was let out for Rs.200 p.m. The owners sold the properties to the United India Life Assurance Co. and the New Guardian of India Life Insurance Co. Ltd. in July 1953. In 1956, the Life Insurance Corpora tion of India, the appellant stepped into the shoes of the said companies The appellant moved two applications before the Rent Controller for fixation of a 'fair rent ' for each of the premises; In respect of the property in Door No. 2, the rent claimed was Rs.2,399/03 while in respect of the other, the rent claimed was Rs.3266/50p. The tenants claimed that, under both the lease deeds, what had been leased out to them was only a vacant land and since the superstructure had been built by them, they were entitled to relief under the Madras City Tenants ' Protection Act. It was further contended that the Rent Controller had no jurisdiction to fix a fair rent. The Rent Controller accepted the contention of the tenant so far as item No. 1 (property at Door No. 2) was concerned but with regard to the second property (Door No. 3), he fixed the fair rent at Rs. 1451 p.m. There were then two appeals to the Court of Small Causes. The Small Causes Court came to the conclusion that the buildings on the land leased vide P 1 had also been conveyed to the appellant and that the LIC was entitled to seek fixation of fair rent in respect of this premises also. However the order of the Rent Controller in regard to the 546 other property in Door No. 3 was upheld. However, in certain earlier proceedings for fixation of fair rent etc., it had been held by the Rent Controller that item No. (Door No. 2) belonged to the LIC, but his order of eviction had been set aside by the appellate court on some other ground. The Court of Small Causes did not treat that decision as res judicata. The tenants being aggrieved by the order of the Court of Small Causes filed revision petitions but they were dis missed on 20.11.1968. The appellant thereupon filed Civil Suit against the tenants respondents for recovery of arrears of rent together with interests etc. on the basis of the fair rent fixed. The respondents tenants also filed a civil suit claiming protec tion under the Madras City Tenants ' Protection Act but this suit and further appeals therefrom were dismissed. In the suit for recovery of rent filed by the appellant, the ten ants contended that since the subject matter of the lease under exhibit P 1 was only a vacant site, the Rent Controller had no jurisdiction to fix the fair rent in respect thereof and that, therefore, the claim in the suit for arrears of rent, based on the Rent Controller 's order in respect of the premises covered by exhibit P 1 had to fail. The trial Judge in the High Court came to the conclusion that exhibit P 1 did not, in law, create a valid lease between the co owners and the tenants. He further held that the superstructure constructed on the land had been conveyed to the vendee under the sale deed dated 30.7.1953 and thus vested in LIC. On this reason ing the High Court held that the Rent Controller had juris diction to fix the fair rent in respect of the premises. The tenants filed an appeal. The appellate Bench confirmed the decree in respect of Item 2 but as regards Item No. 1, the Appellate Bench vacated the decree passed by the trial Court. It held that there was a valid lease between the owners and the tenants under Exts. P 1 and P 2. The appel lant Bench held that the Rent Controller had no jurisdiction to entertain the application for fixation of fair rent in respect of the property which was only a vacant piece of land. Thus, the Court held that the LIC could not maintain the suit for recovery of rent based on the order made by the statutory tribunal under the Rent Control Act. The tenants ' appeal was accordingly partly allowed. LIC came up in appeal to this Court against the said order, after obtaining special leave. Two questions arose for determination by this Court viz., (1) Was the LIC the vendee only of a vacant land with no title to the buildings standing on the site in Item 1, and (2) it open for the tenants to contend that the order of the Court of Small Causes in the earlier rent 547 control proceedings deciding to the contrary, and fixing the fair rent of item 1 could be completely ignored as an order passed totally without jurisdiction though it had become final between the parties? Dismissing the appeal, this Court, HELD: There are clear indications in the Act and rules that the Rent Controller does not have the jurisdiction to decide questions of title. In a proceeding under the Act, whether it be for fixation of fair rent or eviction, the tenant may raise several objections. He may, inter alia, take the point that the opposite party is not the landlord. [561C D] All that the Rent Controller has to do is to satisfy himself that the person seeking eviction or fixation of fair rent is a 'landlord ' who has, prima facie, the right to receive the rent of the property in question. That the Rent Controller 's jurisdiction on this issue is limited is clear from the proviso to Section 10(1) of the Act. [561 F G] The extensive jurisdiction conferred on civil courts under Section 9 of the Code of Civil Procedure should not be curtailed without a specific statutory warrant or except on some clear principle. There is nothing in the Tamil Nadu Rent Control Act which, in any way, takes away, or narrows down, the civil court 's jurisdiction as, for example, there is in the Delhi Rent Control Act (Section 50). [569G H] Section 4 of the Rent Control Act provides only a ma chinery for fixation of fair rent in respect of certain premises. It is the quantum of fair rent that arises for determination by the Rent Controller. There is no doubt that, since an application for this purpose cannot lie except at the instance of a landlord or a tenant, the Rent Controller has to deal with this incidentally but this is not one of the direct issues before the Rent Controller. If and only if, this relationship exists between the parties, the Rent Controller steps in for a limited purpose to determine what the fair rent is and then fades out of the picture. Where a fair rent is fixed by a Controller, the Rent Control Act does not provide for a machinery for recov ery of the amount. The amount has to be recovered by the landlord only by recourse to a civil court. This gives an indication that the determination of the relationship that gives rise to the application is also not conclusive. This is indeed made clear by the provisions relating to eviction. [570B E] If the civil court in the instant case, had come to the conclusion that there is a relationship of a landlord and a tenant, and that the LIC 548 was entitled to recover the rent from the tenants, it will have to pass a decree in favour of the LIC on the basis of the fair rent fixed by the Rent Controller. It will not be open to the civil court to re determine the rent payable by the tenant to the landlord because that is a matter squarely and exclusively within the jurisdiction of the Rent Control ler and, therefore, impliedly excluded from the purview of the civil court. But his decision is not final on the issue that opens up his jurisdiction and cannot preclude an owner from contending, in a civil court, that he should not be asked to pay rent for his own property to some one else. [570F H] There is no reason to hold that contract between a person with himself and others is invalid. [571A] Krishnamurthy vs Parthasarathy, AIR 1949 Mad. 780; Manibhai Hathibhai vs Arbuthnot, AIR 1947 Bom. 413; Rai Brij Raj vs Shaw, ; at 147, 150; Official Trustee vs Sachindranath; , & 99 pp. Antulay vs Nayak, ; at 649, 677 and 700; Trideshwar Dayal vs Maheshwar Dayal; , at 1437; Shiv Chander Kapoor vs Amar Bose, ; paras 22 and 23: Palaniappa Chettiar and Ors. vs Vairavan Chettiar, [19631 76 L.W. 21; Palaniappa Chettiar vs Babu Sahib alias Sheik Mytheen Sahib and Ors., [1964] 77 LW 551; Salay Mohamed Sail etc. vs Jaffer Mohamed Sait 's Memorial Dispensary Charity and Ors., [1969] 1 Andhra Weekly Reporter (S.C. 16); Bhagwan Dayal vs Reoti Devi, ; ; Desika Charyulu vs State of Andhra Pradesh and Ant., AIR 1964 SC 807; Dhulabhai vs State, ; ; Mathura Prasad Bajoo Jaiswal and Ors. vs Dossibai N.B. Jee jeebhoy, [1070] 3 SCR 830; Jeeth Kaur and Ors. vs Smt. P. Rondalamma and Ant., AIR 1983 A.P. 219 and State of Tamil Nadu vs Ramalinga Samigal Madam and Ors.

il Appeal No.18 of 1955. Appeal from the judgment and decree dated March 20, 1651, of the Mysore High Court in R.A. No. 155 of 1947 48, arising out of the judgment and decree dated December 19, 1947, of the Court of Sub_Judge, Mysore, in 0. section Suit No. 44 of 1946 47. section K. Venkataranga Iyengar and K. Keshava Iyengar, for the appellant. A. V. Viswanatha Sastri and K. R. Choudhry, for respondent No. 1. 1958. November 13. The Judgment of the Court was delivered by GAJENDRAGADKAR, J. This appeal arises from a suit brought by the appellant in the court of the Subordinate Judge, Mysore, as the sole executor of the will alleged to have been executed by one Lakshmamma on August 22, 1945, (exhibit A). In this suit the appellant claimed a declaration that the said Lakshmamma was the owner of the properties mentioned in the schedule attached to the plaint and as such was entitled to dispose of them by a will; and be asked for consequential reliefs purporting to give effect to the bequests made by the said will. The schedule attached to the plaint describes the properties covered by the will under five items. First three items in the schedule refer respectively to 5, 4 and 4 agricultural lands at Hampapura village, whereas the fourth item includes 428 9 lands at Arjunahalli village and the last item is.& vacant site in Hampapura village. According to the plaint, under the will respondent I was entitled only to a life interest in items I and 2 and that on her death the said items would vest in respondents 2 to 4 and respondent 5 respectively. Since respondent 1 was in possession of all the five items, the appellant claimed a decree for possession against respondent 1 in respect of items 3, 4 and 5 and a declaration that respondent I was to have only a life interest in items 1 and 2. By his plaint the appellant also claimed to recover Rs. 2,106 which had been collected by respondent 1 by way of income from the suit lands and a further prayer was made for the payment of current mesne profits by respondent 1. Before referring to the pleadings of the parties it would be relevant to mention the material facts in regard to their relationship which are not in dispute. One Annaji lyengar who died in July 1903 left behind him his adopted son, the appellant, and two daughters Gundamma alias Ranganayakamma who is still alive and Lakshmamma alias Achamma who is alleged to have executed the will in suit and died thereafter on September 26, 1945, at Mandya. Respondents 2 to 4 are the sons of the appellant. Lakshmamma was married to Sadagopalachar who died in December 1908. The couple had three children, a son named Narayana lyengar who died on January 14, 1944, without any issue and left behind him his widow respondent 1 ; and the two remaining children of Lakshmamma were daughters Thirumalamma and Yadugiramma. Both of them are dead. Thirumalamma was married to one G. Parthasarathy lyengar by whom she had a son of weak intellect, who died pending litigation, and three daughters Neelu, Jaya and Padmini. Yadugiramma was married to Kalbagal Garudachar and by him she had a son Narasimha lyengar, respondent 5, and daughter Lilly. Kalbagal Garudachar had a son section G. Kalbagal, (hereinafter described as Junior Kalbagal) from his first wife. Jaya was married to Kalbagal Junior. The claim made by the appellant under the will is resisted by respondent 1. 429 Respondents 2 to 5 have not appeared in the proceedings. According to the case set out by the appellant in his plaint Annaji lyengar bad made a gift of properties, items 1 and 2, in favour jointly of Lakshmamma and Sadagopalachar under a registered deed of gift on February 16, 1902 (exhibit D). It was also alleged that the said Annaji lyengar had executed a will On August 31, 1901, (exhibit B2(a)) under which he had bequeathed in favour of Lakshmamma and Sadagopalachar hypo thecation bonds to the extent of Rs. 10,320 as gift with the express stipulation that the survivor of the legatees should take the whole of the bequest by survivorship. The appellant alleged that Sadagopalachar was a man of very moderate means and had given up his petty job in the registration department in order to manage the properties received by him and his wife from Annaji lyengar. During the course of the management Sadagopalachar used the cash of Rs. 10,320 received by bequest under the will of Annaji lyengar to buy some immoveable properties including items 3 and 4. Since Sadagopalachar pre deceased his wife Lakshmamma, all his rights in the properties acquired under the gift deed as well as those subsequently purchased devolved on Lakshmamma alone by survivorship. That is how she became the absolute owner of the said properties. Alternatively it was alleged by the appellant that even if survivorship did not apply and so her son Narayana lyengar acquired interest to half the share in the properties covered by the gift deed, he had during his lifetime sold away considerable properties of his father and mother much above the value of his half share and in consequence the remaining properties which represent Lakshmamma 's half share became her absolute properties. On this alternative ground the absolute title of Lakshmamma with regard to all the properties in suit was set up. The appellant thus claimed that Lakshmamma was entitled to make a will and asked .or a declaration in that behalf and consequential reliefs so as to give effect to the terms and dispositions of the will. According to the appellant the will propounded by him was 430 the last testament of Lakshmamma and it had been a executed by her voluntarily and of her own free will while she was in a sound and disposing state of mind. Respondent I disputed the appellants claim. She denied that Annaji lyengar had made a will on August 31, 1901, or that Lakshmamma and Sadagopalachar had received the moveables of the value of Rs. 10,320 under it. According to her, the gift deed (exhibit D) did not provide for devolution of interest by survivorship; she pleaded that Lakshmamma had transferred all her interests in the properties comprised in the gift deed in favour of her husband Sadagopalachar who then became their sole owner. Respondent 1 did not admit that the properties subsequently purchased by Sadagopalachar including items 3 to 5 were purchased with any monies bequeathed to him and his wife by Annaji lyengar; according to her, Sadagopalachar had made these purchases with his, own funds. Respondent 1 's case was that, after the death of his father Sadagopalachar, her husband Narayana lyengar became the absolute owner of all the properties and so Lakshmamma was not competent in law to make a will in respect of any of them. She further alleged that the will set up by the appellant was not genuine or valid and that at the material time Lakshmamma was not in a sound and disposing state of mind. She contended that the will had been brought into existence through the machinations of the appellant and she disputed the appellant 's right to bring the present suit. On these pleadings the learned trial judge framed fifteen issues. He found that the will executed by Annaji lyengar on August 31, 1901, was genuine and valid; and that the rule of survivorship was applicable as between the legatees inter se in respect of the properties conveyed by the said will. It was, however, held that the rule of survivorship did Dot apply to the properties gifted to Sadagopalachar and Lakshmamma under Annaji 's deed of gift (exhibit D) which was held to be genuine and valid. In regard to the properties subsequently purchased by Sadagopalachar the learned judge said that " in fairness to the parties he would 431 like to hold that various survey numbers in items 3 and 4 had been purchased by Sadagopalachar out of the joint income from the properties bequeathed to him and his wife by Annaji as also from the properties and through income which he got at a partition between himself and his coparCeners ".(Ex. The purchases made by Narayana Iyengar were held to have been made out of the income of the properties of, his father and of his mother. The learned judge ' rejected the plaintiffs case that Narayana lyengar had disposed of his properties equivalent to his right under the gift deed of Annaji (exhibit D) and held that he was the owner of the properties which had. vested in his father. In the result, according to the learned judge, Lakshmamma had a half share in all the properties in suit and so she was competent to make the will in respect of the said share. The learned judge then considered the question as to the execution of the will set up by the appellant and came to the conclusion that the will (exhibit A) was genuine and valid to the extent of the share belonging to the testatrix. The learned judge also found that the suit was maintainable, was not barred by time and had been properly filed. As a result of these findings the learned judge declared that Lakshmamma was the full owner of half the share in the scheduled properties and that respondent I under the will had only a life interest in respect of the said half share in items 1 and 2. As a con sequence of this declaration the decree passed by the learned judge directed respondent I to put the appellant in possession of Lakshmamma 's half share in items 3, 4 and 5; it also ordered respondent 1 to pay. to the appellant a sum of Rs. 1,050 out of the past mesne profits recovered by her. An enquiry into future mesne profits was also directed under 0. XX, r. 12. In view of the fact that the appellant had succeeded only in regard to half the properties in suit the decree askEd the parties to bear their own costs. Against this decree respondent I preferred an appeal in the High Court of Mysore; and the appellant filed cross objections. The High Court held that the appellant had not established that when Lakshmamma was 432 alleged to have executed the will she was in a sound and disposing state of mind or that it was her will in the sense that it represented her intentions. According to the High Court, in the light of this finding " it might be unnecessary to consider the other issues in the case". Even so the High Court proceeded to indicate its conclusions on two of such issues. It held that the appellant had entirely failed to prove that the money for the purchase of items 3, 4 and 5 came out of any bequest under Annaji 's will (exhibit B2(a)) or the incomes from the properties covered by the gift deed (exhibit D) and so in its opinion Lakshmamma could not claim any share in the said properties. On the other hand, the High Court indicated that it was inclined to accept the plea raised by respondent 1 that Lakshmamma had transferred all her interest in the properties comprised in the said deed of gift in favour of her husband Sadagopalachar; and since in its opinion " Lakshmamms at no time appears to have claimed that she had any interest in those properties, there was considerable force in the argument urged by respondent 1 that LakShmamma must have relinquished her interest in the said properties and waived her rights in favour of her husband ". The High Court thought that the learned trial judge had not fully considered all the material bearing on this point and so was in error in holding that at the relevant date Lakshmamma had a subsisting interest in half the share even in the suit properties, items 1 and 2. Having thus indicated its decision on the two issues the High Court has observed that even if it had found in favour of the appellant on these two points it would not have been of any help to him because his case must inevitably fail when it is held that the will set up by him was not proved to be the last will and testament of Lakshmamma. In the result the appeal preferred by respondent I was allowed, the cross objections filed by the appellant were rejected and his suit was dismissed. In the circumstances of the case the High Court made no orders as to costs. The appellant then applied for and obtained a certificate from the High Court that the decision under 433 appeal is one of reversal and it involves a claim respecting properties of the value of not less than Rs. 20,000. In pursuance of this certificate the High Court ordered that the appeal to this Court should be admitted; and so this appeal has come to this Court. Since the main contention raised by the appellant is directed against the finding of the High Court that the will in question is not proved to be the last will and, testament of Lakshmamma, it would be necessary to refer to the broad features, and dispositions, of the will and the evidence adduced by the appellant to prove its execution. At the material time Lakshmamma was about 64 years of age. She usually resided at Hampapur; but about a month before the executing of the will she had gone to Mandya to attend the marriage in the house of Junior Kalbagal. After the marriage was over she would normally have returned to Hampapur but she fell ill and had to extend her stay with Junior Kalbagal. The appellant 's case is that she had told him that she wanted to execute a will and had given him instructions in that behalf. This talk had taken place be tween her and the appellant about a year before the execution of the will. The appellant, however, did not find time to get the will written. When Lakshmamma fell ill at Mandya the appellant had gone to visit her and she pressed the appellant to prepare the draft of her will in accordance with her instructions. So the appellant prepared a draft at Mysore a day prior to the execution of the will. He then went to Mandya by. the morning train on August 22, 1945, and the will was got written about 11 or 11 30 a.m. The appellant had the draft in his hand from which he dictated to the scribe Chokkanna (P. W. 3) who wrote the will. After the will was written the scribe took it to the adjoining room where Lakshmamma was lying in bed. The will was then read out to her and was signed by her in five places (Exs. A 1 to A 5). Subsequently it was attested by two witnesses Krishnamurthy Rao (P. W. 1) and Narasimha Iyengar (P. W. 2). Some time later during the course of the day the Sub Registrar came to the house of Junior Kalbagal and in his 55 434 presence the will (exhibit A) was duly registered. On the same day at about the same time Lakshmamma executed a power of attorney in favour of the appellant (exhibit EE) and this document was also duly attested and registered. The appellant has examined himself (P. W. 7), the two attesting witnesses (P. W. 1 and P.W. 2), the scribe (P. W. 3) and Junior Kalbagal (P. W.4) in support of his case that the will was duly and validly executed by Lakshmamma. The will is a fairly long document and its English translation spreads over eight printed pages. Though the dispositions in the will have occupied a small portion of the document it contains elaborate arguments in support of the averment of the testatrix that she was entitled to make a will in respect of all the properties mentioned in the will. The will begins with the recital about the illness of the testatrix and says " as I have felt in my mind that it is necessary to mention here certain matters clearly so that there may not be any kind of obstacles and obstruction at the instance of any in respect of my purposes coming into effect after my death I have got them written in detail. " Then, the will refers to the gift deed executed by Annaji jointly in favour of the testatrix and her husband Sadagopalachar as well as to Annaji 's will under which hypothecation bonds of the value of Rs. 10,000 were bequeathed to both of them. The will then refers to the fact that Sadagopalachar was possessed of only a house and a carriage shed and owned no other ancestral property. Even the said house was of " very ancient times and was in a dilapidated condition ". According to the will Sadagopalachar held a small government job which he resigned in order to live in Hampapur and to look after the property obtained by gift from Annaji. " It was my opinion ", says the will, " that he was probably looking after my share of the property in addition to his own and was improving the same. It is but natural to think in this manner mutually in respect of husband and wife ". Then the will refers to the subsequent purchase of certain lands and avers that the amounts received by the couple from Annaji were utilised for the said 435 purchase. The will then refers to the death of Sadago palachar in 1908 and describes the management of the properties during the lifetime of Narayana lyengar the son of the testatrix. It says that during Narayanan 's minority the testatrix sold some properties at the advice and with the help of her Brother in law Srinivasa lyengar for debts " without considering whether it was my share or my husband 's share "; she. also sold gold and diamond ornaments to meet the urgent needs of the family. After Narayanan became a major he began to manage the property in constitution with Srinivasa lyengar. Narayanan wanted to build a house for residence in Mysore and so he sold some wet lands situated at Sarvamanya Gaudhanahalli village. Narayanan had no issue and so he spent generously at the time of the marriage of the three daughters of his younger sister Thirumalamma. Besides he got ornaments prepared moderately for all of them and purchased and gave them as pin money some wet lands situated at Arjunahalli village. Narayanan purchased and gave some wet lands at the same village to the son of his second younger sister Kalbagal Narasimha Iyengar and to Singamma and Lalithamma. Then the will refers to certain purchases made by Narayanan and adds that the purchase of the said lands nominally stands in his name though the right to the property vested in the testatrix. The will then states that Narayanan had no issue and so he treated his younger sister 's children as his own, attended to their education, marriage and other auspicious functions with great zeal. Having disposed of his properties for the benefit of the said children Narayanan considered that since he was the only son of the testatrix her share of the property was sufficient for the maintenance of himself and his wife and so he had no worry on that account. In other words, the will alleges that as a result of the alienations made by Narayanan he ceased to have any share in the properties that remained and in consequence the said properties belonged exclusively and solely to the testatrix. Then the will refers to the insurance amount of Rs. 4,000 which was paid to respondent 1 on Narayanan 's death; and 436 in regard to Narayanan 's illness which ultimately resulted in his death the will adds that the testatrix herself had provided separate money for his medicinal and family expenses and that she had given Narayanan Rs. 3,000 which had been deposited with her Brother in law and the Reserve Bank share of Rs. 500 to enable him to purchase a house at Mysore. The ,.will then refers to respondent in terms of affection and states that the testatrix was making a bequest for life of items I and 2 in her favour in order that she may lead her life without any difficulty. ,Except me ", says the will, " no one has any right whatever to the scheduled properties. They should go only to those for whom it is intended here according to my desire after my death but there is no reason whatsoever for their going to my agnates or any others. I am at full liberty to make dispositions hereby according to my desire ". After making these elaborate averments the will proceeds to make dispositions of items I to 5. Items I and 2 are given to respondent for life. " She shall have no right such as hypothecation, sale, gift, exchange, etc., of the said properties nor has she any right whatever to create liability in any way in favour of others ". After her death respondents 2 to 4 are given item I and item 2 is bequeathed to respondent 5. Respondent 5 is described as an heir by the testatrix after her death and has been authorised to perform all her ceremonies. Item 3 is bequeathed to respondent 5 and item 4 to respondents 2, 3 and 4. Out of the 15 acres of land included in item 4, the bequest in regard to 9 acres is burdened with a charge in favour of certain legacies and charities mentioned in the will. The recipients of the legacies who are the relatives of the testatrix are named, and the charities are also specifically mentioned. Rs. 500 each have to be paid to her eldest daughter 's third daughter Padminiamma, to her eldest daughter 's son Thirumalachar and to Sudhakalyani, the daughter of her eldest daughter 's second daughter Jaya and to Nagendra, son of Neelamma, the eldest daughter of her eldest daughter. Besides, Rs. 1,000 had to be used for 437 conducting service in the Sannadi of Lakshminarayanaswamy at Hampapur on the respective dates of death of her husband, her son and herself. A sum of Rs. 500 has to be endowed for the Nandadipa service in the name of Narayanan in the Sannadi of Thirupati Venkataramanaswami, and Rs. 500 for similar service in the name of Sadagopalachar in the Sannadi of Channakeshavaswami, Belur, the place of the family in Hassan District. An amount of Rs. 1,000 has to be utilised for scholarship to poor students. In all Rs. 5,000 have to be spent for these legacies and charities. The will directs that if respondents 2 to 4 fail to make these payments within three years after the death of the testatrix the appellant who is appointed the executor under the will should, after the expiry of the said three years, sell for reasonable price the lands charged in that behalf and should pay the full amount realised by such sale to carry out the aforesaid charitable works and to give effect to the legacies mentioned in the will. The will then avers that after her death the document would remain with the appellant and it adds that the testatrix has not executed any prior will but that in case any such will has been executed by her the same stood cancelled by the execution of the present will. The will then repeats the averment about the title of the testatrix and states that when Narayana Iyengar was alive he had sold about 17 acres of land situate at Adagur and other places for purchasing lands at Arjunahalli village for his sisters ' children and so the testatrix had full liberty to make a disposition in respect of the scheduled properties which were her own. The will also adds that though the said properties stand in the name of her son and rent notes in respect of them are similarly executed in favour of her son that does not affect her title to the said properties in any way. These are the broad features, and dispositions, of the will in question. We would now indicate briefly the evidence led by the appellant on the question about the valid execution of the will. We have already mentioned that the two attesting witnesses, the scribe and the appellant himself have given evidence in support of the will. 438 Mr. Krishnamurthy Rao (P. W. 1) was a medical officer to the Mysore Sugar Company, Mandya, and he knew the Junior Kulbagal who was working as a Cane Superintendent in the said factory. This witness was called by Kalbagal to attest the will and so he went to his house and saw that Lakshmamma was lying in her bed since she had an attack of paralysis on her left side. According to the witness her mind was clear and he attested the will after ascertaining from her that the document had received her approval. The witness was cross examined in regard to his statement that he had treated Lakshmamma and it was brought out in his answers that though she may have been under his treatment for about a week he could not say if her name found a place in the hospital register. He, however, added that even patients who are treated in their houses would be mentioned in the hospital 'register if they come and take medicine from the hospital. The witness admitted that the will was not written in his presence and that it was already written before he went to attest it. When the witness was asked about the details of his signature on the will he gave ans wers which showed that he did not have any clear recollection as to what happened on that date. First he stated that he had put one signature but ultimately admitted that he had signed twice, once while he attested the will and also when the Sub Registrar registered it in his presence. It fact some of his answers suggest that the witness did not even remember that he was present when the Sub Registrar arrived and registered the document. The witness stated that the will was read in his presence but he did not know if the whole was read or only a few portions of it. The next attesting witness is Narasimha lyengar (P. W. 2). He was employed in Mandya Sugar Company Distillery. According to him the will was written in his presence and Lakshmamma put her signature on it also in his presence. In cross examination, however, it appeared that his statement that he was present when the will was written may not be accurate. He did not know whether there was any draft already prepared and he saw none. 439 According to him, after the will was written the appellant read out the will to Lakshmamma but according to the appellant the will was read out by the scribe. He stated that after the will was attested both he and P. W. 1 left the place but it is clear that P. W. 1 was present at the time of registration. The witness even did not know whether Lakshmamma had any attack of paralysis. The evidence of the scribe (P. W. 3) and of the appellant (P. W. 7) clearly negatived Mr. Iyengar 's statement that he was present at the time the will was written. The evidence of both the scribe and the appellant unmistakably shows that Mr. lyengar was not present when the will was written. Chokkanna (P. W. 3) the scribe is a relative of Kulbagal. The mother of Chokkanna and Kulbagal 's mother are sisters. He has written the will. According to him Lakshmamma stated that she wanted to execute a will and that she would agree to what the appellant would get written. The witness stated that the will was written according to the dictation of the appellant in the presence of Lakshmamma. The appellant had a draft with him. Except the appellant, Lakshmamma and the scribe none else was present when the will was written. The attesting witnesses came after the will was written. The witness then read the will to Lakshmamma who consented to the recitals and signed it. It may be pointed out that the account given by the scribe in respect of the writing of the will is somewhat different from the account given by the appellant. The appellant has stated that the will was written in one room and Lakshmamma was lying in the adjoining room and it was after the will was written that the scribe went into the adjoining room and read the will to her so that the statement of the scribe that the will was written in the presence of Lakshmamma is not supported by the appellant. In fact the appellant 's statement is cor roborated by the evidence of Junior Kulbagal in this matter. Mr. Kalbagal (P.W. 4) does not seem to know about the intention of the testatrix to execute the will. It was when plaintiff asked him to get some attesting 440 witnesses that he came to know that a will was going to be executed. He then went and brought P. W. 1 and P. W. 2 for attestation. This witness admitted that Lakshmamma was ill and was unable to get up and leave her bed. He heard about her intention to execute the will about 9 a.m. in the morning. He was not present when the will was written. He was, how ever, present when the will was read out by the scribe to Lakshmamma. His father Kalbagal Garudachar and his wife Jaya were also present. The witness then stated that the appellant brought the Sub Registrar at about 5 30 p. m. and the Sub Registrar registered the will. It would, however, appear from the application (exhibit VI) made to the Sub Registrar inviting him to come to Kalbagal 's house to register the will that it was not the appellant but the witness himself who had brought the Sub Registrar. The last witness in support of the will is the appellant himself, (P.W. 7). He has spoken to the instructions received by him from Lakshmamma a year before the date of the execution of the will and he has stated that he prepared a draft at Mysore a day before the will was executed and that the will was written by the scribe as he dictated the contents from the said draft. He had told Lakshmamma about what the draft contained but he admitted that the draft was not read out to her. The witness has then referred to the fact that the will was read out by the scribe to Lakshmamma and she consented to it, whereupon it was signed by her and subsequently attested by the two attesting witnesses. Then the witness refers to the registration of the document at about 5 30 p.m. On the morning of the day when the will was executed the witness was told by Lakshmamma that she would execute a power of attorney though the witness had not asked for it. A power of attorney was accordingly prepared and duly executed and registered. That in brief is the evidence on which the appellant relies. It would be convenient at this stage to refer briefly to the reasons given by the courts below in support of their respective findings. The learned trial judge put the onus of proving the will on the appellant but 441 he observed that " the proof that is necessary to establish a will is not an absolute or a conclusive one. What is required is only such proof as would satisfy a prudent man: The learned judge then considered the evidence of the two attesting witnesses and the scribe and observed that " there can absolutely be no doubt that P.W. 3 wrote exhibit A at the time when it is said to have been( written ". He was of the opinion that the evidence of the scribe fully corroborates the evidence of P. W. I and P. W. 2. The learned judge then mentioned the fact that P. W. 4 who supported the appellant is no other than the husband of Lakshmamma 's granddaughter. The evidence of the appellant himself was considered by the learned judge and his conclusion was that " it had to be taken that exhibit A is a will executed by Lakshmamma and the signatures, Exs. A I to A 5 are those of Lakshmamma ". The argument urged by respondent I that Lakshmamma could not have understood the contents of exhibit A was rejected by the learned judge and he observed that " when it is proved that Exs. A 1 to A 5 are signatures of Lakshmamma and that she executed exhibit A, it is to be presumed that the testatrix had the knowledge of the contents of the will ". In the end the learned judge thus recorded his finding: " In view of the evidence and the presumption referred to above I think we deed not have any hesitation in holding that Lakshmamma executed exhibit A having fully understood the nature of exhibit A and the recitals made therein ". The High Court, on the other hand, has taken a contrary view. The High Court thought that the evidence adduced by the appellant to prove the execution of the will was not satisfactory. It then examined the said evidence in some detail, criticised the discrepancies appearing in the said evidence, considered the probabilities and concluded that, on the whole, the said evidence would not justify the finding that the will had been duly executed by the testatrix. The High Court also thought that the appellant 's version about the instructions given by Lakshmamma to him 56 442 in the matter of the execution of the will was highly improbable; and, according to the High Court, the whole evidence of the appellant appeared to be unsatisfactory. The High Court then considered the question of onus and observed that since the appellant 's sons had received a substantial benefit under the will and since he had taken a leading part in its execution, the onus was heavy on him to remove the suspicions attending the execution of the document and to establish that Lakshmamma had really understood its contents, had approved of them and had put her signatures on it when she was in a sound and disposing state of mind. It that the High Court also felt that the dispositions made by the will were unnatural and improbable; in particular it took the view that since the appellant had come into the family of Annaji by adoption it was very unlikely that his sons should have received such a substantial benefit under the will. In fact the judgment of the High Court appears to indicate that The High Court was inclined to hold that the testatrix may not have been in a sound and disposing state of mind at the material time. It is on these findingS that the High Court reached its final conclusion that the appellant had failed to prove the due and valid execution of the will. What is the true legal position in the matter of proof of wills ? It is well known that the proof of wills presents a recurring topic for decision in courts and there are a large number of judicial pronouncements on the subject. The party propounding a will or otherwise making a claim under a will is no doubt seeking to prove a document and, in deciding how it is to be proved, we must inevitably refer to the statutory provisions which govern the proof of documents. Sections 67 and 68 of the Evidence Act are relevant for this purpose. Under section 67, if a document is alleged to be signed by any person, the signature of the said person must be proved to be in his handwriting, and for proving such a handwriting under sections 45 and 47 of the Act the opinions of experts and of persons acquainted with the handwriting of the person concerned are made relevant. Section 68 deals with 443 the proof of the execution of the document required by law to be attested; and it provides that such a document shall not be used as evidence until one attesting witness at least has been called for the purpose of proving its execution. These provisions prescribe the requirements and the nature of proof which must be satisfied by the party who relies on a document in a court of law. Similarly, sections 59 and 63 of the Indian Succession Act are also relevant. Section 59 provides that every person of sound mind, not being a minor, may dispose of his property by will and the three illustrations to this section indicate what is meant by the expression " a person of sound mind " in the context. Section 63 requires that the testator shall sign or affix his mark to the will or it shall be signed by some other person in his presence and by his direction and that the signature or mark shall be so made that it shall appear that it was intended thereby to give effect to the writing as a will. This section also requires that the will shall be attested by two or more witnesses as prescribed. Thus the question as to whether the will set up by the propounder is proved to be the last will of the testator has to be decided in the light of these provisions. Has the testator signed the will ? Did he understand the nature and effect of the dispositions in the will ? Did he put his signature to the will knowing what it contained ? Stated broadly it is the decision of these questions which determines the nature of the finding on the question of the proof of wills. It would prima facie be true to say that the will has to be proved like any other document except as to the special requirements of attestation prescribed by section 63 of the Indian Succession Act. As in the case of proof of other documents so in the case of proof of wills it would be idle to expect proof with mathematical certainty. The test to be applied would be the usual test of the satisfaction of the, prudent mind in such matters. However, there is one important feature which distinguishes wills from other documents. Unlike other documents the will speaks from the death of the testator, and so, when it is propounded or produced 444 before a court, the testator who has already departed the world cannot say whether it is his will or not ; and this aspect naturally introduces an element of solemnity in the decision of the question as to whether the document propounded is proved to be the last will and testament of the departed testator. Even so, in dealing with the proof of wills the court will start on the same enquiry as in the case of the proof of documents. The propounder would be called upon to show by satisfactory evidence that the will was signed by the testator, that the testator at the relevant time was in a sound and disposing state of mind, that he understood the nature and effect of the dispositions and put his signature to the document of his own free will. Ordinarily when the evidence adduced in support of the will is disinterested, satisfactory and sufficient to prove the sound and disposing state of the testator 's mind and his signature as required by law, courts would be justified in making a finding in favour of the propounder. In other words, the onus on the propounder can be taken to be discharged on proof of the essential facts just indicated. There may, however, be cases in which the execution of the will may be surrounded by suspicious circumstances. The alleged signature of the testator may be very shaky and doubtful and evidence in support of the propounder 's case that the signature, in question is the signature of the testator may not remove the doubt created by the appearance of the signature; the condition of the testator 's mind may appear to be very feeble and debilitated; and evidence adduced may not succeed in removing the legitimate doubt as to the mental capacity of the testator; the dispositions made in the will may appear to be unnatural, improbable or unfair in the light of relevant circumstances; or, the will may otherwise indicate that the said dispositions may not be the result of the testator 's free will and mind. In such cases the court would naturally expect that all legitimate suspicions should be completely removed before the document is accepted as the last will of the testator. The presence of such suspicious circumstances naturally tends to 445 make the initial onus very heavy; and, unless it is satisfactorily discharged, courts would be reluctant to treat the document as the last will of the testator. It is true that, if a caveat is filed alleging the exercise of undue influence, fraud or coercion in respect of the execution of the will propounded, such pleas may have to be proved by the caveators; but, even without such pleas circumstances may raise a doubt as to whether the testator was acting of his own free will in executing the will, and in such circumstances, it would be a part of the initial onus to remove any such legitimate doubts in the matter. Apart from the suspicious circumstances to which we have just referred, in some cases the wills propounded disclose another infirmity. PrOpounders themselves take a prominent part in the execution of the wills which confer on them substantial benefits. If it is shown that the propounder has taken a prominent part in the execution of the will and has received substantial benefit under it, that itself is generally treated as a suspicious circumstance attending the execution of the will and the propounder is required to remove the said suspicion by clear and satisfactory evidence. It is in connection with wills that present such suspicious circumstances that decisions of English courts often mention the test of the satisfaction of judicial conscience. It may be that the reference to judicial conscience in this connection is a heritage from similar observations made by ecclesiastical courts in England when they exercised jurisdiction with reference to wills; but any objection to the use of the word 'conscience ' in this context would, in our opinion, be purely technical and academic, if not pedantic. The test merely emphasizes that, in determining the question as to whether an instrument produced before the court is the last will of the testator, the court is deciding a solemn question and it must be fully satisfied that it had been validly executed by the testator who is no longer alive. It is obvious that for deciding material questions of fact which arise in applications for probate or in actions on wills, no hard and fast or inflexible rules can 446 be laid down for the appreciation of the evidence. It may, however, be stated generally that a propounder of the will has to prove the due and valid execution of the will and that if there are any suspicious circumstances surrounding the execution of the will the propounder must remove the said suspicions from the mind of the court by cogent and satisfactory evidence. It is hardly necessary to add that the result of the application of these two general and broad principles would always depend upon the facts and circumstances of each case and on the nature and quality of the evidence adduced by the parties. It is quite true that, as observed by Lord Du Parcq in Harmes vs Hinkson (1) " where a will is charged with suspicion, the rules enjoin a reasonable scepticism, not an obdurate persistence in disbelief. They do not demand from the judge, even in circumstances of grave suspicion, a resolute and impenetrable incredulity. He is never required to close his mind to the truth ". It would sound platitudinous to say so, but it is nevertheless true that in discovering truth even in such cases the judicial mind must always be open though vigilant, cautious and circumspect. It is in the light of these general considerations that we must decide whether the appellant is justified in contending that the finding of the High Court against him on the question of the valid execution of the will is justified or not. It may be conceded in favour of the appellant that his allegation that Lakshmamma has put her signatures on the will at five places is proved ; that no doubt is a point in his favour. It may also be taken as proved that respondent I has failed to prove that Lakshmamma was unconscious at the time when the will is alleged to have been executed. It is true she A, as an old woman of 64 years and had been ailing for some time before the will was executed. She was not able to get up and leave the bed. In fact she could sit up in bed with some difficulty and was so weak that she had to pass stools in bed. However, the appellant is entitled to argue that, on the evidence, the sound and disposing (1) 447 state of mind of Lakshmamma is proved. Mr Iyengar, for the appellant, has strongly urged before us that, since these facts are established, the court must presume the valid execution of the will and in support of his contention he has invited our attention to the relevant statements on the point in the text books dealing with the subject. Jarman on " Wills " (1) says that " the general rule is that the onus probandi lies in every case upon the party propounding a will and he must satisfy the conscience of the court that the instrument so propounded is the last will of a free and capable testator '." He adds that, "if a will is rational on the face of it, and appears to be duly executed, it is presumed, in the absence of evidence to the contrary, to be valid." Similarly, Williams on " Executors and Administrators " (2) has observed that, " generally speaking, where there is proof of signature, everything else is implied till the contrary is proved; and evidence of the will having been read over to the testator or of instructions having been given is not necessary. " On the other hand, Mr. Viswanatha Sastri, for respondent No. 1, contends that the statements on which the appellant has relied refer to wills which are free from any suspicions and they cannot be invoked where the execution of the will is surrounded by suspicious circumstances. In this connection, it may be pertinent to point out that, in the same text books, we find another rule specifically mentioned. " Although the rule of Roman Law ", it is observed in Williams, " that " Qui se scripsit haeredem " could take no benefit under a will does not prevail in the law of England, yet, where the person who prepares the instrument, or conducts its execution, is himself benefited by its dis positions, that is a circumstance which ought generally to excite the suspicion of the court, and calls on it to be vigilant and zealous in examining the evidence in support of the instrument in favour of which it ought not to pronounce, unless the suspicion is removed, and (1) Jarman on " Wills" Vol. 1, 8th Ed., P. 50. (2) Williams on " Executors and Administrators" Vol. 1, 13th Ed., P. 92. 448 it is judicially satisfied that the paper does express the true will of the deceased " (1). It would, therefore, be necessary at this stage to decide whether an execution of the will in the present case is surrounded by any suspicious circumstances. Does the will appear to be on the whole an improbable, unnatural and unfair instrument as held by the High Court? That is the first question which falls to be considered. We have already indicated that the preamble to the will contains many argumentative recitals. Indeed it would not be unjust to say that the preamble purports to meet by anticipation the main objections which were likely to be raised to the competence of Lakshmamma to make a will in regard to the properties covered by it. The preamble in great detail makes out a case that the properties received by the testatrix and her husband under the gift deed (exhibit D) devolved upon her by survivorship after her husband 's death, a plea which has not been accepted even by the trial court. It also seeks to prove that the subsequent purchases made by her husband were in law the joint acquisitions of her husband and herself, a point on which the two courts below have differed. It sets out in detail the theory that the son of the testatrix has lost his right, title and interest in the properties which devolved on him after his father 's death because he had alienated more than his share in the said properties during his lifetime; and it even suggests that during his illness and to help him to build a house in Mysore the testatrix had advanced him money from her separate funds, pleas which have not been accepted by either court below. It seems to us that the elaborate and well considered recitals which have been deliberately introduced in the preamble cannot possibly be the result of corresponding instructions given by the testatrix to the appellant for preparing the draft of her will. In the context these recitals sound artificial and unnatural and some of them at any rate are untrue. The draftsman of the will has tried to be overwise ' and that itself is a very serious infirmity in the appellant 's case that the (1) Williams on " Executors and Administrators ", Vol.1, 13th Ed., P. 93. 449 instrument represents the last will and testament of the testatrix. Take for instance the statement in the will that the testatrix had advanced Rs. 3,000 to her son to enable him to purchase a house at Mysore. By itself this is not a matter of very great importance; but this detail has been introduced in the will in order to make out a strong case that all the properties mentioned in the will were the separate properties of the(, testatrix and so it would be relevant to consider what the appellant himself has to say about this recital. In regard to the Rs. 3,000 in cross examination the appellant has stated that Mr. B. G. Ramakrishna lyengar had sent this amount to the husband of respondent 1 in 1942 or so. It was sent by cheque on Mysore Bank. The appellant then added that the husband of respon dent 1 had deposited this amount with B. G. Ramakrishna Iyengar 's father in law after selling Goudanahalli lands with intent to purchase lands at Mysore; so that the claim made in the will that the testatrix bad given this amount to her son out of her separate funds is inaccurate. The manner in which the several recitals have been made in the will amounts to a suspicious circumstance which must be satisfactorily explained by the appellant. The next circumstance which calls for an explanation is the exclusion of the grand children of the testtatrix from any substantial legacies under the will. It is true that a bequest of Rs. 500 each is given to them but that can hardly be regarded as fair or just to these children. It was, however, urged by Mr. lyengar before us that Narayana lyengar had, during his lifetime, given lands to his sister 's daughters. He had also spent considerable amounts on the occasion of their marriages and had given them each valuable ornaments. In this connection, he referred us to certain documents exhibited under exhibit I G ' and attempted to show that the lands given to his sisters ' daughters were of the value of Rs. 1,500 to Rs. 2,000 each. Apart from the fact that the value of these lands is not clearly proved nor are the circumstances under which they came to be gifted to the donees, we 57 450 do not think it would be possible to accept the argument that even with these gifts the testatrix would not have thought of making more substantial bequests to her grand children. It is not suggested that the relations between the testatrix and these grand children were not cordial and affectionate and so it would be reasonable to assume that they would have been the objects of her bounties in a more liberal measure in ordinary circumstances. There is one more point which must be considered in this connection. As we have already mentioned the appellant 's sons have received substantial bounties under the will. Are these bequests probable and natural ? It must be remembered that the appellant came into the family of Annaji by adoption long after the testatrix was married. The record does not show that the testatrix was on such affectionate terms with the appellant that she would have preferred to make a bequest to his sons rather than to her own grand children. Indeed the appellant admitted that, at the relevant time, he was in straightened circumstances and was indebted to the extent of nearly, Rs. 30,000; and it does not appear that when he was faced with financial difficulties of this magnitude he asked for or obtained any assistance from his adoptive sister. That is why the bequests to the appellant 's sons also amount to a suspicious circumstance which must be clearly explained by the appellant. We cannot easily reject the argument urged on. behalf of respondent I that the bequests have been made in the names of the appellant 's sons because, if they had been made in his own name, the properties bequeathed would have been attached and sold at the instance of his numerous creditors. We do not propose to measure precisely the value of the properties bequeathed to the appellant 's sons. It would be enough to say that the said bequests are by no means insignificant or unsubstantial. Therefore, we are unable to see how the appellant can successfully challenge the finding of the High Court that some of the broad features of the will appear to be improbable and unfair; and if that be so, the appellant will have to remove the suspicions arising 451 from these features before he can persuade the court to accept the instrument as the last will and testament of the testatrix. In this connection it is necessary to bear in mind that the appellant whose sons have received the said bequests has admittedly taken a very prominent part in bringing about the execution of the will. He has prepared the draft and it was at his dictation that the scribe wrote the will. Indeed on the important question as to when and how instructions were given by the testatrix and whether or not in preparing the draft those instructions have been faithfully carried out, the only evidence adduced in the case is that of the appellant and no one else. Thus, the very important, if not the decisive, part played by the appellant in the execution of the will cannot at all be disputed in the present case. Mr. Iyengar, for the appellant, strenuously contended that, in deciding whether the suspicions attending the execution of the will have been removed or not, it would be necessary to remember that the whole of the relevant evidence is all one way and there is no evidence in rebuttal led by respondent 1. His argument is that the evidence adduced by the appellant is satisfactory and the conclusion of the trial court which was well founded need not have been reversed by the High Court. In support of this argument, Mr. lyengar referred us to several judicial decisions and suggested that we should consider the evidence in the light of these decisions. According to him, these decisions would afford us considerable assistance and guidance in appreciating the evidence in the present case. That is why we would now briefly refer to some of the decisions cited before us. According to the decisions in Fulton vs Andrew (1) "those who take a benefit under a will, and have been instrumental in preparing or obtaining it, have thrown upon them the onus of showing the righteousness of the transaction ". " There is however no unyielding rule of law (especially where the ingredient of fraud enters into the case) that, when it has been (1) [1875) L.R. 7 H. L 448. 452 proved that a testator, competent in mind, has had a will read over to him, and has thereupon executed it, all further enquiry is shut out ". In this case, the Lord Chancellor, Lord Cairns, has cited with approval the well known observations of Baron Parke in the case of Barry vs Butlin (1). The two rules of law set out by Baron Parke are: " first, that the onus probandi lies in every case upon the party propounding a will; and lie must satisfy the conscience of the court that the instrument so propounded is the last will of a free and capable testator"; "the second is, that, if a party writes or prepares a will under which he takes a benefit, that is a circumstance that ought generally to excite the suspicion of the court and calls upon it to be vigilant and zealous in examining the evidence in support of the instrument in favour of which it ought not to pronounce unless the suspicion is removed, and it is judicially satisfied that the paper propounded does express the true will of the deceased ". It is hardly necessary to add that the statement of these two rules has now attained the status of a classic on the subject and it is cited by all text books on wills. The will propounded in this case was directed to be tried at the Assizes by the Court of Probate. It was tried on six issues. The first four issues referred to the sound and disposing state of the testator 's mind and the fifth to his knowledge and approval of the con tents of the will. The sixth was whether the testator knew and approved of the residuary clause; and by this last clause the propounders of the will were made the residuary legatees and were appointed executors. Evidence was led at the trial and the judge asked the opinion of the jurors on every one of the issues. The jurors found in favour of the propounders on the first five issues and in favour of the opponents oil the sixth. It appears that no leave to set aside the verdict and enter judgment for the propounders notwithstanding the verdict on the sixth issue was reserved; but when the case came before the Court of Probate a rule was obtained to set aside the verdict generally and have a new trial or to set aside the verdict on the (1) ; ,482. 453 sixth issue for misdirection. It was in dealing with the merits of the finding on the sixth issue that the true legal position came to be considered by the House of Lords. The result of the decision was that the rule obtained for a new trial was discharged, the order of the Court of Probate of the whole will was reversed and the matter was remitted to the Court of Probate to do what was right with regard to the qualified pro. bate of the will. The same principle was emphasized by the Privy Council in:Vellasawmy Servai vs Sivaraman Servai (1), where it was held that, where a will is propounded by the chief beneficiary under it, who has taken a leading part in giving instructions for its preparation and in procuring its execution, probate should not be granted unless the evidence removes suspicion and clearly proves that the testator approved the will. In Sarat Kumari Bibi vs Sakhi Chand (2), the Privy Council made it clear that " the principle which requires the propounder to remove suspicions from the mind of the Court is not confined only to cases where the propounder takes part in the execution of the will and receives benefit under it. There may be other suspicious circumstances attending on the execution of the will and even in such cases it is the duty of the propounder to remove all clouds and. satisfy the conscience of the court that the instrument propounded is the last will of the testator. " This view is supported by the observations made by Lindley and Davey, L. JJ., in Tyrrell vs Painton (3). " The rule in Barry vs Butlin (4), Fulton vs Andrew (5) and Brown vs Fisher (6), said Lindley, L. J., " is not in my mind confined to the single case in which the will is prepared by or on the instructions of the person taking large benefits under it but extends to all cases in which circumstances exist which excite the suspicions of the court. " In Rash Mohini Dasi vs Umesh Chunder Biswas (1) (1929) L.R 57 I.A. 96. (3) , 157, 159. (5) (2) (1928) L.R. 56 I.A. 62. (4) ; , 482. (6 (7) (1898) L.R. 25 I.A. 109. 454 it appeared that though the will was fairly simple and not very long the making of it was from first to last the doing of Khetter, the manager and trusted adviser of the alleged testator. No previous or independent intention of making a will was shown and the, evidence that the testator understood the business in which his adviser engaged him was not sufficient to justify the grant of probate. In this case the application for probate made by the widow of Mohim Chunder Biswas was opposed on the ground that the testator was not in a sound and disposing state of mind at the, material time and he could not have understood the nature and effect of its contents. The will had been admitted to the probate by the District Judge but the High Court had reversed the said order. In confirming the view of the High Court the Privy Council made the observations to which we have just referred. The case of Shama Charn Kundu vs Khettromoni Dasi (1), on the other hand, was the case of a will the execution of which was held to be not surrounded by any suspicious circumstances. Shama Charn, the propounder of the will, claimed to be the adopted son of the testator. He and three others were appointed executors of the will. The testator left no natural son but two daughters and his widow. By his will the adopted son obtained substantial benefit. The probate of the will with the exception of the last paragraph was granted to Shama Charn by the trial judge; but, on appeal the application for probate was dismissed by the High Court on the ground that the suspicions attending on the execution of the will had not been satisfactorily removed by Shama Charn. The matter was then taken before the Privy Council; and their Lordships held that, since the adoption of Shama Charn was proved, the fact that he took part in the execution of the will and obtained benefit under it cannot be regarded as a suspicious circumstance so as to attract the rule laid down by Lindley, L. J., in Tyrrell vs Painton (2). In Bai Gungabai vs Bhugwandas Valji.(3), the Privy Council had to deal with a will which was admitted to probate by the first court, but on appeal (1) Cal. (2) , 157, 159. (3) Bom. 455 the order was varied by excluding therefrom certain passages which referred to the deed poll executed on the same day by the testator and to the remuneration of the solicitor who prepared the will and was appointed an executor and trustee thereof. The Privy Council held that " the onus was on the solicitor to satisfy the court that the passages omitted expressed the true will of the deceased and that the court should be diligent and zealous in examining the evidence in its support, but that on a consideration of the whole of the evidence (as to which no rule of law prescribed the particular kind required) and of the circumstances of the case the onus was discharged ". In dealing with the question as to whether the testator was aware that the passages excluded by the appeal court from the probate formed part of the instrument, the Privy Council examined the evidence bearing on the point and the probabilities. In conclusion their Lordships differed from the view of the appeal court that there had been a complete failure of the proof that the deed poll correctly represented the intentions of the testator or that he understood or approved of its contents and so they thought that there were no grounds for excluding from the probate the passages in the will which referred to that deed. They, however, observed that it would no doubt have been more prudent and business like to have obtained the services of some independent witnesses who might have been trusted to see that the testator fully understood what he was doing and to have secured independent evidence that clause 26 in particular was called to the testator 's attention. Even so, their Lordships expressly added that in coming to the conclusion which they had done they must not be understood as throwing the slightest doubt on the principles laid down in Fulton vs Andrew (1) and other similar cases referred to in the argument. In Perera vs Perera (2) it was held that when the testator is of sound mind when he gives instructions for a will but at the time of signature accepts the instrument drawn in pursuance thereof without being able (1) (2) 456 to follow its provisions, he must be deemed to be of sound mind when it is executed. The will of Perera with which the court was concerned in this case was signed with a cross by the testator in the presence of five witnesses present at the same time who duly subscribed the will in the presence of the testator. The Notary Public was also among the persons present but he did not attest the will. No objection was taken in the court of first instance on this ground, but, in the court of appeal, the said objection was raised and it was held that the will was invalid on the ground that though the Notary Public was present he had not attested the instrument. The case was then taken to the Supreme Court in its collective capacity on review preparatory to an appeal to Her Majesty. The Supreme Court reversed the judgment under appeal and then proceeded to determine the case on the merits. The court held by a majority decision that the testator was of sound and disposing state of mind and restored the order of the primary judge. Against this decision there was an appeal. In this case, the evidence about the instructions given by the testator was very clear; and there was not the slightest reason for disbelieving the statement of Gooneratne that he had drawn the will faithfully in accordance with the details of instructions given to him. The will prepared from the said instructions seemed to be fair and just disposition of the testator 's property. There was no concealment about the preparation of the will. The instructions were given on June 1 and it was in the evening of June 4 that the will was brought to the testator for execution. It is on these facts that it was held, following the observations of Sir James Hannen in Parker vs Felgate (1) that if a person has given instructions to a solicitor to make a will and the solicitor prepares it in accordance with those instructions, all that is necessary to make it a good will if executed by the testator is that he should be able to think thus far: " If I gave my solicitor instructions to prepare a will making certain dispositions about my property I have no doubt that he has given effect to my intention and I (1) 457 accept the document which is put before me as carrying it out ". We would again like to emphasize that the evidence about the instructions was very clear and definite in this case and it was also clearly established that the will which was just and fair was executed faithfully in accordance with the said instructions given by the testator. In such a case whether or not the will should be admitted to probate would depend upon the opinion which the court may form about the relevant evidence adduced in support of the will. It would be difficult to deduce any principle from this decision and to seek to apply it to other cases without reference to their facts. The last case to which reference must be made is the decision of the Privy Council in Harmes vs Hinkson (1) It appears that, in this case, the testator George Harmes died in the city of Regina on April 4, 1941. Two days later Mr. Hinkson brought to the manager of the Canada Permanent Trust Company at its office in Regina a document which purported to be the will of the said Harmes. It was dated April 3, 1941, and named the Trust Company as executor. Under the will Mr. Hinkson by a devise and bequest of the residue was to benefit to a sum of more than pound 50,000. Mr. Hinkson was by profession a barrister and solicitor and had drawn the will with no witness present until after the body of the document was complete. Then two nurses were called in to witness its due execution. The learned judge of the Surrogate Court, after a lengthy trial affirmed the will and decreed probate in solemn form. On appeal, by a majority ' decision the order of the trial court was reversed. Then there was a further appeal to the Supreme Court of Canada. It was heard by five learned judges. By a majority (Hudson, J., alone dissenting) the appeal was allowed and the decree of the Surrogate Court was restored. Against this decision the appellant obtained special leave to appeal to His Majesty in Council and it was urged on his behalf that, since the document was charged with suspicion from the outset, probate (1) 58 458 should not have been granted to the respondent Hinkson. The Privy Council did not accept this contention and dismissed the appeal. It was in dealing with the appellant 's contention about the suspicions surrounding the execution of the will that Lord Du Parcq made the observations which we have already quoted. Prima facie the facts on which the appellant relied were strong enough; but the question which according to their Lordships fell to be decided in the appeal was whether the learned trial judge 's decision on the facts was erroneous and so manifestly erroneous that an appellate court ought to set it aside. Their Lordships then referred with approval to the principles which had been frequently enunciated as to the respect which the appellate court ought to pay to the opinion which a Judge who has watched and listened to the witness has formed as to their credibility (Powell vs Streatham ManoR Nursing Home(1). Their Lordships then briefly referred to the evidence led in the case and observed that it was impossible for them judging only from the printed page to decide between the various opinions of Mr. Hinkson 's character which its perusal may leave open for acceptance by different minds. In the result they came to the conclusion in agreement with the Supreme Court that the trial court 's decision on the facts must stand. It would thus be noticed that the decision of the Privy Council proceeded more on the basis that there was no justification for interfering with a finding of fact recorded by the trial judge particularly when the said ,finding rested on his appreciation of the evidence given by several witnesses before him. In this connection it is significant to note that the allegation of the appellant that Mr. Hinkson had exercised undue influence on the testator was repelled by the Privy Council with the observation that their acceptance of the judge 's findings of fact leaves them no alternative but to reject it. Thus this decision merely serves to illustrate the importance which the Privy Council attached to the finding of fact recorded by the trial court in this case. (1) 459 It is in the light of these decisions that the appellant wants us to consider the evidence which he has adduced in the present case. It would be convenient to begin with the appellant 's story about the instructions given by the testatrix for preparing the will. In the plaint the appellant has referred to the sudden illness of the testatrix at Mandya and it is alleged that when she took ill the testatrix sent for him with the obvious intention of making arrangements regarding her properties. Accordingly when he met her at Mandya she explained all her intentions to him in the matter of disposing all her properties and her rights thereto. In other words, the case made out in the plaint clearly and specifically is that when the testatrix was ill at Mandya she sent for the appellant and gave him instructions for preparing a draft of her will. However, when the appellant gave evidence he made a material improvement in his story. According to his evidence, the appellant had received instructions from the testatrix a year before the will was actually drafted. It was then that the testatrix had given him the gift deed (exhibit D) and asked him to prepare the draft. Consistently with this new version the appellant has added in his evidence that when he met her at Mandya during her illness she reminded him that she had asked him to make a will for quite some time and she insisted that the draft should be prepared without any delay. In our opinion, the evidence given by the appellant on this point is clearly an after thought and his story that he had received previous instructions cannot be accepted as true. Besides, it is somewhat remarkable that, on both the occasions when the testatrix talked to the appellant and gave instructions to him no one else was present; and so the proof of this part of the appellant 's case rests solely on his own testimony. If the testatrix had really thought of making a will for over a year before it was actually executed, it is unlikely that she would not have talked about it to other relatives including Kalbagal with whom she was actually staying at the material time. Then it would be necessary to enquire whether the 460 draft which the appellant prepared was consistent with the instructions alleged to have been given by the testatrix. The draft, however, has not been produced in the case on the plea that it had been destroyed; nor is it specifically stated by the appellant that this draft was read out fully to the testatrix before be dictated the contents of the will to the scribe. Thus even the interested testimony of the appellant does not show that be obtained approval of the draft from the testatrix after reading it out fully to her clause by clause. It is common ground that Mandya where the testatrix was lying ill is a place where the assistance of local lawyers would have been easily available; and in ordinary course the testatrix would have talked to Kalbagal and the appellant and they would have secured the assistance of the lawyers for drafting the will; but that is not what the appellant did. He went to Mysore and if his evidence is to be believed he prepared the draft without any legal assistance. Having regard to the nature of the recitals contained in the will it is not easy to accept this part of the appellant 's case. Besides, as we have already indi cated, we find great difficulty in believing that the elaborate recitals could have been the result of the instructions given by the testatrix herself. It is in the light of these circumstances that the direct evidence about the execution of the will has to be considered. The evidence of P. W. I is really inconclusive on the point about the execution of the will. Apart from the fact that he had no clear recollection as to what happened on the day when he attested the will, this witness has frankly stated that he could not state definitely whether the whole of the document was read over to the testatrix before he put the attesting signature; and it was naturally of very great importance in this case to produce satisfactory evidence that the will was read out to the testatrix and she understood the nature and effect of its contents. On this point even if P.W. I is believed it does not help the appellant 's case. The evidence of P.W. 2 cannot carry much weight because his main story that he was present at the time when the will 461 was written is wholly inconsistent with the evidence of P. Ws. 3, 4 and 7. That leaves the evidence of the scribe and the appellant himself. The scribe (P.W. 3) is a near relation of Kalbagal and even he does not at all support the appellant 's case about previous instruction because, according to him, the testatrix said that she would agree to whatever the appellant would get written. The relevant evidence of this witness is clearly inconsistent with the appellant 's case about previous instructions and so it would be difficult to treat the evidence of this witness as suffi cient to prove that the testatrix fully understood the nature of the recitals in the preamble and the effect of the dispositions before she put her signature to the will. The evidence of the appellant (P.W. 7) cannot obviously be useful because it is the evidence of an interested witness and is besides not very satisfactory. On behalf of the appellant it was urged before us by Mr. Iyengar that the evidence of Kalbagal (P. W. 4) is disinterested and so it should be believed. That also appears to be the view taken by the trial court. In our opinion, however, it would not be right or correct to describe Kalbagal as wholly disinterested. Respondent No. 5 who is the step brother of Kalbagal and who stays with him in the same house along with their father has admittedly received substantial benefit under the will. If an undivided brother of P.W. 4 has received this benefit it would not be accurate to say that the witness is wholly disinterested. Besides, it appears from the evidence of Kalbagal that he knew nothing about the execution of the will until the appellant asked him to get some attesting witnesses for the will. This evidence does not strike us as natural or probable; but apart from it, even Kalbagal 's evidence does not show satisfactorily that the will was read out to the testatrix so as to enable her to understand its full effect before it was signed by her. That is the whole of the evidence led by the appellant on the question of the execution of the will. On this evidence we are not prepared to hold that the High Court was in error in coming to the conclusion that it was not shown that the testatrix fully 462 understood the contents of the will and put her signature on the instrument intending that the recitals and the dispositions in the will should be her recitals and dispositions. In this connection we would like to add that the learned trial judge appears to have misdirected himself in law inasmuch as he thought that the proof of the signature of the testatrix on the will raised a presumption that the will had been executed by her. In support of this view the learned judge has referred to the decision of the Calcutta High Court in Surendra Nath Chatterji vs Jahnavi Charn Mukerji (1). In this case no doubt the Calcutta High Court has held that on the proof of the signature of the deceased or his acknowledgment that he has signed the will he will be presumed to have known the provisions of the instrument he has signed; but Mr. Justice B. B. Ghose, in his judgment, has also added that the said presumption is liable to be rebutted by proof of suspicious circumstances and that undoubtedly is the true legal position. What circumstances would be regarded as suspicious cannot be precisely defined or exhaustively enumerated. That inevitably would be a question of fact in each case. Unfortunately the learned trial judge did not properly assess the effect of suspicious circumstances in the present case to which we have already referred and that has introduced a serious infirmity in his final conclusion. Incidentally we may also refer to the fact that the appellant obtained a power of attorney from the testatrix on the same day ; and that has given rise to the argument that the appellant was keen on taking possession and management of the properties under his control even before the death of the testatrix. There is also another circumstance which may be mentioned and that is that the SubRegistrar, in whose presence the document was registered on the same day, has not been examined though he was alive at the date of the trial. On these facts then we are inclined to hold that the High Court was justified in reversing the finding of the trial court oil the question of the due and valid execution of the will. (1) Cal. 463 Before we part with this case, however, we would like to add that the High Court was not justified in recording its findings on two other issues in the present appeal. As we have already indicated, the High Court itself has observed that, once it was held that the will had not been proved by the appellant, no other issue survived for decision. Even so, the High Court has expressed its conclusions in favour of res pondent I on the question about the character of the subsequent acquisitions of items 3, 4 and 5 and about the subsisting title of the testatrix in respect of all the properties covered by the will. Having regard to the relationship between the parties it is difficult to under stand how mere entries in the revenue record made in the name of Sadagopalachar or the long possession of Sadagopalachar and, after his death, of Narayana lyengar can prove the transfer of Lakshmamma 's title or its extinction by adverse possession respectively. It is apparent that, in recording these conclusions, the High Court has not fully or properly considered all the relevant evidence; and consequently, the reasons given by it are open to serious challenge on the merits. Indeed Mr. Viswanatha Sastri did not appear to be inclined to support the said findings. We do not, however, propose to decide these questions on the merits because in view of our conclusion on the principal issue it is unnecessary to consider any other points. We would, therefore, like to make it clear that the said two issues are not decided in the present proceedings and may have to be considered afresh between the parties if and when they arise. The result is the appeal fails and must be dismissed but there will be no order as to costs in this Court. Appeal dismissed.

The mode of proving a will does not ordinarily differ from that of proving any other document except as to the special requirement of attestation prescribed in the case of a will by section 63 of the Indian Succession Act. Proof in either case cannot be mathematically precise and certain and so the test should be one of satisfaction of a prudent mind in such matters. The onus must be on the propounder and in absence of suspicious circumstances surrounding the execution of the will, proof of testamentary capacity and signature of the testator as required by law may be sufficient to discharge the onus. Where, however, there are suspicious circumstances, the onus would be on the propounder to explain them to the satis faction of the Court before the will can be accepted as genuine. If the caveator alleges undue influence, fraud or coercion the onus will be on him to prove the same. Where there are no such pleas but the circumstances give rise to such doubts, it is for the propounder to satisfy the conscience of the Court. What are suspicious circumstances must be judged in the facts and circumstances of each particular case. If the propounder takes a prominent part in the execution of the will which confers substantial benefits on him, that itself is a suspicious circumstance attending the execution of the will and in appreciating the evidence in such a case, the court should proceed with an open but nevertheless vigilant and cautious mind. Harmes vs Hinkson, , Fulton vs Andrew, , Barry vs Butlin, [1838] 2 MOO. P.C. 480, Vallasamy Servai vs Sivaraman Servai, (1929) L.R. 57 I.A. 96 and Sarat Kumar Bibi vs Sakhi Chand, (1928) L. R. 56 1. A. 62, referred to. Case law discussed. In the instant case the appellant, as the sole executor to a will, brought the suit out of which the appeal arises, for a declaration that the testatrix was the owner of certain properties and was as such entitled to dispose of them by the will and asked for consequential reliefs purporting to give effect to the bequests made by her. It appeared from the evidence that the appellant took a prominent, if not a decisive, part in the execution of the 427 will, which contained substantial bequests in favour of his sons. But there was no evidence to show that the draft was ever approved by the testatrix or that the will was fully read out to her and she knew its contents. The trial court decreed the suit but the High Court dismissed the same. Held, that the High Court was right in setting aside the finding of the trial court that the will had been duly and validly executed. Held further, that the trial court was in error in holding that the proof of signature in the instant case could raise a presumption as to the testator 's knowledge of the contents of the will. Surendra Nath Chatterji vs Jahnavi Charan Mukherji, Cal. 390, explained and approved.

vil Appeal No. 6202 (NT) of 1983. From the Judgment and Order dated 3.2. 1981 of the Punjab and Haryana High Court in L.P.A. No. 128of 1981. Raja Ram Aggarwal, Arvind Minocha, H.K. Singh, S.K. Bagga, S.C. Patel and S.K. Gambhir for the Appellants. Kapil Sibal, Additional Solicitor General, S.P. Goel, A. Subba Rao, C.V.S. Rao, Mahabir Singh, Bishambher Lal and K.C. Dua for the Respondents. The Judgment of the Court was delivered by RANGANATHAN, J. 1. All these appeals and writ petitions raise a common question regarding the interpretation of s 9(1) of the Haryana Sales Tax Act, 1973 (hereinafter re ferred to as 'the Act '). Counsel state that the facts in all these appeals are identical and that the only facts neces sary (or, atleast, on record before us), on the basis of which the issue us is to be decided, are these: Each of the appellants/ petitioners (hereinafter referred to compendi ously as 'assessees '), is a registered dealer in the State of Haryana. He purchased certain raw materials in the State without paying tax thereon, in view of the provision con tained in section 24 of the Act. He then manufactured certain goods in the State with the aid of said raw materials. He then sold the manufactured goods to dealers who, in turn, exported those goods out of India. On these facts, it is claimed, the assessee is not liable to pay the purchase tax on the raw materials imposed under section 9(1) of the Act. This claim has been rejected by the taxing authorities and the High Court and hence these appeals. The writ petitions have been filed directly in this Court in view of a learned single Judge of the High Court having decided the issue against the assessees as early as 25.11. 1980 in C.W.P. 1227/80, which was also affirmed by a Division Bench later 2. The Act is a much amended one and Some of its provi sions have been recently amended with retrospective effect from 27th May, 1971 a point of time when actually a prede cessor Act (the Punjab General Sales Tax Act, 1948) had been in force. The provisions of the statute, relevant for our purpose, and their relevant amendments may be noticed first: 347 1. Section 2(e) (a) Originally section 2(e) defined 'export ' to mean "the taking out of goods from the State to any place outside it otherwise than by way of sale in the course of inter State trade or commerce. " (b) Act 44 of 1976, added, at the end of the above definition, the following words w.e.f. 1.4.1976: "or in the course of export out of the territory of India. Section 2(p) (a) section 2(p) defined the expression 'turnover ' as includ ing "the aggregate of the amounts of the sales and purchases . . made by any dealer" in any capacity during a given period. Explanation 2 to the second defini tion provided: "(2) The proceeds of the sale of any goods on the purchase of which tax is leviable under this Act or the purchase value of any goods on the sales of which tax is leviable under this Act, shall not be included in the turnover, but the purchase value of the goods liable to tax under section 9 shall be included. " (b) Act 13 of 1989 amended the Explanation by inserting, in it, after the words "section 9", the words "or section 24". (c) Act 1 of 1990 has amended the above Explanation retrospectively to say that the words "but the purchase value of the goods liable to tax under section 9 or section 24 shall be included" shall be omitted and shall be deemed always to have been omitted with effect from 27.5. So we have to proceed on the basis that the underlined words never were there in el. (p) of section 2. The 1990 Act also inserted an Explanation 6 to the clause w.e.f. 31.3. 1983 which reads: "(6) The purchase of barley or of goods used in the manufac ture of guar gum, scientific goods, utensils and metal handicrafts shall not form part of the turnover of a dealer for the period he is entitled to purchase the goods on the authority of his certificate of registration without payment of sales tax under section 24, provided these are used exclusively for the specified purposes. " 348 111. Section 6 Section 6, the charging section, read as under: "6. Incidence of taxation (1) Subject to other provisions of this Act, every dealer whose gross turnover during the year immediately preceding the commencement of this Act exceeded the taxable quantum, Defined in section 7, shall be liable to pay tax under this Act on all sales and purchases effected after the coming into force of this Act. Provided that this section shall not apply to a dealer who deals exclusively in goods specified in Schedule B. Goods on which no tax is leviable: section 6 read with section 15. (2) Every dealer to whom sub section (1) does not apply shall, subject to other provisions of this Act, be liable to pay tax under this Act on the expiry of thirty days after the date on which his gross turnover during any year first exceeds the taxable quantum; Provided that this sub section shall not apply to a dealer who deals exclusively in goods specified in Schedule B. Provided further that . . XXX XXX XXX Explanation For the purposes of sub section (1) and (2) "purchased" shall mean the purchase of declared (As defined in section 2(c) of the ) goods speci fied in Schedule C and goods falling under section 9. (b) section 6 was amended by Act I of 1990 to read as follows with retrospective effect from 27.5. 1971: "section 6 Incidence of taxation (1) Every dealer whose gross turnover during the year immediately preceding the coming into force of the provisions of this section exceeded the taxable quantum shall be liable to pay tax on all sales and purchases effected after the coming into force of the provi sions of this section. 349 Provided that this sub section shall not apply to a dealer who deals exclusively in goods specified in Schedule B. (2) Every dealer to whom sub section (1) does not apply shall be liable to pay tax on all sales and purchases effected on the expiry of thirty days after the date on which his gross turnover during any year first exceeds the taxable quantum. Provided that this sub section shall not apply to a dealer who deals exclusively in goods specified in Schedule B: Provided further that . . XXX XXX XXX The earlier Explanation, however, is omitted with the same retrospective effect. Section 9 (a) section 9(1) has undergone several amendments: by Act 44 of of of of of 1986 and Act 1 of of 1990 has also an impact, as we shall indicate later. The section originally read thus: "section 9 Liability to pay purchase tax Where a dealer pur chases goods other than those specified in the 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 manufac tured 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 in the course of export out of the territory of India; 350 (b) exports them in the circumstances in which no tax is payable under any other provision of 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. " (b) Act 44 of 1976 made two amendments to this sub section. The first amendment was to insert, after the open ing words, "where a dealer", the words "liable to pay tax under this Act". The second amendment, which is crucial for the purposes of this case, is the addition at the end of sub clause (ii) of clause (a) above, the words: "within the meaning of sub section (1) of section 5 of the . " These amendments were effective from 1.4.1976. (c) Act 11 of 1979 redrafted the above provision, ex cluded milk from clause (b) and added clause (c). After this amendment, effective from 9.4.1979, the provision read thus: "9(1) Where a dealer liable to pay tax under this Act, (a) purchases goods, other than those specified in Schedule B, from any source in the State and uses them in the State in the manufacture of goods specified in Schedule B; or (b) purchases goods, other than those specified 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 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 in the course of export out of the territory of India within the meaning of sub section (1) of section 5 of the ; or (c) 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 351 other provision of 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." (d) A doubt had arisen whether the words "disposes of" used in clause (a)(ii) later, clause (b) above was compre hensive enough to include cases of despatches by a dealer of the manufactured goods otherwise than by way of sale as, for example, by way of stock transfer. The State Government had issued a notification dated 19.7.74 (even before the 1976 amendment) clarifying the position with an answer to the question in the affirmative but this notification as well as the interpretation favoured by it were quashed by a decision of the High Court reported as Goodyear India Ltd. vs State, [1982] 53 STC 163. This led to the amendment of section 9(1) by Act 3 of 1983. This amendment substituted a new clause (b) for the earlier one w.e.f. 27.5.71,inserted a new clause (bb) w.e.f. 9.4.79 and added a proviso. Actually clauses (b) and (bb) are identical, except that the latter excludes milk from Its purview w.e.f. 9.4.79. However, to avoid confusion both the clauses may be set out here: (b) purchases goods, other than those specified in Schedule B, 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 subsection (1) of section 5 of the Central Sales Tax Act, 1956;or; (bb) purchases goods, other than those specified 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 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 sub section (1) of section 5 of the ; or". 352 The proviso added was in the following terms: "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 territo ry of India within the meaning of sub section (3) of section 5 of the ." (e) Act 11 of 1984 effected no material change. The exclusion of milk was decided to be dropped and so all that this amendment did was to roll both clauses (b) and (bb) into one clause, reading thus: "4. Amendment of section 9 of Haryana Act 20 of 197.3 For clauses (b) and (bb) of sub section (1) of section 9 of the principal Act, the following clause shall be substituted, namely: "(b) purchases goods, other than those specified in Schedule B. 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 dispatches 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 subsection (1) of section 5 of the Central Sales Tax Act, 1956;or. (f) Amendment Act 8 of 1986 substituted, in the proviso to section 9( 1 ), the words "scientific goods, guar gum, uten sils and handicrafts" in place of "scientific goods and guar gum" w.e.f. 26.2.86. The amendment to section 9(1) by Act 16 of 1986 is not relevant for our purposes and we pass on to the two relevant amendments effected by Act 1 of 1988. The first was to change the marginal heading of the section to read thus: "9(1) Liability to pay tax on purchase value of goods". The second was to omit the words "sub section (1) of" at the end of clause (b). The relevant part of clause (b), as thus amended, will, therefore, read: "despatches the manufactured goods to a place outside the State in any manner otherwise than by way of sale . . in 353 the course of export outside the territory of India within the meaning of section 5 of the ;" These amendments became effective from 31.12. V. Section 24 section 24 is the next section relevant for our purposes. After its amendment by Act 44 of 1976, it read thus, w.e.f. 28.11.76: "24. Rights of registered dealer Every dealer registered under this Act shall be entitled to purchase, without pay ment of sales tax, the following goods within the State, on the authority of his certificate of registration by giving to the dealer, from whom the goods are purchased, a declara tion, duly filled and signed by him, containing such partic ulars, on such form, obtained from such authority, as may be prescribed, and in case such form is not available with such authority, in such manner as may be prescribed, (a) any goods, other than those leviable to tax at first stage of sale under section 17 or section 13, for the purpose of (i) resale in the State; or (ii) sale in the course of inter State trade or commerce; (b) containers and packing materials and other goods (excluding those liable to tax at the first stage of sale under section 17 or section 18), specified in his certificate of registration for use by him in the manufac ture, in the State, of any goods other than those specified in Schedule B, for the purpose of (i) sale in the State; or (ii) sale in the course of inter State trade or commerce; or (iii) sale in the course of export out of the territory of 354 India within the meaning of sub section (1) of section 5 of the . " (b) Act 3 of 1983 renumbered the above as section 24(1) and added, with effect from 31.3.83, a proviso each, to clauses (a) and (b). These provisions read thus. The proviso to clause (a) was: "Provided that a dealer registered under this Act, shall also be entitled to purchase barley, without payment of sales tax on the authority of his certificate of registra tion, on furnishing to the selling registered dealer, a declaration referred to above, for sale by him in the course of export outside the territory of India within the meaning of section 5 of the ." and that to clause (b) read: "Provided that a dealer registered under this Act, shall also be entitled to purchase, without payment of sales tax, on the authority of his certificate of registration, goods mentioned in clause (b) above, on furnishing to the selling registered dealer a declaration referred to above, for use by him in the manufacture, in the State, of scientific goods and guar gum for the purpose of sale by him in the course of export outside the territory of India within the meaning of sub section (3) of section 5 of the ." It also inserted, with retrospective effect from 1.4.76, the following sub section. "(2) Notwithstanding anything contained in form S.T. 15 or the certificate of registration issued under this Act or the Rules made thereunder, no dealer shall be entitled to claim the right envisaged in sub section (1) so renumbered, for the period from the first day of April, 1976, to the third day of September, 1979 in contravention of the provisions of sub section (1) so renumbered." The Act also contained a section (section 8) validating the notification issued under section 9 read with section 15 and also validating all levy, assessment and collection of taxes under section 9 notwithstanding any judgment, decree or order of any court or other authority. 355 (c) Act 11 of 1984 changed the marginal heading of the section as "Rights and liabilities of registered dealers". It added a clause (c) to sub section (1) relating to use of the goods in the execution of works contract in the State, with which we are not concerned. However, it added a new sub section (3) with retrospective effect from 27.5. 1971, to the following effect: "(3) 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 purposes 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 shall not be levied where tax is payable on such goods under any other provision of this Act. " (d) An amendment of 1986 expanded the proviso to section 24(I)(b) by adding "utensils and metal handicrafts" to "scientific goods and guar gum", as in section 9(1) proviso. (e) Act 1 of 1988, affecting from 31.12.1987, omitted the words "sub section (1) of" in section 24(I)(b)(ii). It also omitted the proviso to the said clause. Section 27 Section 27, which defines "taxable turnover" is not quite relevant for our purposes. We should only like to mention that the provisoes to section 27(a)(iV), section 27(b)(iii) and section 27(c)(ii) inserted by Act 44 of 1976 w.e.f. 1.4.76 all make specific reference to sales "in the course of export out of the territory of India within the meaning of sub section (1) of section 5 of the ". The provisoes to section 27(a)(iv), in particular, make a clear contrast between sales falling under sub section (3) and those failing under sub section (1) of section 5 of the C.S.T. Act. Validation provision Act 1 of 1990 effected no amendments to section 24 or 27. But section 14 of 356 this Act (which is a validation section on the same lines as those contained in the earlier amendment Acts) has been referred to in the course of the arguments before us and can be usefully extracted. It reads: "14. Notwithstanding any judgment, decree or order of any court or tribunal or other authority to the contrary, any levy, assessment, re assessment or collection of any amount by way of tax made or purporting to have been made and any action taken or things done or purporting to have been taken or done before the commencement of the Haryana General Sales Tax (Amendment and Validation) Act, 1990, in relation to such levy, assessment, re assessment or collection made under the provisions of section 9 or subsection (3) of secton 24 of this Act shall be deemed to be as valid and effective as if such levy, assessment, re assessment or collection had been made or action taken or things done under the provisions of clause (p) of section 2, section 6, section 15 A, section 17, section 27 and Schedule D appended to this Act and as amended by the provisions of the Haryana General Sales Tax (Amendment and Validation) Act, 1990 and shall not be called in question in any court or tribunal or other authority and accordingly (i) all acts, proceedings or things done or action taken by the State Government or by any officer of the State Government or by any authority, in connection with the levy, assessment, re assessment or collection of such a tax shall, for all purposes be deemed to be, and to have always been done or taken in accordance with law; (ii) no suit or other proceedings shall be main tained or continued in any court or before any authority for the refund of any such tax so collected; and (iii) no court or authority shall enforce a decree or order directing the refund of any such tax so collected. These, then, are the relevant provisions of the Act. Before turning to the question posed for our considera tion, it is necessary to refer to section 5(1) of the . Thus sub section read as follows: 357 "5. When is a sale or purchase of goods said to take place in the course of import or export (1) A sale or purchase of goods shah be deemed to take place in the course of the export of the goods out of the territory of India only if the sale or purchase either occasions such export or is effected by a transfer of documents of title to the goods after the goods have crossed the customs frontiers of India. " This sub section came up for the consideration of this Court in Mohammed Sirajuddin vs State, [1975] Supp. 1 S.C.R. 169. In that case the appellant 's goods were exported out of India. The course of the transaction was that the appellant sold goods to the State Trading Corporation (S.T.C.) but, to the knowledge of both these parties, the goods were to be exported to fulfill contracts entered into by the S.T.C. with foreign buyers, the terms of such contracts between the foreign buyers and the S.T.C. being referred to in, and part of, the appellant 's contracts with the S.T.C. The apppellant claimed its sales to be "sales in the course of export" and hence exempt under section 5 of the C.S.T. Act. This Court, Khanna, J. dissenting, held that the sales of the appellant were not exempt u/s 5(1). The appellant had agreed to sell his goods only to the S.T.C. and there was no provity of contract between him and the foreign buyer. The court held that the movement of goods outside India was occasioned by the contract between the S.T.C. and the foreign buyer and not by that between the appellant and the S.T.C. The deci sion caused several practical difficulties and called for an amendment of the C.S.T. Act. The object and reasons of the C.S.T. (Amendment) Act (Act 103 of 1976), may be usefully extracted. It said: "According to section 5(1) of the , a sale or purchase of goods can qualify as a sale in the course of export of the goods out of the territory of India only if the sale or purchase has occasioned such export or is by a transfer of documents of title to the goods after gods have crossed the customs frontiers of India. The Su preme Court had held (vide: Mohd. Serajuddin vs State of Orissa, 36 S.T.C. 136 that the sale by an Indian exporter from India to a foreign importer alone qualifies 'as a sale which has occasioned the export of the goods. According to the Export Control Orders, exports of certain goods can be made only by specified agencies such as the State Trading Corporation. In other cases also, manufacturers of goods, particularly in the small scale and medium sectors, have to 358 depend on some experienced export house for exporting the goods because special expertise is needed for carrying on export trade. A sale of goods made to an export canalising agency such as the State Trading Corporation or to an export house to enable such agency or export house to export those goods in compliance with an existing contract or order is inextricably connected with the export of the goods. Fur ther, if such sales do not qualify as sales in the course of export, they would be liable to State sales tax and there would be a corresponding increase in the price of the goods. This would make our exports incompetitive in the fiercely competitive markets. It is, therefore, proposed to amend, with effect from the beginning of the current financial year, section 5 of the to provide that the last sale or purchase of any goods preceding the sale or purchase occasioning export of those goods out of the terri tory of India shall also be deemed to be in the course of such export if such last sale or purchase took place after and was for the purpose of complying with the agreement or order for, or in relation to, such export." section 5(3), inserted by the above Amendment Act w.e.f. 1.4.1976, reads thus: "(3) Notwithstanding anything contained in sub section (1), the last sale or purchase of any goods preceding the sale or purchase occasioning the export of those goods out of the territory of India shall also be deemed to be in the course of such export, if such last sale or purchase ' took place after, and was for the purpose of complying with, the ' agreement or order for or in relation to such export." Now, coming to the facts of the present case, the asses sees purchased raw materials inside the State of Haryana but paid no tax thereon, as they were registered dealers and furnished the declaration forms prescribed under section 24. Their sales of the manufactured goods are to persons who have exported the goods outside India and so, they claim, they are not liable to pay the tax sought to be imposed on them under section 9(1). The department, however, has denied the relief on the short ground that the sales effected by the appellants are not sales in the course of export outside India within the meaning of section 5(I) of the C.S.T. Act. They are only "penultimate" sales; they may be deemd to be 'e xport sales ' because of the fiction created under section 5(3) of the 359 C.S.T. Act but that is not enough to escape from the Clutch es of the charge in section 9(1). Sri Rajaram Agarwal, learned counsel for the assessees, contended that the effect of section 5(3) of the C.S.T. Act is to expand the scope of section 5(1) and include within the concept of sales in the course of export outside India also the 'penultimate ' sales dealt with in Mohd. Sirafuddin 's case (supra), A reference to, and the meaning of, section 5(1) cannot be understood without a reference to section 5(3). As a result of section 5(3), such penultimate sales become export sales falling beyond the purview and competence of State legislatures. The provisions in section 9(1) of the Act need to be interpreted harmoniously and consistently with the con stitutional scheme. section 9(1) is a charging section. Purchases of raw materials in the State used in the manufacture of goods inside the State attract the tax under section 9(1) unless those manufactured goods are dealt with in one of three ways: (1) disposed of by way of sale inside the State; (2) despatched to a place outside the State but by way of a sale in the course of inter State trade or commerce; or (3) despatched to a place outside the State but by way of sale in the course of export outside the territory of India. He submitted that the transactions in the present case fail under category (3) above. In the alternative, he submitted that, clearly, as the assessees had sold goods to other parties in India, those sales must be either local sales falling under category (1) or inter State sales failing under category (2). In any view of the matter, therefore, the assessee 's purchases of raw materials would not attract tax under section 9(1). On the other hand, Sri Gupta, learned counsel for the State. submitted that there were no facts on record to substantiate the claim on behalf of the assessee that the sales in question fulfilled the conditions set out in section 5(3) of the C.S.T. Act, as claimed. He submitted that even if the claim were to be accepted, the assessees would be in no better position. He fully supported the reasoning of the High Court and urged that full effect should be given to the words "within the meaning of sub section (I) of section 5" which found a place in section 9(1)(b) till they were dropped by Act 1 of 1988. If due regard be given to these words, he pointed out, the assessees would be entitled to an exemption from the impugned purchase tax only if their sales 360 were export sales within the meaning of section 5(1) of the C.S.T. Act which they, admittedly were not. He submitted that the argument that, to levy the tax imposed by section 9(1) in cases covered by section 5(3) but not section 5(1) of the C.S.T. Act would violate Article 286 of the Constitution. was misplaced and overlooks the vital circumstances that what section 9(1)(b) taxes are the purchases of raw materials and not the manufactured goods that were eventually exported. Alterna tively, he submits, section 9(1)(b) has been declared unconstitu tional by this Court in the Goodyear case ; and, therefore,, the assessees can seek no implied exemption from its language. If section 9 is left out, he says, the lan guage of section 6 (as amended) which brings to charge all pur chases and sales in the State would be attracted and so the impugned taxation of the purchases would be in order. For these reasons, he submits that the writ petitions were rightly rejected by the. High Court and that the appeals as well as writ petitions before us deserve to be dismissed. It will be convenient first to dispose of the contention dealt with by the High Court. For the purposes of this argument we shall assume that the sales made by the asses sees were 'penultimate sales ' which would fall within the purview of section 5(3) of the C.S.T. Act. The argument on behalf of the Revenue, which has found favour with the High Court is that section 9(1) exempts only sales made in the course of export within the meaning of section 5(1) of the C.S.T. Act but not those under section 5(3) of the said Act. After careful consideration we think that this argument was rightly accepted by the High Court. In the first place there is no dispute before us that section 5(3) covers a category of cases which would not otherwise have come within the purview of section 5(1), as explained in Mohd. Sirajuddin 's case. The language of section 9(1)(a)(ii) later 9(1)(b) using the words "within the meaning of sub section (1) of section 5 of the " have to be given full meaning; in other words, the exemption under section 9(1) has to be restricted only to export sales falling within the scope of section 5(1). It seems clear, from the circumstances referred to below, that the legisla ture deliberately used these words and intended to give a restricted operation to section 9(1)(a)(ii)(b). These cir cumstances are: (1) Section 9(1)(a)(ii), as originally framed, merely uses the words "in the course of export outside the territo ry of India". Clause 9(1)(b) referred to cases where raw materials were purchased and exported and the word 'export ' was defined in section 2(c) as meaning "the taking out of the goods from the 361 State to any place outside it otherwise than by way of sale in the course of inter State trade or commerce." Act 44 of 1976 amended the definition of 'export ' in section 2(c) by adding the wide words "or in the course of export out of the territory 01 ' India" w.e.f. 1.4. But the same Act narrowed down the scope of clause (a)(ii) by adding the restrictive words at the end of the clause. (2) If a reference is made to section 24, one finds that section 24(1)(iii) refers again to sub section (1) of section 5 of the only. However, the language of the two provisoes simultaneously introduced in section 24(1)(a) and (b) by Act 3 of 1983 makes interesting reading. The proviso to clause (a) refers only to "sale by him in the course of export outside the territory of India within the meaning of section 5 of the ", whereas the proviso to clause (b) refers to "sale by him in the course of export outside the territory of India within the meaning of sub section 3 of section 5 of the ". Thus the statute, within the same provision, has made a distinction between a sale in the course of export within the meaning of section 5 and such a sale within the ' meaning of section 5(3). (3) When we turn to section 27 next, we find two provisoes introduced in section 27(1)(iv)(a) by Act 44 of 1976, the same amending Act that introduced the extra words at the end of section 9(1)(a)(ii). These provisoes make a marked contrast between sates failing under sub sections (1) and those falling under subsection (3) of section 5 of the C.S.T. Act. (4) As will be seen from the extract of the legisla tive amendments set out earlier the legislature has subse quently deleted the reference to sub section 3 of section 5 in section 9(1)(b). However, this amendment, which has been made both in section 9 and in section 24 by Act 1 of 1988 has not been given any retrospective effect. Considering that the legislation is replete with instances of retrospec tive effect (in some cases even to as early as a date as 7.9.1955), the failure or omission to give any retrospective effect to the amendment to section 9 in this regard is an eloquent pointer to the intention of the legislature. In view of the circumstances outlined above, we are of the opinion that the High Court was right in concluding that the assessee 362 was not entitled to the exemption under section 9because the sales made by him were not sates in the course of export outside the territory of India within the meaning of section 5(1) of the . Shri Rajaram Agarwal, learned counsel for the assessees raised a new contention before us, which we have already referred to as an alternative contention. This contention which really seems to be unanswerable appears to have been missed at the stage of the High Court but this contention is purely one of law and merits consideration. The point made by him was this. There is no dispute that the assessees have transferred the manufactured goods by way of sale and that these goods have been despatched to various ports of India. The exact terms of despatch are not clear and there are no facts on record which will help us to understand the course of transactions in the several cases before us. But Shri Agarwal submitted that the sales made by the assessees can only fall within one of three categories. They are either local sales or inter State sales or export sales. Each of the assessee have sold its goods to another dealer, If that dealer is also a resident of Haryana and has taken delivery of the goods in Haryana and exported them thereafter, the assessees ' sales would be local sales. If the purchaser dealer of the manufactured goods is in some other State and the goods have been moved out of Haryana in pursuance of that sale, they would be inter State sales. The goods which have been sold by the assessee must have been delivered to the dealer in pursuance of the sale either within the State or outside the State in India. In either event, it would be a sale covered by the exceptions in section 9(1). It would be a local sale or inter State sale. The only third possi bility is that assessee sold the goods to a dealer outside India and exported the goods in pursuance of that sale in which event it would be a sale within the meaning of section 5(1) of the . We think Shri Agarwal is right in saying that any sale effected by the assessees in the circumstances, which have been set out by us earlier, must fall in one of three cate gories. We are unable to conceive of a fourth category of sale, which could be neither a local sale nor an inter State sale nor an export sale. Shri Gupta, on behalf of the State, contended that the goods might have been directly moved by the assessee to a port for shipment abroad in pursuance of an export contract entered into by the dealer who purchased from the assessee. Even in such a case if the transport of goods from the assessee 's place of business to the port is in pursuance of the terms of the sale, the movement of the goods would be occasioned by the sale made by the assessee and would be an inter State sale. If, on the other hand, the goods were sent 363 to the port by the assessee subsequent to and independent of the sale made by him, then, for the purpose of that trans port, the assessee. would only be an agent of the purchaser and the movement of the goods in pursuance of the contract of sale entered into by the purchaser and would be one in the course of export within the meaning of section 5(1) of the C.S.T. Act. As pointed out by Sri Agarwal, even in Mohd. Sirajuddin 's case (supra), although the exemption claimed for the sales as export sales was denied, the conclusion of the High Court that the sales to S.T.C. were inter State sales chargeable under section 5(1) of the C.S.T. Act was upheld. We are, therefore, of the opinion that this alternative contention urged by the learned counsel for the assessee has to be accepted and it has to be held that, since the sales effected by the assessees fall within one of the three exempted categories set out in section 9(1)(b), there can be no levy of purchase tax under section 9(1) of the Act. Faced with this situation, Shri Gupta, for the State, contended that this argument will not avail the assessees as, according to him, section 9(1)(b) of the Act has been de clared unconstitutional by this Court and is, therefore, non est. It is somewhat curious that such contention should come from the department which has charged the assessees on the basis of section 9(1)(b). Nevertheless, we proceed to consider this contention, as Sri Gupta says he can support the as sessments, alternatively, under section 6 of the Act, without any aid from section 9 at all. This contention, it seems to us, proceeds on a misconception of the issue before, and the ratio of the decision of this Court in the Goodyear case ; That was a case in which certain dealers, having purchased raw materials and manufactured goods inside the State despatched those goods outside the State otherwise than by way of sale. The State levied a purchase tax on the raw materials u/s 9(1). Thereupon the assessee contended that the levy of tax in the circumstances was in truth and substance the levy of a tax on the manufactured goods on the event of their consignment outside the State otherwise then by way of sale and that the State legislature was not compe tent to levy such a tax. This contention was accepted by this Court. What was declared unconstitutional by this Court was, therefore, only the levy of a tax where raw materials are purchased and used inside the State for the manufacture of finished goods which are then simply and without any sale despatched rather, consigned outside the State. There is, however, nothing unconstitutional about the two other consequences that flow on the language of the clause: one express and the other implied; one in favour of the Revenue and the other in favour of the assessee viz. 364 (1) that there will be a tax on the purchase of the raw materials if the manufactured goods are disposed of in the State itself otherwise than by way of sale; and (2) that there will be no tax on the purchase of the raw materials if the manufactured goods are despatched from the State consequent on a (i) local sale; (ii) inter State sale; or (iii) a sale in the course of export. It seems that these two aspects of section 9(1)(b) survive even after the judgment of this Court in the Goodyear case ; Shri Gupta, however, drew our attention to certain sentences in the headnote as well as the body of the above decision where certain wider expressions have been used, such as :"s. 9(1)(b) was ultra vires" "section 9(1) and 24(3) are constitutionally invalid" "section 9(1)(c) is ultra vires" and" . . the latter part of section 9(1)(b) is ultra vires and void". As pointed out above, section 9(1) is both a charging and exempting section. Even after the decision the charge under a part of clause (b) still survives and so also the exemption provided in the latter part of clause (b). But let us examine what the position would be if we hold, as con tended by Shri Gupta, that the effect of the decision is that the words "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 Central Sales tax Act, 1956" in section 9(1)(b) should be deemed to have been deleted from the statute. Shri Gupta contends that, if section 9(1) is left out of account for this reason, the pur chases of raw materials by the assessee would be liable to tax under section 6 of the Act. This argument will now be consid ered. The contention of Shri Gupta on this aspect proceeds thus: section 6, which is the charging section, both originally and after its retrospective amendment in 1990, imposes a tax on all sales and purchases effected by a dealer. In the original section, there was an Explanation which restricted the meaning of purchases for the purposes of the section. It provided that only purchases of declared goods, goods speci fied in 365 Schedule C and goods falling under section 9 would be part of the 'turnover '. In other words purchases which did not fall under section 9 i.e. which could not be taxed under section 9, could not be taxed then under section 6 either. But the 1990 amendment has omitted this Explanation retrospectively. The result is that all purchases are now taxable in the State. This contention is an interesting one but it overlooks the effect of section 2(p) read with section 15 of the Act. Though section 6, as amended, purports to make dealers liable to pay tax on their sales as well as purchases, the actual charge of tax, under section 15, is only imposed on the sales and purchases that form part of his taxable turnover. To ascertain what this one has to turn to section 2(p) of the Act. This definition includes, within the definition of 'turnover ' the purchase value of goods liable to tax under section 9 but, the goods presently in question are not laible to tax under section 9, not only as contended for the assessees and held by us above but also on the hypothesis as to the invalidity of section 9(1)(b) on which the present argument on behalf of the Revenue pro ceeds. The, definition also excludes from its purview "the sale proceeds of goods on which purchase tax is leviable under this Act" and "the purchase value of any goods on the sales of which tax is leviable under this Act". There can be no dispute that a tax is leviable under the Act on the goods in question when they are sold by a dealer and, indeed, the assessees would have had to pay tax on the sales made to the purchases effected by them but for a claim for exemption under section 24. The definition of 'turnover ' clearly postulates that goods are either to be taxed at the point of purchase or sale and the same transaction cannot be taxed as a sale in the hands of the dealer who sells to the assessees and as a purchase in the hands of the assessees. The only exception was the limited class of goods covered by section 9 but even this exception has been left out with complete retro spective effect. We do not, therefore, think that Sri Gupta is right in arguing that the purchase tax on the raw materi als can be upheld under section 6 itself even if the charge under section 9 fails. Explanation 6, inserted in section 2(p) read, with the provisoes inserted in section 24(1) w.e.f. 31.3.1983 and their amendment in 1986 have also a bearing in the cases of raw materials purchased for manufacture of guar gum and utensils where the purchase is exempt even if purchased by a registered dealer for the purpose of export within the meaning of section 5(3) of the C.S.T. Act, 1956 and some of the assessees before us are such manufacturers out we leave these amendments out of account as they are relevant only for purposes of later assessment years. The raw materials purchased by the assessees are goods on the sales of which tax is leviable under the Act though the assessees are 366 exempt from payment of such tax by reason of section 24(1). The value of the purchases cannot, therefore, be included Within the definition of "turnover" and, consequently, section 6 will not come to the aid of the Revenue to support the levy of the impugned sales. We may also make a reference to sub section (3) of s, 24, inserted with retrospective effect from 27.5.1971, which taxes the purchase of raw materials, when the dealer who purchases them had claimed exemption under section 24(1) but is found not to have used the goods for the purposes speci fied therein i.e. for the manufacture of goods for the purpose of (a) local sale; (b) inter State sale; or (c) sale in the course of export outside the territory of India within the meaning of sub section (1) of section 5 of the C.S.T. Act. This provision will not help the Revenue for two reasons: (i) As held earlier, while discussing the alternative con tention of Shri Agarwal,sales in the course of export within the meaning of section 5(1) of the C.S.T. Act, 1956. It may be pointed out that, after Act I of 1988, this provision does not tax purchases even in cases where the manufactured goods are disposed of only by way of 'penultimate sales falling under section 5(3) but not under section 5(1) of the C.S.T. Act, 1956, but this amendment came later and will have to be left out of account for the purpose of these cases; (ii) This provi sion has been held to be ultra vires in the Goodyear case (supra). We have, therefore, reached the conclusion that the purchases of raw materials by the assessees are not charge able to tax either u/s 9(1) or section 6 or section 24(3). The appeals and petitions are, therefore, allowed. The relevant assess ments to tax will be computed/modified accordingly. We, however, make no order regarding costs. R.S.S. Appeals & Petitions allowed.

Each of the appellants/petitioners is a registered dealer in the State of Haryana. He purchased certain raw materials in the State without paying purchase tax thereon, in view of the provision contained in section 24 of the Haryana Sales Tax Act, 1973. He manufactured certain goods in the State with the aid of the said raw materials. He then sold the manufactured goods to dealers who, in turn, export ed those goods out of India. On these facts the assessee claimed that he was not liable to pay the purchase tax on the raw materials, imposed under section 9(1) of the Sales Tax Act. The Department denied the relief on the short ground that the sales effected by the appellants were not sales in the course of export outside India within the meaning of section 5(1) of the . Ac cording to the Department, they were only "penultimate" sales, which may be deemed to be 'export sales ' because of the fiction created under section 5(3) of the C.S. Act 1956, but that was not enough to escape from the clutches of the charge in section 9(1). Accordingly, the claim of the asses see was rejected by the taxing authorities. The High Court also rejected the assessee 's petition. Before this Court, it was contended on behalf of the assessees that the effect of section 5(3) of the C.S.T. Act was to expand the scope of section 5(1) and include within the concept of sales in the course of export outside India also the 'penultimate ' sales; that a reference to, and the meaning of, section 5(1) could not be understood without a reference to section 5(3); and that as a result of section 5(3), such penultimate sales became export sales falling beyond the purview and competence of State legislature. It was further submitted that purchases of 344 raw material used in the manufacture of goods inside the State attracted the tax under section 9(1) unless those manufactured goods were dealt with in one of three ways; (1) disposed of by way of sale inside the State; (2) despatched to a place outside the State but by way of a sale in the course of inter State trade or commerce; or (3) despatched to a place outside the State but by way of sale in the course of export outside the territory of India. In the alternative, it was contended that as the asses see had sold goods to other parties in India, those sales must be either local sales or inter state sales; and that in any view of the matter, it would be a sale covered by the exceptions in section 9(1), and the assessee 's purchases of raw material would not attract tax under section 9(1). On the other hand, on behalf of the State it was, inter alia contended that there were no facts on record to sub stantiate the claim on behalf of the assessee that the sales in question fulfilled the conditions set out in section 5(3) of the C.S.T. Act. It was submitted that the assessees would be entitled to an exemption from the impugned purchase tax only if their sales were export Sales within the meaning of section 5(1) of the C.S.T. Act, which they admittedly were not. Alternatively, it was submitted that section 9(1)(b) had been declared unconstitutional by this Court in the Goodyear case ; and the assessee could seek no implied exemption from its language. Therefore, if section 9 was left out, the language of section 6 ( as amended) which brought to charge all purchases and sales in the State would be attracted and so the impugned taxation of purchases would be in order. Allowing the appeals and the petitions, this Court, HELD: (1) The language of section 9(1)(a)(ii) later section 9(1) (b) using the words "within the meaning of sub section (1) of section 5 of the " have to be given full meaning; in other words, the exemption under section 9(1) has to be restricted only to export sales failing within the scope of section 5(1). [360F G] Mohammed Sirajuddin vs State, [1975] Supp. 1 SCR 169, re ferred to. (2) The language of the two provisions simultaneously introduced in section 24(1)(a) and (b) makes interesting reading. The proviso to 345 clause (a) refers only to "sale by him in the course of export outside the territory of India within the meaning of section 5 of the " whereas the proviso to clause (b) refers to "sale by him in the course of export outside the territory of India within the meaning of sub section (3) of section 5 of the ". Thus, the statute, within the same provision, has made a distinction between a sale in the course of export within the meaning of section 5 and such a sale within the meaning of section 5(3). [361C D] (3) The High Court was right in concluding that the assessee was not entitled to the exemption under section 9 because the sales made by him were not sales in the course of export outside the territory of India within the meaning of section 5(1) of the . [362A] (4) What was declared unconstitutional by this Court when it declared section 9(1)(b) of the Act unconstitutional in Goodyear case was only the levy of a tax where raw mate rials were purchased and used inside the State for the manufacture of finished goods which were then simply and without any sale despatched rather, consigned outside the State. There is, however, nothing unconstitutional about the two other consequences that flow on the language of the clause: one express and the other implied; one in favour of the Revenue and the other in favour of the assessee, viz. (1) that there will be a tax on the purchase of the raw materials if the manufactured goods are disposed of in the State itself otherwise than by way of sale; and (2) that there will be no tax on the purchase of the raw materials if the manufactured goods are despatched from the State conse quent on a (i) local sale; (ii) inter State sale; or (iii) a sale in the course of export. These two aspects of section 9(1)(b) survive even after the judgment of this Court in the Goodyear case. [363G H; 364A C] Goodyear, case ; , explained. (5) Section 9(1) is both a charging and exempting sec tion. Even after the decision in Goodyear case the charge under a part of clause (b) still survives and so also the exemption provided in the latter part of clause (b). [364E; C] (6) Since the sales effected by the assessee fail within one of the three exempted categories set out in section 9(1)(b), there can be no levy of purchase tax under section 9(1) of the Sales Tax Act. [363C] (7) The purchase of raw materials by the assessees are not 346 chargeable to tax either under section 9(1)or section 6 or section 24(3). [366G]

it Petition No. 459 & 460 of 1988. (Under Article 32 of the Constitution of India). Harish N. Salve, S.V. Kamdar and M.N. Shroff for the Petitioners. P.K. Goswami, Additional Solicitor General, Kailash Vasdev and Ms. A Subhashini for the Respondents. The Judgement of the Court was delivered by S.C. AGRAWAL, J. These petitions under Article 32 of the Constitution raise a common question as to the validity of sub para (10) of para 218 of the Import & Export Policy for the period April, 1988 to March, 1991. 236 The petitioners in both these writ petitions are partnership firms carrying on business of import of rough diamonds and export of cut and polished diamonds. The Import & Export Policy for the period April 1978 to March 1979, in para 174, made provision for grant of certain import facilities to Export Houses which were registered in accordance with the provisions of the said Policy. One of the said facilities was grant of an Additional licence in terms of para 176 of the said Policy for an amount to be calculated at one third the f.o.b. value of the exports of select products made by the Export House in the year 1977 78. The petitioners submitted application for registration as Export Houses and for grant of Export House Certificate which would have entitled them to the grant of such Additional licence. The said applications of the petitioners were rejected by the authorities on the view that petitioners had failed to diversify their export of "Other Products" during the year 1977 78. The said order refusing the Export Certificate was challenged by the petitioners by filing writ petitions under Article 226 of the Constitution before the Bombay High Court. One of those writ petitions (filed by the petitioners in writ petition No. 460 of 1988 herein) was dismissed by a learned Single Judge of the High Court and the said petitioners filed an appeal before a Division Bench of the High Court. While the said appeal and the other writ petition (filed by the petitioners viz. writ petition No. 459 of 1988 herein) were pending in the Bombay High Court, this Court decided Civil Appeal No. 1423 of 1984, Union of India vs Rajnikant Brothers, and other connected matters by order dated April 18, 1985, wherein it was observed that there was no requirement of diversification of exports as a condition for the grant of Export House Certificates in theImport Policy for the year 1978 1979, and the authorities were directed to issue necessary Export Certificates for the year 1978 79. In that order this Court laid down the following conditioned: "Save and except items which are specifically banned under the prevalent import policy at the time of import, the respondents shall be entitled to import all other items whether canalised or otherwise in accordance with the relevant rules". The writ petition and the appeal were decided by the Bombay High Court in accordance with the aforesaid decision of this Court in the case of Union of India vs Rajnikant Brothers, (supra) and the High Court directed the authorities to grant Export House Certificates to the petitioners under the Import Policy 1978 79 within three months. While giving the said direction the High Court imposed a condition in 237 the same terms as laid down by this Court in its order dated April 18, 1985, referred to above. While construing the aforesaid direction contained in its order dated April 18, 1985, in Rajnikant Brothers case (supra) this Court has held that the grantees of the Additional licences were not only prohibited from importing items which were excluded under the Export Policy 1978 79 but also from importing items excluded under the Import Policy prevailing at the time of import and that the word "banned" was intended to take in terms which were banned altogether as well as items which were banned for import by the holder of an Additional licence. (See: Raj Prakash Chemicals Ltd. & Anr. vs Union of India & Ors. ; In Union of India vs M/s. Godrej Soaps Pvt. Ltd. & Anr., ; this Court construed the words 'whether canalised or otherwise ' contained in the order dated April 18, 1985, passed in Rajnikant Brothers case (supra) and it was observed that the Court would not know whether in the future certain canalised items could be imported directly by an Export House holding an Additional licence and that the possibility of a policy being framed in the future enabling an Export House holding an Additional licence to directly import items which are `non canalised ' and also item which are `canalised ' could not be ruled out and it was in this light that the Court can be said to have used the words "whether canalised or otherwise" in the order dated April 18, 1985. The matter was further clarified by this Court in D.Navinchandra & Co. Bombay & Anr. vs Union of India & Ors. , ; , wherein this Court has observed: "Analysing the said order, it is apparent, (1) that the importation that was permissible was of goods which were not specifically banned, (2) such banning must be under the prevalent import policy at the time of import, and (3) whether items which were canalised or uncanalised would be imported in accordance with the relevant rules. These conditions had to be fulfilled. The Court never did and could not have said that canalised items could be imported in any manner not permitted nor it could have given a go bye to canalisation policy". (P. 1000) In accordance with the directions given by the Bombay High Court the petitioners in writ petition No. 459 of 1988 herein were granted the Export House Certificate and were also granted an Additional licence dated November 16, 1987. Similarly, the petitioners in 238 writ petition No. 460 of 1988 herein were granted the Export House Certificate and an Additional licence dated August 31, 1987. These licences were valid for a period of 12 months and they contained the following endorsement: "This licence in valid for import of items permissible to Export Houses under the Additional Licence category as per para 176 of Import Policy for the period 1978 79 excluding those items which were banner in the policy for the period 1978 79 and those which have been specifically banned in the prevailing Import Policy, 1985 88, pursuant to and subject to the decision of the Supreme Court dated 5.3.1986 in M/s. Raj Prakash Chemicals case civil appeal No. 4978 of 1985; the decision dated 15.5.1986 in the case of M/s. Indo Afghan Chamber of Commerce writ petition No. 199 of 1986, the decision dated 12.9.86 in the case of M/s Godrej Soap Pvt. Ltd. civil appeal No. 3418/1986; the decision dated 12.9.1986 in the case of M/s Star Diamonds Company of India in civil misc. petitions No. 20021 22 of 1986 in civil appeal No. 2924/1984; and the decision dated 15.4.1987 in the writ petition No. 1483 of 1987 filed by M/s. D. Naveen Chandra & Company. xxx" It appears that the petitioners were not able to make imports under the said Additional licences till March 31, 1988. With effect from April 1, 1988, the Government of India issued the revised Import & Export Policy for the period April, 1988 to March 1991. The Import & Export Policy 1988 1991 also contains in para 214 and 215 provisions for grant of Additional licences to Export Houses. In para 215 of the said Policy certain additional facilities have been given in the matter of imports by Export Houses under Additional licences issued to them. In sub para(4) 215 it has been provided as under: "(4) Additional licences issued to Export Houses will also be valid for the import of the following items upto 10% (upto 15% in the case of Trading Houses) of the value of the licence for: (i) Import of technical designs, drawings and other technical documentation for a value not exceeding Rs. 10 lakhs in the case of Export Houses, and Rs. 25 lakhs in the case of Trading Houses; 239 (ii) import of items appearing in Appendices 3 Part A,3 Part B and 5 Part A subject to the following conditions: (a) that the c.i.f. value of a `single item ' shall not exceed 10% of the flexibility in value terms of Rs.10 lakhs, whichever is less: (b) where the value for import of a `single item ' on the basis of 10% as at (a) above, works out to less than Rupees one lakh, import would be permitted upto a value of Rs. 1 lakh, provided it is within the overall flexibility allowed on the licence: and (iii) import of non OGL capital goods (other than those appearing in Appendices 1 Part A and 8) without indigenous clearance, subject to the same conditions as stipulated at (ii) above, within the overall flexibility allowed to Export/Trading Houses". Paragraphs 217 and 218 of the said Policy provide for transitional arrangements. In para 217, it is prescribed that Export Trading House Certificates issued prior to April 1, 1988 would continue to be valid till the date of the expiry and the Export House Trading House can apply for fresh certificates, if they fulfil the eligibility conditions laid down in the policy and in cases where these Certificates are expiring on 31st March, 1988, and the applicants do not fulfil the eligibility conditions for recognition laid down under the revised Policy, recognition would be granted for one year only if they fulfil conditions for renewal of these Certificates as laid down in the Import Policy, 1985 88. Para 218 of the said Policy reads as under: "218. (1) Where the applications from Export Houses/Trading Houses for Additional licences have not been disposed of by 31st March of the proceeding licensing year, the rate of entitlement will be the same as permissible during the licensing year to which the application pertains, but the items to be allowed will be as per the Import Policy in force on the date of issue of the licence. (2) Additional licences already issued prior to 1.4.1988 shall continue to be `non transferable '. (3) The Additional licences issued prior to 1.4.1988 240 shall cease to be valid for import of items of raw materials, components and spares which appeared in Parts I and II of List 8, Appendix 6 of Import Export Policy, 1985 88, but are not now covered by Part I of List 8, Appendix 6 of this Policy. These licences will also cease to be valid for the import of items of capital goods which appeared in Appendix 1 Part B of Import Export Policy, 1985 88 but are now covered by Appendix 1 Part B of this Policy. (4) The Additional licences issued to Trading Houses prior to 1.4.1988 will cease to the valid for the import of items which appeared in Appendices 3 and 5 Part A of the Import Export Policy, 1985 88 but do not appear in Appendices 3 and 5 Part A of this Policy. (5) Additional licences issued to Export Houses/Trading Houses prior to 1.4.1988 shall cease to be valid for import of items of spares appearing in Appendices 2,3, 5 Part A, 8 and 10 of this Policy. (6) Notwithstanding the provisions contained in sub paras (3), (4) and (5) above, the restrictions will not apply to the extent the licence holders have already made firm commitments by irrevocable Letters of Credit opened and established through authorised dealers in foreign exchange before 1st April, 1988 but any extension of these letters of credit made after 31st March, 1988 shall be treated as `fresh commitments '. (7) Additional licences issued to Export Houses/Trading Houses prior to 1.4.1988 will also be valid within their overall value, for import of raw materials, components, consumables and spares appearing in Appendix 6, List 8, Part A of this Policy. Similarly, such licences will also be valid for import of items of capital goods now covered by Appendix 1, Part B of this Policy within their overall value. (8) REP licences held by Export Houses/Trading Houses and already endorsed prior to 1.4. 1988 shall cease to be valid for import of any item which could be imported under Open General Licence under the Import Export Policy, 1985 88 but are no longer so in this Policy. 241 (9) Additional licences issued to Export Houses/Trading Houses after 1.4.1988 on exports made during 1986 87 or earlier periods, will be `non transferable '. These licences will be valid for import of the items appearing in Part I of List 8, Appendix 6 of this Policy. These licences when issued to Trading Houses, will also be valid for import of the items appearing in Appendices 3 and 5 Part A of this Policy, subject to the conditions laid down in this regard, in the Import Export Policy, 1985 88. (10) Additional licences issued on Export Houses/Trading Houses prior to 1.4.1988, or issued after 1.4.1988 on exports made during 1986 87 or earlier periods, will not be eligible for the flexibilities in the import of items of raw materials, components and consumables covered by Appendices 3 and 5 Part A and items of non OGL capital goods (other than those covered by Appendices 1 Part A and 8) available under this Policy. However, these licences will be eligible for the endorsement (if not already endorsed) for the import of non OGL capital goods (other than those covered by Appendices 1 Part A and 8) as allowed against such licences in the Import Policy. 1985 88, subject to the conditions laid down therein provided the items sought to be imported against such licences continued to be non OGL (other than those covered by Appendices 1 Part A and 8) under this Policy". The grievance of the petitioners is confined to sub para (10) of para 218 which lays down that Additional licences issued to Export Houses/Trading Houses prior to April, 1, 1988, or issued after April 1, 1988, on exports made during 1986 87 or earlier periods, will not be eligible for the flexibilities in the import of items of raw materials, components and consumables covered by Appendices 3 and Part A, and items of non OGL capital goods (other than those covered by Appendices 1 Part A 8) available under the revised Policy. Appendix 3 Part A relates to raw materials, components, consumables, tools and spares (other than Iron and Steel and Ferro Alloys) and part B of the said Appendix deal with raw materials (Iron and Steel and Ferro Alloys). Part A of Appendix 5 contains the list of items import of which is canalised through public sector agencies. As a result of the aforesaid provision contained in sub para (10) of the para 218, the petitioners who were granted Additional licences prior to April 1, 1988, cannot avail the flexibilities in import of items granted under 242 clauses (ii) and (iii) of sub para (4) of para 215 of the Import Policy 1988 1991. On behalf of the petitioners it has been urged by Shri Salve that sub para (10) of para 218 of the Import & Export Policy 1988 1991 arbitrarily discriminates between Export Houses who were issued Additional licences prior to April, 1 1988, and Export Houses who were issued Additional licences on or after April 1, 1988 in as much as the Export Houses who were issued Additional licences prior to April 1, 1988, on the basis of exports made during 1986 87 or earlier periods have been denied the facilities which have been given to Export Houses who were issued Additional licences on or April 1, 1988, on the basis of exports made during the period subsequent to 1986 87. It has been submitted that all Export houses who have been granted Additional licences constitute a single class and that there is no basis for classifying such Export Houses into two different categories on the basis of the date of issuance of the Additional Licences or on the basis of the period of the exports against which such licences have been issued and that such a classification has no connection whatsoever with the object sought to be achieved by the Import & Export Policy 1988 91. On behalf of the respondents it has been submitted by the learned Additional Solicitor General that there is no similarity between the petitioners who have been granted Additional licences on the basis of their exports made during the period 1977 78 in accordance with the Import Policy 1978 79 and the Export Houses who would be granted Additional licences on or after April 1, 1988, under the Import & Export Policy 1988 91 inasmuch as the conditions of eligibility for grant of such licences and the value of licences under the Import & Export Policy 1978 79 were quite different from those contained in the Import & Export Policy 1988 91. It has been urged that under Import & Export Policy 1978 79 Additional licences were to be given on the basis of one third of the f.o.b. value of the exports made in 1977 78 whereas under Import & Export Policy 1988 91 Additional licences are to be given on the basis of not foreign exchange earnings from the exports actually made and the value of such Additional licence is only 10 to 12% of the net foreign exchange earnings. As regards the right to equality guaranteed under Article 14 the position is well settled that the said right ensures equality amongst equals and its aim is to protect persons similarly placed against discriminatory treatment. It means that all persons similarly circumstan 243 ced shall be treated alike both in privileges conferred and liabilities imposed. Conversely discrimination may result if persons dissimilarly situate are treated equally. Even amongst persons similarly situate differential treatment would be permissible between one class and the other. In that event it is necessary that the differential treatment should be founded on an intelligible differentia which distinguishes persons or things that are grouped together from others left out of the group and that differential must have a rational relation to the object sought to be achieved by the statute in question. The petitioners, in order to successfully invoke the right guaranteed under Article 14 of the Constitution, will have to establish that they and the Export Houses which were issued Additional licences under the Import Policy 1988 91 are similarly situate. A close examination of the Import & Export Policy 1978 79 under which the petitioners have been granted the Additional licences and the Import & Export Policy 1988 91 shows that there is material difference between the conditions for grant of Additional licences under Import Policy 1978 79 and the conditions for grant of such licences under the Import Policy 1988 91 and it cannot be said that the petitioners who have been granted Additional licences under the Import & Export Policy 1978 79 and the Export & Import Policy 1988 91 are persons similarly circumstanced. Under the Import & Export Policy 1978 79, there were two requirements for grant of Additional license: one was the condition as to eligibility for registration as an Export House and grant of Export House Certificates; and the other was the basis for issuing the Additional licences to Export House which had been granted Export House Certificates. In Para 165 of the said Policy eligibility for grant of Export House Certificates was to be determined on the basis of the export actually made in the three year base period 1975 76, 1976 77 and 1977 78 and in para 166 it was laid down that annual average f.o.b. value of exports in the prescribed base period of select products should not be less than Rs. One crore or those of non select products Rs. Five crores, but in the case of a small scale unit or a consortium of small scale units, the said minimum limit was reduced to Rs. 25 lakhs for select products and Rs. 2 crores for non select products. In para 176 of the said Policy it was laid down that the value of the Additional licences to be granted for 1978 79 would be calculated at one third of the f.o.b. value of the export of select products made in 1977 78 and manufactured by the small scale and cottage industries 244 plus 5% of the f.o.b. value of other exports of select products made in the same year. In other words, under the Import & Export Policy of 1978 79 the basis for grant of Export House Certificate as well as grant of Additional licences to Export Houses was the f.o.b. value of the exports. Under the Import & Export Policy 1988 91 provision with regard to eligibility for the grant of Export House/Trading House Certificate is contained in para 212 which prescribed that the said eligibility shall be determined on the basis of the net foreign exchange (NEF) earnings from the export actually made in preceding three licensing years termed as 'the Base period '. The expression 'net foreign exchange earnings ' has been defined as the total f.o.b. value of admissible exports minus the c.i.f. value of Advance/Imprest (including Diamond Imprest/DTC Imperest) Licences/Import Export Pass Books (excluding Special Imprest Import Export Pass Book) if any issued, and the REP licences issued or the eligibility thereto, during the preceding three licensing years. Among the conditions for eligibility for grant of such Certificates are that the annual average NFE earnings in the prescribed base period should not be less than Rs. 2 crores in the case of Export House and Rs. 10 crores in the case of Trading Houses and the NEF earnings in none of the three years of the base period should be less than 25% of the minimum average NFE earnings prescribed. For determining the eligibility of the products manufactured by small scale and cottage sector industries are to be reckoned at twice the actual NFE earnings. In para 215 of the said Policy, it is providedthat the Export House/Trading House would be eligible to Additional licences on the basis of the admissible exports made in the preceding licensing year and that the value of these licences will be calculated at 10% of the NFE earnings on the total eligible exports made in the preceding licensing year and that this percentage shall be 12% in cases where an Export/Trading House is able to achieve a minimum growth of 10% in term of NFE realisation in the previous year, over and above the year preceding the same. This indicates that under the Import & Export Policy 1988 91 for the purposeof grant of Export House Certificate as well as Additional licences the emphasis is on the net foreign exchange earnings made by the Export House, which means that the value of the imports made by the Import House for the purpose of exporting goods is to be excluded from the f.o.b. value of exports. That apart even the value of the Additional licences which can be issued under the Import & Export Policy 1988 91 on the basis of NFE earnings is much less viz. 10% as against 33.33% of f.o.b. value under the Import & Export Policy 1978 79. The said 10% value can be 245 increased to 12% in cases where the Export House is able to achieve a minimum growth of 10% in terms of realisation in the previous year, over the above the year preceding the same. The aforesaid examination of the provisions contained in the Import & Export Policy 1978 79 and the Import & Export Policy 1988 91 shows that while in the Import & Export Policy 1978 79 the emphasis was only on the f.o.b. value of exports without taking into account the outgo of foreign exchange in importing the goods required for achieving the export by an Export House and Additional licences were granted for a much larger amount at a high percentage on the basis of the f.o.b. value of the exports, in the Import & Export Policy 1988 91 there is a more realistic appraisal of actual benefit to country 's economy by the exports by taking into account the net foreign exchange earnings after deducting the value of the imports and additional licences are issued on the basis of the net foreign exchange earnings for a much lesser value on a smaller percentage. The petitioners who were granted Additional licences to the extent of 33.33% of the f.o.b. value of the exports made them during the year 1977 78 cannot, therefore, be said to be persons similarly circumstanced as Export House who exported goods in the year 1987 88 and in subsequent years and obtain Additional licences for a much lesser value under the Import Policy 1988 91 on the basis of the net foreign exchange earnings. The provisions conferring flexibility in the matter of imports contained in sub para (4) of para 215 of the Import & Export Policy 1988 91 are intended to give an incentive to Export Houses to increase the exports in a way as to enhance the net foreign exchange earnings of the country. The petitioner were no granted Additional licences on the basis of net foreign exchange earnings and they have secured the Additional licences on the basis of the f.o.b. value of the exports, without taking into account the value of the goods imported by them for achieving the exports. They cannot claim to be entitled to the same facilities that have been provided to Export Houses who are granted Additional licences under the Import & Export Policy 1988 91. Shri H.N. Salve, has, however, urged that in view of the decision of this Court in D. Navinchandra & Co. case (supra) the Export Houses who were granted Additional licences under the Import & Export Policy 1978 79 have to be treated at par with Export Houses who have been granted Additional licences under the Import & Export Policy for the subsequent years and since there has been relaxation in the matter of policy of canalisation of imports under sub para (4) of 246 para 215 in respect of Additional licences granted to Export Houses under the Import & Export Policy 1988 91, the petitioners are also entitled to a similar relaxation. We are unable to agree with this contention. In D. navinchandra & Co. case (supra) this Court has not laid down that Export Houses, like the petitioners, who are granted Additional licences on the basis of the order Dated April 18, 1985, are to be treated at par with Export Houses who are granted Additional licences under Import & Export Policy prevalent at the time of import. In that case this Court, while explaining the background in which the order dated April 18, 1985, was passed, has observed: "It has to be borne in mind that basic background under which the Rajnikant 's decision was rendered, the Export Houses had been refused Export House Certificates because it was insisted that they should have diversified their export and that was a condition for the grant or entitlement of an export house certificate. it was found and it is common ground now that was wrong. Therefore, the wrong was undone. Those who had been denied Export House Certificates on that wrong ground were put back to the position as far as it could be if that wrong had not been done. To do so, the Custom authorities and Govt. authorities were directed to issue necessary Export House Certificates for the year 1978 79 though the order was passed in April, 1985. This was a measure of restitution, but the Court while doing so, ensured that nothing illegal was done." (P.1000) After referring to the decision in Raj Prakash Chemicals Ltd. (supra) this Court has stressed: "The items had to pass to two tests, firstly, they should have been importable under the import policy 1978 79 and secondly they should also have been importable under the import policy 1985 88 in terms of the Order dated 18th April, 1985, and if one may add, in such terms 'in accordance with the import rules ' whether canalised or not canalised." (P. 1001) This Court has gone on to emphasise: "It must be emphasised that in the Order dated 18th April, 1985, this Court did not do away with canalisation. That 247 was not the issue before this Court. The expression 'whether canalised or not canalised ' was to include both. This Court did not say that canalised items could be imported directly by the importers ignoring the canalisation process. We are of the opinion that this Court did not say that canalisation could be ignored. That was not the issue. High public policy, it must be emphasised, It involved in the scheme of canalisation." (Pages 1001 2) Shri Salve has placed reliance on the following observations of this Court in this case: " Canalised items are those items which are ordinarily open to import only through a public sector agency. Although generally these are importable through public section agencies, it is permissible for any import policy to provide an exception to the rule and to declare that an importer might import a canalised item directly. It is in that sense and that sense only that the Court could have intended to define the entitlement of diamond exporters. They would be entitled to import items which were canalised or not if the import policy prevailing at the time of import permitted them to import items falling under such category. This was also viewed in that light in the case of Indo Afghan Chambers of Commerce (supra). " These observations only indicate that import of the canalised items under Additional licences issued to Export Houses, like the petitioners, would be permissible if the import policy prevailing at the time of import permits them to import such items. In other words it would depend on the terms of the import policy prevailing at the time of import. The decision in Indo Afghan Chambers of Commerce vs Union of India, to which reference has been made, is also to the same effect. In fact case Export Houses, like the petitioners, wanted to import to Dry Fruits under the Additional licences issued to them. Under the Import POLIcy 1985 88 prevailing at the time of such import, the import of Dry Fruits was permissible only by dealers engaged in the trade of stocking and selling Dry Fruits. It was held that the Export Hoses could not import Dry Fruits in view of the said restriction placed in the Import Policy 1985 88. The decision of this Court in D. Navinchandra & Co. case (supra) reiterates that the rights of the petitioners under the Additional licences issued to them would be governed by the terms of the import policy prevailing at the time of import. 248 Here we find that in the Import & Export Policy 1988 91 there has been relaxation to a limited extent in respect of import by Export Houses who are granted Additional licences under the said Policy on the basis of their exports during that period 1987 88 and subsequent periods. Since the basis for the grant of Additional licences which are entitled to this relaxation is different from the basis on which Additional licences were granted to the petitioners, the petitioners cannot claim the benefit of the same relaxation and assail the validity of sub para (10) of para 218 of the Import & Export Policy 1988 91. Shri Salve has invited our attention to the Import Licence dated November 21, 1988 issued in favour of M/s. Suraj Diamonds Industries Pvt. Ltd wherein it is stated that this licence is valid for import of items as per para 215 of Import & Export Policy 1988 91 subject to restrictions/conditions laid down therein. It has been submitted that this licence has also been issued under the Import & Export Policy 1978 79 on the basis of the f.o.b. value of exports. It has been urged that the petitioners as well as the said license, namely, M/s. Suraj Diamonds Industries Pvt. Ltd. are persons similarly situate and whereas M/s. Suraj Diamonds Industries Pvt. Ltd. have been granted an Additional licence whereunder, it is permissible to import items as per para 215 of the Import & Export Policy 1988 91, the said facility has been denied to the petitioners and that the petitioners have been subjected to arbitrary and hostile discrimination. The learned Additional solicitor General had pointed out the said licence to M/s. Suraj Diamonds Industries Pvt. Ltd. was used under a mistake and the said mistake has been rectified on 2nd December, 1988, i.e., within 10 days of the issue of the said licence. In view of the fact that the licence issued in favour of M/s. Suraj Diamonds Industries was issued under a mistake and the said mistake has been rectified, it cannot be said that the petitioners have been subjected to hostile discrimination vis a vis other Export House similarly situate. Before we conclude, we may take note of the recent decision of this Court in B. Vijay Kumar & Co. etc. vs Collector of Central Excise and Customs, ; The appellants therein had been granted Additional Import licence in pursuance of this Court 's order dated April 18, 1985 in Rajnikant Brothers, case (supra) and had imported canalised items under the said licence. The goods were not cleared by the customs authorities and the Collector of Customs imposed penalty and passed orders for confiscation of the goods and permitted the appellants to take delivery of good on payment of redemption fine. The Customs, Excise & Gold (Control) Appellate Tri 249 bunal (hereinafter referred to as 'the Appellate Tribunal ') on appeal, while upholding the order of imposition of redemption fine, set aside the order of Collector imposing penalty. In view of the special facts and circumstances of the case and specially having regard to the findings of the Appellate Tribunal that the appellants imported canalised items bona fide, this Court set aside the orders of the Collector and the Appellate Tribunal with regard to confiscation of goods and imposition of redemption fine without dealing with the submissions of learned counsel for the parties with regard to the interpretation and the effect of the earlier judgments of this Court in Raj Prakash Chemicals case (supra), Indo Afghan case (supra), Godrej Soap case (supra) and D. Navinchandra & Co. case (supra). This decision is, therefore, a decision based on the facts of that particular case only. As a result of the aforesaid discussion it must be held that the petitioners have failed to make out a case for interference by this Court under Article 32 of the Constitution. As indicated earlier, the licences issued to the petitioners were valid for a period of twelve months and the said period has expired during the pendency of these writ petitions. By order dated may 3, 1988, this Court, whiledirecting that notice be issued had further directed that the matter be listed on July 20, 1988, and in these circumstances this Court did not pass any interim order for stay. The writ petitions could not, however, be heard as per the aforesaid directions. Since the matter has been pending in this Court and the Additional licences issued to the petitioners have expired in the meanwhile we consider it appropriate that the period of validity of the said licences should be extended so that the petitioners can avail the same and are able to import the goods which can be so imported under the prevailing Import Policy. It is, therefore, directed that the period of validity of the Additional licences that have been granted to the petitioners under Import & Export Policy 1978 79 may be extended by six months from the date of such extension. Subject to the aforesaid observations, the writ petitions are dismissed. The parties are left to bear their own costs. T.N.A. Petitions dismissed.

The petitioners, carrying,on import export of diamonds, field applications for registration as Export Houses and grant of Additional Import Licences under Para 174 and 176 of the Import and Export Policy 1978 79 which were rejected by the authorities on the ground that they have failed to diversify their exports of "other products" during the year 1977 78. They challenged the order of the authorities by filing writ petitions before the Bombay High Court under Article 226 of the Constitution. One of the petitions was dismissed by a learned single judge of the High Court and the said petitions filed an appeal before a Division Bench of the High Court. During the pendency of the appeal 233 and the writ petition,the Supreme Court by its order dated April 18, 1985 decided the case of Union of India vs Rajnikant Bros. holding that there was no requirement of diversification of exports as a condition for the grant of Export Houses Certificates in the Import Export Policy for the year 1978 79 but the grantee of Additional Licences were not only prohibited from importing items which were excluded in the Export Policy 1978 79 but also from importing items excluded under the Import Policy prevailing at the time import. The High Court decided the cases of the petitioners in accordance with the decision of this Court in Union of India vs Rajnikant Bros. Purusant to the decision of the Bombay High Court petitioners were granted Export House Certificates and Additional Import Licences which were valid for 12 months, with the same condition as provided by this Court in its order dated April18, 1985 in the case of Rajnikant. However, the petitioners were not able to make imports under the said licences till 31st March,1988.On 1.4.1988, the Government of India issued a revised Export and Import Policy for the period 1988 91.Under Para 215 of the said revised policy certain flexibilities were granted in the matter of imports to the grantees of Additional Import Licences. However, under para 218(10) of the said revised Policy the holdersof the Additional Import Licences issuedprior to 1.4.1988 were made ineligible for the benefit of flexibilities in import as contained in para 215(4). Since ,the petitioners were holding licences issued prior to 1.4.1988 they could not avail the flexibilities in import as contained in Para 215 of the 1988 91 Policy. Consequently, they filed writ petitions in this Court challenging the validity of para218(10) of the 1988 91 Policy contending (i) that all the Export Houses who were granted Additional Licences constitute at single class and their classification on the basis of date or on the basis of period of exports has no connection with the object sought to be achieved by the 1988 91 policy; (ii) that Para 218(10) of 1988 91 Policy arbitrarily discriminates between Export Houses who were issued Additional Licences prior to 1.4.1988 since the benefits ofPara 214 of 1988 91 Policy were conferred only on the latter; (iii) that in view of the judgement of this Court in C.Naveenchandra and Co. vs Union of India, [1987] 2 S.C.R. 989 the petitioners should be treated at par with the grantees of Additional Licences under the Export Policy for the subsequent years and since there has been relaxation in the matter of policy of canalisation of imports under Para 215(4) in respect Additional Licences granted to Export Houses under the 1988 91 Policy, the petitioners were also entitled to a similar relaxation. Dismissing the petitions, this Court, 234 HELD: 1. The right to equality guaranteed under Article 14 ensures equality amongst equals and its aim is to protect persons similarly placed against discriminatory treatment. It means that all persons similarly circumstance shall be treated alike both in privileges conferred and liabilities imposed. Conversely discrimination may result if persons dissimilarily situate are treated equally. Even amongst persons similarly situate differential treatment wouldbe permissible between one class and the other. In that event it is necessary that the differential treatment should be founded on an intelligible differentia which distinguishes persons or things that are grouped together from others left out of the group and that differentia must have a rational relation tothe object sought to be achieved by the statute in question. [242H, 243A B] 2. A close examination of the Import & Export Policy 1978 79 and the Import & Export Policy 1988 91 shows that there is material difference between the conditions for grant of Additional licences under Import Policy 1978 79 and the conditions for grant of such licences under the Import Policy 1988 91. While in the Import & Export policy 1978 79 the emphasis was only on the f.o.b. value of exports without taking into account the outgo of foreign exchange in importing the goods required for achieving the exports by an Export House and Additional licences were granted for a much larger amount at a higher percentage on the basis of the f.o.b.value of the exports, where as in the Import & Export Policy 1988 91 there is a more realistic appraisal of actual benefit to the country ' economy by the exports by taking into account the net foreign exchange earnings after deducting the value of the imports and additional licences are issued on the basis of the net foreign exchange earnings for a much lesser value on a smaller percentage. Therefore, the basis for the grant of Additional Licences which are entitled to relaxation in import under the 1988 91 Policy is different from the basis on which Additional Licences were granted under the 1978 79 policy. [243C, 245B C,248A] 3. The petitioners were not granted Additional Licences on the basis of net foreign exchange earnings and they have secured the Additional Licences on the basis of f.o.b. value of the exports, without taking into account the value of goods imported by them for achieving the exports. It cannot be said that the petitioners who have been granted Additional Licences under the 1978 79 Policy and the Export Houses who were granted Additional Licences under the 1988 91 Policy are persons similarly circumstanced. Therefore the petitioners cannot claim the same facilities that have been provided to Export Houses who are granted Additional Licences under the 1988 91 Policy. Hence they have failed to make out a case for interference by this Court under 235 Article 32 and consequently they cannot assail the validity of Para 218(10) of the Import & Export Policy 1988 91.[245E, 243D, 245F, 249C, 248B] 4. Export Houses, like the petitioners, who were granted Additional Licences on the basis of order of this Court dated April 18, 1985 are not to be treated at par with Export Houses who are granted Additional Licences under the Import & Export Policy prevalent at the time of import. Import of canalised items under Additional Licences issued to the petitioners would be permissible if the import policy prevailing at the time of import permits them to import such items. Therefore the rights of the petitioners under the Additional Licences issued to them would be governed by the terms of the Import Policy prevailing at the time of import.[246A B, 247E, 247H] D. Naveenchandra & Co. Bombay & Anr. vs Union of India Raj Prakash Chemicals Ltd. & Anr. vs Union of India & Ors. , ; ; Union of India vs Godrej Soaps Pvt . Ltd., [1986]3 S.C.R. 771; Union of India vs Rajnikant Bros., Civil Appeal No. 1423 of 1984 decided on 18.4.1985; Indo Afghan Chamber of Commerce vs Union of India, , referred to. B. Vijay Kumar & Co. etc. vs Collector of Central Excise and Customs, ; ; held inapplicable.

ivil Misc. Petition No. 15001 of 1989. AND I.A. No. 1 of 1989 in S.L.P. No. 12288 of 1984. From the Judgment and Order dated 20.4.1984 of the Andhra Pradesh High Court Appeal No. 472 of 1976. K. Mahadeva Reddy, Ms. Manjul Gupta, T.V.S.N. Chari and A. Subba Rao for the Petitioner. K. Ram Kumar, S.A. Ahmed, Tanweer Abdul and Mohan Pandey for the Respondents. The following Order of the Court was delivered: 540 The special leave petition under Article 136 of the Constitution is directed against the affirming judgment of the Andhra Pradesh High Court in a suit for title and injunction. In view of the fact that a petition of compromise in respect of the entire subject matter of litigation has been filed in this Court it is unnecessary to refer to the facts leading to the litigation. We shall, therefore, confine the discussion to matters pertinent to the compromise. Subbamma adopted one K.V Seshiah. Seshiah married two wives. Through the first wife he had a son born to him by name Sudarshan Gupta and through the second another son by name Anand Babu. In February, 1985, during the pendency of the special leave petition the adoptive mother died. Sudarshan and Anand Babu led claim to the entire property of Subbamma exclusively to each of them under two different wills said to be by subbamma and each contended that the other will was a forged one. With the death of the adoptive mother, Seshiah led claim to the entire property as heir. While each of the parties had taken such stand in the litigation a compromise was brought about on 21.8.1987 between the father and his two sons and the same was filed in this Court. The terms of the compromise stipulated payment of Rs. 1 lakh by the father to each of his two sons in lieu of relinquishment of their interest. When the matter was listed before the Court for recording of the compromise, Sudarshan Gupta, second respondent herein, maintained that he had not been paid Rs.1 lakh as stipulated and he had no intention to accept the compromise. The question as to recording of the compromise was taken up by the Court and parties have been heard. One of the stipulation in the compromise deed which has admittedly been signed by the father and his two sons stipulates: "The petitioner has given to the second and third respondents (the two sons) an amount of Rs. 1 lakh each and the second and third respondents have received the same." In the face of such a statement in the compromise deed signed by the parties the second respondent had disputed the fact of payment and has, in the meantime, alienated about 81 acres of property which constitutes the subject matter of dispute to third parties. The alienees 541 have now been brought on record unders order of this Court. We have heard counsel for the original parties as also the alienees. The alienations are for about a purported consideration of Rs. 4 lakhs. The sale deeds indicate that a sum of Rs. 1 lakh had been received earlier and a net amount of Rs.77,124 out of the consideration money under these documents has been paid before the registering authority. The alienees have admittedly been in possession of the property from the date of the sales which is more than three years ' old by now. Admittedly, the transfers are pendente lite. In fact, if the compromise is valid and binding the alienor respondent No. 2 had no interest in the property to part with in view of the stipulation in the compromise that on receipt of Rs. 1 lakh he relinquished his entire interest in the property. The alienees have made an attempt to hold out that there were agreements for sale prior to the compromise for which there is no acceptable evidence. We think we have to find that the alienees had no interest in the property prior to the compromise and we must hold that the sale deeds are subsequent to 21.8.1987. Mr Ram Kumar who appeared for the second respondent, apart from maintaining that his client has not received the sum of Rs.1 lakh has not been able to point out any justification as to why the compromise should not be acted upon and on the basis of it the litigation may not be disposed of. The factum of compromise is not in dispute. Respondent No. 2 and his counsel Mr. Ram Kumar have accepted the fact that the parties have signed the compromise petition which contain terms which they had accepted and all parties have accepted the document of compromise to be genuine. Counsel for the alienees has taken the stand that the said alienations are valid and the transferees have become owners of the property and has even maintained that there have been improvements of the property by the alienees. He sought to rely on certain decisions which on being referred to were found to be totally inapplicable to the facts of the case. On the other hand, we find that a similar question arose before the Orissa High Court in the case of Bhoja Govinda Maikap & Anr. vs Janaki Dei & Ors., AIR (1980) Ori. 108 where the power of the Court under Order 23, rule 3 of the Code of Civil Procedure in the face of an objection of one of the parties to the compromise was considered. Relying upon several authorities of different High Courts and one of the Privy Council referred to in the decision, the High 542 Court held that once the Court was satisfied that there was a compromise it was for the Court to record the same and no option lay before the Court to act otherwise. We are in accord with the principle indicated in the said decision and are of the view that as the compromise petition is genuine and lawful the same has to be acted upon. We direct that the compromise petition shall be accepted and in terms thereof the suit shall be disposed of and the terms of the compromise shall form part of the order to be drawn up in this Court for disposing of the special leave petition. With a view to settling all equities between the parties and with the consent of Seshiah who is present in Court, and counsel for the sons and after hearing the Advocate for the alienees, we make the following directions: 1. Seshaiah shall pay a sum of Rs. 1 lakh more to Sudarshan Gupta within eight weeks from today. This amount shall be deposited in the Registry of this Court within the time indicated and Sudarshan Gupta shall be free to withdraw the amount. Rs 77,124 being the amount paid by the alienees before the Sub Registrar in respect of the sale deeds shall be deposited within the same period in the Trial Court and the alienees of the different sale deeds would be entitled to withdraw the amounts on the basis of the record made by the Sub Registrar on each of the sale deeds. The alienees have no right created under the alleged sale deeds. Their possession is without authority of law. Ordinarily, they would have been liable to account for mesne profits. In view of the fact that there was the allegation of payment of Rs. 1 lakh to Sudarshan Gupta which we have not investigated and to meet the further allegation that some improvements have been made to the property which too we have not gone into, we direct that the mesne profits shall be set off against the same. Under orders of this Court security has been furnished for mesne profits. In view of the aforesaid direction, the security furnished in the Trial Court shall stand discharged and the alienees will have no liability to account for mesne profits. We declare and clarify that none of the sale deeds is valid and none of the alienees has any interest in the aforesaid property. 543 4. The alienees shall deliver vacant possession of the property by 30th of April, 1991, to Seshiah and in the event of failure to do so the Trial Court is directed by our present order to deliver vacant possession of the entire property in suit including those which are covered by the sale deeds in favour of the alienees to Seshiah within one month therefrom. If necessary, the Trial Court may appoint a Commissioner and take police help for executing this order and such cost shall ultimately be borne by the defaulting alienees but may initially be met by Seshiah. There would be no order for costs.

Respondent No. 1 adopted petitioner appellant, who married two wives and through the first wife he had a son, the respondent No. 2 and through the second, another son, the respondent No. 3. During the pendency of the special leave petition the adoptive mother of appellant died. Respondent 2 and 3 laid claim to the entire property of respondent No. 1 exclusively under two different wills said to be by the respondent No. 1 and each contended that the other will was a forged one. On the death of the adoptive mother, the appellant laid claim to her entire property as heir. While each of the parties had taken such stand, in the litigation a compromise was brought about on 21.8.1987 between the appellant and his two sons, the respondents 2 and 3 and the same was filed in this Court and in terms of the compromise the appellant, to make payment of Rs. 1 lakh to each of his two sons in lieu of relinquishment of their interest. When the matter was listed for recording the compromise, the respondent No. 2 contended that as he had not been paid Rs. 1 lakh as stipulated in the compromise, in the meanwhile he had alienated about 81 acres of the suit properties to the third parties. The alienees had been also impleaded as parties under the orders of this Court. Disposing of the petition, this Court, HELD: 1. Once the Court was satisfied that there was a compromise it was for the Court to record the same and no option lay before the Court to act otherwise. [542A B] 539 2. As the compromise petition in the instant case is genuine nd lawful the same has to be acted upon. [542B] 3. It is directed that the compromise petition shall be accepted and in terms thereof the suit shall be disposed of and the terms of the compromise shall form part of the order to be drawn up in this Court for disposing of the special leave petition. [542B C] 4. With a view to settling all equities between the parties, directed that the appellant to pay a sum of Rs.1 lakh more to respondent No. 2 within eight weeks. Rs. 77,124 being the amount paid by the alienees before the Sub Registrar in respect of the sale deeds shall be deposited. [542C E] 5. The alienees have no right created under the alleged sale deeds. Their possession is without authority of law and clarified that none of the sale deeds is valid. [542F H] 6. The alienees shall deliver vacant possession of the property by 30th of April, 1991, and in the event of failure to do so the Trial Court directed to deliver vacant possession. [543A B] Bhoja Govinda Maikap & Anr. vs Janaki Dei & Ors., , approved.

Special Leave Petition Nos. 823 24 of 1990. From the Judgement and Order dated 6.10.1989 of the Karnataka High Court W.A. Nos. 321 & 322 of 1989. S.R. Bhat for the Petitioners. R.N. Narasimha Murthy, K.H. Nobin Singh, M. Veerappa and S.N. Bhatt for the Respondents. The following Order of the Court was delivered: A few facts are necessary for the disposal of these petitions. The petitioners were the owners of certain lands which were acquired by the respondents under the provisions of Sections 17 and 19 of the Bangalore Development Act, 1976 (hereinafter referred to as "the Bangalore Act"). Under the provisions of Section 36 of the Bangalore Act, where the acquisitions, otherwise than by agreement, it will be regulated by the provisions , as far they are applicable, of the Land Acquisition Act, 1894 (hereinafter referred to as "the Land Acquisition Act"). Section 11 A of the Land Acquisition Act, which section was included in the said Act in 1984 as set out hereinafter, very briefly states, provides that the Collector must make his award within two years from the date of the publication of the declaration and that if no award is made within that period, the entire proceedings for acqui 565 sition of the land shall lapse. Under the Explanation to the first proviso to Section 11 A,"the period during which any action or proceeding to be taken in pursuance of the said declaration is stayed by an order of a Court shall be excluded". It was, inter alia contended by the petitioners that as the awards in these cases has not been made within two years of the notification making the declaration under Section 4 of the Land Acquisition Act, the entire acquisition proceedings had lapsed. That contention was repelled along with certain other contentions in the judgment of the High Court which is sought to be impugned before us. The relevant dates which have to be borne in mind in this connection, are as follows: The notification making the declaration under Section 4 of the Land Acquisition Act in respect of the lands in question was made on September 20, 1977. On September 20, 1984 Section 11 A which introduced into the Land, Acquisition Act by the Land Acquisition (Amendment) Act, 1984, was brought into force. Under the first proviso to Section 11 A it was prescribed that where the said declaration (under Section 4 of the Land Acquisition Act) has been published before the commencement of the Land Acquisition (Amendment) Act, 1984, the award must be made within a period of two years from such commencement. Thus, the award should have been made within two years from September 20, 1984. On September 11, 1985, the petitioners obtained an interim order from this Court directing status quo with regard to the possession of the lands in question in Special Leave Petition No. 294 of 1985 preferred against the order of the Karnataka High Court dated August 14, 1984, with which we are not directly concerned here. The said Special Leave Petition No.294 of 1985 was dismissed on April 29, 1987. On December 16 17, 1987, two writ petitions were field by the respective petitioners in the Karnataka High Court challenging the acquisition on the ground that the awards were not made within the stipulated time. In these two writ petitions, the Karnataka High Court granted interim stay of further proceedings in respect of the acquisition of the said lands. These petitions were dismissed by a learned Single Judge of that High Court on November 29, 1988. Appeals against the decision of a learned Single Judge were dismissed by the Karnataka High Court on October 6, 1989, by a Division Bench of that High Court. The petitioners preferred these Special Leave Petitions, namely S.L.P. Nos. 823 and 824 of 1990 against the decision of the Devision Bench of that High Court, and obtained an interim stay of dispossession therein. Whatever the ultimate effect of the stay orders, in view of the provisions of Section 11 A of the Land Acquisition Act, to which we have already referred 566 earlier, it is beyond dispute that the fact of the stay orders was highly material in the determination of these Special Leave Petitions. Curiously enough, there is no reference in the Special Leave Petitions to any to the stay orders and we came to know about these orders only when the respondents appeared in response to the notice and filed their counter affidavit. In our view, the said interim orders have a direct bearing on the question raised and the non disclosure of the same certainly amounts to suppression of material facts. On this ground alone, the Special Leave Petitions are liable to be rejected. It is well settled in law that the relief under Article 136 of the Constitution is discretionary and a petitioner who approaches this Court for such relief must come with frank and full disclosure of facts. If he fails to do so and suppresses material facts, his application is liable to be dismissed. We accordingly dismiss the Special Leave Petitions. There will be no order as to costs of these petitions. R.P. SLPs dismissed.

Petitioners ' lands were acquired by the respondents under sections 17 and 19 of the Bangalore Development Act, 1976. Section 36 of the said Act made applicable the provisions of the Land Acquisition Act, 1894, where acquisition is otherwise than by agreement. The notification making the declaration under section 4 of the Land Acquisition Act in respect of the lands in question was made on 20.9.1977. On 20.9.1984s. 11 A was introduced and brought into force by the Land Acquisition (Amendment) Act, 1984 prescribing that where the declaration under section 4 of the Land Acquisition ACt was published before the commencement of the Land Acquistion (Amendment) Act, 1984, the award was to be made within two years from such commencement. The awards should have thus been made within two years from 20.9.1984. On 11.9.1985 the petitioners obtained an interim order from this Court directing status quo with regard to the possession of the lands in question in a special leave petition which was dismissed on 29.4.87. on December 16 17,1987 two writ petitions were filed by the petioners in the High Court Challenging the acquisition, contending that as the awards were not made within two years of the notification making the declaration under section 4 of the Land Acquisition Act, the entire acquisition proceedings had lapsed. The High Court granted interim stay in respect of the acquisition of the lands. The petitions were later dismissed. Appeals therefrom were also dismissed by a Division Bench. The petitioners preferred these special leave petitions and obtained interim stay of dispossession. Dismissing the special leave petitions, this Court, 564 HELD: 1. The relief under Article 136 of the Constitution is discretionary and a petitioner who approaches this Court for such relief must come with frank and full disclosure of facts. If he fails to do so and suppresses material facts, his application is liable to be dismissed.[566B C] 2.Whatever the ultimate effect of the stay orders, in view of the provisions of section 11 A of the Land Acquisition ACt, the Fact of the stay orders was highly material in the determination of these special leave petitions. There was no reference in the special leave petitions to any of the stay orders and the Court could know about these orders only when the respondents appeared in response to the notice and filed their counter affidavit. The said interim orders had a direct bearing on the question raised and the non disclosure of the same certainly amounts to suppression of material facts. On this ground alone, the special leave petitions were liable to be rejected. [565G H; 566A B]

Criminal Appeal No. 400 of 1979. From the Judgment and Order dated 27.4.79 of the Madras High Court in Criminal Misc. P. No. 265 of 1978. 216 Kapil Sibal, B.R.L. Iyengar, K.V. Mohan, S.R. Setia, K.R. Nambiar and A.K. Nigam for the Appellant. A.D. Giri, Solicitor General, K.T.S. Tulsi, Additional Solicitor General, A.M. Khanwilkar and P. Parmeswaran for the Respondent. The Judgment of the Court was delivered by RAY, J. I have had the advantage of deciphering the two draft judgments prepared by my learned brothers Shetty and Verma, JJ. I agree with the conclusions arrived at by my learned brother Shetty, J. Yet considering the great impor tance of the questions involved in this matter, I deem it just and proper to consider the same and to express my own views. Three very important questions fall for decision in this case. First of all whether a Judge of the Supreme Court or a Judge of a High Court is a public servant within the meaning of Section 2 of the Prevention of Corruption Act, 1947. Section 2 of the Prevention of Corruption Act interprets a public servant as meaning a public servant as defined in section 21 of the Indian Penal Code i.e. Act 45 of 1860. Section 21 of the Indian Penal Code states that a public servant denotes a person falling under any of the descrip tion mentioned therein: "Third Every Judge including any person empowered by law to discharge, whether by himself or as a member of any body of persons any adjudicarory functions. " Thus, the definition of a public servant is very wide enough to include Judges of the Supreme Court as well as Judges of the High Court. Section 77 of the Indian Penal Code provides immunity to the Judges in respect of any act done by a Judge when acting judicially in the exercise of any power which is, or which in good faith he believes to be, given to him by law. The next question is whether a judge of the Supreme Court or a Judge of High Court including the Chief Justice of the High Court can be prosecuted for having committed the offence of criminal misconduct as referred to in clause (e) of sub section 1 of section 5 of the Prevention of Corrup tion Act, 1947. Provisions of clause (e) of section 5(1) are as follows: 217 "if he or any person on his behalf is in possession or has, at any time during the period of his office, been in possession, for which the public servant cannot satisfactorily account, of pecuniary resources or property disproportionate to his known sources of income. " Therefore, it is clear that a Judge will be liable for committing criminal misconduct within the meaning of clause (e) of sub section (1) of section 5 of the said Act if he has in his possession pecuniary resources or property dis proportionate to his known sources of income for which the public servant (or a Judge as the public servant) cannot satisfactorily account. Section 6(1)(c) specifically enjoins that no court shall take cognizance of an offence punishable under Section 5 of this Act, alleged to have been committed by a public servant i.e. the Judge of the High Court includ ing the Chief Justice of the High Court as in the present case, except with the previous sanction under clause (c) in the case of any other person, of the authority competent to remove him from his office. So to initiate a proceeding against a Judge of a Supreme Court for criminal misconduct failing under Section 5(1)(e), previous sanction of the authority who is competent to remove a Judge including Chief Justice of the High Court from his office, is imperative. A Judge of the Supreme Court as well as a Judge of the High Court is a constitutional functionary appointed under Article 124 and under Article 217 of the Constitution re spectively. Sub article 2 of Article 124 further provides that every Judge of the Supreme Court shall be appointed by the President by warrant under his hand and seal after consultation with such of the Judges of the Supreme Court and of the High Courts in the States as the President may deem necessary for the purpose and shall hold office until he attains the age of sixty five years. It also provides that in the case of appointment of a Judge other than the Chief Justice, the Chief Justice of India shall always be consulted. Article 217 provides that every Judge of a High Court shall be appointed by the President by warrant under his hand and seal after consultation with the Chief Justice of India, the Governor of the State, and in the case of appointment of a Judge other than the Chief justice, the Chief Justice of the High Court. Sub article 4 of the said article 124 further enjoins that a Judge of the Supreme Court shall not be removed from his office except by an order of the President passed after an address by each House of Parliament supported by a majority of the total member ship of that House and by a majority of not less than two thirds of the members of that House present and voting has 218 been presented to the President in the same session for such removal on the ground of proved misbehaviour or incapacity. Sub article (5) also provides that Parliament may by law regulate the procedure for the presentation of an address and for the investigation and proof of the misbehaviour or incapacity of a Judge under clause (4). Article 2 18 states that provisions of clauses (4) and (5) of Article 124 shall apply in relation to a High Court. On a plain reading of the provisions of sub article 4 of Article 124, a Judge of the Supreme Court can only be re moved on the ground of proved misbehaviour or incapacity by an order of the President passed after an address by each House of Parliament supported by a majority of the total membership of that House and by a majority of not less than two thirds of the members of that House present and voting, has been presented to the President in the same session for such removal on the ground of proved misbehaviour or inca pacity. In other words, the President cannot on its own remove a Judge of the Supreme Court unless an address by each House of Parliament supported by a majority of the total membership of that House and by a majority of not less than two thirds of the members of that House present and voting, is passed and presented to him for removal of the Judge on the ground of proved misbehaviour or incapacity. Therefore, the repository of this power is not in the Presi dent alone but it is exercised after an address by each House of Parliament supported by a majority of the total membership of that House and by a majority of not less than two third of the members of that House is presented to the President. Without such an address by each of the House of the Parliament, the President is not empowered under the Constitution to order removal Of a Judge of the Supreme Court from his office. Article 2 18 lays down that a Judge of the High Court may be removed from his office by the President in the manner provided under clauses (4) and (5) of Article 124. So viewing the aforesaid constitutional provisions for removal of a Judge for proved misbehaviour or incapacity, it is imperative that each House of the Parlia ment shall make an address to the President after the same is supported by a majority of the total membership of that House and by a majority for not less than two thirds of the members of that House present and voting. Unless that ad dress is presented to the President in the same session for such removal, the President is not empowered under the Constitution to make the order for removal of the Judge of the Supreme Court of India or of the Judge of the High Court on the ground of proved misbehaviour or incapacity. Of course, the power of the President to remove a Judge of the Supreme Court or of the High Court is to be 219 exercised by the President in the manner expressly laid down in clause 4 of Article 124. In the case of Union of India vs Sankalchand, AIR 1977 (SC) 2328 it has been observed by majority of the Constitution Bench that there is no need or justification, in order to uphold or protect the independ ence of the judiciary, for construing Article 222(1) to mean that a Judge cannot be transferred from one High Court to another without his consent. "The power to transfer a High Court Judge is conferred by the Constitution in public inter est and not for the purpose of providing the executive with a weapon to punish a Judge who does not toe its line or who, for some reason or the other, has fallen from its grace. The executive possesses no such power under our Constitution and if it can be shownthough we see the difficulties in such showing that a transfer of a High Court Judge is made in a given case for an extraneous reason, the exercise of the power can appropriately be struck down as being vitiated by legal mala fides. The extraordinary power which the Constitution has conferred on the President by article 222(1) cannot be exercised in a manner which is calculated to defeat or destroy in one stroke the object and purpose of the various provisions conceived with such care to insulate the judiciary from the influence and pressures of the executive. The power to punish a High Court Judge, if one may so describe it, is to be found only in article 2 18 read with article 124(4) and (5) of the Constitu tion, under which a Judge of the High Court can be removed from his office by an order of the President passed after an address by each House of Parliament, supported by a majority of the total membership of that House and by a majority of not less then two thirds of the members of that House present and voting, has been presented to the President in the same session for such removal on the ground of proved misbehaviour or incapacity. Thus, if the power of the President, who has to act on the advice of the Council of Ministers, to transfer a High Court Judge for reasons not bearing on public interest but arising out of whim, caprice or fancy of the executive or its desire to bend a Judge to its own way of thinking, there is no possibility of any interference with the independence of the judiciary if a Judge is transferred without his consent. The same view about the independence of the judiciary from the con 220 trol of the executive has been spelt out by the observations of the Constitution Bench of Seven Judges in the case of S.P. Gupta & Ors. vs President of India and Ors. , AIR 1982 (SC) 149. "The concept of independence of judiciary is a noble concept which inspires the Constitutional Scheme and constitute the foundation on which rests the edifice of our democratic polity. If there is one principle which runs through the entire fabric of the Constitution, it is the principle of the rule of law and under the Constitution, it is the judiciary which is entrusted with the task of keeping every organ of the State within the limits of the law and thereby making the rule of law meaningful and effective. It is to aid the judiciary in this task that the power of judicial review has been conferred upon the judiciary and it is by exercising this power which constitutes one of the most potent weapons in armoury of the law, that the judi ciary seeks to protect the citizen against violation of his constitutional or legal rights or misuse of abuse of power by the State or its officers. The judiciary stands between the citizen and the State as a bulwark against executive excesses and misuse or abuse or power by the executive and there it is absolutely essential that the judiciary must be free from executive pressure or influence and this has been secured by the Constitution makers by making elaborate provisions in the Constitution to which detailed reference has been made in the judgments in Sankalchand Sheth 's case (AIR 1977 SC 2326) (supra). But it is necessary to remind ourselves that the concept of independence of the judiciary is not limited only to independence from execu tive pressure or influence but it is a much wider concept which takes within its sweep independence from many other pressures and prejudices. It has many dimensions. namely fearlessness of other power centres economic or political, and freedom from prejudices acquired and nourished by the class of which the Judges belong. If we may again quote the eloquent words of Justice Krishna Iyer: "Independence of the judiciary is not genuflexion; nor is it opposition to every proposition of Government. It is neither judiciary made to opposition measure nor Government 's pleasure. 221 The tyceon, the communalist, the parochialist, the faddist, the extremist and radical reactionary lying coiled up and sub consciously shaping judicial menrations are menaces to judicial independence when they are at variance with parts III and IV of the Paramount Parchment". Judges should be of stern stuff and tough fibre, unbending before power, economic or political, and they must uphold the core principle of the rule of law which says "Be you ever so high, the law is above you. " This is the principle of independence of the judi ciary which is vital for the establishment of real participatory democracy, maintenance of the rule of law as a dynamic concept and delivery of social justice to the vulnerable sections of the community. It is this princi ple of independence of the judiciary which we must keep in mind while interpreting the relevant provisions of the Constitution. The third most crucial question that fails for consider ation in this case is who is the competent authority to remove a Judge either of the, Supreme Court or of the High Court from his office in order to enable that authority to grant sanction for prosecution of the Judge under the provi sions as enjoined by Section 6 of the Prevention of Corrup tion Act, 1947. Section 6 has been couched in negative terms to the following effect: "No Court shall take cognizance of an offence punishable under Section 16 1 or Section 164 or Section 165 of the Indian Penal Code (45 of 1860), or under sub section (2) or sub section (3A) of Section 5 of this Act, alleged to have been committed by a public servant, except with the previous sanction, . (c) in the ease of any other person, of the authority competent to remove him from his office. In order to launch a prosecution against a Judge either of the Supreme Court or of the High Court or the Chief Jus tice of the High Court previous sanction of the authority competent to remove a Judge from his office is mandatorily required. The question, therefore, arises who is the author ity competent to grant sanction. The Judge of the Supreme Court or the Judge of the High Court is appointed under the provisions of Article 124 or under the provisions of Article 217 respec 222 tively. A Judge of the Supreme Court shall be appointed by the President by the warrant under his hand and seal after consultation with such Judges of the Supreme Court and of the High Court in the State as the President may deem neces sary for the purpose and shall hold office until he attains the age of 65 years. Similarly, a Judge of the High Court shall be appointed by the President by the warrant under his hand and seal after consultation with the Chief Justice of India, the Governor of the State, and in case of an appoint ment of the Judge other than the Chief Justice, the Chief Justice of the High Court and shall hold office except in the case of an additional judge till he attains the age of 62 years. It is, therefore, evident that a Judge of the Supreme Court as well as a Judge of the High Court is a constitutional functionary as has been observed by this Court in the decisions cited hereinbefore and to maintain the independence of the judiciary and to enable the Judge to effectively discharge his duties as a Judge and to maintain the rule of law, even in respect of lis against the Central Government or the State Government. The Judge is made total ly independent of the control and influence of the executive by mandatorily embodying in article 124 or article 217 that a Judge can only be removed from his office in the manner provided in clause (4) and (5) of article 124. Thus, a Judge either of the High Court or of the Supreme Court is inde pendent of the control of the executive while deciding cases between the parties including the Central Government and State Government uninfluenced by the State in any manner whatsoever. It is beyond any pale of doubt that there is no master and servant relationship or employer and employee relationship between a Judge of the High Court and the President of India in whom the executive power of the Union is vested under the provisions of Article 53 of the Consti tution. The President has not been given the sole power or the exclusive power to remove a Judge either of the Supreme Court or of the High Court from his office though the Presi dent appoints the Judge by warrant under his hand and seal after consultation with such of the Judges of the Supreme Court and of the High Court in the States as he may deem necessary for that purpose and in case of the appointment of the Judge of the High Court, the President appoints a Judge by warrant under his hand and seal after consultation with the Chief Justice of India, the Governor of the State and in a case of appointment of a Judge other than the Chief Jus tice, the Chief Justice of the High Court. The only mode of removal of a Judge from his office on the ground of proved misbehaviour or incapacity is laid down in clauses (4) and (5) of Article 124. It is has been eloquently and vehemently urged on behalf of the appellant that since the Judge of the Supreme Court as well as of the High Court is a constitu tional functionary and 223 there is no employer and employee relationship or master and servant relationship between the Judge and the President of India and for that the Central Government or the State Government there is no authority to remove the Judge from 'his office by the executive except by taking recourse to procedure of impeachment as envisaged in Article 124(4) and (5) of the Constitution of India. It has been further urged in this connection that if it is assumed that the President has the power to remove a Judge of the Supreme Court or of the High Court from his office it will do away with the independence of the judiciary and will being the judiciary under the control of the executive indirectly in as much as under Article 74 of the Constitution of India, the President while exercising his executive power has to act on the aid and advice of the Council of Ministers with the Prime Minis ter at the Head, as has been held by this Court in Shamsher Singh & Anr. vs State of Punjab, ; and S.P. Gupta & Ors. etc. vs Union of Inida & Ors. etc. , (supra). It has been, therefore, urged that Section 6(i)(C) of the Prevention of Corruption Act, 1947 is not applicable to the case of a Judge of the Supreme Court or of the High Court No prosecution can be launched against a Judge of the Supreme Court or of the High Court under the provisions of the said Act except in the mode envisaged in Article 124, clauses 4 and 5 of the Constitution for removal of the Judge. The FIR in question, which has been lodged against the appellant should be quashed and set aside Section 2 of the Prevention of Corruption Act denotes a public servant as defined in Section 21 of the Indian Penal Code (45 of 1860). It has been noticed hereinbefore that the third clause particularly of Section 21 of the Indian Penal Code includes every Judge including any person empowered by law to dis charge whether by himself or as a member of any body of persons any adjudicatory functions. Therefore a Judge of the High Court or of the Supreme Court comes within the defini tion of public servant and he is liable to be prosecuted under the provisions of 'the Prevention of Corruption Act. It is farthest from our mind that a Judge of the Supreme Court or that of the High Court will be immune from prosecu tion for criminal offences committed during the tenure of his office under the provisions of the Prevention of Corrup tion Act. In these circumstances the only question to be consid ered is who will be the authority or who is the authority to grant sanction for prosecution of a Judge of the High Court under section 6(1)(c) of the said Act. The Judge as a con stitutional functionary being appointed by the President can only be removed by mandatory procedure provided under Arti cle 124 of the Constitution and in no other manner. The has been enacted by Parliament to regulate 224 the procedure for the investigation and proof of the misbe haviour or incapacity of a Judge of the Supreme Court under clause (5) of subsection 1 of Article 124 of the Constitu tion. The Judges (Inquiry) Rules, 1969 have been framed under section 7(4) of the . The said Act and the Rules made thereunder only provide for removal of a Judge on the ground of proved misbehaviour or inability. It does not provide for prosecution of a Judge for offences under section 5(1)(e) of the Prevention of Corruption Act. It is apropos to mention in this connection that in England, before the full development of ministerial responsibility, impeachment was a weapon enabling the Com mons to call to account ministers appointed by, and respon sible to, the Crown. As the commons acquired direct control over ministers, there was no need to employ the cumbersome machinery of impeachment and there has been no impeachment since 1805. As impeachment of political offenders might involve not only deprivation of office but other penalties, the royal prerogative of pardon does not extend to prevent ing impeachment but extends to pardoning punishments in flicted on an impeachment. In England, offices held during good behaviour may in the event of misconduct be determined by impeachment. In practice, however, an address to the Crown for the removal of a judge must originate in the House of Commons; the procedure is judicial and the judge is entitled to be heard. There is no instance of the removal of a judge by this method since the Act of Settlement. This power to remove by impeachment or address, a person holding office during good behaviour, is an essential counterpart to the independence secured to the holders of high office by making their tenure one of good behaviour instead of at pleasure. Under article II, section 4, U.S. Constitution, the President, VicePresident and 'all civil officers of the United States can be removed from office on impeachment for, and convic tion of, "Treason, Bribery or other high Crimes and misde meanours". Since the President of the United States who is the, highest executive authority of the State, an impeach ment has been provided for and in fact, President Johnson was impeached in 1867 for high crimes and misdemeanours. In 1917, Justice Archibald of the Commerce Court was 'removed from office by impeachment for soliciting for himself and others, favours from railroad companies, some of which were at the time litigants in his court; in 1936 the removal of Judge Wright of the Florida Court for conduct in relation to a receivership Which evoked serious doubts as to this integ rity, although he was acquitted of specific charges, seem to have restored the wider view. For, in neither case, were the two judges found guilty of an indictable offence. It has been said that: 225 "As to the Judges of the United States at least lack of 'good behaviour ' and 'high crimes and misdemeanours ' are overlapping if not precisely coincidental concepts." (Seervai 's Constitutional Law of India, Third Edition, Vol. II, page 1698 paras 18.8 and 18.9). It has been urged by the Solicitor General as well as the Additional Solicitor General that the Judges of the High Court cannot be said to be exempted from prosecution in respect of offences provided in the Prevention of Corruption Act. It has been urged further that under Article 361, the President and the Governor have been given protection from being answerable to any court for the exercise and perform ance of the powers and duties of his office or for any act done or purporting to be done by him in the exercise and performance of those powers and duties. Clause 2 of the said Article further provides that no criminal proceedings what soever shall be instituted or Continued against the Presi dent, or the Governor of a State, in any court during his term of office. No such immunity from criminal prosecution has been provided for in the case of a Judge of the High Court or of the Supreme Court. It has, therefore, been urged that the High Court should ensure modalities for launching prosecution against a Judge under the said Act. Undoubtedly, respect for the judiciary and its public credibility and dignity has to be maintained in order to ensure respect for the Judges in public and also for the decisions rendered by the judges. It is, therefore, necessary to evolve some method commensurate with the grant of sanction in cases of serious allegation corruption and acquisition or the posses sion of disproportionate assets which the Judge cannot satisfactorily account for 'or possession of property dispro portionate to the sources of income of the Judge. If these things are allowed to go unnoticed it will create a serious inroad on the dignity respect, and credibility and integrity of the High Office which a Judge of the Supreme Court and of the High Court occupies resulting in the erotion on the dignity and respect for the high office of the Judges in the estimation of the public. As has been suggested by my learned Brother Shetty, J. that the President is given the power to appoint the Judges of the Supreme Court as well as of the High Court by warrant under his hand and seal and similarly even after passing of an address by both the Houses of the Parliament in the manner provided in Article 124, clauses (4) and (5) and placed before the President, a Judge cannot be removed from his office unless and order to that effect is passed by the President. The President, therefore, has the power to appoint as well as to remove a Judge from his office on the ground of 226 proved misbehaviour or incapacity as provided in Article 124 of the Constitution. The President, therefore, being the authority competent to appoint and to remove a Judge, of course in accordance with the procedure envisaged in Article 124, clauses (4) and (5) of the Constitution, may be deemed to be the authority to grant sanction for prosecution of a Judge under the provisions of Section 6(1)(c) in re spect of the offences provided in section 5(1)(e) of the Prevention of Corruption Act, 1947. In order to adequately protect a Judge from frivolous prosecution and unnecessary harassment the President will consult the Chief Justice of India who will consider all the materials placed before him and tender his advice to the President for giving sanction to launch prosecution or for filing FIR against the Judge concerned after being satisfied in the matter. The President shall act in accordance with advice given by the Chief Justice of India If the Chief Justice of India. If the chief Justices of opinion that it is not a fit case for grant of sanction for prosecution of the Judge concerned the Presi dent shall not accord sanction to prosecute the Judge;This will save the Judge concerned from unnecessary harassment as weal as from frivolous prosecution against him as suggested by my learned brother Shetty, J. in his judgment. Similarly in the case of Chief Justice of the Supreme Court the Presi dent shall consult such of the Judges of the Supreme Court as he may deem fit and proper and the President shall act in accordance with the advice given to him by the Judge or Judges of the Supreme Court. The purpose of grant of previ ous sanction before prosecuting a public servant i.e. a Judge of the High Court or of the Supreme Court is to pro tect the Judge from unnecessary harassment and frivolous prosecution more particularly to save the Judge from the biased prosecution for giving judgment in a case which goes against the Government or its officers though 'based on good reasons and rule of law. Mention may be made in this connec tion to the decision in C.K. Daphtary vs O.P. Gupta, A.I.R. 197 1 SC 1132, wherein it has been observed: "It seems to us that whoever drafted the Impeachment Motion drafted it with a view to bring the facts within the meaning of the express "misbehaviour" in Article 124(4) for he must have realised that to say that a Judge has committed errors, even gross errors, cannot amount to "misbehaviour". The contention that frivolous prosecution can be launched against a Judge for giving a judgment against the Central Government or any of its Officers is of no avail in as much as such decision does not amount to misbehaviour within the meaning of the Article 124 of the Constitution. 227 It is also necessary to mention in this connection that the appellant resigned his post of Chief Justice when FIR was lodged by the CBI and so he ceased to be a public serv ant on the date of lodging the FIR against him by the CBI. The scope and applicability of section 6 of the Prevention of Corruption Act came to be considered in the case of R.S. Nayak vs A.R. Antulay; , before a Constitution Bench of this Court where it has been observed: "Section 6 bars the Court from taking cogni zance of the offences therein enumerated alleged to have been committed by a public servant except with the previous sanction of the competent authority empowered to grant the requisite sanction . . . Section 6 creates a bar to the court from taking cogni zance of offences therein enumerated except with the previous sanction of the authority set out in clause (a) (b) & (c) of sub sec. The object underlying such provision Was to save the public servant from the harassment of frivolous or unsubstantiated allegations. The policy underlying Sec. 6 and similar sections, is that there should not be unneces sary harassment of public servant (C.R. Bansi vs State of Maharashtra), ; Existence thus of a valid sanction is a pre requisite to the taking of cognizance of the enumerated offences alleged to have been committed by a public servant. The bar is to the taking of cognizance of offence by the court. Therefore, when the court is called upon to take cognizance of such offences, it must enquire whether there is a valid sanction to prosecute the public servant for the of fence alleged to have been committed by him as public servant. Undoubtedly the accused must be a public ' servant when he is alleged to have committed the offence of which he is accused because Sections 161, 164, 165 IPC and Sec. 5(2) of the 1947 Act clearly spell out that the offences therein defined can be committed by a public servant. If it is con templated to prosecute public servant who has committed such offences, when the court is called upon to take cognizance of the offence, a sanction ought to be available otherwise the court would have no jurisdiction to take cognizance of the offence. A trial without a valid sanction where one is necessary under section 6 has been held to be a trial without jurisdiction by the court. (R.R. Chari vs State of U.P., and S.N. Bose vs State of Bihar), In Mohd. Iqbal Ahmed vs State of A.P., it was held that the terminus 228 a quo for a valid sanction is the time when the court is called upon to take cognizance of the offence. Therefore, when the offence is alleged to have been committed the accused was a public servant but by the time the court is called upon to take cognizance of the offence committed by him as public servant, he has ceased to be public servant, no sanction would be necessary for taking cognizance of the offence against him. This approach is in accord with the policy underlying Sec. 6 in that a public servant is not to be exposed to harassment of a frivolous or speculative prosecution. If he has ceased to be a public servant in the meantime, this vital considera tion ceases to exist. " In the present appeal the appellant ceases to be a public servant as h. resigned from the office. Therefore at the time of filing the FIR the appellant ceases to be a public servant and so no sanction under Sec. 6(1)(c) of the said act is necessary. The main plank of the argument regarding sanction is, therefore, non existent. In these circumstances the judgment and order of the High Court dismissing the application under Secll. 482 of the Code of Criminal Procedure is in my considered opinion, wholly in accordance with law and as such the Order of the High Court has to be upheld in any circumstances. I agree with the conclusion of my learned brother Shetty, J. The appeal is, therefore, dismissed. The trial of Criminal Case No. 46/77 filed by the Respondent be proceeded with. K. JAGANNATHA SHETTY, J. This appeal by certificate under Articles 132(1) and 134(1)(e) of the Constitution has been filed by the former Chief Justice of the Madras High Court against the Full Bench decision of the same High Court refusing to quash the criminal proceedings taken against him. The appeal raises the questions of singular importance and consequence to Judges of the High Courts and this Apex Court. The central issue is whether the Judges could be prosecuted for offence under the Prevention of Corruption Act, 1947 ( 'the Act '). The background of the case in the barest outline is as follows: The appellant started his life as an Advocate in the High Court of Madras. He joined the Madras Bar in 1941. In 1953 he was appointed as Assistant Government Pleader. In 1959 he became Government Pleader. He held that post till 20 February 1960 when he was elevated to the Bench as a perma nent Judge of the Madras High Court. On 229 1 May 1969, he became the Chief Justice of the Madras High Court. During his tenure as the Judge and Chief Justice he was said to have acquired assets disproportionate to the known source of income. The complaint in this regard was made to the Delhi Special Police Establishment ("CBI"). On 24 February 1976, the CBI registered a case against him with issuance of a First Information Report which was filed in one of the Courts at New Delhi. It was alleged in the First Information Report that taking into consideration the sources of income of the appellant as a Judge and Chief Justice of the High Court and the mode and style of his living with the probable expenses required during the period of his Judgeship/Chief Justiceship, it is reasonably be lieved that the appellant cannot satisfactorily account fox the possession of assets which are far disproportion he to his known source of income. It was further alleged that he has committed offences under Section 5(2) read with clauses (b)(d) and (e) of Section 5(1) of the Act. On 28 February 1976, a copy of the First Information Report was personally taken by the Investigating Officer to Madras and it was filed before the Court of Special Judge, Madras. The appel lant on coming to know of these developments proceeded on leave from 9 March 1976 and subsequently retired on 8 April 1976 on attaining the age of superannuation. The investigation of the case by CBI was however, con tinued with the culmination of filing a final report. On 15 December 1977, a final report under Section 173(2) of the Code of Criminal 'Procedure (Cr. P.C.) was filed against the appellant before the Special Judge, Madras. The report under Section 173(2) is generally called as the charge sheet, and we would also prefer to term it as the charge sheet. The charge sheet inter alia states that the appellant after assuming. office as the Chief Justice of Madras gradually commenced accumulation of disproportionate assets etc. That for the period between 1 May 1969 to 24 February 1976, he was in possession of the pecuniary resources and property disproportionate by Rs.6.41,416.36 to the known sources of income over the same period. It was in his own name and in the names of his wife Smt. Eluthai Ammal and his two sons Shri V. Suresh and Shri V. Bhaskar. The appellant cannot satisfactorily account for such disproportionate assets. The appellant has thereby committed the offence of criminal misconduct under clause (e) of Section 5(1) which is punish able under Section 5(2) of the Act. The particulars of the disproportionate assets and the income of the appellant during the aforesaid period have been fully set out in the charge sheet. On perusing the charge sheet the learned Special Judge appears to have issued process for appearance of the appellant but the appel 230 lant did not appear there. He moved the High Court of Madras under Section 482 of the Cr. P.C. to quash that criminal proceedings before the High Court he contended that the proceedings initiated against him were unconstitutional, wholly without jurisdiction, illegal and void. The Full Bench of the High Court by majority view has dismissed his case. However, in view of the importance of the Constitu tional questions involved in the case the High Court granted certificate for appeal to this Court. It may be noted that before the High Court every conceivable point was argued. They are various and varied. We may briefly refer to those contentions not for the pur pose of examining them, since most of them have not been pressed before us, but only to indicate as to how the appel lant projected his case. It was inter alia, contended that the Judges of the High Court and Supreme Court shall not be answerable before the ordinary criminal courts but only answerable to Parliament. The Parliament alone could deal with their misbehaviour under the provisions of Articles 124(4) and (5) read with Articles 217 and 218 of the Consti tution. The Judge shall hold office until the age of super annuation subject to earlier removal for proved misbehaviour or incapacity. This protection to Judges will be defeated if they are compelled to stand trial for offence committed while discharging duties of their office even before retire ment. Even the Parliament or the State Legislatures are not competent to make laws creating offences in matters relating to discharge of Judge 's duties. Any such law would vitiate the scheme and the federal structure of the Constitution particularly the scheme of Article 124(4) read with Article 2 17 and 2 18. If the Legislatures are held to have powers to create offence for which Judges could be tried in ordi nary criminal Courts then, it may affect the very independ ence of the Judiciary and the basic structure of the Consti tution. Though the definition of "public servant" under Section 21 of the Indian Penal Code may include a Judge of the Higher Judiciary, since the Judge is not 'employed in connection with the affairs of the Union or State ', the definition Should be narrowed down only to Judges other man the Judges of the Higher Judiciary. The jurisdiction of the CBI to register the case against the appellant and to investigate the offence was also questioned. The issuance of the First Information RepOrt and the subsequent filing of the charge sheet were impeached. It was alleged that they were actuated by collat eral considerations. Alternatively, it was claimed that even assuming that all the allegations against the appellant are true, it will not constitute an offence under clause (e) of Section 5(1) of the Act since ingredients of the offence are not present in the case. The last and 231 perhaps the most important contention urged before the High Court was regarding the necessity to obtain prior sanction from the competent authority for prosecution of the appellant as required under Section 6 of the Act. And since there was no such sanction obtained the Court has no juris diction to take cognizance of the case. Mr. Justice Mohan, with whom Mr. Justice Natarajan, (as he then was) joined rejected all the contentions in a well considered judgment. The views expressed by Mohan, J., on all the issues except on the last one need not be set out here since all those issues have not been raised before us. On the last aspect relating to the requirement of prior sanction for prosecution of the appellant, the learned Judge, held that since the appellant has retired from serv ice and was no longer a 'public servant ' on the date of filing the charge sheet, the sanction for his prosecution required under Section 6 of the Act is not warranted. The third Judge Mr. Justice Balasubramanyan in a separate judg ment has concurred with the majority views on most of the questions. He has however, differed on three points out of which one alone need be mentioned. The other two have not been supported before us by counsel for the appellant. The learned Judge has dealt with the ingredients of the offence under clause (e) of Section 5(1) with which the appellant was charged. While analysing ingredients of the offence, he went on to state that the gist of the offence is not the possession of assets merely. Nor even the sheer excess of assets over income, but the inability of the public servant in not being able to satisfactorily account for the excess. He observed that clause (e) of Section 5(1) of the Act places the burden of establishing unsatisfactory accounting squarely on the prosecution. In order to properly discharge this burden cast by the section, it Would be necessary for the Investigating Officer first of all to call upon the public servant to account for the disproportionate assets. He must then proceed to record his own finding on the expla nation of the public servant. He must state whether it is satisfactory or not. And the offence complained of under clause (e) of Section 5(1) is not made out without such exercise and finding by the Investigating Officer. The learned Judge, however, was careful enough to modulate his reasoning so that it may be in conformity with the constitu tional protection guaranteed to the accused under Article 20(3) of the Constitution, Article 20(3) provides that no person accused of any offence shall be compelled to be a witness against himself. The learned Judge said that in view of Article 20(3) the Investigating Officer has no power to compel the accused to give his explanation for his dispro portionate assets, but he must necessarily ask the public servant for an account. 232 In this case. the accused appellant has voluntarily submitted his statement of assets and income to the Investi gating Officer in the course of investigation. Balasubraman yan, J., however, seems to have ignored that statement and focussed his attention on the default of the Investigating Officer in not calling upon the appellant to account for the disproportionate assets. ' In that view, he held that the chargesheet could not be sustained and accordingly quashed the prosecution. Before us, counsel for the appellant advanced only two propositions. The first concerns with the ingredients of the offence alleged and the requirements of the charge sheet filed against the appellant. It also involves the duties of the Investigating Officer. In this regard counsel sought to support the views expressed by Balasubramanyan, J., in his dissenting judgment. The second proposition relates to the inapplicability of the Act to Judges of the High Courts and Supreme Court. The essence of the submissions made on this aspect is based on the special status and role of Judges of the higher judiciary and in the need to safeguard judicial independence consistent with the constitutional provisions. We will take up the second question first for considera tion because. if it is determined in favour of the appel lant, the first becomes academic and wc may conveniently leave it out. For a proper consideration of the submissions made by counsel on both sides the attention may be drawn to the relevant provisions of the Act. Section 2 provides: "2. For the purposes of this Act, "public servant" means a public servant as defined in Section 21 of the Indian Penal Code. " Section 4 provides: 4. [(1)] Where in any trial of an of fence punishable under section 16 1 or section 165 of the Indian Penal Code (or of an offence referred to in clause (a) or clause (b) of sub section (1) of section 5 of this Act punisha ble under subsection (2) thereof), it is proved that an accused person has accepted or obtained, or has agreed to accept or attempted to obtain, for himself or for any other per son, any gratification (other than legal remuneration) or any valuable thing from any person, it shall be presumed unless the contrary is 233 proved that he accepted or obtained, or agreed to accept or attempted to obtain, that grati fication or that valuable thing, as the case may be, as a motive or reward such as is mentioned in the said section 161, or, as the case may be, without consideration or for a consideration which he knows to be inadequate. (2) Where in any trial of an offence punisha ble under section 165A of the Indian Penal Code (or under clause (ii) of sub section (3) of section 5 of this Act) it is proved that any gratification (other than legal remunera tion) or any valuable thing has been given or offered to be given or attempted to be given by an accused person, it shall be presumed unless the contrary is proved that he gave or offered to give or attempted to give that gratification or that valuable thing, as the case may be as a motive or reward such as is mentioned in section 161 of the Indian Penal Code or, as the case may be without consider ation or for a consideration which he knows to be inadequate. (3) Notwithstanding anything contained in sub sections (1) and (2) the court may decline to draw the presumption referred to in either of the said sub sections, if the gratification or thing aforesaid is, in its opinion, so trivial that no inference of corruption may fairly be drawn." Two other provisions are more material namely section 5 and section 6 and must be set out in full. Section 5 provides: "5(1) A public servant is said to commit the offence of criminal misconduct (a) if he habitually accepts or obtains or agrees to accept or attempts to obtain from any person for himself or for any other per son, any gratification (other than legal remuneration) as a motive or reward such as is mentioned in section 161 of the Indian Penal Code, or (b) if he habitually accepts or obtains or agrees to accept or attempts to obtain for himself or for any other person, any valuable thing without consideration or for a con 234 sideration which he knows to be inadequate, from any person whom he knows to have been, or to be, or to be likely to be concerned in any proceeding or business transacted or about to be transacted by him, or having any connection with the official functions of himself or of any public servant to whom he is subordinate, or from any person whom he knows to be inter ested in or related to the person so con cerned, or (c) if he dishonestly or fraudulent|y misap propriates or otherwise converts for his own use any property entrusted to him or under his control as a public servant or allows any other person so to do, or (d) if he, by corrupt or illegal means or by otherwise abusing his position as public servant, obtains for himself or for any other person any valuable thing or pecuniary advan tage (or) (e) if he or any person on his behalf is in possession or has, at any time during the period of his office, been in possession, for which the public servant cannot satisfactorily account, of pecuniary resources or property disproportionate to his known sources of income. (2) Any public servant who commits criminal misconduct shall be punishable with imprison ment 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. (3) Whoever habitually commits (i) an offence punishable under section 162 or section 163 of the Indian Penal Code, or (ii) an offence punishable under section 165 A of the Indian Penal Code, shall be punishable with imprisonment for a term which 235 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. (3A) Whoever attempts to commit an offence referred to in clause (c) or clause (d) of sub section (1) shall be punishable with imprisonment for a term which may extend to three years, or with fine, or with both. (3B) Where a sentence of fine is imposed under subsection (2) or sub section (3), the court in fixing the amount of fine shall take into consideration the amount or the value of the property, if any, which the accused person has obtained by committing the offence or where the conviction is for an offence referred to in clause (e) of subsection (1), the pecuniary resources or property referred to in that clause for which the accused person is unable to account satisfactorily. (4) The provisions of this section shall be in addition to, and not in derogation of, any other law for the time being in force, and nothing contained herein shall exempt any public servant from any proceeding which might, apart from this section, be instituted against him. Section 6 is in the following terms: "6. No court shall take cognizance of an offence punishable under section 161 (or section 164) or section 165 of the Indian Penal Code, or under sub section (2) (or sub section 3A) of section 5 of this Act, alleged to have been committed by a public servant, except with the previous sanction, (a) in the case of a person who is employed in connection with the affairs of the (Union) and is not removable from his office save by or with the sanction of the Central Government (of the) State Government; (b) in the case of a person who is employed in connection with the affairs of (a State) and is not removable from his 236 office save by or with the sanction of the Central Government (of the) State Government (c) in the case of any other person, of the authority competent to remove him from his office. (2) Where for any reason whatsoever any doubt arises whether the previous sanction as re quired under sub section (1) should be given by the Central or State Government or any other authority, such sanction shall be given by that Government or authority which would have been competent to remove the public servant from his office at the time when the offence was alleged to have been committed. It will be convenient, if at this stage, we also read Section Omitting the immaterial clauses, Section 5A is in these terms: "5A. Notwithstanding anything contained in the Code of Criminal Procedure, 1898, no police officer below the rank (a) in the case of the Delhi Special Police Establishment, of an Inspector of Police; (b) in the presidency towns of Calcutta and Madras, of an Assistant Commissioner of Po lice; (c) in the presidency towns of Bombay, of a Superintendent of Police; and (d) elsewhere, of a Deputy Superintendent of Police, shall investigate any offence punishable under Section 161, section 165 or section 165A of the Indian Penal Code or under section 5 of this Act without the order of a Presidency Magistrate or a Magistrate of the first class, as the case may be, or make any arrest there for without a warrant: Provided that if a police officer not below the rank of an Inspector of Police is autho rised by the State Government in this behalf by general or special order, he may also investigate any such offence without the order of a Presi 237 dency Magistrate or a Magistrate of the first class, as the case may be, or make arrest therefor without a warrant: Provided further that an offence referred to in clause (e) of sub section (1) of Section 5 shall not be investigated without the order of a police officer not below the rank of a Superintendent of Police. The Act was intended to suppress bribery and corruption in public administration and it contains stringent provi sions. Section 4 raises presumption unless the contrary is proved by the accused in respect of offence punishable under section 161 or section 165 of the Indian Penal Code or of an offence referred to in clause (a) or clause (b) of section 5(1) of the Act. Section 5 of the Act creates offence of criminal misconduct on the part of a public servant. The public servant defined under section 2 means a public serv ant as defined in Section 21 of the IPC. Section 21 of the IPC is not really defining "public servant" but enumerating the categories of public servants. It has enumerated as many as twelve categories of public servants. Section 5(2) pro vides punishment for such an offence of criminal misconduct up to a term of 7 years or with fine, or with both. Section 6 prohibits Courts from taking cognizance of an offence unless certain condition is complied with. We will have an occasion to consider the provisions of Section 6 in detail and for the present we may deal only with the condition prescribed by the Section for a Court to take cognizance of an offence The condition prescribed therein is the previous sanction of a competent authority. The public servant cannot be prosecuted for offences specified in the Section unless there is prior sanction for prosecution from the competent authority. It may be of importance to remember that the power to take cognizance of an offence is vested in the Court of competent jurisdiction. Section 6 is primarily concerned to see that prosecution for the specified offences shall not commence without the sanction of a competent authority. That does not mean that the Act was intended to condone the offence of bribery. and corruption by public servant. Nor it was meant to afford protection to public servant from criminal prosecution for such offences. It is only to protect the honest public servants from frivolous and vexatious prosecution. The competent authority has to examine independently and impartially the material on record to form his own opinion whether the offence alleged is frivolous or vexatious. The competent authority may refuse sanction for prosecution if the offence alleged has no material to support or it is frivolous or intended to harass the honest officer. But he cannot refuse to grant sanction if the material collected has made out 238 the commission of the offence alleged against the public servant. Indeed he is duty bound to grant sanction if the material collected lend credence to the offence complained of. There seems to be another reason for taking away the discretion of the investigating agency to prosecute or not to prosecute a public servant. When a public servant is prosecuted for an offence which challenges his honesty and integrity, the issue in such a case is not only between the prosecutor and the offender, but the State is also vitally concerned with it as it affects the morale of public serv ants and also the administrative interest of the State. The discretion to prosecute public servant is taken away from the prosecuting agency and is vested in the authority which is competent to remove the public servant. The authority competent to remove the public servant would be in a better position than the prosecuting agency to assess the material collected in a dispassionate and reasonable manner and determine whether sanction for prosecution of a public servant deserves to be granted or not. Section 6 may now be analysed. Clause (a) of Section 6(1) covers public servants employed in connection with the affairs of the Union. The prescribed authority for giving prior sanction for such persons would be the Central Govern ment. Clause (b) of Section 6(1) covers public servants employed in connection with the affairs of the State. The authority competent to give prior sanction for prosecution of such persons would be the State Government. Clauses (a) and (b) would thus cover the cases of public servants who are employed in connection with the affairs of the Union or State and are not removable from their office save by or with the sanction of the Central Government or the State Government. That is not the end. The Section goes further in clause (c) to cover the remaining categories of public servants. Clause (c) states that in the case of any other person the sanction would be of the authority competent to remove him from his office. Section 6 is thus all embracing bringing within its fold all the categories of public serv ants as defined under Section 21 of the IPC. It is common ground that clauses (a) and (b) of Section 6(1) of the Act cannot cover the Judges of the High Courts and the Supreme Court since they are not employed in connec tion with the affairs of the Union or State. The question is whether they could be brought within the purview of clause (c) of Section 6(1). Mr. Kapil Sibal learned Counsel for the appellant stressed the need to read clause (c) in "ejusdem generis" to clauses (a) and (b). According to him the entire Section 6 seems to apply only to such public servants where there is relationship of master and servant between, them and their employer. 239 If there is no relationship of master and servant, as be tween public servant and the authority to appoint him, clause (c) has no application to the public servant. So far as the Judges of the High Courts and the Supreme Court are concerned, it was contended that there is no relationship of master and servant between them and the Government.and clause (c) of Section 6(1) is inapplicable to them. It is true that the relationship of master and servant as is ordinarily understood in common law does not exist between the Judges of higher judiciary and the Government. Where there is relationship of master and servant the master would be in commanding position. He has power over the employee not only to direct what work the servant is to do, but also the manner in which the work is to be done. The servant undertakes to serve the master and obey the reasona ble orders within the scope of his duty. It is implicit in such relationship that the servant may disobey the master 's order only at his peril. But there is no such relationship between the Judges and their appointing authority that is, the Government. The Judges are not bound nor do they under take to obey any order of the Government within the scope of their duties. Indeed, they are not Judges if they allow themselves to be guided by the Government in the performance of their duties. In Union of India vs S.H. Sheth, ; at 450 Chandrachud, J., as he then was, has illu mined this idea: "the Judges owe their appointment to the Constitution and hold a position of privilege under it. They are required to 'uphold the Constitution and the laws ', 'wit hout fear ' that is without fear of the Executive; and 'without favour ' that is without expecting a favour from the Executive. There is thus a fundamental distinction between the master and servant relationship between the Government and the Judges of High Courts and the Supreme Court. " But we cannot accept the contention urged for the appellant that clause (c) should be read in "ejusdem generis" to clauses (a) and (b) of Section 6(1) of the Act. The application of the ejusdem generis rule is only to general word following words which are less general, or the general word following particular and specific words of the same nature. In such a case, the general word or expression is to be read as com prehending only things of the same kind as that designated by the preceding specific words or expressions. The 'general word is presumed to be restricted to the same genus as those of the particular and specific words. (See Maxwell on The Interpretation of Statutes, 12th Ed. p. 297). What do we have here? Section 21 of the IPC while defining "public servant" has denoted as many as twelve categories of per sons. It includes not only the State and Central Government employees but also others like Judge, juryman, assessor 240 and arbitrator. It also includes every person in the service or pay of the Government or remunerated by fees or commis sion by the Government. Each category is different from other and there is hardly any relationship of master and servant in some of the categories. The provisions of clauses (a) and (b) of Section 6(1) of the Act covers certain cate gories of public servants and the 'other ' which means re maining categories are brought within the scope of clause (c). Clause (c) is independent of and separate from the preceding two clauses. The structure oil the section does not permit the applicability of the rule of ejusdem generis. There are, however, two requirements for the applicabil ity of clause (c) of Section 6(1) to a Judge of the higher judiciary. First, the Judge must be a public servant. Sec ond, there must be an authority competent to remove the Judge from his office. If these two requirements are com plied with, a Judge cannot escape from the operation on the Act. On the first requirement there is little doubt and also not seriously disputed by counsel for the appellant. His approach however, is to limit the operation of clause (c) only to Judges of the Subordinate judiciary. But we do not find any sustainance in that approach. From the very com mencement of the IPC "Every Judge" finds a place in the categories of "public servant" defined under Section 21 of IPC. It was specifically denoted in the third category of public servant under Section 21 of IPC. In 1962, the Government of India constituted a Committee chaired by C.K. Santhanam, MP to suggest improvements in the provisions of the Act. Nine specific terms of references were made to the Committee. The Fourth term of reference made to the Committee reads: "to suggest changes in law which would ensure speedy trial of cases of bribery, corrup tion and criminal misconduct, and make the law otherwise more effective." The Committee collected a lot of material from the public relating to the nature of corruption in the administration. It was represented to the Committee by the public that corruption has increased to such an extent that people have started losing faith in the integrity of public administration. "We heard from all sides", the Committee reported, "that corruption has, in recent years, spread even to those levels of administration from which it was conspic uously absent in the past." (See: Santhanam Committee Re port, paras 2.12,2.15 and 2.16). The Committee submitted its report on 31st March 1964. While examining the Fourth term of reference extracted above, the Committee in Section 7 of its report considered the question of amendments to the IPC. The Committee drew particular 241 attention to the definition of 'public servant ' in Section 21 of the IPC. Under paragraph 7.6 of the Report, the Com mittee has suggested that the present definition of 'public servant ' under Section 21 of the IPC requires to be en larged. It has stated, among others that 'a further category should be added to include all persons discharging adjudica tory functions under any Union or State Law for the time being in force. ' Under para 7.7, the Committee recommended that the third category under Section 21 of the IPC may be amended as stated below: "Third Every Judge including any person en trusted with adjudicatory functions in the course of enforcement of any law for the time being in force. " This recommendation led to the enactment of Anti Corrup tion Laws (Amendment) Act 1964 (Act No. 40 of 1964), The Parliament by passing this enactment has reenacted Section 21 with the third category as follows: "21. 'public servant ' The words 'public serv ant ' denote a person falling under any of the descriptions hereinafter following, namely; Third Every Judge including any person empow ered by; law to discharge, whether by himself or as a member of any body of persons, any adjudicatory functions. " It will be seen that the Parliament has not only retained the expression "Every Judge" in the original enumeration of public servant under Section 21 of the IPC but also enlarged the expression to include any person empowered by law to discharge any adjudicatory functions. Reference may also be made to Section 19 of the IPC, in which "Judge" is defined. Section 19 reads: "19. "Judge" The word "Judge" denotes not only every person who is officially designated as a Judge, but also every person who is empowered by law to give, in any legal proceeding, civil or criminal, a definitive judgment, or a judgment which, if not appealed against, would be definitive, or a judgment which, if confirmed by some other authority, would be definitive, or 242 who is one of a body of persons, which body of persons is empowered by law to give such a judgment. " The expression "Every Judge" used in the third category of Section 21 indicates all Judges and all Judges of all Courts. It is a general term and general term in the Act should not be narrowly construed. It must receive comprehen sive meaning unless there is positive indication to the contrary. There is no such indication to the contrary in the Act. A Judge of the superior Court cannot therefore be excluded from the definition of public servant. He squarely falls within the purview of the Act provided the second requirement under clause (c) of Section 6(1) is satisfied The second requirement for attracting the provisions of clause (c) of Section 6(1) to a Judge of the superior Judi ciary is that for the purpose of granting sanction for his prosecution, there must be an authority and the authority must be competent to remove the Judge. It is now necessary to identify such authority in relation to the higher judici ary. In our country, the Judges of higher Judiciary are safe and secure. They are high dignitaries and constitutional functionaries. They are appointed by the President in the exercise of his executive power but they are independent of the Executive. They hold office till they attain the age of superannuation. The High Court Judge retires at 62, while the Supreme Court Judge retires at 65. They are liable to be removed for proved misbehaviour or incapacity. The Executive is competent to appoint the Judges but not empowered to remove them. The power to remove them is vested in Parlia ment by the process analogous to impeachment. The power is located under Article 124 of the Constitution. Article 124 provides, so far as material, as follows: "124. Establishment and constitution of Su preme Court XXXXX XXXXX XXXXX (4) A Judge of the Supreme Court shall not be removed from his office except by an order of the President passed after an address by each House of Parliament supported by a majority of the total membership of that House and by a majority of not less than two thirds of the members of that House present and voting has been presented to the President in the same session for such removal on the ground of proved misbehaviour or incapacity. 243 (5) Parliament may by law regulate the proce dure for the presentation of an address and for the investigation and proof of the misbe haviour or incapacity of a Judge under clause (4). Article 2 18 provides that the provisions of clauses (4) and (5) of Article 124 shall apply in relation to a High Court as they apply in relation to the Supreme Court. In exercise of the power vested under clause (5) of Article 124, the Parliament has passed the prescribing the procedure for presentation of an address and for the investigation and proof of misbehaviour or incapacity of a Judge. It will be useful to refer to the relevant provisions of the . Section 3(1) provides for giving notice of a motion for presenting an address to the President praying for the removal of a Judge, (a) in the case of a notice of motion given in the House of the People, it should be signed by not less than one hundred members of that House; (b) in the case of a notice given in the Council of States, it should be signed by not less than fifty mem bers of that Council. The notice of motion should be given to the Speaker or, as the case may be, to the Chairman who may, after consulting such persons, as he thinks fit and after considering such materials, if any, as may be avail able to him, either admit the motion or refuse to admit the same. Section 3(2) states that if the motion referred to in sub section (1) is admitted, the Speaker or, as the case may be, the Chairman shall constitute a Committee for making an investigation into the grounds on which the removal of a Judge is prayed for. There shall be three members of the Committee; of whom one shall be chosen from among the Chief Justice and other Judges of the Supreme Court; one shall be chosen from among the Chief Justices of the High Courts and one shall be a person who is, in the opinion of the Speaker or, as the case may be, the Chairman, a distinguished ju rist. The section further provides that the Committee shall frame definite charges against the Judge on the basis of which the investigation is proposed to be held and the Judge shall be given a reasonable opportunity of presenting a written statement of defence. There are Rules called the Judges (Inquiry) Rules, 1969 formed under the Judges (En quiry) Act prescribing procedure for holding an inquiry against the Judge. Section 4(1) of the states that at the conclusion of the investigation, the Committee shall submit its report to the Speaker or, as the case may be, to the Chairman, stating therein its findings 'on each of the charges separately with such observations on the whole case as he thinks fit. The Speaker or the 244 Chairman, as the case may be, shall cause that report to be laid before the House of People and the Council of States. Section 6 provides that if the report of Committee contains a finding that the Judge is not guilty of any misbehaviour or does not suffer from any incapacity, then, no further step be taken in either House of Parliament Section 6(2) states that if the report of the Committee contains a finding that the Judge is guilty of any misbeha viour or suffers from any incapacity, then, each House of Parliament shall take further steps. The motion to present an address to the President together with the report of the Committee, shall be taken up for consideration by the House in which it is pending. That address praying for removal of the Judge must be adopted by each House of Parliament in accordance with the provisions of clause (4) of Article 124. Clause (4) of Article 124 provides that the address must be passed by each House of Parliament supported by a majority of the total membership of that House and by a majority ofi not less than two thirds of the members of that House present and voting. Thereafter it shall be presented to the President for removal of the Judge. Incidentally, it may be mentioned that the same procedure has been made applicable for removal of the Comptroller and Auditor General of India. (See clause (1) of Article 148 and for removal of the Chief Election Commissioner. (See clause (5) of Article 324 of the Constitution. Counsel for the appellant while referring to the afore mentioned provisions of the Constitution pointed out that the power to remove a Judge is not vested in any single individual or authority. No single person or authority is competent to take even cognizance of any allegation of misconduct of a Judge, or to take legal action for his removal. The power to remove a Judge is vested in the two Houses of Parliament and the President. The process and power are 'both integrated in Parliament and Parliament alone is competent to remove a Judge. But Parliament, coun sel contended, cannot be the sanctioning authority for the prosecution of a Judge. The grant of sancricrequires consid eration of material collected by the investigation agency and Parliament cannot properly consider the material. Par liament is wholly unsuitable to that work. It would be reasonable to presume that the Legislature while enacting clause (c) of Section 6(1) of the Act could not have intend ed Parliament to be the sanctioning authority. The other authority cannot be involved to grant sanction for prosecu tion of a Judge since it would be inconsistent with the provisions of the Act and the Constitutional requirements. Counsel asserted that it is necessary to exclude the Judges of the Supreme Court and of 245 the High Courts from the operation of the Act. Mr. Tulsi, learned Additional Solicitor General, on the other hand, emphasised on the role of the President in relation to removal of a Judge. He pointed out that the order of the President for removal of a Judge is imperative under clause (4) of Article 124 of the Constitution and the President could be the proper authority under clause (c) of Section 6(1) of the Act. Such, then, put quite shortly, were the contentions addressed to us on the authority competent to grant sanction for prosecution of Judges of the superior judiciary. We agree with counsel for the appellant that Parliament could not have been intended to be the sanctioning authority under clause (c) of Section 6(1). The composition of Parlia ment consisting of the President and two Houses (Article 79) makes it unsuitable to the task. The nature of transacting business or proceeding in each House renders it impractica ble. The individual Member of the House takes part in a proceeding usually by speech and voting; but the conduct of Judge in the discharge of his duties cannot be discussed. Article 121 provides "that no discussion shall take place in Parliament with respect to the conduct of any Judge of the Supreme Court or of a High ' Court in the discharge of his duties except upon a motion for presenting an address to the President praying for the removal of the Judge as hereinaf ter provided. " The only exception made in the Constitution for discussion on the conduct of a Judge is when the motion is taken up for his removal. On no other occasion the con duct of a Judge in the discharge of duties could be the subject matter of discussion in the two Houses of Parlia ment. Without discussion, it would be difficult for Parlia ment to make an objective judgment with regard to grant of sanction for prosecution. Parliament cannot therefore be the proper authority for granting sanction for the prosecution of a Judge. That does not however, follow that the Judges of superi or Courts are entitled to be excluded from the scope of the Act as contended for the appellant. That would be defeating the object of the Act. The Act was intended to cover all categories of public servants. The apparent policy of the legislation is to insure a clean public administration by weeding out corrupt officials. The Preamble of the Act indicates that the Act was intended to prevent more effec tively the bribery and corruption by public servants. This Court has an occasion to examine the broad outlines of the Act. J., in S.A. Venkataraman vs The 246 State; , while, analysing the provisions of the Act observed (at 1048): "that the provisions of the Act indicate that it was intention of the legislature to treat more severely than hitherto corruption on the part of a public servant and not to condone it in any manner whatsoev er. " Reference may also be made to the observations of Subba Rao. J., as he then was, in M. Narayanan vs State of Kerala, ; The learned Judge said that the Act is a socially useful measure conceived in the public inter est and it should be liberally constured. To quote his own words (at 729): "The Preamble indicates that the Act was passed as it was expedient to make more effec tive provisions for the prevention of bribery and corruption. The long title as well as the preamble indicate that the Act was passed to put down the said social evil i.e. bribery and corruption by public Servant. Bribery is a form of corruption. The fact that in addition to the word 'bribery ' the word 'corruption ' is used shows that the legislation was intended to combat also other evils in additon to bribery. The existing law. i.e. Penal Code was found insufficient to eradicate or even to control the growing evil of bribery and cor ruption corroding the public service of our country. The provisions broadly include the existing offences under sections 161 and 165 of the Indian Penal Code committed by public servants and enact a new rule of presumptive evidence against the accused. The Act also creates a new offence of criminal misconduct by public servants though to some extent it overlaps on the pre existing offences and enacts a rebuttable presumption contrary to the well known principles of Criminal Juris prudence. It also aims to protect honest public servants from harassment by prescribing that the investigation against them could be made only by police officials of particular status and by making the sanction of the Government or other appropriate officer a pre condition for their prosecution. As it is a socially useful measure conceived in public interest, it should be liberally construed so as to bring about the desired object i.e. to prevent corruption among public servants and to prevent harassment of the honest among them." In Craies on Statute Law. (6th ed. p. 531) it is stated that "the distinction between a strict and a liberal construction has almost disappeared with regard to all classes of statutes, so that all statutes, 247 whether penal or not, are now construed by substantially the same rules . . They are construed now with reference to the true meaning and real intention of the Legislature. " The construction which would promote the general legislative purpose underlying the provision in question, is to be preferred to a construction which would not. If the literal meaning of the legislative language used would lead to results which would defeat the purpose of the Act the Court would be justified in disregarding the literal meaning and adopt a liberal construction which effectuates the object of the legislature. Section 6, with which we are concerned indeed, requires to be liberally construed. It is not a penal provision but a measure of protection to public serv ants in the penal enactment. It indicates the authorities without whose sanction a public servant cannot be prosecut ed. It is sufficient that the authorities prescribed there under fall within the fair sense of the language of the Section. The expression "the authority competent to remove" used in clause (c) of Section 6(1) is to be construed to mean also an authority without whose order or affirmation the public servant cannot be removed. In this view, the President can be considered as the authority to grant sanc tion for prosecution of a Judge since the order of the President for the removal of a Judge is mandatory, The motion passed by each House of Parliament with the special procedure prescribed under clause (4) of Article 124 will not proprio vigore operate against the judge. It will not have the consequence of removing the Judge from the office unless it is followed by an order of the President. The importance of an order of the President for removal of a Judge could be seen by contrasting the provisions of clause (4) of Article 124 with the provisions for removal of the President, VicePresident and Speaker. Article 61 pro vides procedure for removal of the President of India. Clause (4) of Article 61 reads as follows: "61(4) If as a result of the investigation a resolution is passed by a majority of not less than two thirds of the total membership of the House by which the charge was investigated or caused to be investigated, declaring that the charge preferred against the President has been sustained, such resolution shall have the effect of removing the President from his office as from the date on which the resolu tion is so passed. " Similar is the consequence of passing the resolution for removal of the Vice President under Article 67 and the Speaker under Article 248 94 of the Constitution. Article 67(b) of the Constitution provides that the Vice President may be removed from his office by a resolution of the Council of States passed by a majority of all the then members of the Council and agreed to by the House of People. Article 94(c) provides that the Speaker may be removed from his office by a resolution of the House of the People passed by a majority of all the then members of the House. The resolution passed in accordance with the procedure prescribed under the respective provi sions for removing the President, Vice President and the Speaker, will ipso facto operate against those authorities. No further order from any other authority for their removal is necessary. But that is not the position in the case of removal of a Judge. Clause (4) of Article 124 mandates that "a Judge shall not be removed from his office except by an order of the President passed after an address by each House of Parliament . " The clause (4) is in the negative terms. The order of the President is sine qua non for removal of a Judge. The President alone could make that order. It is said that Section 6 envisages that the authority competent to remove a public servant from the office should be vertically superior in the hierarchy in which the office exists. Section 6 applies only in cases where there is a vertical hierarchy of public offices and the public servants against whom sanction is sought from the sanctioning author ity. Where the office held by the public servant is not a part of vertical hierarchy in which there is an authority above the public servant, then, Section 6 can have no appli cation. We have been referred to the observations of Desai J., in R.S. Nayak vs A.R. Antulay, at 206: "That competent authority alone would know the nature and function discharged by the public servant holding the office and whether the same has been abused or misused. It is the vertical hierarchy between the authority compete. to remove the public servant from that office and the nature of the office held by the public servant against whom sanction is sought which would indicate a hierarchy and which would therefore, permit inference of knowledge about the functions and duties of the office and its misuse or abuse by the public servant. That is why the Legislature clearly provided that that authority alone would be competent to grant sanction which is entitled to remove the public servant against whom sanction is sought from the office. " 249 With the utmost respect, we are unable to agree with the above observations. It seems to us that these observations were not intended to lay down the law that the authority competent to grant sanction for prosecution of public serv ant should be vertically superior in the hierarchy in which the office of the public servant exists. That was not the issue in that case. The observations therefore, are not meant to be and ought not to be regarded as laying down the law. It has been said almost too frequently to require repetition that judgments are not to be read as statutes. In our opinion, it is not necessary that the authority compe tent to give sanction for prosecution or the authority competent to remove the public servant should be vertically superior in the hierarchy in which the, office of the public servant exists. There is no such requirement under Section, 6. The power to give sanction for prosecution can be con ferred on any authority. Such authority may be of the de partment in which the public servant is working or an out side authority. All that is required is that the authority must be in a position to appreciate the material collected against the public servant to judge whether the prosecution contemplated is frivolous or speculative Under our enact ment the power has been conferred on the authority competent to remove the public servant. Under the British Prevention of Corruption Act, 1906 the power to give consent for prose cution for an offence under that Act has been conferred upon the Attorney General or Solicitor General. The President is not an outsider so far judiciary is concerned. The President appoints the Judges of the High Courts and the Supreme Court in exercise of his executive powers. Clause (1) of Article 217 provides that every Judge of the High Court shall be appointed by the President after consultation with the Chief Justice of India, the Governor of the State, and in the case of appointment of a Judge Other than the Chief Justice, the Chief Justice of the High Court. Similarly the President appoints the Judges of the Supreme Court. Clause (2) of Article 124 provides that every Judge of the Supreme Court shah be appointed by the Presi dent in consultation with such of the Judges of the supreme Court and of the High Courts as the President may deem necessary for the purpose and in case of appointment of a Judge other than the Chief Justice, the Chief Justice of/India shall always be consulted. The President exercises this power with the aid and advice of his Council of Minis ters under Article 74 of the Constitution. Shamsher Singh vs State of Punjab, [ 14 and S.P. Gupta vs Union of India, [1982] 2 SCR 365. Parliament has no part to play in the matter of appointment of Judges except that the Executive is responsible to the Parliament. 250 In the event of President regarded as the authority competent to give prior sanction for the prosecution of a Judge, counsel for the appellant contended, that the Presi dent cannot act independently. The President exercises his powers by and with the advice of his Council of Ministers. The Executive may misuse the power by interfering with the judiciary. The Court shall avoid interpretation which is likely to impair the independence of the judiciary. Counsel urged that a separate Parliamentary law to deal with the criminal misconduct of Judges of superior courts consistent with the constitutional scheme for their removal could be enacted and such a legislation alone would ensure judicial independence and not the present enactment. A suggestion was also made that since 'misbehaviour ' under clause (4) of Article 124 of the Constitution and 'criminal misconduct ' under Section 5(1)of the Act being synonymous, the constitu tional process for removal of the Judge must be gone through first and only after his removal the prosecution if need be recommended in the same process. Otherwise, it is said that it would lead to anomaly since there is no power either in the Constitution or under any other enactment to suspend the Judge or refuse to assign work to the Judge pending his trial or conviction in the Criminal Court and the Judge can insist on his right to continue till his removal even after his conviction and sentence. It is inappropriate to state that conviction and sen tence are no bar for the Judge to sit in the Court. We may make it clear that if a Judge is convicted for the offence of criminal misconduct or any other offence involving moral turpitude, it is but proper for him to keep himself away from the Court. He must voluntarily withdraw from judicial work and await the outcome of the criminal prosecution. If he is sentenced in a criminal case he should forthwith tender his resignation unless he obtains stay of his convic tion and sentence. He shall not insist on his right to sit on the Bench till he is cleared from the charge by a Court of competent jurisdiction. The judiciary has no power of the purse or the sword. It survives only by public confidence and it iS important to the stability of the society that the confidence of the public is not shaken. The Judge whose character is clouded and whose standards of morality and rectitude are in doubt may not have the judicial inde pendence and may not command confidence of the public. He must voluntarily withdraw from the judicial work and admin istration. The emphasis on this point should not appear superflu ous Prof. Jackson says "Misbehaviour by a Judge, whether it takes place on the bench or off the bench, undermines public confidence in the administration of justice, and also dam ages public respect for the law of the 251 land; if nothing is seen to be done about it, the damage goes unrepaired. This must be so when the judge commits a serious criminal offence and remains in office". (Jackson 's Machinery of Justice by J.R. Spencer 8th ed. p.p. 369 370) The proved "misbehaviour" which is the basis for removal of a Judge under clause (4) of Article 124 of the Constitu tion may also in certain cases involve an offence of crimi nal misconduct under section S(1) of the Act. But that is no ground for withholding criminal prosecution till the Judge is removed by Parliament as suggested by counsel for the appellant. One is the power of Parliament and the other is the jurisdiction of a Criminal Court. Both are mutually exclusive. "Even a Government servant who is answerable for his misconduct which may also constitute an offence under the IPC or under Section 5 of the Act is liable to be prose cuted in addition to a departmental enquiry. If prosecuted in a criminal court he may be punished by way of imprison ment or fine or with both but in departmental enquiry, the highest penalty that could be imposed on him is dismissal. The competent authority may either allow the prosecution to go on in a Court of law or subject him to a departmental enquiry or subject him to both concurrently or consecutive ly. It is not objectionable to initiate criminal proceedings against public servant before exhausting the disciplinary proceedings, and a fortiori, the prosecution of a JUdge for criminal misconduct before his removal by Parliament for proved misbehaviour is unobjectionable. There are various protections afforded to Judges to preserve the independence of the judiciary. They have pro tection from civil liability for any act done or ordered to be done by them in discharge of their judicial duty whether or not such judicial duty is performed within the limits of their jurisdiction. That has been provided under Section 1 of the . Likewise, Section 77 IPC gives them protection from criminal liability for an act performed judicially. Section 77 states that ?nothing is an offence which is done by a Judge when acting judicially in the exercise of any power which is, or which in good faith he believes to be, given to him by law". A discussion on the conduct of Judges of the High Courts and the SUpreme Court in the discharge of their duties shall not take place in the State Legislatures or in Parliament (Articles 12 1 and 211). The High Courts and the Supreme Court have been constituted as Courts of record with the power to punish anybody for committing contempt. (Articles 129 and 215). The (Act 7 0 71) provides power to the Court to take civil and criminal contempt proceedings. 252 But we know of no law providing protection for Judges from Criminal prosecution. Article 361(2) confers immunity from criminal prosecution only to the President and Governors of States and to no others. Even that immunity has been limited during their term of office. The Judges are liable to be dealt with just the same way as any other person in respect of criminal offence. It is only in taking of bribes or with regard to the offence of corruption the sanction for crimi nal prosecution is required. The position in other countries seems to be not differ ent. In the book "Judicial Independence The Contemporary Debate" by section Shetreet and J. Deschenes '(1985 ed.) there is an article titled as "Who watches the Watchman" by Mauro Cappelletti. The author has surveyed the penal liability of judges in the legal systems of some of the countries. The author states. In a number of national systems one can also find the provision of criminal sanctions for certain acts or omissions that are typical only of the administration of Justice, such as deni de justice, or wilful abuse of the judicial office. Even crimes which are of more general application, such as the taking of bribes, might well be sanctioned differently but possibly more severely when they refer" to judicial officers. In other countries, howev er, such as Poland, Greece and Italy, a different approach prevails. There is no criminal sanction which is specifical ly applicable only to judicial behaviour; rather, the judges are included in those criminal provisions which apply gener ally to public servants, such as provisions concerning corruption, omission or refusal to perform activities of office, vexation, etc. " If we take the early English law it will be seen that the corruption on the part of a Judge was the most reprehen sible crime and punishable as high treason. Even Lord Becon, the most gifted mind of the English Renaissance, acclaimed philosopher and the best legal brain was not spared from the punishment for accepting bribes. He was fined forty thousand pounds, a monumental sum, and imprisoned in the Tower during the King 's pleasure." He was also barred forever from hold ing any office in the "State or Commonwealth" or from sit ting in Parliament, or from coming "within the verge of the Court." King James however, liberated him from prison, remitted his fine, and pardon him fully (The Corrupt Judge by Joseph Borkin 1962 ed. p. 3, 4. & 17). There is however, apprehension that the Executive being the largest litigant is likely to misuse the power to prose cute the Judges. 253 That apprehension in our over litigious society seems to be not unjustified or unfounded. The Act no doubt provides certain safeguards. Section 6 providing for prior sanction from the competent authority and directing that no court shall take cognizance of the offence under Section 5(1) without such prior sanction is indeed a protection for Judges from frivolous and malicious prosecution. It is a settled law that the authority entitled to grant sanction must apply its mind to the facts of the case and all the evidence collected before forming an opinion whether to grant sanction or not. Secondly, the trial is by the Court which is independent of the Executive. But these safeguards may not be adequate. Any complaint against a Judge and its investigation by the CBI, if given publicity will have a far reaching impact on the Judge and the litigant public. The need therefore, is a dicious use of taking action under the Act. Care should be taken that nonest and fearless judges are not harassed. They should be protected. In the instant case the then Chief Justice of India was requested to give his opinion whether the appellant could be proceeded under the Act. It was only after the Chief Justice expressed his views that the appellant could be proceeded under the provi sions of the Act, the case was registered against him. Mr. Tulsi, learned Additional Solicitor General submitted that he has no objection for this Court for issuing a direction against the Government of India to follow that procedure in every case. But Counsel for the appellant has reservations. He maintained that it would be for the State to come forward with u separate enactment for the Judges consistent with the Constitutional provisions for safeguarding the independence of the judiciary and not for this Court to improve upon the defective law. In our opinion, there is no need for a sepa rate legislation for the Judges. The Act is not basically defective in its application to judiciary. All that is required is to lay down certain guidelines lest the Act may be misused. This Court being the ultimate guardian of rights of people and independence of the judiciary will not deny itself the opportunity to lay down such guidelines. We must never forget that this Court is not a Court of limited jurisdiction of only dispute settling. Almost from the beginning, this Court has been a law maker, albeit, in Holmes 's expression. 'interstitial law maker '. Indeed, the court 's role today is much more. It is expanding beyond dispute settling and interstitial law making. It is a prob lem solver in the nebulous areas. In this case, we consider it no were opportunity: it is a duty. It is our responsibil ity and duty to apply the existing law in a form more condu cive to the independence of the Judiciary. The Chief Justice of India is a participatory functionary in the 254 matter of appointment of Judges of the Supreme Court and the High Courts. (Articles 124(2) and 2 17(1).) Even for trans fer of a Judge from one High Court to another the Chief Justice should be consulted by the President of India (Article 222). If any questionarises as to the age of a Judge of a High Court,the question shall be decided by the President after consultation with the Chief Justice of India (Article 217(3)). Secondly, the Chief Justice being the head of the judiciary is primarily concerned with the integrity and impartiality of the judiciary. Hence it is necessary that the Chief Justice of India is not kept out of the picture of any criminal case contemplated against a Judge. He would be in a better position to give his opinion in the case and consultation with the Chief Justice of India would be of immense assistance to the Government in coming to the right conclusion. We therefore, direct that no criminal case shall be registered under Section 154, Cr. P. C. against Judge of the High Court, Chief Justice of High Court or Judge of the Supreme Court unless the Chief Justice of India is consulted in the matter. Due regard must be given by the Government to the opinion expressed by the Chief Justice. If the Chief Justice is of opinion that it is not a fit case for proceeding under the Act, the case shall not be regis tered. If the Chief Justice of India himself is the person against whom the allegations of criminal misconduct are received the Government shall consult any other Judge or Judges of the Supreme Court. There shall be similar consul tation at the stage of examining the question of granting sanction for prosecution and it shall be necessary and appropriate that the question of sanction be guided by and in accordance with the advice of the Chief Justice of India. Accordingly the directions shall go to the Government. These directions, in our opinion, would allay the apprehension of all concerned that the Act is likely to be misused by the Executive for collateral purpose. For the reasons which we have endeavoured to outline and subject to the directions issued, we hold that for the purpose of clause (c) of Section 6(1) of the Act the Presi dent of India is the authority competent to give previous sanction for the prosecution of a Judge of the Supreme Court and of the High Court. It remains only to deal with one short point in this part of the discussion. The High Court has expressed the view that no sanction for prosecution of the appellant under Section 6 was necessary since he has retired from the serv ice on attaining the age of superannuation and was not a public servant on the date of filing the chargesheet. The view taken by the High Court appears to be unassailable. The scope of Section 6 was first considered by this Court in S.A. Venkatararnan 's 255 case, where it was observed (at 1048) that Section 6 of the Act must be considered with reference to the words used in the section independent of any construction which may have been placed by the decisions on the words used in Section 197 of the Cr. The Court after analysing the terms of Section further observed (at 1049) that "there is nothing in the words used in Section 6(1) to even remotely suggest that previous sanction was necessary before a court could take cognizance of the offences mentioned therein in the case of a person who had ceased to be a public servant at the time the court was asked to take_ cognizance, although he had been such a person at the time the offence was committed. " This view has been followed in C.R. Bansi vs State of Maha rashtra; , and also in K.S. Dharmadatan vs Central Government & Ors., ; and finally reiterated in a Constitution Bench decision in R.S. Nayak & Ors. A.R. Antulay, The question is, therefore, no longer res integra. This brings us to the end of the second question and takes us on to the first question. Among the substantive points raised for the. appellant, the first question relates to the nature of the offence created under clause (e) of Section 5(1). The second, allied question, is as to the invalidity of the charge sheet filed in the instant case in as such as it failed to incorporate the essential ingredient of the offence. It was urged that the public servant is entitled to an opportunity to explain the disproportionality between the assets and the known sources of income. This opportunity should be given to the public servant by the Investigating Officer and the charge sheet must contain a statement to that effect, that is, to the unsatisfactory way of accounting by the public servant. Unless the charge sheet contains such an averment, counsel contended that under law an offence under clause (e) of Section 5(1) of the Act is not made out. For a proper consideration of the contentions, we may have the pre natal history of clause (e) of Section 5(1). Section 5(1) of the Act, as originally stood, provides in the four clauses (a), (b), (c) and (d) the acts or the omissions of which public servant is said to have committed an offence of criminal misconduct in the discharge of his duties. All these provisions are still there except the term 'in the discharge of his duties '. There then followed, Section 5(3) which was in these terms: " In any trial of an offence pun ishable under sub section (2) the fact that the accused person or any other person on his behalf is in possession, for which the accused person cannot satisfactorily account, of pecuniary resources or property 256 disproportionate to his known sources of income may be proved, and on such proof the court shall presume, unless the contrary is proved, that the accused person is guilty of criminal misconduct in the discharge of his official duty and his conviction therefor shall not be invalid by reason only that it is based solely on such presumption." ' This Section 5(3) does not create a new offence but only provides an additional mode of proving an offence punishable under Section 5(2) for which any accused person was being tried. It enables the Court to raise a presumption of guilt of the accused in certain circumstances. This additional mode is by proving the extent of the pecuniary resources or property in the possession of the accused or any other person on his behalf and thereafter showing that this is disproportionate to his known sources of income. If these facts are proved the section makes it obligatory for the Court to presume that the accused person is guilty of crimi nal misconduct in the discharge of his official duty, unless the contrary is proved by the accused that he is not so guilty. The Section 5(3) further provides that the convic tion for an offence of criminal misconduct shall not be invalid by reason that it is based solely on such presump tion. (See: (i) C.S.D. Swamy vs The State, ; ; (ii) Surajpal Singh vs The State of U.P., [961] 2 SCR 97 1, and (iii) Sajjan Singh vs The State of Punjab, ; In 1962, as earlier explained, Santhanam Committee on 'Prevention of Corruption ' was constituted to review, among other things, the law relating to corruption, to ensure speedy trial of cases of bribery and criminal misconduct and to make the law otherwise more effective. The Committee in its report has, inter alia recommended the inclusion of clause (e) of Section 5(1) as a substantive offence in the Act. The Government accepted that recommendation and to give effect to that recommendation, enacted clause (e) of Section 5(1) replacing Section 5(3) of the Act. The Statement of Objects and Reasons accompanying the Bill leading to the enactment of 'The AntiCorruption Laws (Amendment) Act, 1964 (Act No. 40 of 1964) by which clause (e) of Section 5(1) was introduced into the Act reads: The Committee has recommended a number of important amendments to the Preven tion of Corruption Act, 1947. It has suggested that the presumption enunciated in sub section (1) and (2) of Section 4 of the Act should be made available also in respect of offences under 257 Section 5 and possession of disproportionate assets should be made a substantive offence." (Emphasis supplied) For immediate reference, clause (e) of Section 5(1) is reproduced hereunder: " 5(1)(e) if he or any person on his behalf is in possession or has, at any time during the period of his office, been in possession, for which the public servant cannot satisfactorily account, of pecuniary resources or property disproportionate to his known sources of income". The terms of clause (e) indicates that the principle underlying section 5(3) appears to have been elevated to a substantive offence in somewhat different words. We will presently analyse the ingredients of the offence under clause (e), but before that, two decisions of this Court on the scope of clause (e) may be referred. In Maharashtra vs K.K.S. Ramaswamy; , , Shinghal, J., said (at 276) that the result of the enactment of clause (e) is that mere possession of pecuniary resources or property dispro portionate to the known sources of income of a public serv ant, for which he could not satisfactorily account, became an offence by itself although Section 5(3) which existed prior to Section 5(1)(e) did not constitute an offence. In State of Maharashtra vs Wasudeo Ramachandra Kaidal war; , , Sen, J., spelled out succintly the insight of clause (e) of Section 5(1) (at pp. 682 to 684): "The terms and expressions appearing in section 5(1)(e) of the Act are the same as those used in the old section 5(3). Although the two provisions operate in two different fields, the meaning to be assigned to them must be the same. The expression "known sources of income" means "sources known to the prosecution". So also the same meaning must be given to the words "for which the public servant is unable to satisfactorily account" occurring in section 5(1)(e). No doubt section 4(1) provides for pre sumption of guilt in cases falling under sections 5(1)(a) and (b), but there was, in our opin ion, no need to mention section 5(1)(a) therein. For the reason is obvious. The provision contained in section 5(1)(e) of the Act is a self contained provision. The first part of the Section casts a burden on the prosecution and the second 258 on the accused. When section 5(1)(e) uses the words "for which the public servant is unable to satisfactorily account", it is implied that the burden is on such public servant to ac count for the sources for the acquisition of disproportionate assets. The High Court, therefore, was in error in holding that a public servant charged for having dispropor tionate assets in the possession for which he cannot satisfactorily account, cannot be convicted of an offence under section 5(2) read with section 5(1)(e) of the Act unless the prosecu tion disproves all possible sources of income. " On the burden of proof under Section 5(1)(e) of the Act, learned Judge said: "The expression "burden of proof" has two distinct meanings; (1) the legal burden i.e. the burden of establishing the guilt, and (2) the evidentia1 burden, i.e. the burden of leading evidence. In a criminal trial, the burden of proving everything essential to establish the charge against the accused lies upon the prosecution, and that burden never shifts. Not,/withstanding the general rule that the burden of proof lies exclusively upon the prosecution, in the case of certain c fences, the burden of proving a particular fact in issue may be laid by law upon the accused. The burden resting on the accused in such cases is, however, not so onerous as that which lies on the prosecution and is dis charged by proof of a balance of probabili ties. " As to the ingredients of the offence, learned Judge contin ued: "The ingredients of the offence of criminal misconduct under section 5(2) read with section 5(1)(e) are the possession of pecuniary resources or property disproportionate to the known sources of income for which the public servant cannot satisfactorily account. To substantiate the charge, the prosecution must prove the follow ing facts before it can bring a case under section 5(1)(e), namely, (1)it must establish that the accused is a public servant, (2) the nature and extend of the pecuniary resources or property which were found in his possession, (3) it must be proved as to what were his known sources of income i.e. known to the, prosecution, and (4) it must prove quite objectively, that such resources or property found in possession of the accused 259 were disproportionate to his known sources of income. Once these four ingredients are estab lished, the offence of criminal misconduct under section 5(1)(e) is complete, unless the accused is able to account for such resources or proper" The burden then shifts to the accused to satisfaction. account for his possession of disproportionate assets. The extent and nature of burden of proof resting upon the public servant to be found in posses sion of disproportionate assets under section 5(1)(c) cannot be higher than the test laid by the Court in Jahgan 's case (supra), i.e. to establish his case by a preponderance of probability. That test was laid down by the Court following the dictum of Viscount Sankey, L.C. in Woolmington vs Director of Public prosecutions. " The soundness of the reasoning in Wasudeo Ramachandra Kaidalwar case (supra) has been doubted. Counsel for the appellant urged that the view taken on Section 5(3) cannot be imported to clause (e) of Section 5(1) and the decision, therefore, requires reconsideration. But we do not think that the decision requires reconsideration. It is signifi cant to note that there is useful parallel found in Section 5(3) and clause (e) of Section 5(1). Clause (e) creates a statutory offence which must be proved by the prosecution. It is for the prosecution to prove that the accused or any person on his behalf, has been in possession of pecuniary resources or property disproportionate to his known sources of income. When that onus is discharged by the prosecution, it is for the accused to account satisfactorily for the disproportionality of the properties possessed by him. The Section makes available statutory defence which must be proved by the accused. It is a restricted defence that is accorded to the accused to account for the disproportionali ty of the assets over the income. But the legal burden of proof placed on the accused is not so onerous as that of the prosecution. However, it is just not throwing some doubt on the prosecution version. The Legislature has advisedly used the expression "satisfactorily account". The emphasis must be on the word "satisfactorily". That means the accused has to satisfy the court that his explanation is worthy of acceptance. The burden of proof placed on the accused is an evidential burden though not a pursuasive burden. The ac cused however, could discharge that burden of proof "on the balance of probabilities" either from the evidence of the prosecution and/or evidence from the defence. This procedure may be contrary to the well known principle of 260 criminal jurisprudence laid down in Woolmington vs Director of Public Prosecution, ; that the burden of proof is always on the prosecution and never shifts to the accused person. But Parliament is competent to place the burden on certain aspects on the accused as well and partic ularly in matters "specially within his knowledge". (Section 106 of the Evidence Act). Adroitly, as observed in Swamy case (at 469) and reiterated in Wasudeo case (at 683), the prosecution cannot, in the very nature of things, be expect ed to know the affairs of a public servant found in posses sion of resources of property disproportionate to his known sources of income. It is for him to explain. Such a statute placing burden on the accused cannot be regarded as unrea sonable, unjust or unfair. Nor it can be regarded as con trary to Article 21 of the Constitution as contended for the appellant. It may be noted that the principle re affirmed in Woolmington case is not a universal rule to be followed in every case. The principle is applied in the absence of statutory provision to the contrary. (See the observations of Lord Templeman and Lord Griffiths in Rig. vs Hunt, at 1118 and 1129). Counsel for the appellant however, submitted that there is no law prohibiting a public servant having in his posses sion assets disproportionate to his known sources of income and such possession becomes an offence of criminal miscon duct only when the accused is unable to account for it. Counsel seems to be focussing too much only on one part of clause (e) of Section 5(1). The first part of clause (e) of Section 5(1) as seen earlier relates to the proof of assets possessed by the public servant. When the prosecution proves that the public servant possesses assets disproportionate to his known sources of income the offence of criminal miscon duct is attributed to the public servant. However, it is open to the public servant to satisfactorily account for such disproportionality of assets. But that is not the same thing to state that there is no offence till the public servant is able to account for the excess of assets. If one possesses assets beyond his legitimate means, it goes with out saying that the excess is out of illgotten gain. The assets are not drawn like nitrogen from the air. It has to be acquired for which means are necessary. It is for the public servant to prove the source of income or the means by which he acquired the assets. That is the substance of clause (e) of Section 5(1). In the view that we have taken as to the nature of the offence created under clause (e), it may not be necessary to examine the contention relating to ingredient of the of fence. But since the legality of the charge sheet has been impeached, we will deal with that contention 261 also. Counsel laid great emphasis on the expression "for which he account satisfactorily account" used in clause (e) of Section 5(1) of the Act. He argued that that term means that the public servant is entitled to an opportunity before the Investigating Officer to explain the alleged dispropor tionality between assets and the known sources of income. The Investigating Officer is required to consider his expla nation and the charge sheet filed by him must contain such averment. The failure to mention that requirement would vitiate the charge sheet and renders it invalid. This sub mission, if we may say so, completely overlooks the powers of the Investigating Officer. The Investigating Officer is only required to collect material to find out whether the offence alleged appears to have been committed. In the course of the investigation, he may examine the accused. He may seek his clarification and if necessary he may cross check with him about his known sources of income and assets possessed by him. Indeed, fair investigation requires as rightly stated by Mr. A.D. Giri learned Solicitor General, that the accused should not be kept in darkness. He should be taken into confidence if he is willing to cooperate. But to state that after collection of all material the investi gating Officer must give an opportunity to the accused and call upon idm to account for the excess of the assets over the known sources of income and then decide whether the accounting is satisfactory or not, would be elevating the Investigating Officer to the position of an enquiry officer or a judge. The investigating officer is not holding an enquiry against the conduct of the public servant or deter mining the disputed issues regarding the disproportionality between the assets and the income of the accused. He just collects material from all sides and prepares a report which he files in the Court as charge sheet. The charge sheet is nothing but a final report of police officer under Section 173(2) of the Cr. The Section 173(2) provides that on completion of the investigation the police officer investigating into a cognizable offence shall submit a report. The report must be in the form prescribed by the State Government and stating therein (a) the names of the parties; (b) the nature of the information; (c) the names of the persons who appear to be acquainted with the circumstances of the case; (d) whether any offence appears to have been committed and, if so, by whom (e) whether the accused has been arrested; (f) whether he had been released on his bond and, if so, whether with or without sureties; and (g) whether he has been. forwarded in custody under Sec. 170. As observed by this Court in Satya Narain Musadi and Ors. vs State of Bihar, at 157; that the statutory requirement of the report under Section 173(2) would be complied 262 with if the various details prescribed therein are included in the report. This report is an intimation to the magis trate that upon investigation into a cognizable offence the investigating officer has been able to procure sufficient evidence for the Court to inquire into the offence and the necessary information is being sent to the Court. In fact, the report under Section 173(2) purports to be an opinion of the investigating officer that as far as he is concerned he has been able to procure sufficient material for the trial of the accused by the Court. The report is complete if it is accompanied with all the documents and statements of wit nesses as required by Section 175(5). Nothing more need be stated in the report 'of the Investigating Officer. It is also not necessary that all the details of the offence must be stated. The details of the offence are required to be proved to bring home the guilt to the accused at a later stage i.e. in the course of the trial of the case "adducing acceptable evidence. In the instant case, the charge sheet contains all the requirements of Section 173(2). It states that the investi gation shows that between 1 May 1969 and 24 February 1976 the appellant as the Chief Justice of the High Court of Madras was in possession of the pecuniary resources and property in his own name and in the name of his wife and two sons etc., which were disproportionate by Rs.6,41,416.36 to the known sources of income over the same period and cannot satisfactorily account for such disproportionate pecuniary resources and property. The details of properties and pecu niary resources of the appellant also have been set out in clear terms. No. more, in our opinion, is required to be stated in the charge sheet. It is fully in accordance with the terms of Section 173(2) Cr. P.C. and clause (e) of Section 5(1) of the Act. For the foregoing reasons, we dismiss the appeal and direct the trial court to proceed with the case expeditious ly. Before parting with the case, we may say a word more. This case has given us much concern. We gave our fullest consideration to the questions raised. We have examined and re examined the questions before reaching the conclusion. We consider that the society 's demand for honesty in a judge is exacting and absolute. The standards of judicial behaviour, both on and off the Bench, are normally extremely high. For a Judge to deviate from such standards of honesty and impar tiality is to betray the trust reposed on him. No excuse or no legal relativity can condone such betrayal. From the standpoint of justice the size of the bribe or scope of corruption cannot be the scale for measuring a judge 's dishonour. A single dishonest judge not only dis 263 honours himself and disgraces his office but jeopardizes the integrity of the entire judicial system. A judicial scandal has always been regarded as far more deplorable than a scandal involving either the Executive or a member of the Legislature. The slightest hint of irregu larity or impropriety in the Court is a cause for great anxiety and alarm. "A legislator or an administrator may be found guilty of corruption without apparently endangering the foundation of the State. But a Judge must keep himself absolutely above suspicion" to preserve the impartiality and independence of the judiciary. and to have the public confi dence thereof. SHARMA, J. I have gone through the learned judgments of Mr. Justice Ray, Mr. Justice Shetty and Mr. Justice Verma. I agree with Mr. Justice Ray and Mr. Justice Shetty that the appeal should be dismissed. In view of the elaborate discus sion of the facts and law in the judgments of my learned brothers, I am refraining from dealing with them in detail, and am indicating my reasons briefly. The expression "public servant" used in the Preven tion of Corruption Act, 1947 (hereinafter referred to as the 'Act ') is undoubtedly wide enough to denote every judge, including Judges of the High Court and the Supreme Court. The argument is that in view of the language of the Act considered along with the provisions of the Constitution especially Article 124, Section 5 of the Act must be held to be inapplicable to the High Court and Supreme Court Judges. It has not, however, been suggested, and rightly, that the Parliament lacks jurisdiction in passing a law for trial and conviction of High Court and Supreme Court Judges in cases where they are guilty of committing criminal offences. The contention is that in view of the scheme of the Act it should be inferred that the penal provisions of the Act do not apply to them. Great reliance has been placed on Section 6, requiring previous sanction of the authority competent to remove the Judge ' from the office as a necessary condition for taking cognizance. It has been urged that in view of this essential requirement it has to be held that the Act does not cover the case of a member of the higher judiciary while in office and consequently it cannot be made applica ble to him even after his retirement. For the purpose of this argument it is presumed that there is no authority competent to remove a High Court Judge from his office within the meaning of Section 6, and the condition precedent for starting a prosecution against him, therefore, cannot be satisfied. I do not think this basic assumption is correct. 264 3. Section 6(1)(c) of the Act speaks of the "authority competent to remove him from his office". The question is as to whether there is some "authority competent" to remove a High Court Judge from his office or not. An answer in the negative will be inconsistent with Article 124 Clauses 4 and 5 read with Article 2 18 of the Constitution. It is signifi cant to note that Article 124(4) speaks of "removal from his office", and Section 6 of the Act uses similar language. The removal of a Judge does not take .place automatically on commission or omission of a particular act or acts or on fulfilment of certain prescribed conditions. It is dependant on certain steps to be taken as mentioned)in the Article through human agency. Initially some members 9f the Parlia ment have to move in the matter and finally an order has to be passed by the President. Thus although more than one person are involved in the process, it is not permissible to say that no authority exists for the purpose of exercising the power to remove a High Court Judge from his office. As to who is precisely the authority in this regard is a matter which, in my view, does not arise in the present case, but the vital question whether such an authority exists at all must be answered in the affirmative. It has been strenuously contended by Mr. Sibal, learned counsel for the appellant, that the Constitution envisages an independent judiciary, and to achieve this goal it is essential that the other limbs of the State including the executive and the lagislature should be denied a posi tion from where the judiciary can be pressurized. The State is an organisation committed to public good; it is not an end in itself. Its different branches including the legislature, judiciary and the executive are intended to perform different assigned important functions. Judiciary has a duty to dispense justice between person and person as also between person and State itself. To be able to perform its duties effectively the Judges have to act "without fear or favour, affection or ill will". They must, therefore, be free from pressure from any quarter. Nobody can deny this basic essence of independence of judiciary. But for the judiciary to be really effective, the purity in the administration of justice and the confidence of the people in the courts are equally essential. It is to achieve this end that the higher judiciary has been vested with the power to punish for its own contempt. This has become neces sary so that an aggrieved or misdirected person may not cast aspersions on the court which may adversely affect the public confidence. If the community loses its faith in the courts, their very existence will cease to have any meaning. A person with a just cause shall not approach the court for a legal 265 remedy, if according to his belief the decision of the court would be given on extreneous consideration and not on the merits of his claim. People will return to the law of the jungle for settling their dispute on the streets. These aspects are common for the entire judiciary, whether Higher or Subordinate, and to my mind no classification is permis sible separating one category from another. Although the Judges of the higher judiciary perform important functions and are vested with special jurisdic tion, at cannot be forgotten that judicial power, wherever it is vested, is integral and basic for a democratic consti tution. A large number of cases are finally decided at the stage of the subordinate judiciary. The subordinate judici ary, therefore, also needs the same independence which is essential for the higher judiciary. It is, therefore, not safe to assume that the Act intended to make in its applica tion any discrimination between the lower and the higher judiciary. Protection to the public servant in general is provided under Article 311 and the interest of the subordi nate judiciary is further taken care of by the High Court, and this along with the provisions regarding previous sanc tion shields them from unjustified prosecution. Similarly protection is available to the High Court and Supreme Court Judges through the provisions of Article 124(4) and (5) of the Constitution. So far this aspect is concerned, the two categories of Judges High Court and Supreme Court Judges on the one hand and the rest on the other have not been treated by the law differently. There cannot be any rational ground on the basis of which a member of a higher judiciary may be allowed to escape prosecution while in identical circum stances a member of the subordinate judiciary is tried and convicted. Such an interpretation of the Act will militate against its constitutional validity and should not, there fore, be preferred. There is still another reason indicating that the interpretation suggested on behalf of the appellant should not be accepted. If it is held that a member of the higher judiciary is not liable to prosecution for an offence under Section 5 on account of the requirement of previous sanction under Section 6, it will follow that he will be immune from ' the prosecution not only under Section 5(1)(e) as is the present case, but also for the other offences under Clauses (a) to (d). So far offences punishable under Sections 161, 164 and 165 of the Indian Penal Code are concerned they are also subject to such previous sanction. The result will be serious. It is a well established principle that no person is above the law and even a constitutional amendment as contained in Article 329 A in the case of the Prime Minister was struck 266 down in at 470 C D. It has to be remembered that in a proceeding under Article 124 a Judge can merely be removed from his office. He cannot be convicted and pun ished. Let us take a case where there is a positive finding recorded in such a proceeding that the Judge was habitually accepting bribe, and on that ground he is removed from his office. On the argument of Mr. Sibal, the matter will have to be closed with his removal and he will escape the crimi nal liability and even the ill gotten money would not be confiscated. Let us consider another situation where an abetter is found guilty under Section 165 A of the Indian Penal Code and is convicted. The main culprit, the Judge shall escape on the argument of the appellant. In a civi lised society the law cannot be assumed to be leading to such disturbing results. In adopting the other view I do not see any difficul ty created either by the scheme or the language of the Act or by any constitutional provision. The statement in Santha nam Committee 's report that the members did not consider judiciary to be included in the terms of the reference, is not of much help as admittedly the Act applies to the mem bers of the subordinate judiciary. Nor can the rules relat ing to disclosure by some Govt. servants of their assets and liabilities determine the scope of the law. These rules differ from place to place and are amended from time to time according to the changing exigencies. As has been stated earlier, the power to remove a High Court Judge from his office does exist and has to be exercised in appropriate circumstances according to the provisions of Article 124. It is, therefore, not right to say that previous sanction for his prosecution cannot be made available. Section 2 of the Act adopts the definition of "public servant" as given in Section 21 of the Indian Penal Code, which includes "Every Judge". If the legislature had intended to exclude the High Court and Supreme Court Judges from the field of Section 5 of the Act, it could have said so in unambiguous terms instead of adopting the wide meaning of the expression "public servant" as given in the Indian Penal Code. The further question as to the identity of the authority empowered to grant the necessary sanction as mentioned in Section 6 of the Act was hotly debated during the hearing of the case. Mr. Justice Shetty has held that since ultimately it is the order of the President which is necessary for the removal of a Judge, he must be treated to be the competent authority. Taking into consideration the independence of judiciary as envisaged by the Constitution, it has further been observed that the Chief Justice of India will have to be 267 consulted in the matter and steps would have to be taken in accordance with his advice. Mr. Justice Ray and Mr. Justice Venkatchaliah are in agreement with this view. These obser vations, I believe, would be not only acceptable, but wel come to the Union of India, as during the hearing it was at the suggestion of the learned Solicitor General and the Additional Solicitor General, that the desirability of the aforesaid direction in the judgment was considered by the Bench. I also fully appreciate that if the executive follows this rule strictly, a further protection from harassment of the judges by uncalled for and unjustified criminal prosecu tion shall be available. But in my view such a binding direction cannot be issued by this Court on the basis of the provisions of the Constitution and the Act. Before proceeding further 1 would again state that having answered the question as to whether a Judge of the superior court can be removed by some authority whoever he or they may be, in the affirmative, it is not necessary to decide the further controversy as mentioned above. I would, therefore, be content merely by indicating some of the aspects which may be relevant for the issue, to be decided later in a case when it directly arises. If the President is held to be the appropriate authority to grant the sanction without reference to the Parliament, he will be bound by the advice, he receives from the Council of Ministers. This will seriously jeopardise the independence of judiciary which is undoubtedly a basic feature of the Constitution. Realising the serious implica tion it was suggested on behalf of the Union of India that this Court may lay down suitable conditions by way of prior approval of the Chief Justice of India for launching a prosecution. I fully appreciate the concern of all of us including the Union of India for arriving at a satisfactory solution of the different problems which are arising, but if we start supplementing the law as it stands now, we will be encroaching upon the legislative field. To meet this objec tion it was contended that it is permissible for us to issue the suggested direction because the Chief Justice of India is not a stranger in the matter of appointment of a Judge of the High Court or the Supreme Court; rather he is very much in the picture. Reference was made to the provisions of Articles 124 (2) and 2 17(1). The difficulty in accepting this argument is that the Governor of the State and the Chief Justice of the High Court are as much involved in the matter of appointment of a Judge of the High Court as the Chief Justice of India. We cannot, therefore, simplify the problem by referring to the aforesaid Articles. In my view the approval of Chief Justice of India can be introduced 268 as a condition for prosecution only by the Parliament and not by this Court. The question, then, is as to what is the protection available under the law as it exists today, to the independ ence of the judiciary of the country. The answer is in Section 6 of the Act, which by providing for previous sanc tion of the authority empowered to remove the Judge, takes us to Article 124, Clauses (4) and (5). Since the Constitu tion itself has considered it adequate in the matter of dealing with serious accusations against the Judges by incorporating the provisions of Clauses (4) and (5) in Article 124, they must be treated to be appropriate and suitable; and should be resorted to in the matter of prose cution also, in view of the Parliament enacting Section 6 of the Act in the language which attracts the constitutional provisions. It has been argued that in view of the constitution al prohibition against any discussion in Parliament with respect to the conduct of a Judge of the superior court, except in connection with his removal under Article 124, it will not be possible to obtain the necessary sanction as mentioned in Section 6 of the Act, except by initiating a motion for removal also simultaneously; and then, it will be a time consuming process. I will assume the contention to be correct, but for that reason I do not think that the correct interpretation of the legal position can be discorrected, as it does not lead to any illegal consequence, untenable position or an absurd result. It is true that the grant of sanction will be delayed until the accusation is examined according to the law enacted under Clause (5) of Article 124, but once that stage is over and a finding is recorded against the Judge, there should not be any hitch in combin ing the two matters that is the removal and the grant of sanction which are obviously intertwined. It has to be remembered that the prosecution under Section 5(1) of the Act refers to collection by the Judge of disproportionately large amount of wealth during the period he has been in office. The two matters the prosecution and removal should not, therefore, be treated to be separate and unconnected with each other. Otherwise, there will be scope left for the Judge concerned to claim that although he may be facing prosecution or may have been even convicted after trial, he still continues to be a Judge entitled to exercise his powers, as he has not been removed from his office. It was stated during the course of the hearing that actually such a situation has arisen in another country where a Judge al though punished with imprisonment was insisting that he still continued in his office. I do not think that such a thing is permissible in this country. The anomaly involved in such situations 269 can be satisfactorily resolved by combining the two matters and getting clearance from the Parliament. Before closing this chapter I would again repeat that this issue is not arising in the present case and will have to be considered and finally decided only when it directly arises. Since, however, opinions have been expressed. which I regret I do not find myself in a position to share. I have, with great est respect of my learned brothers, taken the liberty to state some important considerations, which appear to be relevant to me. Mr. Sibal next contended that as the appellant was not called upon to account for the property which was found in his possession, one of the essential ingredients under Section 5(1)(e) is not satisfied. There is no merit whatso ever in this point either. The section does not contemplate a notice to be served on the accused. If the prosecuting at hority after making a suitable enquiry, by taking into account the relevant documents and questioning relevant persons, forms the opinion that the accused cannot satisfac torily account the accumulation of disproportionate wealth in his possession the section is attracted. The records clearly indicate that after duly taking all the appropriate steps it was stated that the assets found in the possession of the appellant in his own name and in the name of his wife and two sons, were disproportionate by a sum of over Rs.6 lacs to his known sources of income during the relevant period and which he "cannot satisfactorily account". Since I do not find any merit in any of the points urged on behalf of the appellant this appeal is dismissed. VERMA, J. I have perused the opinions of my learned brethren constituting the majority taking the view that the Prevention of Corruption Act applies. I am unable to sub scribe to this view. My dissenting opinion is at best only academic. All the same I deem it fit to record the same with my reasons for taking a different view. It is indeed unfor tunate that this question should at all arise for judicial determination. However, the question having arisen we are bound to give our opinion. In view of the significance of the point, I record my respectful dissent reassured by the observations of Hughes that 'unanimity which is merely formal, which is recorded at the expense of strong, con flicting views, is not desirable in a court of last resort, whatever may be the effect on public opinion at the time. This is so because what must ultimately sustain the court in public confidence is the character and independence of the judges . It is better that their independence should be maintained and recognised than that 270 unanimity should be secured through its sacrifice. I would rather b.e a conscientious lone dissenter than a troubled conformist. It is in this spirit, in all humility, I record my dissent. Can the Chief Justice of a High Court or any of its puisne Judges be prosecuted for an offence punishable under the Prevention of Corruption Act, 1947 (hereinafter referred to as 'the Act ')? This is the main question arising for decision in this appeal. The appellant, K. Veeraswami, a former Chief Justice of the Madras High Court filed an application under Section 482 of the Code of Criminal Proce dure, 1973 (Criminal M.P. No. 265 of 1978) to quash the proceedings in C.C. No. 46 of 1977 in the Court of the Special Judge, Madras, initiated on a charge sheet accusing him of the offence of criminal misconduct under Section 5(1)(e) punishable under Section 5(2) of the Act, as amended by the Amendment Act of 1964. The matter was heard by a full bench of the High Court which dismissed the application by order dated 27.4. 1979 according to the majority opinion of Natarajan and Mohan, JJ. while Balasubrahmanyan, J. dissent ed. This appeal is by a certificate granted by the High Court under Articles 132(1) and 134(1)(c) of the Constitu tion of India in view of the important question of law involved for decision. The material facts are only a few. The appellant joined the Bar of Madras in the year 1941 and had a lucrative prac tice. In 1953 he was appointed as Assistant Government Pleader and in 1959, the Government Pleader at Madras. On 20.2.1960, he was elevated to the Bench of the Madras High Court being appointed as a permanent Judge of that Court. On 1.5. 1969, he was appointed the Chief Justice of the Madras High Court, from which office he retired on 7.4.1976. On 24.2. 1976, the Central Bureau of Investigation at Delhi registered a case against the appellant under the Act and on 28.2.1976, the First Information Report was lodged accusing the appellannt of the offence of criminal misconduct under Section 5(1)(e) punishable under Section 5(2) of the Act. A charge sheet dated 15.12.1977 was filed alleging that be tween 1.5. and 24.2. 1976, while the appellant was a public servant, he was in possession of pecuniary resources and property in his own name and in the names of his wife Smt. Eluthai Ammal and his two sons S/Shri V. Suresh and V. Bhaskar, which were disproportionate to the extent of Rs.6,41,416.36p. to his known sources of income during that period and that he cannot satisfactorily account for such disproportionate pecuniary resources and property. The charge sheet also gave particulars on the basis of which the disproportion in assets was alleged. 271 The appellant filed a petition under Section 482 Cr. P.C. in the High Court for quashing the prosecution pending in the Court of Special Judge, Madras, on the above charge sheet, with the result indicated above. Several arguments including the allegation of mala fides against the Central Government were advanced in the High Court on behalf of the appellant. It is, however, unnecessary to refer to all of them since at the hearing of the appeal before us, the appellant 's case was confined only to the grounds stated hereafter and the ground of mala fides alleged in the High Court was expressly given up at the hearing before us by Shri Kapil Sibal, learned counsel for the appellant. Shri Kapil Sibal, learned counsel for the appellant advanced two arguments only. His first contention is that the Judges of the High Courts and the Supreme Court are not within the purview of the Act, which is a special enactment applicable to public servants, in whose case prosecution can be launched after sanction granted under Section 6 of the Act, which is alien to the scheme envisaged for constitu tional functionaries like Judges of the High Courts and Supreme Court. He argued that the special provisions in the Constitution of India relating to the Judges of the High Courts and the Supreme Court clearly indicate that they are not within the purview of the Act and that after their appointment in the manner prescribed, they are wholly immune from executive influence, their tenure being fixed by the Constitution, except for removal in the manner prescribed by Article 124(4). The other argument of Shri Sibal is that one of the essential ingredients of the offence of criminal misconduct, defined in Section 5(1)(e) of the Act, which is punishable under Section 5(2) thereof, is the inability of the accused to satisfactorily account for possession of disproportionate assets, which must be evident from the documents annexed to the charge sheet to enable the Special Judge to take cognizance of the offence and this can be possible only if the accused is asked to give his account before filing of the charge sheet. On this basis, it was argued that the procedure for grant of sanction under Sec tion 6 of the Act which requires the sanctioning authority to see the explanation of the public servant before granting sanction, makes it feasible, which also shows its inapplica bility to the superior Judges, in whose case there is no such service record or machinery provided. In a way, the second argument of Shri Sibal also is connected with his first argument. Shri Sibal argued that irrespective of the desirability of enacting a law providing for the prosecution and trial of superior Judges accused of the offence of criminal misconduct, the existing law contained in the Act is inapplicable to them. In reply, the learned Solicitor General, 272 who was followed by the learned Additional Solicitor Gener al, strenuously urged that the Judges of the High Courts and the Supreme Court also fall within the purview of the Act being 'public servants ', which definition is wide enough to include 'every Judge '. They argued that there is no immunity to the superior Judges as in the case of the President and the Governor under Article 36 1 of the Constitution and, therefore, there was no reason to exclude to superior Judges from the purview of the Act. The difficulty of sanction under Section 6 for the prosecution of superior Judges and the special provisions contained in clauses (4) and (5) of Article 124 read with Article 2 18, it was suggested, pre sented no difficulty since the President of India could be treated as the competent authority to grant sanction in accordance. with Section 6(1)(c) of the Act in the case of the High Court and Supreme Court Judges. The learned Solici tor General and the Additional Solicitor General also urged that adequate safeguards in the form of guidelines be sug gested by this Court to prevent any abuse of executive authority or harassment to independent Judges. It was sug gested that some machinery involving the Chief Justice of India for grant of sanction for prosecution by the President of India, even for investigation into the offence, could be suggested by this Court for implicit compliance by the executive. It was argued that in this manner preservation of independence of the judiciary could be ensured while treat ing the superior Judges also within the purview of the Act to enable the prosecution and punishment of the corrupt ones. In view of the great significance of the point involved for decision which has arisen for the first time, the matter was heard at considerable length to illuminate the grey areas. At the hearing the consensus was that, this unfortu nate controversy not envisaged earlier, having now arisen, may be, it is time that a clear provision be made within the constitutional scheme to provide for a machinery to deal with the corrupt members of the superior judiciary, which itself is necessary for preservation of the independence of the judiciary. However, the difference is with regard to the adequacy of machinery enacted in the existing legislation for this purpose. In other words, the difference is about the law as it is and not about what it should be. For the purpose of deciding this case, we have to see the law as it now exists. The main point for consideration is whether the Chief Justices and puisne Judges of the High Courts are within the purview of the Act. It is implicit that if the answer is in the affirmative, then the Chief Justice and Judges of the Supreme Court also would fall within the purview of the Act and so also the Comptroller and Auditor Genera 273 and the Chief Election Commissioner, whose terms and condi tions of office are the same as those of a Judge of the Supreme Court of India. If for any reason the Comptroller and Auditor General and the Chief Election Commissioner be considered outside the purview of the Act, that would itself indicate exclusion of certain similar constitutional func tionaries from the purview of the Act. The real question, therefore, is: Whether these constitutional functionaries were intended to be included in the definition of 'public servant ', as defined in the Act, and the existing enacted law is to that effect. The desirability of enacting such a law applicable to them, it was strenuously urged at the hearing, would be a matter primarily for the Parliament to consider in case the existing law as enacted does not apply to them. There is no material to indicate that corruption in judiciary was a mischief to be cured when the Prevention of Corruption Act was enacted. For this reason, the desirabil ity now expressed of having such a law cannot be an aid to construction of the existing law to widen its ambit and bring these constitutional functionaries within it since such an exercise would be wholly impermissible in the garb of judicial craftmanship which cannot replace legislation in a vergin field. Judicial activism can supply the deficien cies and fill gaps in an already existing structure found deficient in some ways, but it must stop sort of building a new edifice where there is none. In a case like the present, the only answer can be a definite 'yes ' or definite 'no ', but not 'yes ' with the addition of the legislative require ments in the enactment which are wholly absent and without which the answer cannot be 'yes '. In my considered view laying down guidelines to be implicitly obeyed, if they find no place in the existing enactment and to bring the superior Judges within the purview of the existing law on that basis, would amount to enacting a . new law outside the scope of the existing law and not merely construing it by supplying the deficiencies to make it workable for achieving the object of its enactment. It was suggested at the hearing that the guidelines so suggested and supplied with the aid of which the existing law could be made applicable to supe rior Judges would be akin to the exercise performed by this Court while dealing with the Administrative Tribunals Act in S.P. Sam path Kumar vs Union of India & Ors., ; I am afraid this analogy is not apt there being no similarity in the two situations. The Administrative Tribu nals Act as enacted was found to suffer from certain infirm ities which would render it invalid and thereby failing to achieve the object of its enactment unless the deficiencies therein were supplied. It was to overcome this situation that this Court in Sam path Kumar suggested ways and means to overcome those infirmities to achieve the object of enactment of that legislation and thereby make the legisla tion workable as a 274 valid piece of legislation. The situation here is entirely different. The Act is wholly workable in its existing form for the public servants within its purview and there is no impediment in its applicability to the large number of public servants who have been dealt with thereunder ever since its enactment. The only question which now arises is: Whether this piece of legislation also applies to certain constitutional functionaries such as the High Court Judges and if the answer is in the negative, the life of the enact ment is not jeopardised in any manner. The only result is that in case such a legislation for superior Judges also is considered necessary at this point of time, the Parliament can perform its function by enacting suitable legislation, it being a virgin field of legislation. It is, therefore, difficult to appreciate such an argument when the question for our decision is only of construction of the legislation as enacted to determine the field of its operation. Reference may now be made to certain statutory provi sions on the basis of which the point has to be decided. The definition of 'public servant ' given in the Act includes 'every Judge '. Sub section (1) of Section 5 of the Act defines 'criminal misconduct ' in its several clauses and Sub section (2) thereof prescribes punishment for the of fence of criminal misconduct. Section 5A deals with investi gation into cases under this Act and Section 6 is the provi sion for previous sanction necessary for prosecution. Thus, no Court shall take cognizance of an offence punishable under Sub section (2) of Section 5 of the Act except with the previous sanction of the competent authority envisaged by clauses (a), (b) and (c) of Sub section (1) of Section 6 of the Act. It is for this reason that Section 6 assumes significance for the applicability of the Act since previous sanction for prosecution is necessary for taking cognizance of an offence under Section 5(2) of the Act and in situa tions where no such sanction can be envisaged, the Act cannot be made applicable. The relevant provisions of the Act as in existence after the 1964 amendment are quoted as under: "2. Interpretation. For the purposes of this Act, "public servant" means a public servant as defined in Section 21 of the Indian Penal Code (45 of 1860). XXX XXX XXX 4. Presumption where public servant accepts gratification other than legal remu neration. (1) Where in any trial of an of fence punishable under Section 16 1 or Section 165 of the Indian Penal Code (45 of 1860) or of an offence 275 referred to in clause (a) or clause (b) of sub section (1) of Section 5 of this Act punishable under sub section (2) thereof, it is proved that an accused person has accepted or obtained, or as agreed to accept or at tempted to obtain, for himself or for any other person, any gratification (other than legal remuneration) or any valuable thing from any person, it shall be presumed unless the contrary is proved that he accepted or ob tained, or agreed to accept or attempted to obtain that gratification or that valuable thing as the case may be as a motive or reward such as is mentioned in the said Section 161, or, as the case may be, without consideration or for a consideration which he knows to be inadequate. (2) Where in any trial of an offence punishable under Section 165A of the Indian Penal Code (45 of 1860) or under clause (ii) or sub section (3) of Section 5 of this Act, it is proved that any gratification (other than legal remuneration) or any valuable thing has been given or offered to be given or attempted to be given by an accused person, it shall be presumed unless the contrary is proved that he gave or offered to give or attempted to give that gratification or that valuable thing as the case may be as a motive or reward Such as is mentioned in Section 161 of the Indian Penal Code or, as the case may be, without consideration or for a considera tion which he known to be inadequate. (3) Notwithstanding anything contained in subsections (1) and (2), the court may decline to draw the presumption referred to in either of the said sub sections if the gratification or thing aforesaid is, in its opinion, so trivial that no inference of corruption may fairly be drawn. Criminal misconduct. (1) A public servant is said to commit the offence of criminal misconduct (a) if he habitually accepts or obtains or agrees to accept or attempts to obtain from any person for himself or for any other per son, any gratification (other than legal remuneration) as a motive or reward such as is mentioned in Section 161 of the Indian Penal Code (45 of 1860), or 276 (b) if he habitually accepts or obtains or agrees to accept or attempts to obtain for himself or for any other person, any valuable thing without consideration or for a consider ation which he knows to be ' inadequate from any person whom he knows to have been, or to be, or to be likely to be concerned in any proceeding or business transacted or about to be transacted by him. or having any connection with the official functions of himself or of any public servant to whom he is subordinate, or from any person whom he knows to be inter ested in or related to the person so con cerned, or (c) if he dishonestly or fraudulently misap propriates or otherwise converts for his own use any property entrusted to him or under his control as a public servant or allows any other person so to do, or (d) if he, by corrupt or illegal means or by otherwise abusing his position as public servant, obtains for himself or for any other person any valuable thing or pecuniary advan tage, or (e) if he or any person on his behalf is in possession or has, at any time during the period of his office, been in possession, for which the public servant cannot satisfactorily account, of pecuniary resources or property disproportionate to his known sources of income. (2) Any public servant who commits criminal misconduct 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. XXX XXX XXX 5A. Investigation into cases under this Act. (1) Notwithstanding anything con tained in the Code of Crimi 277 nal Procedure, 1898 (5 of 1898), no police officer below the rank, (a) in the case of the Delhi Special Police Establishnent, of an Inspector of Police; (b) in the presidency towns of Calcutta and Madras, of an Assistant Commissioner of Po lice; (c) in the presidency town of Bombay, of Superintendent of Police; and (d) elsewhere, of a Deputy Superintendent of Police, shall investigate any offence punishable under Section 161. Section 165 or Section 165A of the Indian Penal Code (45 of 1860) or under Section 5 of this Act without the order of a Presidency Magistrate or a Magistrate of the first class, as the case may De, or make any arrest therefor without a warrant: Provided that if a police officer not below the rank of an Inspector of Police is authorised by the State Government in this behalf by general or special order, he may also investigate any such offence without the order of a Presidency Magistrate or a Magis trate of the first class, as the case may be, or make arrest therefor without a warrant: Provided further that an offence referred to in clause (e) of sub section (1) of Section 5 shall not be investigated without the order of a police officer not below the rank of a Superintendent of Police. (2) If, from information received or otherwise, a police officer has reason to suspect the commission of an offence which.he is empowered to investigate under subsection (1) and considers that for the purpose of investigation or inquiry into such offence, it is necessary to inspect any bankers ' books, then, notwithstanding anything conrained in any law for the time being in force, he may inspect any bankers ' books in so far as they relate to the accounts of the person suspected to have committed that offence or of any other person suspected to be holding money on 278 behalf of such person, and take or cause to be taken certified copies of the relevant entries therefrom, and the bank concerned shall be bound to assist the police officer in the exercise of his powers under this sub section: Provided that no power under this sub section in relation to the accounts of any person shall be exercised by a police officer below the rank of Superintendent of Police, unless he is specially authorised in this behalf by a police officer of or above the rank of a Superintendent of Police. Explanation. In this sub section, the expressions "bank" and "bankers ' books" shall have the meanings assigned to them in the Bankers ' Books Evidence Act, 189 1 ( 18 of 1891). Previous sanction necessary for prosecution. (1) No court shall take cogni zance of an offence punishable under Section 161 or Section 164 or Section 165 of the Indian Penal Code (45 of 1860), or under sub section (2) or sub section (3A) of Section 5 of this Act, alleged to have been committed by a public servant, except with the previous sanction, (a) in the case of a person who is employed in connection with the affairs of the Union and is not removable from his office save by or with the sanction of the Central Government, of the Central Government; (b) in the case of a person who is employed in connection with the affairs of a State and is not removable from his office save by or with the sanction of the State Government, of the State Government; (c) in the case of any other person, of the authority competent to remove him from his office. (2) Where for any reason whatsoever any doubt arises whether the previous sanction as required under subsection (1) should be given by the Central or State Government or any other authority, such sanction shall be given by that Government or authority which would have been com 279 petent to remove the public servant from his office at the time when the offence was alleged to have been committed. " The relevant provisions of the Constitution of India are as under: 12 1. Restriction on discussion in Parliament . No discussion shall take place in Parliament with respect to the conduct of any Judge of the Supreme Court or of a High Court in the discharge of his duties except upon a motion for presenting an address to the President praying for the removal of the Judge as hereinafter provided. XXX XXX XXX 124. Establishment and constitution of Supreme Court. (1) . . XXX XXX XXX (4) A Judge of the Supreme Court shall not be removed from his office except by an order of the President passed after an address by each House of Parliament supported by a majority of the total membership of that House and by a majority of not less than two thirds of the members of that House present and voting has been presented to the President in the same session for such removal on the ground of proved misbehaviour or incapacity. (5) Parliament may by law regulate the procedure for the presentation of an address and for the investigation and proof of the misbehaviour or incapacity of a Judge under clause (4). XXX XXX XXX 148. Comptroller and Auditor General of India.(1) There shall be a Comptroller and Auditor General of India who shall be appoint ed by the President by warrant under his hand and seal and shall only be removed from office in like manner and on the like grounds as a Judge of the Supreme Court. XXX XXX XXX 280 211. Restriction on discussion in the Legislature. No discussion shall take place in the Legislature of a State with respect to the conduct of any Judge of the Supreme Court or of a High Court in the dis charge of his duties. XXX XXX XXX 218. Application of certain provi sions relating to Supreme Court to High Courts . The provisions of clauses (4) and (5) of Article 124 shall apply in relation to a High Court as they apply in relation to the Supreme Court with the substitution of refer ence to the High Court for references to the Supreme Court. XXX XXX XXX 324. Superintendence, direction and control of elections to be vested in an Elec tion Commission. (1) XXX XXX XXX (5) Subject to the provisions of any law made by Parliament, the conditions of service and tenure of office of the Elec tion Commissions and the Regional Commission ers shall be such as the President may by rule determine: Provided that the Chief Election Commissioner shall not be removed from his office except in like manner and on the like grounds as a Judge of the Supreme Court and the conditions of service of the Chief Elec tion Commissioner shall not be varied to his disadvantage after his appointment: Provided further that any other Election Commissioner or a Regional Commis sioner shall not be removed from office except on the recommendation of the Chief Election Commissioner. XXX XXX XXX 361. Protection of President and Governors and Rajpramukhs. (1) The President, or the Governor or 281 Rajpramukh of a State, shall not be answerable to any court for the exercise and performance of the powers and duties of his office or for any act done or purporting to be done by him in the exercise and performance of those powers and duties: Provided that the conduct of the President may be brought under review by any court, tribunal or body appointed or designat ed by either House of Parliament for the investigation of a charge under Article 61: Provided further that nothing in this clause shall be construed as restricting the right of any person to bring appropriate proceedings against the Government of India or the Government of a State. (2) No criminal proceedings whatso ever shall be instituted or continued against the President, or the Government of a State, in any court during his term of office. (3) No process for the arrest or imprisonment of the President, or the Governor of a State, shall issue from any court during his term of office. (4) No civil proceedings in which relief is claimed against the President, or the Governor of a State, shall be instituted during his term of office in any court in respect of any act done or purporting to be done by him in his personal capacity, whether before or after he entered upon his office as President, or as Governor of such State, until the expiration of two months next after notice in writing has been delivered to the President or the Governor. as the case may be, or left at his office stating the nature of the pro ceedings, the cause of action therefore, the name, description and place of residence of the party by whom such proceedings are to be instituted and the relief which he claims. " It may also be mentioned that the has been enacted by the Parliament to regulate the procedure for the investigation and proof of the misbeha viour or incapacity of a Judge of the Supreme Court or of a High Court and for the presentation of an 282 address by Parliament to the President and for matters connected therewith, as contemplated by Articles 124(5) of the Constitution of India. It is in the background of these provisions that the point arising for our determination has to be decided. I may also at this stage refer to the recommendations made by the Santhanam Committee which preceded the 1964 amendment in the Act. It is as a result of the 1964 amend ment that clause (e) was inserted in Sub section (1) of Section 5 of the Act to make the possession of dispropor tionate assets by a public servant by itself a substantive offence of criminal misconduct, while prior to this amend ment such a provision was merely a rule of evidence con tained in Sub section (3) of Section 5 as initially enacted which was then available only to prove the offence of crimi nal misconduct defined in clauses (a) to (d) of Sub section (1) of Section 5. In the Report of the Santhanam Committee, certain portions relating to the judiciary which may throw light on the question before us are extracted as under: "SECTION 12 MISCELLANEOUS XXX XXX XXX 12.2 We did not consider the judici ary to be included in our terms of reference. Except the Supreme Court and some subordinate courts in the Union Territories, the Govern ment of India have no direct relation with the administration of the judiciary except that appointment of High Court Judges is made by the President. It has to be borne in mind, however, that all courts in india are common to the Centre and the States and can entertain and decide cases relating to exclusively Central subjects. Therefore, integrity of the judiciary is of paramount importance even for the proper functioning of the Central Govern ment. Though we did not make any direct inquiries, we were informed by responsible persons including Vigilance and Special Police Establishment Officers that corruption exists in the lower ranks of the judiciary all over India and in some places it has spread to the higher ranks also. We were deeply distressed at this information. We, therefore, suggest that the Chief Justice of India in consulta tion with the Chief Justices 283 of the High Courts should arrange for a thor ough inquiry into the incidence of corruption among the judiciary, and evolve, in consulta tion with the Central and State Governments, proper measures to prevent and eliminate it. Perhaps the setting up of vigilance organisa tion under the direct control of the Chief Justice of every High Court coordinated by a Central Vigilance Officer under the Chief Justice of India may prove to be an appropri ate method. XXX XXX XXX SUMMARY OF CONCLUSIONS AND RECOMMENDATIONS XXX XXX XXX 117. The Chief Justice of India in consulta tion with the Chief Justices of the High Courts should arrange for a thorough inquiry into the incidence of corruption, among the judiciary, and evolve, in consultation with the Central and State Governments, proper measures to prevent and eliminate it. Perhaps the setting up of vigilance organisations under the direct control of the Chief Justice of every High Court coordinated by a Central Vigilance Officer under the Chief Justice of India may prove to be an appropriate method. (Para. 12.2) XXX XXX XXX REPORT ON THE GOVERNMENT SERVANTS ' CONDUCT RULES XXX XXX XXX Rule 15 15. The Committee attaches great impor tance to the changes recommended in the exist ing Rule 15 relating to the acquisition and disposal of property by Government servants. On the one hand, these reports serve as a check against corruption and on the other, it may be irritating to honest Government serv ants to be subject to restrictions 284 not imposed on other citizens. It is also necessary to ensure that the reports are such as to serve the purpose for which they are obtained. Further, no reports need be obtained from those Government servants who have no opportunity to enrich themselves by unlawful means. The most important change made by the Committee in this rule is the replacement of the annual immovable property return by a complete periodical statement of assets and liabilities. In the circumstances now obtain ing in the country, the immovable property return has ceased to have much significance. The Committee considers that in order to enable Government to ascertain whether any Government servant is in possession of assets disproportionate to his known sources of income or whether he is running into debt, it is necessary that the Government servant should furnish a complete statement of his assets and liabilities periodically. The Committee considers that only the more/ important items of movable property should be reported specifically and that it would be sufficient if Government servants report the total value of other movable property except articles of daily use like clothes, utensils, crockery, books, etc. But it is essential that the value of 'movable property should be stated in the statement of assets and liabilities. The Committee considered the argument that there was no need for the submission of periodical returns of assets and liabilities and that it would be sufficient if such a statement is given once either on entry or after promulgation of these rules and that thereafter it should be enough if the Govern ment servant is required to report all trans actions in immovable property and all transac tions in movable property exceeding a speci fied value. The Committee decided to recommend that Government servants should be required to submit a periodical statement of assets and liabilities, as it would not be reasonable to require the Government servants to report all the innumerable small transactions taking place continually. But as these small transac tions may cumulatively be sizable and have a big effect on his financial position, the purpose will 285 be served only by obtaining a periodical balance sheet. The Committee, however, consid ers that the reports need not be frequent and that it may perhaps be sufficient if they are submitted once in five years. Another point that was consid ered by the Committee was whether jewellery should be included within the definition of movable property. The Committee recognises that inclusion of jewellery may be considered to be an unnecessary intrusion into the pri vate affairs of a Government servant. But jewellery constitute important assets and if excluded from the definition of movable property, the balance sheet submitted by the Government servant may not set out the true picture." (emphasis supplied) In view of the decision by a Constitution Bench in R.S. Nayak vs A.R. Antulay, the correctness of which was not disputed before us, we have to assume for the purpose of this case that no sanction under Section 6 of the Act was required for prosecution of the appellant since cognizance of the offence was taken after the appellant ceased to hold the office of Chief Justice on 7.4.1976 on his retirement. It was, however, contended that for the purpose of deciding the question of applicability of the Act to the appellant as a Judge or Chief Justice of the High Court, the office with reference to which the offence under the Act is alleged to have been committed, it is necessary to consider the feasibility of grant of sanction under Section 6 of the Act for prosecution of a person holding such an office. In other words, the argument is that not withstanding the fact that no sanction was required for prosecution of the appellant after his retirement, the need and feasibility of grant of the sanction under Section 6 of the Act if he was prosecuted before his retirement is the test to determine the applicability of the Act to a person holding, the office of a Judge or Chief Justice of a High Court. It is argued that if the grant of sanction under Section 6 of the Act for prosecution of the incumbent for the offence is not feasible or envisaged, the clear indica tion is that holder of such office does not fall within the purview of the Act. The question of grant of sanction under Section 6 for the prosecution of a Judge or Chief Justice of a High Court for an offence punishable under Section 5(2) of the Act is, therefore, of considerable importance to decide the main question in this appeal. Clauses (a), (b) and (c) in Sub section (1) of Section 6 exhaus 286 tively provide for the competent authority to grant sanction for prosecution in case of all the public servants failing within the purview of the Act. Admittedly, such previous sanction is a condition precedent for taking cognizance of an offence punishable under the Act, of a public servant who is prosecuted during his continuance in the office. It follows that the public servant falling within the purview of the Act must invariably fall within one of the three clauses in Sub section (1) of Section 6. It follows that the holder of an office, even though a 'public servant ' accord ing to the definition in the Act, who does not fall within any of the clauses (a), (b) or (c) of Sub section (1) of Section 6 must be held to be outside the purview of the Act since this special enactment was not enacted to cover that category of public servants inspite of the wide definition of 'public servant ' in the Act. This is the only manner in which these provisions of the Act can be harmonized and given full effect. The scheme of the Act is that a public servant who commits the offence of criminal misconduct, as defined in the seven clauses of Sub section (1) of Section 5, can be punished in accordance with Subsection (2) of Section 5, after investigation of the offence in the manner prescribed and with the previous sanction of the competent authority obtained under Section 6 of the Act, in a trial conducted according to the prescribed procedure. The grant of previous sanction under Section 6 being a condition precedent for the prosecution of a public servant covered by the Act, it must follow that the holder of an office who may be a public servant according to the wide definition of the expression in the Act but whose category for the grant of sanction for prosecution is not envisaged by Section 6 of the Act, is outside the purview of the Act, not intended to be covered by the Act. This is the only manner in which a harmonious constitution of the provisions of the Act can be made for the purpose of achieving the object of that enact ment. This appears to be the obvious conclusion even for a case like the present where no such sanction for prosecution is necessary on the view taken in Antulay, and not chal lenged before us, that the sanction for prosecution under Section 6 is not necessary when cognizance of the offence is taken after the accused has ceased to hold the office in question. In this context, it is useful to recall the analysis of Section 6 made in R.S. Nayak vs A.R. Antulay, , which is as under: "Offences prescribed in Sections 161, 164 and 165 IPC and Section 5 of the 1947 Act have an intimate and inseparable relation with the office of a public servant. A public servant occupies office which renders him a public servant and 287 occupying. the office carries with it the powers conferred on the office. Power general ly is not conferred on an individual person. In a society governed by rule of law power is conferred on office or acquired by statutory status and the individual occupying the office or on whom status is conferred enjoys the power of office or power flowing from the status. The holder of the office alone would have opportunity to abuse or misuse the of fice. These sections codify a well recognised truism that power has the tendency to corrupt. It is the holding of the office which gives an opportunity to use it for corrupt motives. Therefore, the corrupt conduct is directly attributable and flows from the power con ferred on the office. The interrelation and interdependence between individual and the office he holds is substantial and not severa ble. Each of the three clauses of subsection (1) of Section 6 uses the expression 'office ' and the power to grant sanction is conferred on the authority competent to remove the public servant from his office and Section 6 requires a sanction before taking cognizance of offences committed by public servant. The offence would be committed by the public servant by misusing or abusing the power of office and it is from that office, the author ity must be competent to remove him so as to be entitled to grant sanction. The removal would bring about cessation of interrelation between the office and abuse by the holder of the office. The link between power with oppor tunity to abuse and the holder of office would be severed by removal from office. Therefore, when a public servant is accused of an offence of taking gratification other then legal remuneration for doing or forebearing to do an official act (Section 161 (IPC) or as a public servant abets offences punishable under Sec tions 161 and 163 (Section 164 IPC) or as public servant obtains a valuable thing with out consideration from person concerned in any proceeding or business transacted by such public servant (Section 165 IPC) or commits criminal misconduct as defined in Section 5 of the 1947 Act, it is implicit in the various offences that the public servant has misused or abused the power of office held by him as public servant. The expression 'office ' in the three sub clauses of Section 6(1) would clear ly denote that office which the public servant misused or abused for corrupt motives for which he is to be prosecuted and in respect of which a sanction to prosecute him is necessary by the competent authority 288 entitled to remove him from that office which he has abused. This interrelation between the office and its abuse if severed would render Section 6 devoid of any meaning. And this interrelation clearly provides a clue to the understanding of the provision in Section 6 providing for sanction by a competent authori ty who would be able to judge the action of the public servant before removing the bar, by granting sanction, to the taking of the cogni zance of offences by the court against the public servant. Therefore, it unquestionably follows that the sanction to prosecute can be given by an authority competent to remove the public servant from the office which he has misused or abused because that authority alone would be able to know whether there has been a misuse or abuse of the office by the public servant and not some rank outsider. By a catena of decisions, it has been held that the authority entitled to grant sanction must apply its mind to the facts of the case, evidence collected and other incidental facts before according sanction. A grant of sanction is not an idle formality but a solemn and sacrosanct act which removes the umbrella of protection of Government servants against frivolous prosecutions and the aforesaid requirements must therefore, be strictly complied with before any prosecution could be launched against public servants. (See Mohd. lqbal Ahmad vs State of A.P., ; ; Legislature advisedly conferred power on the authority competent to remove the public servant from the office to grant sanction for the obvious reason that that authority alone would be able, when facts and evidence are placed before him, to judge whether a serious offence is committed or the prosecution is either frivolous or specula tive. That authority alone would be competent to judge whether on the facts alleged, there has been an abuse or misuse of office held by the public servant. That authority would be in a position to know what was the power con ferred on the office which the public servant holds, how that power could be abused for corrupt motive and whether prima facie it has been so done. That competent authority alone would know the nature and functions discharged by the public servant holding the office and whether the same has been abused or misused. It is the vertical hierarchy between the authority competent to remove the public servant from that office and the nature of the office held by the 289 public servant against whom sanction is sought which would indicate a hierarchy and which would therefore, permit inference of knowledge about the functions and duties of the office and its misuse or abuse by the public servant. That is why the Legislature clearly provided that that authority alone would be competent to grant sanction which is entitled to remove the public servant against whom sanction is sought from the office." (emphasis supplied) (para 23, pp. 204 206) It is significant from the above extract in Antulay that for the purpose of grant of sanction under Section 6 of the Act to prosecute the public servant, a 'vertical hierarchy between the authority competent to remove the public servant from that office and the nature of the office held by the public servant against whom sanction is sought ' is clearly envisaged and, therefore, the authority competent to remove the public servant from that office should be vertically superior in the hierarchy in which the office exists having the competence to judge the, action of the public servant before removing the bar by granting sanction. In other words, Section 6 applies only in cases where there is a vertical hierarchy of public offices and the public servant against whom sanction is sought is under the sanctioning authority in that hierarchy. It would follow that where the office held by the public servant is not a part of a verti cal hierarchy in which there is an authority above the public 'servant in that hierarchy, by the very scheme of Section 6 it can have no application and holder of such office who does not have any vertical superior above him in the absence of any such hierarchy cannot be within the ambit of the enactment, the Act not being envisaged or enacted for holder of such public office. The decisions of this Court have unequivocally held that a Judge or Chief Justice of a High Court is a constitutional functionary, even though he holds a public office and in that sense, may be included in the wide definition of 'public servant '. It is for this reason that the learned Solicitor General did not place reliance on clauses (a) and (b) of Sub section (1) of Sec tion 6 in the present case but relied on clause (c) thereof, to contend that sanction thereunder can be obtained for the prosecution of a Judge or Chief Justice of a High Court since the holder of such an office can be removed from office by the President in accordance with clause (4) of Article 124 of the Constitution. This is the only argument for this purpose and, therefore, its tenability has to be tested. Section 6(1)(c) provides for previous sanction 'in the case of any . 290 other person, of the authority competent to remove him from his office '. Clauses (4) and (5) of Article 124 which apply to a Judge of the Supreme Court are made applicable to Judges of the High Courts by virtue of Article 218. These may be re quoted here for readyreference: "124. Establishment and constitution of Su preme Court '(1) . XXX XXX XXX (4) A Judge of the Supreme Court shall not be removed from his office except by an order of the President passed after an address by each House of Parliament supported by a majority of the total membership of the House and by a majority of not less than two thirds of the members of that House present and voting has been presented to the President in the same session for such removal on the ground of proved misbehaviour or incapacity. (5) Parliament may by law regulate the procedure for the presentation of an address and for the investigation and proof of the misbehaviour or incapacity of a Judge under clause (4). XXX XXX XXX 218. Application of certain provi sions relating to Supreme Court to High Courts. The provisions of clauses (4) and (5) of Article 124 Shall apply in relation to a High Court as they apply in relation to the Supreme Court with the substitution of refer ences to the High Court for references to the Supreme Court." According to Article 124(4), a Judge can be removed from his office by an order of the President passed after an address by each House of Parliament supported by the pre scribed majority on the ground of proved misbehaviour or incapacity. Since the order of removal in such a case is to be made by the President, the learned Solicitor General contended that the competent authority to remove such a Judge as required by Section 6(1)(c) is the President and it is in this manner that Section 6(1)(c) is attracted. The question is whether this argument is tenable. 291 There are several fallacies in this argument. Section 6(1)(c) speaks of 'authority competent to remove ' which plainly indicates the substantive competence of the authori ty to remove, not merely the procedural or formal part of it. In other words, the authority itself should be competent to remove or the one to decide the question of removal and not the which merely obeys or implements by the decision of some other authority. This conclusion is reinforced 'by the above extract from the Antulay decision, which speaks of the vertical hierarchy between the authority competent to remove the public servant and the nature of the office held by the public servant indicating that the removing authority should have the competence to take a decision on the material placed before it for the purpose of deciding whether the public servant against whom sanction is sought, has been prima facie guilty of abuse of his office so that there is occasion to bring about cessation of interrelation between the office and abuse by the holder of the office by his removal therefrom. Obviously, the competent sanctioning authority envisaged thereby is a vertical superior in the hierarchy having some power of superintendence over the functioning of the public servant. Where no such relation ship exists in the absence of any vertical hierarchy and the holder of the public office is a constitutional functionary not subject to power of superintendence of any superior, Section 6 can have no application by virtue of the scheme engrafted therein. The expression 'authority competent to remove ' under Section 6(1)(c), unless construed in this manner, will foul with the construction made on Section 6 andits scheme in the Antulay decision. In S.P. Gupta & Ors. vs Union of India & Ors. etc. , 1982] 2 SCR 365 it was clearly pointed out that a High Court Judge is a high constitutional functionary and while dealing with the question of the machinery having legal sanction to deal with a High Court Judge against whom alle gations of lack of intergrity and corruption were made, it was stated as under: ". Baldly put, the question is: Should an Additional Judge whose misbeha viour or lack of integrity has come to the fore he continued as an Additional Judge or confirmed as a Permanent Judge? The answer at the first impulse and rightly would be in the negative but the question requires deeper consideration. If the misbehaviour or lack of integrity is glaringly self evident the ques tion of his continuance obviously cannot arise and in all probabilities will not engage the attention of the appointing authority, 292 for, the concerned Judge in such a situation would himself resign but when we talk of misbehaviour or lack of integrity on the part of an Additional Judge having come to the fore, by and large the instances are of sus pected misbehaviour and/or reported lack of integrity albeit based on opinions expressed in responsible and respectable quarters and the serious question that arises is whether in such cases the concerned Additional Judge should be dropped merely on opinion material or concrete facts and material in regard to allegations of misbehaviour and/or lack of integrity should be insisted upon? In my view since the question relates to the continuance of a high constitutional functionary like the Additional Judge of High Court it would be jeopardising his security and judicial inde pendence if action is taken on the basis or merely opinion material. Moreover, no machin ery having legal sanction behind it for hold ing an inquiry disciplinary or otherwise against the concerned Judge on allegations of misbehaviour and or lack of integrity obtains in the Constitution or any law made by the Parliament, save and except the regular proc ess of removal indicated in article 124(4) and (5) read with article 218 and the Judges (In quiry) Act, 1968."Therefore, the important question that arises in such cases of suspect ed misbehaviour and/or reported lack of integ rity is who will decide and how whether the concerned Judge has in fact indulged in any misbehaviour or act of corruption? In the absence of satisfactory machinery possessing legal sanction to reach a positive conclusion on the alleged misbehaviour or an act of corruption the decision to drop him shall have been arrived at merely on the basis of opin ions, reports, rumours or gossip and apart from being unfair and unjust to him such a course will amount to striking at the root of judicial independence. The other alternative, namely, to continue him as an Additional Judge for another term or to make him permanent if a vacancy is available and then take action for his removal under the regular process indicat ed in article 124(4) and (5) read with article 2 18 and Judges (Inquiry) Act,1968 may sound absurd but must be held to be inevitable if judicial independence, a cardinal faith of our Consti tution, is to be preserved and safeguarded. Not to have a corrupt Judge or a Judge who has misbehaved is unquestionably in public inter est but at the same time preserving judicial independence is of the highest public inter est. It is a question of 293 choosing the lesser evil and in inevitable course has to ' be adopted not for the protec tion of the corrupt or dishonest judge but for protecting several other honest, conscientious and hard working Judges by preserving their independence; it is a price which the Society has to pay to avoid the greater evil that will ensue if judicial independence is sacrificed. Considering the question from the angle of public interest therefore, I am clearly of the view that while considering the question of continuance of the sitting Additional Judges on the expiry of their initial term either as Additional Judges or as Permanent Judges the test of suitability contemplated within the consultative process under article 217(1) should not be invoked at least until such time as proper machinery possessing legal sanction is provided for enabling a proper inquiry against an alleged errant Judge less cumbersome than the near impeachment process contemplated by article 124(4) and (5) of the Constitution." (Tulzapurkar, J. ) (pp. 920 21) " . . As the law now stands it is not open to any single individual, whether it is the President or the Chief Justice of India or anybody else to take cognizance of any allegations of misbehaviour or of incapacity of a Judge and to take any legal action on their basis under the Judges (Inquiry) Act,/1968. One hundred Members of the Lok Sabha or fifty Members of the Rajya Sabha alone can initiate any action on such allega tions. Naturally, all others are excluded from taking cognizance of them and acting on them . . (Venkataramiah, J.) (pp. 1338 39) (emphasis supplied) Even though the above observations were made in the context of continuance in office of Additional Judge of the High Court and the transfer of Judges to another High Court, yet the nature of office of a High Court Judge and the only legal sanction available under the existing law to deal with them even in the event of allegations of corruption was clearly spelt out. It was pointed out that ordinarily such a person faced with cogent material against him would resign, but in case he does not, the only remedy available is his removal from office in accordance with clauses (4) and (5) of Article 124 read with Article 294 218 of the Constitution till a suitable provision with legal sanction is made. It was also pointed out that the object served in this manner was the greater public interest to preserve independence of judiciary and not to protect the corrupt Judge who was an exception. The scheme of the exist ing law to deal with such situations was considered at length and it was also held that even the power to transfer under Article 222 of the Constitution to another High Court could not be exercised for these reasons. In this context, clause (5) of Article 124 is also of considerable significance. The construction made of the provisions of the Act must also fit in with the scheme of clauses (4) and (5) of Article 124 read with Article 2 18 of the Constitution in order to present a harmonious scheme. Clause (5) of Article 124 enables enactment of a special law by the Parliament to regulate the procedure for presentation of an address and for the 'investigation ' and 'proof ' of the 'misbehaviour ' or incapacity of a Judge under clause (4). It is in exercise of this power that the Parliament has enacted the . It is significant that clause (5) of Article 124 covers the field of 'investiga tion ' and 'proof ' of the 'misbehaviour ' of a Judge. There can be no doubt that the expression 'misbehaviour ' is of wide import and includes within its ambit criminal miscon duct as defined in Sub section (1) of Section 5 of the Act as also lesser misconduct of a Judge falling short of crimi nal misconduct. The special law envisaged by Article 124(5) for dealing with the misbehaviour of a Judge covers the field of 'investigation ' and 'proof ' of the 'misbehaviour ' and the only punishment provided is by Article 124(4) of removal from office. There is no escape from the conclusion that Article 124(5) is wide enough to include within its ambit every conduct of a Judge amounting to misbehaviour including criminal misconduct and prescribes the procedure for investigation and proof thereof. Thus, even for the procedure for investigation into any misbehaviour of a Judge as well as its proof, a law enacted by the Parliament under Article 124(5) is envisaged in the constitutional scheme. Such a law in the form of the and the rules framed thereunder has been enacted. These provi sions were made in the Constitution and the law thereunder enacted when the Prevention of Corruption Act, 1947 was in the Statute Book. The prior enactment and existence of the Prevention of Corruption Act, 1947 at the time then clause (4) and (5) of Article 124 of the Constitution were framed, does indicate the constitutional scheme that a separate parliamentary law to deal with the investigation and proof of misbehaviour of a Judge was clearly contemplated by providing a special machinery for this category of constitu tional functionaries 295 notwithstanding the general law available and applicable to the public servants in general, which included the Preven tion of Corruption Act, 1947. If special provisions in the form of clauses (4) and (5) of Article 124 and Article 2 18 of the Constitution and the special enactment by the Parlia ment under Article 124(5) were provided in the constitution al scheme for Judges of the High Courts and the Supreme Court, there can be no valid reason to hold that they are governed by the general provisions in addition to these special provisions enacted only for them. The need for these special provisions is a clear pointer in the direction of inapplicability to them of the general provisions applicable to the public servants holding other public offices, not as constitutional functionaries. Construction of Section 6(1)(c) of the Act as suggested by the learned Solicitor General by treating the President as ,the competent authori ty to remove a High Court Judge would conflict with the provisions enacted in clauses (4) and (5) of Article 124 read with Article 218 of the Constitution. Such a construc tion has undoubtedly to be avoided. This is more so, since the rejection of such an argument would not in any manner jeopardise the provisions of the Act as it would result only in the failure of the attempt to bring the constitutional functionaries such as Judges of the High Courts and the Supreme Court within the purview of that Act, while the Act would continue to apply to the public servants in general who fall within the scheme of Section 6 of the Act for the purpose of grant of previous sanction for prosecution which is a condition precedent for cognizance of an offence pun ishable under that Act. It can also not be overlooked that the Santhanam Commit tee Report did not consider the judiciary within its purview and it merely made certain recommendations to devise a machinery involving the Chief Justice of India to deal with the cases of errant Judges. The 1964 amendment made in the Act pursuant to the recommendations of the Santhanam Commit tee did not make any amendment in the Act to indicate that Judges of the High Courts and the Supreme Court were also brought within the purview of the Act. It was thereafter that the Judges (Inquiry) Act, 1963 and the rules framed thereunder were enacted to provide for the investigation and proof of allegations of misbehaviour of a Judge in accord ance with Article 124(5) of the Constitution. The decision in S.P. Gupta was rendered much later and while dealing with the situations arising out of allegations of misbehaviour including corruption against High Court Judges, it was held that the only machinery with legal sanction in existence is that available under clauses (4) and (5) of Article 124 of the Constitution. It is reasonable to assume that while rendering the decision in S.P. Gupta, 296 where in the question of dealing with some Judges against whom allegations of lack of integrity and corruption also were made and the question was of the machinery available for dealing with them, the learned Judges could not have been unaware of the provisions of the Act while taking the view that the only legal machinery available under the existing law is that in accordance with clauses (4) and (5) of Article 124 of the Constitution. These are strong reasons to hold that Section 6(1)(c) of the Act is inappliable to a Judge of a High Court or the Supreme Court and for that reason such constitutional functionaries do not fall within the purview of the Act. An additional reason 'indicating inapplicability of the Act is the practical difficulty in applying criminal miscon duct, defined in clause (e) of Sub section (1) of Section 5 of the Act, to a Judge of a High Court or the Supreme Court. The history of insertion of this clause:, y the 1964 amend ment to the Act is well known. What was earlier a rule of evidence in Sub section (3) of Section 5 of the Act, was made a substantive offence of criminal misconduct by insert ing clause (e) in Sub section (1) of Section 5 by this amendment. Apart from the argument of the learned counsel for the appellant that the inability to satisfactorily account for possession of disproportionate assets is an ingredient of the offence in clause (e), practical require ment of this clause is a further pointer to indicate inap plicability thereof to a Judge of a High Court or the Su preme Court. The fact remains that while according sanction to prosecute under Section 6 of the Act, the competent authority has to satisfy itself about the public servant 's inability to satisfactorily account for possession of dis proportionate assets. As held in Antulay, the competent authority before granting sanction has to apply its mind and be satisfied about the existence of a prima facie case for prosecution of the public servant on the basis of the mate rial placed before it. In order to form an objective opin ion, the competent authority must undoubtedly have before it the version of the public servant on the basis of which the conclusion can be reached whether it amounts to satisfactory account or not. It is well known and is also clear from the Report of the Santhanam Committee that the rules applicable to the public servants in general regulating their conduct require them to furnish periodical information of their assets which form a part of their service record. The recom mendations of the Santhanam Committee after which the 1964 amendment inserting clause (e) in Sub section (1) of Section 5 was made, suggest some amendment to the rules governing the conduct of public servants for giving periodical infor mation of all their assets. Prescribing the substantive offence by insertion of clause (e.) as a part of the same schem 297 of amendment also suggests the manner in which this require ment of the offence of inability to satisfactorily account can be examined by the competent authority while granting sanction to prosecute the public servant. These words in clause (e) have to be given some meaning which would place the burden on the prosecution, howsoever light, to make out a prima facie case for obtaining sanction of the competent authority under Section 6 of the Act and this can be done only if it is read as a part of the scheme under which the public servant is required to furnish particulars of his assets with reference to which the disproportion and his inability to satisfactorily account can be inferred. This requirement can be easily satisfied in the case of public servants governed by conduct rules requiring them to furnish periodical returns of their/assets and to intimate the superior in the hierarchy of acquisition of every material assets, so that his service record at all times contains particulars of his known assets. In the case of such public servants whenever sanction to prosecute is sought under Section 6 of the Act, the competent authority can form the requisite opinion on the basis of the available material including the service record of the public servant to come to the conclusion whether the offence under clause (e) of possession of disproportionate assets which the public servant cannot satisfactorily account is made out prima facie. In the case of Judges of the High Courts and the Supreme Court, there is no such requirement under any provi sion of furnishing particulars of their assets so as to provide a record thereof with reference to which such an opinion can be formed and there is no vertical superior with legal authority enabling obtaining of information from the concerned Judge. It does appear that this too is a pointer in the direction that even after the 1964 amendment of the Act following the Report of the Santhanam Committee when clause (e) was inserted in Sub section (1) of Section 5 of the Act, the Legislature did not intend to include Judges of the High Courts and the Supreme Court within the purview of the enactment. If the Act is applicable to Judges of the High Courts and the Supreme Court, it is obvious that the same must apply also to the Chief Justice of India, the Comptroller and Auditor General and the Chief Election Commissioner. Incongruous results would follow in such an event, even assuming that the guidelines suggested by the learned Solic itor General, are deemed to be incorporated in the Act by implication while dealing with persons holding these of fices. Apart from the legal permissibility of implying these guidelines in the Act, there are obvious practical difficul ties which cannot be overcome. In the proposed guidelines, it was suggested that the involvement of the Chief Justice of India invariably should be read even for commencing the 298 investigation into the offence and the President, while granting the sanction under Section 6(1)(c), would also act on the advice of the Chief Justice of India. Assuming that it is permissible to do so in the absence of any such provi sion in the Act, the problem which stares us in the face is, what is to be done where such action is contemplated against the Chief Justice of India himself. Any provision which cannot apply to the Chief Justice of India, cannot obviously apply to the Judges of the Supreme Court, or for that matter even to the High Court Judges, since the Chief Justice of India is not a vertical superior of any of them, there being no such vertical hierarchy and the Chief Justice of India having no power of superintendence even over the High Court Judges, much less the Supreme Court Judges: The incumbent of the office of Chief Justice of India exercises only moral authority over his colleagues in the Supreme Court and the High Court Judges, which has no legal sanction behind it making it justiciable. In the case of the Comptroller and Auditor General and the Chief Election Commissioner, the situation would be more piquant. Obviously, the Chief Jus tice of India cannot be involved in the process relating to them and there is none else to fill that role in that situa tion. The Constitution, while providing that their position would be akin to that of a Judge of the Supreme Court, could not have intended to place them on a pedestal higher than that of a Supreme Court Judge. The infirmity of this argu ment advanced by the learned Solicitor General invoking the aid of certain implied guidelines involving the Chief Jus tice of India in the process of contemplated action under the Act against a Judge of the High Court or the Supreme Court, leaves more questions unanswered that it answers. That apart, if the Act was intended to apply to these con stitutional functionaries, it could not have been enacted leaving such gaping holes which are incapable of being plugged to present a comprehensive scheme for this purpose. It was also suggested at the hearing that the absence of need of sanction for prosecution under Section 6 of the Act after the public servant ceases to hold office as held in Antulay, suggests answer to the question of construction posed in this case. It does not appear to be so. The need for sanction under Section 6 for prosecution of the holder of a public office indicates the ambit and scope of the enactment for deciding whether the holder of a public office falls within the purview of the enactment. No doubt, as held in Antulay, no sanction for prosecution under Section 6 is required after the public servant ceases to hold office, but it does not imply that every holder of a public office after ceasing to hold that office is within the purview of the enactment, even though during the tenure in office, only those public servants are 299 within its ambit in whose case sanction under Section 6 must be obtained. The ambit of the enactment is to be determined on the basis of the public office held by the public serv ant, which office is alleged to have been abused during the tenure for committing the offence of criminal misconduct under the Act and it is not the fact of continuance in that office or ceasing to hold it which decides the ambit of the enactment. In other words, if the holder of a public office during his tenure in office cannot be prosecuted without sanction under Section 6, then, as held in Antulay, no sanction for his prosecution after ceasing to hold the office may be necessary, but his prosecution is made because while in office he could be prosecuted With the previous sanction under Section 6. Conversely, if the holder of a public office while continuing in that office could not be prosecuted under this Act on account of inapplicability of Section 6 and, therefore, the non feasibility of previous sanction for prosecution under Section 6, then on his ceas ing to hold the office, he is not brought within the purview of the Act merely because Antulay decides that no sanction for prosecution under Section 6 is 'needed after the holder of a public office ceases to hold that office. It is for the purpose of construing the provisions of the enactment and determining the scope and ambit thereof and for deciding whether the holder of a public office comes within the purview of the enactment that the feasibility of previous sanction for prosecution and applicability of Section 6 of the Act is important. In short, it is for the purpose of construction of the provisions of the enactment and deter mining its scope that Section 6 which prescribes the condi tion precedent of previous sanction for prosecution for the offence of criminal misconduct punishable under Section 5(2) of the Act, holds the key which unlocks the true vistas of the enactment. The concept of sanction for prosecution by a superior is so inextricably woven into the fabric of the enactment that the pattern is incomplete without it. The clear legislative intent is that the enactment applies only to those in whose case sanction of this kind is contemplated and those to whom the provision of sanction cannot squarely apply are outside its ambit. The provision for sanction is like the keystone in the arch of the enactment. Remove the keystone of sanc tion and the arch crumbles. The conclusion that the Act does not apply to these constitutional functionaries, namely, Judges of the High Courts, Judges of the Supreme Court, the Comptroller and Additor General and the Chief Election Commissioner, need not be viewed with scepticism or treated as their exclusion from the purview of the Act as if they are ordinarily 300 within its ambit. A proper perception would indicate that these constitutional functionaries were never intended to fail within the ambit of the Act as initially enacted in 1947, when provisions similar to Articles 124(4) & (5) of the Constitution were present in the Government of India Act, 1935, nor was any such attempt made by amendment of the Act ' in 1964 subsequent to the Report of the Santhanam Committee and the same position continues in the Prevention of Corruption Act, 1988. If there is now a felt need to provide for such a situation, the remedy lies in suitable parliamentary legislation for the purpose preserving the independence of judiciary free from likely executive influ ence while providing a proper and adequate machinery for investigation into allegations of corruption against such constitutional functionaries and for their trial and punish ment after the investigation. The remedy is not to extend the existing law and make it workable by reading into it certain guidelines for which there is no basis in it, since the Act was not intended to apply to them. The test of applicability of the existing law would be the legal sanc tion and justiciability of the proposed guidelines without which it is unworkable in the case of such persons. In fact, the very need to read the proposed guidelines in the exist ing law by implication is a clear indication that the law as it exists does not apply to them. Making the law applicable with the aid of the suggested guidelines, is not in the domain of judicial craftmanship, but a naked usurpation of legislative power in a virgin field. It appears that the framers of the Constitution, while dealing with such constitutional functionaries, contemplated merely their removal from office in the manner provided in Article 124(4) as the only punishment; and a special law enacted by the Parliament under Article 124(5), even for investigation and proof of any misbehaviour alleged against a superior Judge instead of the general law was clearly visualised when the alleged misbehaviour is connected with his office. A charge of corruption against a superior Judge amounting to criminal misconduct by abuse of his office would certainly fail within the ambit of misbehaviour con templated under Article 124(5), since misbehaviour of a Judge in the form of corruption by abuse of his office would be an act of gross misbehaviour justifying his removal from office, irrespective of other legal sanction, if any, to punish a corrupt Judge. It cannot be imagined that the framers of the Constitution provided for removal of a supe rior Judge on lesser grounds of misbehaviour but nor for the gross misbehaviour of corruption. There is no escape from the conclusion that the gross misbehaviour of corruption of a Judge must undoubtedly fall within the ambit or Article 124(5) justifying his removal in the manner provided in Article 124(4). Article 124(5) con 301 templates a special law enacted by the Parliament even for investigation into any allegation of misbehaviour which must include an allegation of corruption. Can it, therefore, be said that while investigation into the allegation of corrup tion for the purpose of removal under Article 124(4) needs a special law made by the Parliament under Article 124(5), it is not so for his prosecution which can be made under the provisions of the existing Prevention of Corruption Act? It appears that the framers of the Constitution did not contem plate the need for prosecution of a Judge at that level and expected that a superior Judge would resign if faced with credible material in support of allegations of misbehaviour, and in case he did not resign, his removal under Article 124(5) would be sufficient to deal with the situation. The need for his prosecution was not visualised and, therefore, not provided for in the existing law. The Act had already been made when the Constitution was framed and the amendment made in the Act in 1964 was after the experience for some time of the functioning of the judiciary under the Constitu tion. It is significant that even the , was enacted under Article 124(5) of the Constitution much later and after the 1964 amendment of the Act. The fact that the Parliament did not enact any other law even then for the investigation into allegations of corruption against a superior Judge and for his trial and punishment for that offence and rest content merely with enacting the , to provide for the procedure for remov al of a Judge under Article 124(4) is a clear pointer in the direction that the Parliament has not as yet considered it expedient to enact any such law for the trial and punishment on the charge of corruption of a superior Judge, except by his removal from office in the manner prescribed. It may also be noticed that the provisions of the , provide the procedure for investigation and proof of an allegation of corruption against a superior Judge and if the Prevention of Corruption Act is held applicable to them, then there would be two separate procedures under these two enactments providing for investigation into the same charge. Can this anomaly and incongruity be attributed to a conscious act of the Parliament while enacting the , after the 1964 amendment in the Act. Maybe, need is now felt for a law providing for trial and punishment of a superior Judge who is charged with the criminal misconduct of corruption by abuse of his office. If that be so, the Parliament being the sole arbiter, it is for the Parliament to step in and enact suitable legislation in consonance with the constitutional scheme which provides for preservation of the independence of judiciary and it is not for this Court to expand the field of operation of the existing law to cover 302 the superior Judges by usurping the legislative function of enacting guidelines to be read in the existing law by impli cation, since without the proposed guidelines the existing legislation cannot apply to them. Such an exercise by the Court does not amount to construing an ambiguous provision to advance the object of its enactment, but would be an act of trenching upon a virgin field of legislation and bringing within the ambit of the existing legislation a category of persons outside it, to whom it was not intended to apply either as initially enacted or when amended later. In this context, it would not be out of place to mention that this unfortunate situation has also another dimension. The framers of the Constitution had visualised that the constitutional scheme for appointment of the superior Judges would ensure that by an honest exercise performed by all the constitutional functionaries of their obligation in the process of appointment of a superior Judge, there would be no occasion to try and punish any appointee to such a high office for an act of corruption. Appointment of superi or Judges is from amongst persons of mature age with known background and reputation in the legal profession. By that age the personality is fully developed and the propensities and background of the appointee is well known. The collec tive wisdom of the constitutional functionaries involved in the process of appointing a superior Judge is expected to ensure that persons of unimpeachable integrity alone are appointed to these high offices and no doubtful persons gain entry. In the case of any late starter or an exception, the power of removal in accordance with Article 124(4) by adopt ing the procedure prescribed under Article 124(5) was ex pected to be sufficient to eradicate the exceptional menace while preserving independence of the judiciary. If this scheme is found to be inadequate in the present context, it is also indicative of the failure of the constitutional functionaries involved in the process of appointments in fulfilling the confidence reposed in them. It is not unlike ly that the care and attention expected from them in the discharge of this obligation has not been bestowed in all cases. The need for such legislation now would, therefore, not be entirely on account of the absence of it so far, but also due to the failure of proper discharge of this consti tutional obligation and not any defect in the constitutional scheme. It is, therefore, time that all the constitutional functionaries involved in the process of appointment of superior Judges should be fully alive to the serious impli cations of their constitutional obligation and be zealous in its discharge in order to ensure that no doubtful appoint ment can be made even if sometime a good appointment does not go through. This is not difficult to achieve. The work ing of the appointment process is a 303 matter connected with this question and not divorced from it. most often, it is only a bad appointment which could have been averred that gives rise to a situation raising the question of the need of such a law. Due emphasis must, therefore, be laid on prevention even while taking curative measures. It is a sad commentary on the working of the appointment process and the behaviour of some of the appointees which has led to this situation. The confidence reposed in them by the framers of the Constitution has been betrayed to this extent. It was expected that the superior Judges who were constituted into a different class and created as superior morally not needing the deterrence of such a law to punish them would be alive to the need of a high code of conduct regulating their behaviour justifying the absence of such a law for them. It was reasonable to further expect that the aberrations, if any, in their rank would be subject to the moral and social sanction of their community ensuring that they tread the right path. The social sanction of their own community was visualised as sufficient safeguard with im peachment and removal from office under Article 124(4) being the extreme step needed, if at all. It appears that the social sanction of the community has been waning and inade quate of late. If so, the time for legal sanction being provided may have been reached. No doubt for the judicial community in general it would be a sad day to become suspect needing such a legislation to keep it on the right track. However, that is the price the entire community has to pay if its internal checks in the form of moral and social sanction are found deficient and inadequate to meet the situation which legal sanction alone can prevent. It is for the Parliament to decide whether that stage has reached in the superior judiciary when legal sanction alone can be the remedy for maintenance of public confidence in the integrity of the superior judiciary without which independence of the judiciary would itself be in jeopardy. The view that Judges of the High Courts and the Supreme Court are outside the purview of the Prevention of Corrup tion Act, fits in with the constitutional scheme and is also in harmony with the several nuances of the entire existing law relating to the superior Judges while the contrary view fouls with it at several junctures and leaves many gaping holes which cannot be filled by judicial exercise. The patchwork of proposing guidelines suggested by the learned Solicitor General apart from being an impermissible judicial exercise, also does not present a complete and harmonious picture and fails to provide answers to several obvious querries which arise. The inescapable con 304 clusion, therefore, is that the Prevention of Corruption Act, 1947, as amended by the 1964 amendment is inapplicable to Judges of the High Courts and the Supreme Court. Juris prudentially this conclusion need not be anathema as stated in section 84: "In the absence of a statute, misfeasance of a judicial officer is not a criminal offence, impeachment being the exclusive remedy. " These words summarise the true legal position in the case of superior Judges who are separately classified in the consti tutional scheme itself. There is nothing strange about the above view since the scheme in some other countries also appears to be the same. In recent years in some countries, there were instances which provoked a strong debate on the subject and different remedies were advocated to deal with the situation. It may be mentioned that instances of punishment for corruption in earlier centuries including the indictment of Lord Bacon is not apposite for the reason that the situation then was not akin to the scheme in the Indian Constitution for the judges of the High Courts and the Supreme Court and the protection given to them for ensuring the independence of judiciary. As indicated earlier, while adopting curative measures for the malady, a renewed emphasis on its prevention in the future has to be borne in mind. In this context, it is useful to recall the high esteem in which the higher judici ary was held by the prime builders of our nation in its nascent stage. In a letter dated 18th December, 1947, to the Prime Minister, Pt. Jawaharlal Nehru and the Deputy Prime Minister, Sardar Vallabhbhai Patel, the first Chief Justice of free India said: "Under the Constitution Act, provi sions can be made for the appointment, the salary, pension, leave and removal of the judges. In addition to that, I think it will be desirable to insert a provision under the Act, or to frame statutory rule under the Act, defining the relations between the judiciary and the executive. All communications in respect of the appointments and the griev ances, if any, of the judges should come from the Chief Justice of the provincial High Court, through the Governor and not through the Home Department of the province. I recog nise that the Governor General or the Presi dent, who will be an elected person, will have to consult the Cabinet according to the 305 Rules of Business framed for working the Central Government. It seems to me, however, fundamentally essential that the High Courts, the Federal Court and the Supreme Court (when established) should not be considered a part of, or working under, any department of the executive Government of India. It should be an independent branch of the Government in touch directly with the GovernorGeneral or the President of the Dominion of India. I am sure the Cabinet will agree to the principle of keeping the judiciary free from the control of the executive. The duty and credit for maintaining this high tradition is on the Government in existence when the 'Constitution and the statutory rules are framed, and I have written this to you confi dently hoping that you share my desire to safeguard the dignity and independence of the judiciary and will do the needful in the matter." Sardar Vallabhbhai Patel promptly replied to the Chief Justice of India saying 'your views will be very helpful to us in dealing with the subject. ' (Sardar Patel 's Correspondence, 1945 50, edited by Durga Das, Vol. VI, pp. 274 76) The framers of the Constitution had visualized the higher echelons of the judiciary as comprised of men of strong moral and ethical fibre who would provide moral leadership in the society of free India and function as the sentinel of the other wings of the State not needing scruti ny themselves. Our Constitution provides for separation of powers of the three wings of the State with judicial review as one of the essential tenets of the basic structure of the Constitution. It is thus the judiciary which is entrusted with the task of interpretation of the Constitution and ensuring that the other two wings do not overstep the limit delineated for them by the Constitution. With this duty entrusted to the higher judiciary, it was natural to expect that the higher judiciary would not require any other agency to keep a watch over it and the internal discipline flowing from the moral sanction of the community itself will be sufficient to keep it on the right track without the re quirement of any external check which may have the tendency to interfere with the independence of the judiciary, a necessary concomitant of the proper exercise of its consti tutional obligation. It is for this reason that the higher. judiciary was treated differently in the 306 Constitution indicating the great care and attention be stowed in prescribing the machinery for making the appoint ments. It was expected that any deviation from the path of rectitude at that level would be a rare phenomenon and for the exceptional situation the provision for removal in accordance with clause (4) of Article 124 was made, the difficulty in adopting that course being itself indicative of the rarity with which it was expected to be invoked. It appears that for a rare aberrant at that level, unless he resigned when faced with such a situation, removal from office in accordance with Article 124(4) was envisaged as the only legal sanction. If this was the expectation of the framers of the Constitution and their vision of the moral fibre in the higher echelons of the judiciary in free India, there is nothing surprising in the omission to bring them within the purview of the Prevention of Corruption Act, 1947, or absence of a similar legislation for them alone. Obviously, this position continued even during the delibera tions of the Santhanam Committee which clearly mentioned inits Report submitted in 1964 that it has considered the judiciary outside the ambit of its deliberations. Clearly, it was expected that the higher judiciary whose word would be final in the interpretation of all laws including the Constitution, will be comprised of men leading in the spirit of self sacrifice concerned more with their obligations than rights, so that there would be no occasion for anyone else to sit in judgment over them. If it is considered that the situation has altered requiring scrutiny of the conduct of even Judges at the highest level and that it is a matter for the Parliament to decide, then the remedy lies in enacting suitable legislation for that purpose providing for said guards to ensure independence of judiciary since the exist ing law does not provide for that situation. Any attempt to bring the Judges of the High Courts and the Supreme Court within the purview of the Prevention of Corruption Act by a seemingly constructional exercise of the enactment, appears to me, in all humility, an exercise to fit a square peg in a round hole when the two were never intended to match. I would, therefore, allow the appeal even though by the majority view it must fail. ORDER In view of the majority judgments, the appeal is dismissed. R.P. Appeal dismissed.

A complaint against the appellant, a former Chief Jus tice of a High Court, was made to the CBI on which a case under section 5(2) read with section 5( I )(e) of the Prevention of Corruption Act, 1947 was registered on 24.2.1976. On 28.2.1976 the F.I.R. was filed in the court of Special Judge. The appellant proceeded on leave from 9.3.1976 and retired 8.4.1976 on attaining the age of superannuation. The investigation culminated in the filing of charge sheet/final report under section 173(2), Cr. P.C. against the appellant on 15.12.1977 before the Special Judge. The Charge sheet stated that the appellant after assum ing office of the Chief Justice on 1.5.1969 gradually com menced accumulation of assets and was in possession of pecuniary resources and property, in his name and in the names of his wife and two sons, disproportionate to his known sources of income for the period between the date of his appointment as Chief Justice and the date of registra tion of the case, and thereby he committed the offence of criminal misconduct under section 5( 1 )(e), punishable under section 5(2) of the Prevention of Corruption Act, 1947. The Special judge issued process for appearance of the appellant. Mean while, the appellant moved the High Court under section 482, Cr. P.C. to quash the said criminal proceedings. The matter was heard by a Full Bench of the High Court which dismissed the application by 2:1 majority; but granted a certificate under Articles 132(1) and 134(1)(c) of the Constitution in view of the important question of law in volved. In appeal to this Court it was contended by the appel lant that the provisions of the Prevention of Corruption Act, 1947 do not apply to a judge of a superior Court as for such prosecution previous sanction of an authority competent to remove a public servant as provided under section 6 of the Prevention of Corruption Act, 1947 is imperative and power to remove a Judge is not vested in any single individual authority but is 191 vested in the two Houses of Parliament and the President under Article 124(4) of the Constitution; that the Parlia ment cannot be the sanctioning authority for the purpose of section 6 and if the President is regarded as the authority, he cannot act independently as he exercises his powers by and with the advice of his Council of Ministers and the Execu tive may 'misuse the power by interfering with the judici ary; that section 6 applies only in cases where there is master and servant relationship between the public servant and the authority competent to remove him, and where there is verti cal hierarchy of public offices and the sanctioning authori ty. is vertically superior in the hierarchy in which office of the public servant against whom sanction is sought ex ists; that no prosecution can be launched against a Judge of a superior Court under the provisions of the Prevention of Corruption Act except in the mode envisaged by Article 124(4) of the Constitution; that no law prohibits a public servant having in his possession assets disproportionate to his known sources of income and such possession becomes an offence only when the public servant is unable to account for it; and that the public servant is entitled to an oppor tunity by the investigating officer to explain dispropor tionality between the assets and the known sources of income and the charge sheet must contain such an averment, and failure to mention that requirement would vitiate the charge sheet and render it invalid and, no offence under section 5(1)(e) of the Act could be made out. On the questions: (1) whether a Judge of a High Court or of the Supreme Court is a 'public servant ' within the mean ing of section 2 of the Prevention of Corruption Act, 1947; (2) whether a Judge of the High Court including the Chief Jus tice, or a Judge of the Supreme Court can be prosecuted for an offence under the Prevention of Corruption Act, 1947; and (3) who is the competent authority to remove a Judge either of the Supreme Court or of the High Court from his office in order to enable that authority to grant sanction for prose cution of the Judge under the provisions of section 6 of the Prevention of Corruption Act, 1947. Dismissing the appeal, this Court, HELD: (Per Majority Ray, Shetty, Sharma and Venkatachaliah, JJ). A Judge of a High Court or of the Supreme Court is a 'public servant ' within the meaning of section 2 of the Preven tion of Corruption Act, 1947. Prosecution of a Judge of a High Court, including the Chief 192 Justice, or a Judge of the Supreme Court can be launched after obtaining sanction of the competent authority as envisaged by section 6 of the Prevention of Corruption Act. Per Verma, J. (dissenting) 1. (i) A Judge or Chief Justice of a High Court is a Constitutional functionary, even though he holds a public office and in that sence he may be included in the wide definition of a public servant. But a public servant whose category for the grant of sanction for prosecution is not envisaged by section 6 of the Act is outside the purview of the Act, not intended to be covered by the Act. 1(ii) The Prevention of Corruption Act, 1947, as amended by the 1964 amendment is inapplicable to Judges of the High Courts and the Supreme Court. (Per Majority Ray, Shetty and Venkatachaliah, JJ.) 3.1 For the purpose of section 6(1)(c) of the Prevention of Corruption Act, 1947, the President of India is the authori ty competent to give previous sanction for prosecution of a Judge of a superior Court. 3.2 No criminal case shall be registered under section 154, Cr. P.C. against a Judge of the High Court, Chief Justice of the High Court or a Judge of the Supreme Court unless the Chief Justice of India is consulted in the matter. 3.3 If the Chief Justice of India himself is the person against whom the allegations of criminal misconduct are received, the Government shall consult any other judge or Judges of the Supreme Court. 3.4 There shall be similar consultation at the stage of examining the question of granting sanction for prosecution and it shall be necessary and appropriate that the question of sanction be guided by and in accordance with the advice of the Chief Justice of India. Sharma. J. (contra) As to who is precisely the authority for granting previ ous sanction for prosecution of a Judge is a matter which did not arise in the instant case and will have to be final ly decided when it directly arises. How 193 ever, the issues of removal under article 124(4) of the Consti tution and sanction under section 6 of the Act can be combined for getting clearance from the Parliament. Verma. J. (dissenting) 3. Section 6 of the Act is inapplicable to Judges of High Courts or of the Supreme Court and such Constitutional functionaries do not fail within the purview of the Preven tion of Corruption Act, 1947. Per B.C. Ray, J. 1. A Judge of the High Court or of the Supreme Court comes within the definition of public servant under section 2 of the Prevention of corruption Act, 1947. and he is liable to be prosecuted under the provisions of the Act. [223E F] 2.1 A Judge will be liable for committing criminal misconduct within the meaning of section 5(1)(e) of the Act, if he has in his possession pecuniary resources or property disproportionate to his known sources of income for which he cannot satisfactorily account. [217B] 2.2 A Judge of a superior Court will not be immune from prosecution for criminal offences committed during the tenure of his office under the provisions of the Act. [223F] 3.1 In order to launch a prosecution against a Judge of a superior Court for criminal misconduct failing under section 5(1)(e) of the Act, previous sanction of the authority competent to remove a Judge, including Chief Justice of a High Court, from his office is imperative. [217C D; 221G] 3.2 The President of India has the power to appoint as well as to remove a Judge from his office on the ground of proved misbehaviour or incapacity as provided in Article 124 of the Constitution and, therefore he, being the authority competent to appoint and to remove a Judge, of course, in accordance with the procedure envisaged in clauses(4) and (5) of Article 124. may be deemed to be the authroity to grant sanction for prosecution of a Judge under the provi sions of section 6(1)(c) in respect of the offences provided in section 5(1)(e) of the Act. [225G H; 226A B] 3.3 In order to adequately protect a Judge from frivo lous prosecution and unnecessary harassment the President will consult the Chief Justice of India who will consider all the materials placed before 194 him and tender his advice to the President for giving sanc tion to launch prosecution or for filing FIR against the Judge concerned after being satisfied in the matter. The President shall act in accordance with the advice given by the Chief Justice of India. [226B C] If the Chief Justice of India is of opinion that it is not a fit case for grant of sanction for prosecution of the Judge concerned, the President shall not accord sanction to prosecute the Judge. This will save the ,fudge concerned from unnecessary harassment as well as from frivolous prose cution against him. [226C] In the case of the Chief justice of the Supreme Court, the President shall consult such of the Judges of the Su preme Court as he may deem fit and proper and shall act in accordance with the advice given to him by the Judge or Judges of the Supreme Court. [226D] 3.4 In the instant case, the appellant had resigned from his office and ceased to be a public servant on the date of lodging the F.I.R. against him by the C.B.I. and, therefore, no sanction under section 6(1)(c) of the Act was necessary. [227A; 228C] R.S. Nayak vs A.R. Antulay, ; , referred to. 4.1 A Judge of the Supreme Court as well as a Judge of the High Court is a constitutional functionary and to main tain the independence of the judiciary and to enable the Judge to effectively discharge his duties as a judge and to maintain the rule of law, even in respect of against the Central Government or the State Government, he is made totally independent of the control and influence of the executive by mandatorily embodying in Article 124 or Article 217 of the Constitution that a Judge can only be removed from his office in the manner provided in clauses (4) and (5) of Article 124. [222B D] 4.2 Power to remove by impeachment or address, a person holding office during good behaviour, is an essential coun terpart to the independence secured to the holders of high office by making their tenure one of good behaviour instead of at pleasure. [224D E] 4.3 A Judge of the Supreme Court or of the High Court can only be removed on the ground of proved misbehaviour or incapacity by an order of the President passed after follow ing the mandatory procedure expressly laid down in Article 124(4) of the Constitution. Without an address by each of the Houses of the Parliament, the President is not 195 empowered under the Constitution to order removal of a Judge of the Supreme Court or of the High Court from his office on the ground of proved misbehaviour or incapacity. Therefore, the repository of this power is not in the President alone but it is exercised after an address by each of the Houses of Parliament in the manner provided in Article 124(4). [218B H; 219A] Union of India vs Sakalchand, ; and S.P. Gupta and Ors. vs President of India and Ors, AIR 1982 SC 149, referred to. There is no master and servant relationship or employer and employee relationship between a Judge and the President of India in whom the executive power of the Union is vested under the provisions of Article 53 of the Consti tution. [222E] 6. It is necessary to evolve some method commensurate with the grant of sanction in cases of serious allegations of corruption and acquisition or the possession of dispro portionate assets which the Judge cannot satisfactory ac count for or possession of property disproportionate to the sources of income of the Judge. Otherwise, it will create a serious inroad on the dignity, respect and credibility and integrity of the high office which a superior ,fudge occu pies resulting in the erosion of the dignity and respect for the high office of the Judges in the estimation of the public. [225E F] 7.1 The purpose of grant of previous sanction before prosecuting a public servant including a Judge of the High Court or of the Supreme Court is to protect the Judge from unnecessary harassment and frivolous prosecution more par ticularly to save the Judge from the biased prosecution for giving judgment in a case which goes against the Government or its officers though based on good reasons and rule of law. [226D E] 7.2 Frivolous prosecution cannot be launched against a Judge for giving a judgment against the Central Government or any of its officers inasmuch as such decision does not amount to misbehaviour within the meaning of Article 124 of the Constitution. [226G H] Shamsher Singh & Ant. vs State of Punjab, ; and G.K. Daphtary vs O.P. Gupta; , , re ferred to. Per Shetty, and Venkatachaliah, JJ. 196 1. The expression "public servant" as defined under section 2 of the Prevention of Corruption Act, 1947 means a public serv ant as defined in section 21, I.P.C. From the very commencement of the I.P.C. "Every Judge" finds a place in the categories of public servant defined under section 21 and this expression indicates all Judges and all Judges of all Courts. It is a general term and general term in the Act should not be narrowly construed. It must receive comprehensive meaning unless there is positive indication to the contrary. There is no such indication to the contrary in the Act. A Judge of the superior Court cannot therefore excluded from the defi nition of 'public servant '. [237C; 240D; 242A B] 2.1 A public servant cannot be prosecuted for offences specified in section 5 of the Prevention of Corruption Act, 1947, unless there is prior sanction under section 6 for prosecution from the competent authority. [237E] 2.2 There are two requirements for the applicability of clause (c) of section 6(1) to a Judge of the higher judiciary the Judge must be a public servant, and there must be an authority competent to remove him from his of fice. If these two requirements are complied with, a Judge cannot escape from the operation of the Act. [240B C] 2.3 The Judges are liable to be dealt with just the same way as any other person in respect of criminal offence. It is only in taking of bribes or with regard to the offence of corruption the sanction for criminal prosecution is re quired. There is no law providing protection for Judges from criminal prosecution. [252A B] It is not objectionable to initiate criminal proceedings against public servant before exhausting the disciplinary proceedings, and a fortiori, the prosecution of a Judge for criminal misconduct before his removal by Parliament for proved misbehaviour is unobjectionable. [252D E] The "proved misbehaviour" which is the basis for removal of a Judge under clause (4) of Article 124 of the Constitu tion may also in certain cases involve an offence of crimi nal misconduct under section 5(1) of the Act. But that is no ground for withholding criminal prosecution till the Judge is removed by Parliament. One is the power of Parliament and the other is the jurisdiction of a criminal court. Both are mutually exclusive. [251A C] 3.1 For the purpose of section 6(1)(c) of the Act, the President of India the authority competent to give previous sanction for the prosecution 197 of a Judge of the Supreme Court and the High Court. 3.2 Section 6(1) brings within its fold all the catego ries of public servants as defined in section 21 of the I.P.C. Clauses (a) and (b) would cover the cases of public servants who are employed in connection with the affairs of the Union or State and are not removable from their office save by or with the sanction of the respective government. Clause (c) states that in the case of any other person the sanction would be of the authority competent to remove him from his office. [238E F] The provisions of clauses (a) and (b) of section 6 [(1)] cover certain categories of public servants and the 'other ' which means remaining categories are brought within the scope of clause (c). Clause (c) is independent of and sepa rate from the preceding two clauses. The structure of the section does not permit the applicability of the rule of ejusdem generis. [240A B] 3.3 The application of the ejusdem generis rule is only to general word following words which are less general, or the general word following particular and specific words of the same nature. In such a case, the general word or expres sion is to be read as comprehending only things of the same kind as that designated by the preceding specific words or expressions. The general word is presumed to be restricted to the same genus as those of the particular and specific words. [239F G] 3.4 The construction which would promote the general legislative purpose underlying the provision, is to be preferred to a construction which would not. [247A] If the literal meaning of the legislative language used would lead to results which would defeat the purpose of the Act, the Court would be justified in disregarding the liter al meaning and adopt a liberal construction which effectu ates the object of the legislature. [247A B] S.A. Venkataraman vs The State, ; and M. Narayanan vs State of Kerala, ; , referred to. Craies on Statute Law, (6th Edn. p. 531) referred to. 3.5 In view of the composition of Parliament, the nature of transacting business or proceeding in each House, the prohibition by Article 121 on discussion with respect to the conduct of any Judge of the Supreme Court or of a High Court, in the discharge of his duties except 198 upon a motion for presenting an address to the President praying for his removal, the Parliament cannot be the proper authority for granting sanction for the prosecution of a Judge, That does not, however, follow that the Judges of superior Courts are entitled to be excluded from the scope of the Act. [245C F] 3.6 Section 6 requires to be liberally construed. It is not a penal provision but a measure of protection to public servants in the penal enactment. It indicates the authori ties without whose sanction a public servant cannot be prosecuted. It is sufficient that the authorities prescribed thereunder fail within the fair sense of the language of the section. [247B C] The expression "the authority competent to remove" used in section 6(1)(c) is to be construed to mean also an authority without whose order or affirmation the public servant cannot be removed. The order of the President for removal of a Judge is mandatory. The motion passed by each House of Parliament with the special procedure prescribed under article 124(4) will not proprio vigore operate against the Judge. It will not have the consequence of removing the Judge from the office unless it is followed by an order of the President. Clause (4) of article 124 is in the negative terms. The order of the President is sine qua non for removal of a Judge. The President alone could make that order. [247C E, 248C] 3.7 The relationship of master and servant as is ordi narily understood in common law does not exist between the Judges of higher judiciary and the Government. The Judges are not bound nor do they undertake to obey any order of the Government within the scope of their duties. Indeed, they are not Judges if they allow themselves to be guided by the Government in the performance of their duties. [239B D] Union of India vs H.S. Seth, ; , referred to. 3.8 It is not necessary that the authority competent to give sanction for prosecution or the authority competent to remove the public servant should be vertically superior in the hierarchy in which the office of the public servant exists. There is no such requirement under section 6 of the Act. The power to give sanction for prosecution can be conferred on any authority. Such authority may be of the department in which the public servant is working or an outside authority. All that is required is that the authority must be in a position to appreciate the materials collected against the public servant to judge whether the prosecution contemplated is frivolous or speculative. [249B C] 199 R.S. Nayak vs A.R. Antulay, , distinguished. The President is not an outsider so far judiciary is concerned. He appoints the Judges of the High Court and the Supreme Court in exercise of his executive powers. [249E] Shamsher Singh vs State of Punjab, [1975] 1 SCR 365 and S.P. Gupta vs Union of India, [1982] 2 SCR 365, referred to. Parliament has no part to play in the matter of appoint ment of Judges except that the Executive is responsible to the Parliament. [249G H] 3.9 In the instant case, the view taken by the High Court that no sanction for prosecution of the appellant under section 6 of the Act was necessary since he had retired from the service on the age of superannuation and was not a public servant on the date of filing the charge sheet, is unassailable. The question is no longer res integra. [254G H; 255C] S.A. Venkataraman vs The State, ; ; C.R. Bansi vs State of Maharashtra, ; and K.S. Dharmadatan vs Central Government & Ors., ; , referred to. R.S. Nayak & Ors vs A.R. Antulay, , referred to. 4.1 There are various protections afforded to Judges to preserve the independence of the judiciary. They have pro tection from civil liability for any act done or ordered to be done by them in discharge of their judicial duty whether or not such judicial duty is performed within the limits of their jurisdiction, as provided under section 1 of . Likewise section 77, I.P.C. gives them protection from criminal liability for an act performed judicially. A discussion on the conduct of the Judges of the Supreme Court and the High Courts in the discharge of their duties shall not take place in Parliament or in the State Legislatures, as envisaged by Articles 121 and 211 of the Constitution. The Supreme Court and the High Courts have been constituted as Courts of Record with the power to punish for committing contempt as laid down by Articles 129 and 215. The provides power to take civil and criminal contempt proceedings. The Executive is competent to appoint the Judges but not empowered to remove them. The power to remove is vested in Parliament by the process analogous to impeachment as envisaged by Article 124 of the Constitution. [251E H; 242E] 200 4.2 Previous sanction of the competent authority as contem plated by section 6 is only to protect the honest public servants from frivolous and vexatious prosecution. The competent authority may refuse sanction for prosecution if the offence alleged has no material to support or it is frivolous or intended to harass the honest officer. But he is duty bound to grant sanction if the material collected lend credence to the offence complained of the discretion to prosecute a public servant is taken away from the prosecuting agency and is vested in the authority competent to remove the public servant. The latter would be in a better position than the prosecuting agency to assess the material collected in a dispassionate and reasonable manner and determine whether or not the sanction for prosecution deserves to be granted. [237F G; 238A C] 4.3 The apprehension, that the Executive being the largest litigant is likely to misuse the power to prosecute the Judges, in our overlitigious society is pot unjustified or unfounded. The Act provides certain safeguards like section 6 and trial by the court which is independent of the Executive. But these safeguards may not be adequate. Any complaint against a Judge and its investigation by the CBI, if given publicity, will have a far reaching impact on the Judge and the litigant public. The need therefore is a judicious use of taking action under the Act. Care should be taken that honest and fearless Judges are not harassed. They should be protected. [252G H; 253A C] 5.1 There is no need for a separate legislation for the Judges. The Act is not basically defective in its applica tion to judiciary. All that is required is to lay down certain guidelines lest the Act may be misused. This Court being the ultimate guardian of rights of people and inde pendence of the judiciary will not deny itself the opportu nity to lay down such guidelines. This Court is not a Court of limited jurisdiction of only dispute settling. Almost from the beginning, this Court has been a law maker, albiet, 'interstitial ' law maker. Indeed the Court 's role today is much more. It is expanding beyond dispute settling and interstitial law making. It is a problem solver in the nebulous areas. [253E G] 5.2 The Chief Justice of India is a participatory func tionary in the matter of appointment of Judges of the Su preme Court and the High Courts; he is to be consulted by the President of India even for transfer of a Judge from one High Court to another; and question of age of a Judge of a High Court shall be decided by the President after consult ing him. The Chief Justice of India being the head of the Judiciary is primarily concerned with the integrity and impartiality of the judiciary. Hence it is necessary that the Chief Justice of India is not 203 either from the evidence of the prosecution and/or evidence from the defence. [259F G] 8.3 Parliament is competent to place the burden on certain aspects on the accused as well and particularly in matters "especially within his knowledge". (section 106 of the Evidence Act). Adroitly the prosecution cannot, in the very nature of things, be expected to know the affairs of a public servant found in possession of resources of property disproportionate to his known sources of income. It is for him to explain. Such a statute placing burden on the accused cannot be regarded as unreasonable, unjust, or unfair. Nor can it be regarded as contrary to Article 21 of the Consti tution. The principle that the burden of proof is always on the prosecution and never shifts to the accused is not a universal rule to be followed in every case. The principle is applied only in the absence of statutory provision to the contrary. [260A C] Woolmington vs Director of Public Prosecution, [1935] A .C. 462; C.S.D. Swamy vs The State, ; ; Surajpal Singh vs The State of U.P., ; ; Sajjan Singh vs The State of Punjab, ; ; Rig vs Hunt, and Maharashtra vs K.K.S. Ramas wamy; , , referred to. State of Maharashtra vs Wasudeo Ramchandra Kaidalwar, ; , referred to. 9.1 To state that after collection of all material, the investigating officer must give an opportunity to the ac cused and call upon him to account for the excess of the assets over the known sources of income and then decide whether the accounting is satisfactory or not, would be elevating him to the position of an enquiry officer or a judge. He is not holding an enquiry against the conduct of the public servant or determining the disputed issues re garding the disproportionality between the assets and the income of the accused. He just collects material from all sides and prepares a report which he files in the Court as a chargesheet. The investigating officer is only required to collect material to find out whether the offence alleged appears to have been committed. In the course of the inves tigation, he may examine the accused. Indeed, fair investi gation requires that the accused should not be kept in darkness. He should be taken into confidence if he is will ing to cooperate. [261B E] 10.1 The charge sheet is nothing but a final report of the police officer under section 173(2) of the Cr. P.C. Section 173(2) provides that on 204 completion of the investigation the police officer investi gating into a cognizable Offence shall submit a report, which must be in the form prescribed by the State Govern ment. The statutory requirement of the report under section 173(2) would be complied with if the various details pre scribed therein are included in the report and it accompa nies all the documents and statements of witnesses as re quired by section 172(5) Cr. P.C. Nothing more need be stated in the report of the investigating officer. It is also not necessary that all the details of the offence must be stat ed. The details of the offence are required to be proved to bring home the guilt of the accused at a later stage in the course of the trial of the case by adducing acceptable evidence. [261E H; 262A C] Satya Narain Musadi and Ors. vs State of Bihar, , referred to. 10.2 In the instant case, the charge sheet contained all the requirements of section 173(2), Cr. It stated that the investigation showed that between 1.5.1969 and 24.2.1976 the appellant had been in possession of the pecuniary resources and property in his own name and in the names of his wife and two sons, which were disproportionate to the known sources of income over the same period and he cannot satis factorily account for such disproportionate pecuniary re sources and property. The details of properties and pecuni ary resources of the appellant also were set out in clear terms. No more was required to be stated in the charge sheet. It was fully in accordance with the terms of section 173(2), Cr. P.C. and clause (e) ors. 5(1)(e) of the Act. [262C E] 11. The society 's demand for honesty in a Judge is exacting and absolute. The standards of judicial behaviour, both on and off the Bench, are normally extremely high. For a judge to deviate from such standards of honesty and impar tiality is to betray the trust reposed on him. No excuse or no legal relativity can condone such betrayal. From the standpoint of justice the size of the bribe or scope of corruption cannot be the scale for measuring a judge 's dishonour. A single dishonest judge not only dishonours himself and disgraces his office but jeopardises the integ rity of the entire judicial system. [262F H; 263A] A judicial scandal has always been regarded as far more deplorable than a scandal involving either the Executive or a member of the Legislature. The slightest hint of irregu larity or impropriety in the Court is a cause for great anxiety and alarm. [263A B] Per Sharma, J.: 1. The expression "public servant" used in the Prevention of 205 Corruption Act, 1947 is undoubtedly wide enough to denote every Judge, including the Judges of the High Courts and the Supreme Court [263D] 2.1 Section 2 of the Act adopts the definition of "public servant" as given in section 21, I.P.C. which includes "Every Judge". If the legislature had intended to exclude Judges of the High Courts and the Supreme Court from the field of section 5 of the Act, it could have said so in unambigu ous terms instead of adopting the wide meaning of the ex pression "public servant" as given in the Indian Penal Code. [266E F] 2.2 No person is above the law. In a proceeding under Article 124 of the Constitution, a Judge can merely be removed from his office. He cannot be convicted and pun ished. In a case where there is a positive finding recorded in such a proceeding against the Judge and on that ground he is removed from his office, it cannot be said that he will escape the criminal liability. In a civilised society the law cannot be assumed to be leading to such disturbing results. [265G; 266A B] 2.3 It is not safe to assume that the Prevention of Corruption Act intended to make in its application any discrimination between the lower and the higher judiciary. There cannot be any rational ground on the basis of which a member of a higher judiciary may be allowed to escape prose cution while in identical circumstances a member of the subordinate judiciary is tried and convicted. Such an inter pretation of the Act will militate against its constitution al validity and should not, therefore, be preferred. [265C E] 3.1 The power to remove a High Court Judge from his office does exist and has to be exercised in appropriate circumstances according to the provisions of Article |24 of the Constitution. It cannot, therefore be said that previous sanction for his prosecution cannot be made available. [266D E] 3.2 Section 6(1)(c) of the Act speaks of the "authority competent to remove" the public servant "from his office". An answer in the negative to the question as to whether there is some authority competent to remove a Judge of a High Court will be inconsistent with Article 124 clauses (4) and (5) read with Article 218 of the Constitution. Although more than one person are involved in the process, it is not permissible to say that no authority exists for the purpose of exercising the power to remove a High Court Judge from his office. [264A C] As to who is precisely the authority in this regard is a matter 206 which does not arise in the instant case, but the vital question whether such an authority exists at all must be answered in the affirmative. [264C D] 4.1 If the President is held to be the appropriate authority to grant the sanction without reference to the Parliament, he will be bound by the advice he receives from the Council of Ministers. This will seriously jeopardise the independence of judiciary which is undoubtedly a basic feature of the Constitution. [267D E] 4.2 Since the Constitution itself has considered it adequate in the matter of dealing with serious accusations against the Judges by incorporating the provisions of clauses (4) and (5) in Article 124, they must be treated to be appropriate and suitable; and should be resorted to in the matter of prosecution also, in view of the Parliament enacting section 6 of the Act in the language which attracts the constitutional ,provisions. [268B C] 4.3 It is true that the grant of sanction will be de layed until the accusation is examined according to the law enacted under Clause (5) of Article 124, but once that stage is over and a finding is recorded against the Judge, there should not be any hitch in combining the two matters the removal and the grant of sanction which are obviously inter twined, for getting clearance from Parliament. [268E H; 269A] 5.1 Protection to the public servant in general is provided under Article 311 of the Constitution and the interest of the subordinate judiciary is further taken care of by the High Courts, and this alongwith the provisions regarding previous sanction shields them from unjustified prosecution. Similarly, protection is available to the High Court and Supreme Court Judges through the provisions of clauses (4) and (5) of Article 124 of the Constitution. So far this aspect is concerned, the two categories of Judges High Court and Supreme Court Judges on the one hand and the rest on the other have not been treated by the law differently. [265C E] 5.2 The protection to the independence of the Judiciary is in section 6 of the Prevention of Corruption Act, 1947, which by providing for previous sanction of the authority empowered to remove the Judge, leads to Article 124 of the Constitution. [268A B] 6.1 Taking into consideration the independence of Judi ciary as envisaged by the Constitution, if the President of India is treated as the sanctioning authority in the case of a Judge, and the Chief Justice of 207 India is consulted in the matter and steps are taken in accordance with his advice, and the executive follows this rule strictly, a further protection from harassment of the Judges is uncalled for and unjustified criminal prosecution shall be not made available. But such a binding direction cannot be issued by this Court on the basis of the provi sions of the Constitution and the Act. The approval of the Chief Justice of India can be introduced as a condition for prosecution only by the Parliament and not by this Court. If the Court starts supplementing the law as it stands now, it will be encroaching upon the legislative field. [266G H; 267A B; F H; 268A] 7. Section 5(1)(e) does not contemplate a notice to be served on the accused. If the prosecuting authority after making a suitable enquiry, by taking into account the rele vant documents and questioning relevant persons, forms the opinion that the accused cannot satisfactorily account for the accumulation of disproportionate wealth in his posses sion the section is attracted. [269B D] 8. In the instant case, the records clearly indicate that after duly taking all the appropriate steps it was stated that the assets found in the possession of the appel lant in his own name and in the names of his wife and two sons, were disproportionate to his known sources of income during the relevant period and for which he "cannot satis factorily account". [269D E] Per Verma, J. (dissenting) 1.1 A Judge or Chief justice of a High Court is a Con stitutional functionary, even though he holds a public office and in that sense he may be included in the wide definition of a 'public servant '. However, the holder of an office who may be a public servant according to the wide definition of the expression in the prevention of corruption Act, but whose category for grant of sanction for prosecu tion is not envisaged by section 6 is outside the purview of the Act, not intended to be covered by the Act. [289F; 286D E] 1.2 Section 6(1)(c) of the Prevention of Corruption Act, 1947, is inapplicable to a Judge of a High Court or the Supreme Court and such constitutional functionaries do not fall within the purview of the Act. [296B] 1.3 Previous sanction under section 6 of the Prevention of Corruption Act, 1947, is a condition precedent for taking cognizance of an offence punishable under the Act, of a public servant who is prosecuted during 208 his continuance in the office. The public servant failing within the purview of the Act must invariably fail within one of the three clauses in section 6(1). If the holder of an office, even though a public servant according to the defi nition in the Act does not fail within any of the clauses (a), (b) or (c) of sub section (1), he must be deemed to be outside the purview of the Act since this special enactment was not enacted to cover that category of public servants in spite of the wide definition of 'public servant ' in the Act. [286A B] 1.4 Section 6(1)(c) speaks of 'authority competent to remove ', which plainly indicates the substantive competence of the authority to remove, not merely the procedural or formal part of it. The authority itself should be competent to remove or the one to decide the question of removal and not one which merely obeys or implements the decision of some other authority. It contemplates that the removing authority should have the competence to take a decision on the material placed before it for the purpose of deciding whether the public servant, against whom sanction is sought, has been prima facie guilty of abuse of his office so that there is occasion to bring about cessation of interrelation between the office and abuse by the holder of the office by his removal therefrom. [291A C] R.S. Nayak vs A.R. Antulay, , referred to. 1.5 The competent sanctioning authority envisaged by section 6( 1 )(c) is a vertical superior in the hierarchy having some power of superintendence over the functioning of the public servant. Where no such relationship exists in the absence of any vertical hierarchy and the holder of the public office is a constitutional functionary not subject to power of superintendence of any superior, section 6 can have no application by virtue of the scheme engrafted therein. [291C D] 1.6 Construction of section 6(1)(c) of the Act treating the President as the competent authority to remove a High Court Judge would conflict with the provisions enacted in clauses (4) and (5) of Article 124 read with Article 218 of the Constitution. Such a construction has to be avoided. [295B C] 1.7 The Prevention of Corruption Act is wholly workable in its existing form for the public servants within its purview and there is no impediment in its applicability to the large number of public servants who have been dealt with thereunder ever since its enactment. [274A] 209 1.8 In view of the special provisions enacted in clauses (4) and (5) of Article 124 read with Article 218 of the Constitution, non application of section 6(1) of the Preven tion of Corruption Act, 1947 to the Constitutional function aries such as Judges of the High Courts and the Supreme Court, would result only in the failure of the attempt to bring them within the purview of the Act, while the Act would continue to apply to the public servants in general who fail within the scheme of section 6 of the Act 1or the pur pose of grant of previous sanction for prosecution which is a condition precedent for cognizance of an offence punisha ble under that Act. [295A E] 2.1 The construction made of the provisions of the Act must also fit in within the scheme of clauses (4) and (5) of Article 124 read with Article 218 of the Constitution in order to present a harmonious scheme. [294C B] 2.2 There can be no doubt that the expression 'misbeha viour ' is of wide import and includes within its ambit criminal miscondust as defined in sub section (1) of section 5 of the Act as also lesser misconduct of a Judge falling short of criminal misconduct. The special law envisaged by Article 124(5) for dealing with the misbehaviour of a Judge covers the field of 'investigation ' and 'proof ' of the 'misbeha viour and the only punishment provided is by Article 124(4) of removal from office. [294D E] 2.3 Article 124(5) of the Constitution is wide enough to include within its ambit every conduct of a Judge amounting to misbehaviour including criminal misconduct and prescribes the procedure for investigation and proof thereof. [294E] 2.4 Even for the procedure for investigation into any misbehaviour of a Judge as well as its proof, a law enacted by the Parliament under Article 124(5) is envisaged in the constitutional scheme. Such a law in the form of the and the Rules framed thereunder has been enacted. These provisions were made in the Constitution and the law thereunder enacted when the Prevention of Corruption Act, 1947 was in the statute book. [294F G] 2.5 The prior enactment and existence of the Prevention of Corruption Act, 1947 at the time when clauses (4) and (5) of Article 124 of the Constitution were framed, does indi cate the constitutional scheme that a separate parliamentary law to deal with the investigation and proof of misbehaviour of a Judge was clearly contemplated by providing a special machinery for this category of constitutional func 210 tionaries notwithstanding the general law available and applicable to the public servants in general, which included the Prevention of Corruption Act, 1947. [294G H; 295A] 2.6 In view of the special provisions in the form of clauses (4) and (5) of Article 124 and Article 218 of the Constitution, and the special enactment by the Parliament under Article 124 (5) provided in the Constitutional scheme for Judges of the High Courts and the Supreme Court, it cannot be said that they are governed by the general provi sions in addition to these special provisions enacted only for them. The need for these special provisions is a clear pointer in the direction of inapplicability to them of the general provisions applicable to the public servants holding other public offices, not as constitutional functionaries. [295A B] 2.7 The view that Judges of the High Courts and the Supreme Court are outside the purview of the Prevention of Corruption Act, fits in with the constitutional scheme and is also in harmony with the several nuances of the entire existing law relating to the superior Judges while the contrary view fouls with it at several junctures and leaves many gaping holes which cannot be filled by judicial exer cise. [303F G] 2.8 The Prevention of Corruption Act, 1947, as amended by the 1964 amendment, is inapplicable to Judges of the High Courts and the Supreme Court. [304A] $ 84, referred to. 3.1 There is practical difficulty in applying criminal misconduct, defined in clause (e) of sub section (1) of section 5 of the Act to a Judge of a High Court or the Supreme Court. [296C] 3.2 The words in clause (e) of section 5 (1) of the Act have to be given some meaning which would place the burden on the prosecution, howsoever light, to make out a prima facie case for obtaining sanction of the competent authority under section 6 of the Act and this can be done only if it is read as a part of the scheme under which the public servant is required to furnish particulars of his assets with reference to which the disproportion and his inability to satisfactorily ac count can be inferred. [297A B] 3.3 While according sanction to prosecute under section 6 of the Act, the competent authority has to satisfy itself about the public servant 's inability to satisfactorily account for possession of disproportionate assets. The competent author ity before granting sanction has to apply 211 its mind and be satisfied about the existence of a prima facie case for prosecution of the public servant on the basis of the material placed before it. In order to form an objective opinion, the competent authority must have before it the version of the public servant on the basis of which the conclusion can be reached whether it amounts to satis factory account or not. [296E F] 3.4 The rules applicable to the public servants in general regulating their conduct require them to furnish periodical information of their assets which form a part of their service record. In the case of such public servants whenever sanction to prosecute is sought under section 6, the competent authority can form the requisite opinion on the basis of the available material including the service record of the public servant to code to the conclusion whether the offence under clause (e) of section 5 (1) of possession of dis proportionate assets which the public servant cannot satis factorily account is made outprima facie. [296F G, 297C D] 3.5 In the case of Judges of the High Courts and the Supreme Court, there is no requirement under any provision of furnishing particulars of their assets so as to provide a record thereof with reference to which such an opinion can be formed and there is no vertical superior with legal authority enabling obtaining of information from the con cerned Judge. This too is a pointer in the direction that even after the 1964 amendment of the Act the Legislature did not intend to include Judges of the High Courts and the Supreme Court within the purview of the enactment. [297D F] 4.1 If the Act is applicable to Judges of the High Courts and the Supreme Court, it is obvious that the same must apply also to the Chief Justice of India, the Comptrol ler and Auditor General and the Chief Election Commissioner. Incongruous results would follow in such an event. [297F G] 4.2 If the involvement of the Chief Justice of India is necessary even for commencing the investigation into the offence, and the President while granting the sanction under section 6(1)(c) is also assumed to act on the advice of the Chief Justice of India and if it is permissible to do so in the absence of any 'such provision in the Act, the problem would arise where such action is contemplated against the Chief Justice of India himself. [297G H; 298A] 4.3 Any provision which cannot apply to the Chief Justice of 212 India, cannot apply to the Judges of the Supreme Court, or for that matter even to the High Court Judges, since the Chief Justice of India is not a vertical superior of any of them, there being no such vertical hierarchy and the Chief Justice of India having no power of superintendence even over the High Court Judges, much less the Supreme Court Judges. [298A B] 4.4 In the case of the Comptroller and Auditor General and the Chief Election Commissioner, the situation would be more piquant. The Chief Justice of India cannot be involved in the process relating to them and there is none else to fill that role in that situation. The Constitution, while providing that their position would be akin to that of a Judge of the Supreme Court, could not have intended to place them on a pedestal higher than that of a Supreme Court Judge. If the Act was intended to apply to these constitu tional functionaries, it could not have been enacted leaving such gaping holes which are incapable of being plugged to present a comprehensive scheme for this purpose. [298C E] 5.1 The need for sanction under section 6 of the Act for prosecution of the holder of a public office indicates the ambit and scope of the enactment for deciding whether the holder of a public office falls within the purview of the enactment. No sanction for prosecution under section 6 is re quired after the public servant ceases to hold office, but it does not imply that every holder of a public office after ceasing to hold that office is within the purview of the enactment, even though during the tenure in office, only those public servants are within its ambit in whose case sanction under section 6 must be obtained. [298F H; 299A] 5.2 The ambit of the enactment is to be determined on the basis of the public office held by the public servant, which office is alleged to have been abused during the tenure for committing the offence of criminal misconduct under the Act and it is not the fact of continuance in that office or ceasing to hold it which decides the ambit of the enactment. If the holder of a public office during his tenure in office cannot be prosecuted without sanction under section 6, then, no sanction for his prosecution after ceasing to hold the office may be necessary, but his prosecution is made because while in office he could be prosecuted with the previous sanction under section 6. Conversely, if the holder of a public office while continuing in that office could not be prosecuted under this Act on account of inapplicability of section 6 and, therefore, the non feasibility of previous sanc tion for prosecution under section 6, then on his ceasing to hold 213 5.3 It is for the purpose of construing the provisions of the enactment and determining the scope and ambit thereof and for deciding whether the holder of a public office comes within the purview of the enactment that the feasibility of previous sanction for prosecution and applicability of section 6 of the Act is important since it holds the key which unlocks the true vistas of the enactment. [299D E] 5.4 The concept of the sanction for prosecution by a superior is so inextricably woven into the fabric of the enactment that the pattern is incomplete without it. The clear legislative intent is that the enactment applies only to those in whose case sanction of this kind is contemplated and those to whom the provision of sanction cannot squarely apply are outside its ambit. The provision for sanction is like the keystone in the march of the enactment. Remove the keystone of sanction and the arch crumbles. [299E G] R.S. Nayak vs A.R. A ntulay, , dis tinguished. 6.1 The higher judiciary was treated differently in the Constitution indicating the great care and attention be stowed in prescribing the machinery for making the appoint ments. It was expected that any deviation from the path of rectitude at that level would be a rare phenomenon and for the exceptional situation the provision of removal in ac cordance with clause (4) of Article 124 was made, the diffi culty in adopting that course being itself indicative of the rarity with which it was expected to be invoked. It appears that for a rare aberrant at that level, unless the Judge resigned when faced with such a situation, removal from office in accordance with Article 124(4) was envisaged as the only legal sanction. If this was the expectation of the framers of the Constitution and their vision of the moral fibre in the higher echelons of the judiciary in free India, there is nothing surprising in the omission to bring them within the purview of the Prevention of Corruption Act, 1947, or absence of a similar legislation for them alone. This position continued even during the deliberations of the Santham Committee which clearly mentioned in ics Report submitted in 1964 that it has considered the judiciary outside the ambit for its deliberations. Clearly, it was expected that the higher judiciary Whose word would be final in the interpretation of all laws including the Constitu tion, will be comprised of men leading in the spirit of self sacrifice concerned more with their obligations then rights, so that there would be no occasion for any one else to sit in judgment over them. [305H; 306A D] 6.2 The fact that the Parliament did not enact any other law for 214 the investigation into allegations of corruption against a superior Judge and for his trial and punishment for that offence and rest content merely with enacting the , to provide for the procedure for remov al of a Judge under Article 124 (4) is a clear pointer in the direction that the Parliament has not as yet considered it expedient to enact any such law for the trial and punish ment on the charge of corruption of a superior Judge, except by his removal from office in the manner prescribed. The provisions of the , provide the procedure for investigation and proof of an allegation of corruption against a superior Judge and if the Prevention of Corruption Act, 1947 is held applicable to them, then there would be two separate procedures under these two enactments providing for investigation into the same charge. This anomaly and incongruity cannot be attributed to a conscious act of the Parliament while enacting , after the 1964 amendment in the Prevention of Corruption Act. [301D F] 7.1 The constitutional functionaries namely Judges of High Courts, Judges of the Supreme Court, the Comptroller and Auditor General and the Chief Election Commissioner were never intended to fall within the ambit of the Act as ini tially enacted in 1947, when provisions similar to Articles 124(4) and (5) of the Constitution were present in the Government of India Act, 1935, nor was any such attempt made by amendment of the Prevention of Corruption Act in 1964 and the same position continues in the Prevention of Corruption Act, 1988. [300A B] 7.2 If there is now a felt need to provide for such a situation, the remedy lies in suitable parliamentary legis lation for the purpose preserving the independence of judi ciary free from likely executive influence while providing a proper and adequate machinery for investigation into allega tions of corruption against such constitutional function aries and for their trial and punishment after the investi gation. The remedy is not to extend the existing law and make it workable by reading into it certain guidelines for which there is no basis in it, sing the Act was not intended to apply to them. [300B C] 7.3 The test of applicability of the existing law would be the legal sanction and justiciability of the proposed guidelines without which it is unworkable in the case of such persons. In fact, the very need to read the proposed guidelines in the existing law by implication is a clear indication that the law as it exists does not apply to them. Making the law applicable with the aid of the suggested guidelines, is not in the domain of judicial craftsmanship, but a naked usurpation of legislative power in a virgin field. [300C D] 215 8.1 Laying down guidelines to be implicitly obeyed, if they find no place in the existing enactment and to bring the superior Judges within the purview of the existing law on that basis would amount to enacting a new law outside the scope of the existing law and not merely construing it by supplying the deficiencies to make it workable for achieving the object of its enactment. [273E F] S.P. Sampath Kumar vs Union of India, ; , distinguished. 8.2 In case a legislation like the Prevention of Corrup tion Act for superior Judges also is considered necessary at this point of time, the Parliament can perform its function by enacting suitable legislation, it being a virgin field of legislation. [274B] 8.3 There is no material to indicate that corruption in judiciary was a mischief to be cured when the Prevention of Corruption Act was enacted. For this reason, the desirabili ty now expressed of having such a law cannot be an aid to construction of the existing law to widen its ambit and bring these constitutional functionaries within it. [273B C] 8.4 Judicial activism can supply the deficiencies and fill gaps in an already existing structure found deficient in some ways, but it must stop sort of building a new edi fice where there is none. [273D] 8.5 If it is considered that the situation has altered requiring scrutiny of the conduct of even Judges at the highest level, and that it is a matter for the Parliament to decide, then the remedy lies in enacting suitable legisla tion for that purpose providing for safeguards to ensure independence of judiciary since the existing law does not provide for that situation. [306D E] 8.6 Any attempt to bring the Judges of the High Courts and the supreme Court within the purview of the Prevention of Corruption Act by a seemingly constructional exercise of the enactment, appears to be an exercise to fit a square peg in a round hole when the two were never intended to match. [306E F]

(C) No. 677 of 1988. (Under Article 32 of the Constitution of India). P.N. Duda, N. Safaya, P.K. Choudhary and Ms. Rekha Pandey for the Petitioners. Kapil Sibal, Additional Solicitor General, Ms. A. Subha shini and K. Swamy for the Respondents. The Judgment of the Court was delivered by V. RAMASWAMI, J. In this petition under Article 32 of the Constitution, the petitioners have questioned the con stitutional validity of Section 5 of the (12 of 1919) (hereinafter called 'the Act '). The grounds on which the vires of the provisions is attacked are that the section gives an unguided, unchanelised and arbitrary power to the State Government to include any substance as poison for the purpose of restriction to be imposed on the posses sion for sale and sale of the same. It was further contended that the restriction imposed on possession for sale and sale were not reasonable restrictions. The petitioner 's have also taken the plea that though the Act is a Central enactment it is possible of unjust and unjustified discriminatory appli cation as it is left to each State Government to determine what substance they would include as poison and regulated and the decision in one State to include the substance as poison is not automatically made applicable to the other States. The object of the enactment is to regulate the posses sion for sale and the sale, whether wholesale or retail of poisons and the importation of the same. In other words, it is intended to control over the traffic in poisons. Though the original enactment, the Poisons Act, 1904 was restrict ed, it was applicable to white arsenic, the expanded its provisions and enabled State Government to declare any substance as poison for the purposes of the Act by a notification under the Act or the rules made under the Act. In exercise of this power by the Notification No. F. 10/44/72 fin. (G) dated 7.8.1973 the Lt. Governor of Delhi amended the Delhi Poisons Rules, 1926 (hereinafter called the Rules) by including to the list of substances included in the Rules as "Poisons" "the substance commonly known 222 as 'thinner ' containing spirit and other soluble material such as shellac in which the percentage of such soluble material does not exceed 30%" as poison and consequential amendment of rules 12 and 13 of the Rules. It was the con tention of the petitioners before the authorities that their "unit is manufacturing only those thinners which contain only liquid substance, like as ecotone, ethyl acetate SDS etc. and not all solubles. " According to them, therefore, the substance manufactured by them would not come within the amended Rules. Though in the beginning the petitioners were contending that in substance manufactured by them did not come within Rule 2(x)(2) and there were some correspondence in this regard, when the competent authority held that the substance manufactured by the petitioners would come within the definition of 'thinner ' as contained in Rule 2(x)(2) of the Rules, the petitioners did not question the finding on any material. Before us also they had not placed any materi al to show that the finding was wrong or that the substance would not come within Rule 2(x)(2). In fact the learned counsel argued the petition on the basis that the petition ers are a manufacturer of 'thinner ' within Rule 2(x)(2) which has been declared as poison for purposes of the Act. Originally the Act contained a schedule in which the list of substances declared as poisons were listed. Later when Delhi Poisons Rules, 1926 were made in exercise of the powers under the Act those list of substances were included in the list enumerated in Rule 2 thereof. Rule 2 was amended as already stated including 'thinner ' of the description mentioned therein as poison. Section 5 of the Act the con stitutional validity of which is questioned reads as fol lows: "5. Presumption as to specified poisons: Any substance specified as a poison in a rule made or notification issued under this Act shall be deemed to be a poison for the purpose of this Act. " It was a law in force in the territory of India before the commencement of the Constitution and as such continued in force. The Act is intended to regulate the importation, possession and sale of poisons. Some substances were includ ed in the Rules made in 1926 as poisons and that is not in dispute. Section 5 of the Act deals with presumption and states that any substance specified as a poison in a Rule or noti fication issued under the Act shall be deemed to be a 'po ison ' for purposes of the Act. Rules of 1926 were made in exercise of the rule making power under Section 3 of the Act. 223 That Section enables the State Government to make Rules generally to carry out the purposes and objects of the Act. Rules were amended in 1973 and duly notified as required by the Act. Section 2(3) of the , 1/1904 defined poison as: "Any substance which were applied to the body internally or externally, or in any way intro duced into the system, is capable, without acting mechanically, but by its own inherent qualities,. or destroying life? When this Act 1/1904 was repealed and re enacted as Poison Act 12 of 1919 the definition was omitted and speci fied substances were included in the schedule with a power vested in the State Government to amend the same by Rules including other substances to the list of poisons. It is not all poisonous substances that are brought within the regula tion under the Act. It is those substances which the Govern ment consider its possession for sale or sale to be regulat ed in the interest of health and safety of the society. This limitation is inherent in the scheme of the Act itself. Of course no comprehensive definition can be given to the word poison. Under this term would fall anything calcu lated to destroy life. Substances harmless in themselves might become poison by the time or manner of their adminis tration. Nothing is a poison unless regard be had to its administration. A substance may be a deadly poison or a valuable medicine according to how and how much is taken. If the resultant effect of administering into the system pro duces a violent, morbid or fatal changes or which destroys living tissues, the substance can be safely called poison. Section 4 of the Act impliedly sets out certain guidelines when the State can notify a substance as poison. It states that the State Government may by rule regulate the posses sion of any specified poison in any local area in which the use of such poison for the purpose of committing murder or mischief by poisoning cattle appears to it to be of such frequent occurrence as to render restriction on the posses sion thereof desirable. Any substance which is used for purposes mentioned therein can definitely be declared as poison. That is what the Government have done in this case. It has become a notorious fact, which we can even take judicial notice of, that the substance known as 'thinner ' as it is or mixing with some other substances are taken as intoxicating spirits endangering the life. In many cases deaths have also occurred due to drinking such substance. If the Government thought in the circumstances that the posses sion or sale of the same is to be regulated it could not be said that they have no power to regulate. Section 2 224 also enables the Government by Rule to regulate the posses sion for sale and the sale of the specified poison. It is in exercise of this power Rule 13 was amended by substituting the old Rule by the following Rule: "13 (1) All poisons kept for sale by any licence holder under these rules (except those kept by a chemist, druggist or compounder for the purchase of dispensing or compounding in compliance with the prescription of medical or veterinary practitioner) shall be kept in a box, almirah, room or building (according to the quantity maintained), which shall be secured by lock and key and in which no sub stance shall be placed other than poisons, possessed in accordance with a licence granted under the Act, and each poison shall .be kept within such box, almirah, room or building in a separate closed receptacle of glass, metal or earthenware. Every such box, almirah, room or building and every receptacle shall be marked with the word 'poison ' in red charac ters both English and vernacular and in the case of receptacles containing separate 'poison ' with the name of such 'poison '. Provided that above rule shall not apply to 'poison ' mentioned in Clause (x) of Rule 2. (ii) All 'poisons ' mentioned in clause (x) of rule 2 shall be kept in a room or building (according to quantity maintained) which shall be secured by lock and key in a separate receptacle of glass, metal and earthenware etc. Every such room building and every such receptacle shall be marked with the word 'poison ' in red character both English and vernacular, with the name of the 'poison '. " We are not impressed with the argument that any require ment in this Rule is unreasonable or offends the petition ers ' right to carry on any trade or business. The nature of trade in poison is such that nobody can be considered to have an absolute right to carry on the same. It is a busi ness which can be termed even as inherently dangerous to health and safety of society in view of the rampant misuse and sale to the poor, weak and helpless as an intoxicant. A law in such circumstance can regulate the trade. This posi tion is well settled and it would be pedantic to cite all the authorities of this Court on this point. It is also not necessary that the same substance should be declared as poison for the entire country. The notification and its application to any area would depend on the necessity 225 to declare the substance as poison on the particular facts and situation prevailing in that area and the need to regu late the possession and sale in that area. No question of discrimination can arise in such circumstances. We are of opinion that the provisions of neither Section 2 nor 5 nor the impugned notification are hit by any consti tutional limitation. The writ petition accordingly fails and it is dismissed. Rule nisi is discharged. No order as to costs.

The Lt. Governor of Delhi amended the Delhi Poisons Rules, 1926 by the Notification No. F.10/44/72 fin. (G) dated 7.8.1973 by including to the list of substances in cluded in the Rules as "Poisons", the substance commonly known as "thinner" containing spirit and other soluble material. The petitioners in this petition under Article 32 of the Constitution questioned the constitutional validity of Section 5 of the on the grounds that the section gives an arbitrary power to the State Government to include any substance as poison for the purpose of restric tion to be imposed on the possession for sale and sale of the same; that the restriction imposed on possession for sale and sale were not reasonable restrictions; that though the Act was a Central enactment, it was possible of unjust and unjustified discriminatory application as it was left to each State Government to determine what substance they would include as poison, and that the substance, 'thinner ', manu factured by the petitioners would not come within the amend ed Rules. Dismissing the petition, this Court, HELD: 1. The object of the enactment is to regulate the possession for sale and the sale, whether wholesale or retail of poisons and the importation of the same. In other words, it is intended to control over the traffic in poi sons. The enabled State Government to declare any substance as poison for the purposes of the Act by a notification under the Act or the rules made under the Act. [221 G] 3. It is not all poisonous substances that are brought within the regulation under the Act. It is those substances which the Government consider its possession for sale or sale to be regulated in the interest of health and safety of the society. This limitation is inherent in the scheme of the Act itself. [223 C D] 4. No comprehensive definition can be given to the word, "poison". Under this term would fall anything calculated to destroy life. Substances harmless in themselves might become poison by the time or manner of their administration. Noth ing is a poison unless regard be had to its administration. A substance may be a deadly poison or a valuable medicine according to how and how much is taken. If the resultant effect of administering into the system produces a violent, morbid or fatal changes or which destroys living tissues, the substance can be safely called poison. Any substance which is used for purposes mentioned therein section 4 can definitely be declared as poison. [223 D F] 5. It has become a notorious fact that the substance known as 'thinner ' as it is or mixing with some other sub stances are taken as intoxicating spirits endangering the life. In many cases deaths have also occurred due to, drink ing such substance. If the Government thought in the circum stances that the possession or sale of the same is to be regulated it could not be said that they have no power to regulate. Section 2 also enables the Government to regulate the possession for sale and the sale of the specified poi son. [223 G H; 224 A] 6. The nature of trade in poison is such that nobody can be considered to have an absolute right to carry on the same. It is a business which can be termed even as inherent ly dangerous to health and safety of society in view of the rampant misuse and sale to the poor, weak and helpless as an intoxicant. A law in such circumstance can regulate the trade. It is also not necessary that the same substance should be declared as poison for the entire country. The notification and its application to any area would depend on the necessity to declare the substance as poison on the particular facts and situation prevailing in that area and the need to 221 regulate the possession and sale in that area. No question of discrimination can arise in such circumstances. [224 G H; 225 A]

Appeal No. 4366 of 1991. From the Judgment and Order dated 16.5.1988 of the Punjab & Haryana High Court in Regular Second Appeal No. 3648 of 1987. R.K.Kapoor and Anis Ahmed Khan for the Appellant. S.N.Mishra, L.K. Gupta, D.K. Yadav and D.K.Garg for the Respondents. The Judgment of the Court was delivered by AHMADI, J. Delay condoned. Special leave granted. The constitutional validity of section 15(1)(a) of the Punjab Preemption Act, 1913 was challenged on the ground that it offended the fundamental right guaranteed by Article 19(1)(f) m Ram Sarup vs Munshi & Ors., A Constitution Bench of this Court upheld the validity holding that there was no infringement of Article 19(1)(1 ') of the Constitution. Thereafter, a host of writ petitions 122 were filed in this Court under Article 32 of the Constitu tion challenging the constitutional validity of section 15 on the ground that it infringed Articles 14 and 15 of the Constitution. It may be mentioned that the mother State, the State of Punjab, had repealed the Act in 1973 but it contin ued to be in force in the State of Haryana which prior to 1966 was a part of the State of Punjab. Section 15 of the 1913 Act, as it originally stood, underwent substantial changes in 1960 and as amended read as under: "15. Persons in whom right of pre emption vests in respect of sales of agricultural land and village immovable property (1) The right of pre emption in respect of agricultural land and village immovable property shall vest (a) where the sale is by a sole onwer First, in the son or daughter or son 's son or daughter 's son of the vendor; Secondly, in the brother or brother 's son of the vendor; Thirdly, in the father 's brother or father 's brother 's son of the vendor; Fourthly, in the tenant who holds under tenan cy of the vendor the land or properly sold or a part thereof Co) where the sale is of a share out of joint land or property and is not made by all the co sharers jointly First, in the sons or daughters or son 's son or daughter 's sons of the vendor or vendors; Secondly, in the brothers or brother 's sons of the vendor or vendors; Thirdly, in the father 's brother or father 's brother 's sons of the vendor or vendors; Fourthly, in the other co sharers; Fifthly, in the tenants who hold under tenancy of the vendor or vendors the land or property sold or a part thereof; (c) where the sale is of land or property owned jointly and is made by all the co shar ers jointly 123 First, in the sons or daughters or sons ' sons or daughters ' sons of the vendors; Secondly in the brothers or brother 's sons of the vendors; Thirdly, in the father 's brothers or father 's brother 's sons of the vendors Fourthly, in the tenants, who hold under tenancy of the vendors or any one of them the land or properly sold or a part thereof. (2) Notwithstanding anything con tained in sub section (1): (a ') where the sale is by a female of land or property to which she has succeeded through her father or brother or the sale in respect of such land or property is by the son or daughter of such female after inheritance, the right of pre emption shall vest: (i) if the sale is by such female, in her brother or brother 's son; (ii) if the sale is by the son or daughter of such female, in the mother 's brothers or the mother 's brother 's sons of the vendor or vendors; (b) where the sale is by a female of land or property to which she has succeeded through her husband, or through her son in case the son has inherited the land or property sold from his lather, the right of pre emption shall vest First, in the son or daughter of such husband of the female: Secondly, in the husband 's brother or hus band 's brother 's son of such female." This Court in Atam Prakash vs State of Haryana & Ors, ; ; held that the right of pre emption given to co sharers as well as to a tenant can be justified as they constitute a class by themselves. This Court, therefore, upheld the constitutional validity of clause 'fourthly of section 15(1)(a) clauses 'fourthly ' and 'fifthly ' of section 15(1)(b) and clause fourthly of section 15(1)(c) as valid and not infringing Articles 14 or 15 of the Constitution This Court, however, did not find any justification for the classification contained m section 15 which conferred a right of pre emption on the kinsfolk. The right of preemption based on consanguinity was held to be a relic of the feudal past totally inconsistent with the constitutional philosophy and scheme. It also found the list of kinsfolk entitled to pre emption as intrinsically defec tive and Self contradictory. Finding no reasonable classifi cation it struck down 124 clauses 'first ', 'secondly ' and 'thirdly ' of section 15(1)(a), clauses 'first ', 'secondly ', and 'thirdly ' of section 15(1)(b) and clause 'first ', 'secondly ', and 'third ly ' of section 15(1)(c) and the entire section 15(2) as ultra vires the Constitution. The right of pre emption in regard to a co sharer was upheld on the consideration that if an outsider is introduced as a co sharer in a property it will make common management extremely difficult and destroy the benefits of ownership in common. The right of pre emp tion vested in a tenant was sustained on the ground that 1 and reform legislations in regard to the tiller of the soil to obtain proprietary right in the soil with a view to ensuring his continuance in possession of the land and consequently of his livelihood without threat or disturbance from the superior proprietor. The right of pre emption granted to a tenant was taken as another instance of a legislation aimed at protecting the tenant 's interest in the land. Holding that the co sharers and the tenants constitut ed a distinct class by themselves, the right of pre emption conferred on them was upheld as reasonable and in public interest. In taking this view strong reliance was placed on the ratio of the decision of this court in Bhau Ram vs B. Baijnath Singh, ; wherein the vires of a provision of the Rewa State Pre emption Act which conferred a right of pre emption based on vicinage and the right of preemption conferred on co sharers and the Punjab Pre emption Act, 1913 were challenged on the ground of infraction of Article 19(1) (f) of the Constitu tion. In that case it was held that a right of pre emption by vicinage offended Article 19(1) (f) of the Constitution but a similar right conferred on co sharers was intra vires Article 19(1)(1) of the Constitution. In that case also this Court held that the right of pre emption vested in co shar ers was a reasonable restriction on the right to hold, acquire or dispose of property conferred by Article 19(1)(1) of the Constitution. In Atam Prakash s case, this Court, therefore, held that what was said about the right of pre emption granted to co sharers in relation to Article 19(1)(1) of the Constitution applied with equal force to justify the classification in relation to Articles 14 and 15 of the Constitution. After the surgery, section 15 underwent at the hands of this Court removing the offending pans in Atarn Prakash 's case, what survives of section 15 is that in the case of sale of agricultural land and village immovable property by a sole owner, the tenant alone can exercise the right of pre emption. Where the sale is of a share out of joint land or property, and is, not made by all the co sharers jointly, only the other co sharers and the tenants can exercise the right of pre emption. Where the sale is of a land or proper ty owned jointly and is made by all the co sharers jointly, the right to pre empt survives to the tenants only. Since in the present case, we are concerned with sale by a single co sharer and not 125 by all the co sharers jointly, the remaining part of section 15(1)(b), with which we are concerned, reads as under: "15(b). Persons in whom right of pre emption vests in respect of sales of agricultural land and village immovable property (1) The right of pre emption in respect of agricultural land and village immovable property shall vest Co) where the sale is of a share out of joint land or property and is not made by all the co sharers jointly XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX Fourthly, in the other co sharers; Fifthly, in the tenants who hold under tenancy of the vendor or vendors the land or property sold or a part thereof." Counsel for the appellant submitted that since the suit land belonged to more than one co sharer and had not been sold jointly by all the co sharers, he, as a co sharer, was entitled to claim the right of pre emption under clause 'fourthly ' of section 15(1)(b). A similar question came up before this Court in Jagdish & Ors. vs Nathi Mal Kejriwal & 0rs. ; , ; wherein a two judge Bench of this Court negatived the contention in the follow ing words: "In order to understand the meaning of the words 'other co sharers ' in Section 15(1)(b) we have to read the Act as it stood before the decision in Atam Prakash 's case ; (supra). It is seen that the expression 'other co sharers ' in clause 'Fourthly ' of Section 15(1)(b) of the Act refers to only those co sharers who do not fail under clause 'First ' or 'Secondly ' or 'Thirdly ' of Section 15(1)(b) of the Act. Since the petitioners admittedly fall either under clause 'First ' or under clause 'Secondly ' of Section 15(1)(b) of the Act they are clearly outside the scope of clause 'Fourthly '. Therefore, the petition ers cannot claim the right of pre emption under clause 'Fourthly ' We do not, therefore, find any substance in this contention. " In the present case also the appellant seeks to exercise the right of pre emption as a co sharer i.e. father 's broth er 's son of the vendors. His contention is that he falls within the expression other co sharers ' in clause 'Fourthly ' of section 15(1)(b) and is, therefore, entitled to exercisee the right of pre emption conferred on him by that provision. The courts below 126 have negatived this contention solely on the ground that it cannot stand after the pronouncement of this Court in the case of Jagdish (supra). Counsel for the appellant, however, contended that the interpretation placed by the two judge Bench on the expression 'other co sharers ' in section 15(1)(b) requires reconsideration as it leads to certain anomalous situation e.g. a sister who is a co sharer can claim pre emption while her brother cannot or a daughter 's daughter of the vendor can claim pre emption but not the son. The history of the Punjab Pre emption law may be kept in mind to understand the purport of clause 'Fourthly ' of section 15(1)(b) of the Act. Under the Punjab Pre emption Act, 1905, the corresponding provision, section 12, con ferred a right of pre emption, in the case of a sale of a share of such land or properly held jointly, firstly, in the lineal discendents of the vendor in male line in order of succession; secondly, in the co sharers, if any, who are agnates, in order of succession; thirdly, in the persons described in sub clause (a) i.e. in persons who but for such sale would be entitled to inherit the properly in the event of his or their decease, in order of succession and fourth ly, in the co sharers jointly or severally. It will be noticed that priority for the exercise of the right owes statutorily fixed and even in the case of those falling within the same class, the exercise of right was regulated by the use of the expression, 'in order of succession '. The 1905 Act was repealed and replaced by the 1913 Act. Accord ing to section 15 of this Act before its amendment in1960, in the case of sale of a share out of joint land or proper ty, the right of preemption was conferred firstly on the lineal descendents of the vendor in order of succession; secondly, in the co sharers, if any, who are agnates, in order of succession; thirdly in persons not included under firstly or secondly above, in order of succession, who but for such sale would be entitled, on death of the vendor, to inherit the land or property sold and fourthly, in the co sharers. Section 15 after its amendment in 1960 provided that where the sale is of a share out of the joint land or property and is not by all the co sharers jointly, the right of pre emption was vested, first, in the sons or daughters or son 's son or daughter 's sons of the vendor or vendors; Secondly, in the brothers or brother 's sons of the vendor or vendors; Thirdly, in the father 's brother or father 's broth er 's sons of the vendor or vendors Fourthly, in the other co sharers and Fifthly n the tenants. Read in the context, it becomes clear that the legislature desired to confer the right of pre emption on specified family members of the vendor or vendors in the first three clauses of section 15(1)(b) and with a view to covering all the remaining co sharers not specifically mentioned the preceding clauses it used the expression 'other co sharers ' in the fourth clause which was meant to serve as a residuary clause to ensure 127 that, no co sharer is left out. Since this Court found certain intrinsic contradictions in the list of relatives covered by the first three clauses, it saw no justification for the classification contained in the said provision conferring a right based on consanguinity and, therefore, struck down those clauses:as discriminatory and violative of Articles 14 and 15 of the Constitution. At the same time it upheld the right conferred on co sharers for reasons stated earlier. Thus the purport of Atam Prakash 's case (supra) was that while co sharers were entitled to pre empt, the confer ment of that right on certain kinsfolk based on the rule of consanguinity being a relic of the feudal past could not be tolerated. This Court never intended to exclude any speci fied co owners from the scope of clause fourthly of section 15(1)(b) of the Act. Once conferment of the right of pre emption in favour of co sharers was considered to be a reasonable restriction on the right to hold, acquire and dispose of property under Article 19(1) (f), the same re striction was held to be valid when tested on the touchstone of Articles 14 or 15 of the Constitution. We find it diffi cult to hold that the purport of the of Court 's decision in Attam Prakash 's case was to deny the right of pre emption to those relative or relatives of the vendor or vendors who were specified in the erstwhile first three clauses of section 15(1)(b) even if they happen to be co sharers. The expression 'other co sharers ' was used in the fourth clause of the said provision to ensure that no co sharer was left out or omitted and not to deny the right to kinstolk coshar ers covered by the preceding clauses. If the preceding clauses were not erased from the statute book as unconstitu tional the kinsfolk would have exercised the right in the order of preference, for which no justification was found. The relations in the first three clauses of section 15(1)(b) may or may not be co sharers, The use of the expression 'other ' in clause fourthly conveys the possibility of their being co sharer also. What this Court disapproved as offen sive to Articles 14 and 15 is the classification based on consanguinity and not on co ownership. The right of pre emption to co sharers is held to be intra vires the Consti tution Therefore, it is difficult to hold that this Court intended to deny the right of pre emption of those kinsfolk even if they happened to be co sharers. That would clearly be discriminatory. With respect, therefore, we find it difficult to approve of the interpretation placed on clause `fourthly '; of section 15(1)Co) of the Act by this Court in Jagdish 's case. We think on a proper construction of that clause after the preceding clauses were held to be unconsti tutional the word 'other ' preceding. the word 'co sharer ' is rendered redundant. We, therefore, do not approve the ratio of Jagdish 's case and overrule the same. In the result the appeal succeeds, '[he decision of all the three courts below dismissing the appellant 's suit is set aside and the suit is decreed. 128 We direct that on the appellant plaintiff depositing the entire amount of sale price together with the amount needed for the stamp duty for the execution of the conveyance in his favour within three months from today, the purchaser respondent No. 1 shah within one month of such deposit execute a conveyance of the land, i.e. his share therein derived from his vendors, in favour of the appellant and shall deliver possession thereof to the appellant. If the respondent No. 1 fails to do so, the Court shall appoint a Commissioner who shall execute the conveyance on behalf of the respondent No. 1 and the Court shall put the appellant in possession of the suit land. There will be no order as to costs throughout. V.P.R. Appeal allowed.

The appellant seeking to exercise the right of pre emption as a co sharer, i.e. father 's brother 's son of the vendors, contended that he fell within the expression 'other co sharers ' in clause 'Fourthly ' of section 15(1)(b) of the Punjab pre emption Act, 1913 and was, therefore, entitled to exercise the right of pre emption. The courts below negatived his contention following the decision of this Court in Jagdish & Ors. vs Nathi Mal Kej riwal & Ors. ; , In this appeal filed by special leave, the appellant submitted that since the suit land belonged to more than one co sharer and had not been sold jointly by all the co shar ers, he, as a co sharer, as entitled to claim the right of pre emption under clause 'fourthly 'of section 15(1)(b) and that in Jagdish 's case, the interpretation placed on the expression 'other co shar ers ' in section 15(1)(b) required reconsideration. Allowing the appeal, this Court, HELD: 1. According to section 15 of the Act before its amendment in 1960, in the case of sale of share out of joint land or property, the right of pre emption was conferred firstly on the lineal descendants of the vendor in order of succession; secondly, in the co sharers, if any, who are agnates, in order of succession; thirdly, in persons not included under firstly or secondly above, in order of suc cession, who but for such sale would be entitled, on death of the 120 vendor, to inherit the land or property sold and fourthly, in the cosharers. [126 E F] 2. Section 15 after its amendment in 1960 provided that where the sale is of a share out of the joint land or property and is not by all the co sharers jointly, the right of pre emption was vested, first, in the sons or daughters or son 's son or daughter 's sons of the vendor or vendors; Secondly, in the brothers or brother 's sons of the vendor or vendors; Thirdly, in the father 's brother or father 's broth er 's sons of the vendor or vendors; Fourthly, in the other cosharers and Fifthly, in the tenants. [126 F G] 3. The legislature desired to confer the right of pre emption on specified family members of the vendor or vendors in the first three clauses of section 15(1)(b) and with a view to covering all the remaining co sharers not specifi cally mentioned in the preceding clauses it used the expres sion 'other co sharers ' in the fourth clause which was meant to serve as a residuary clause to ensure that no cosharer is left out. [126 G 127 A] 4. The expression 'other co sharers ' was used in the fourth clause of the said provision to ensure that no co sharer was left out or omitted and not to deny the right to kinsfolk co sharers covered by the preceding clauses. If the preceding clauses were not erased from the statute book as unconstitutional the kinsfolk would have exercised the right in the order of preference, for which no justification was found. The relations in the first three clauses of section 15(1)(b) may or may not be co sharers. The use of the ex pression 'other ' in clause fourthly conveys the possibility of their being cosharer also. [127 D F] 5. The purport of Atam Prakash 's case was that while cosharers were entitled to pre empt, the conferment of that right on certain kinsfolk based on the rule of consanguinity being a relic of the feudal past could not be tolerated. This Court never intended to exclude any specified co owners from the scope of clause fourthly of section 15(1)(b) of the Act. Once conferment of the right of preemption in favour of co sharers was considered to be a reasonable restriction on the right to hold, acquire and dispose of property under Article 19(1)(f), the same restriction was held to be valid when tested on the touchstone of Articles 14 or 15 of the Constitution. [127 B D] 121 6. What this Court disapproved as offensive to Articles 14 and 15 is the classification based on consanguinity and not on co ownership. The right of pre emption to co sharers is held to be intra vires the Constitution. Therefore, it is difficult to hold that this Court intended to deny the right of pre emption of those kinsfolk even if they happened to be co sharers, That would clearly be discriminatory. [127 F G] 7. The interpretation placed on clause 'fourthly ' of section 15(1)(b) of the Act by this court in Jagdish 's case was not correct on a proper construction of that clause after the preceding clause were held to be unconstitutional, the word 'other ' preceding the word 'co sharer ' is rendered redundant. [127 G] Ram Sarup vs Munshi & Ors., ; = ; ; Atam Prakash vs State of Haryana & Ors., ; = ; ; Bhau Ram vs B. Baijnath Singh, = ; , referred to. Jagdish & Ors. vs Nathi Mal Kejriwal & Ors., ; , over ruled.

ivil Appeals Nos. 259 and 260 of 1958. Appeals by special leave from the judgment and orders dated August 5, 1955, of the former Travancore Cochin High Court in Income tax Reference Appeals Nos. 6 of 1953 and 21 of 1954. K.N. Rajagopala Sastri, R. H. Dhebar and D. Gupta, for the appellant. G. B. Pai and Sardar Bahadur, for the respondent in C. A. No. 259 of 1959. A. V. Viswanatha Sastri and Naunit Lal, for the respondents in C. A. No. 260 of 1958. February 23. The Judgment of the Court was delivered by KAPUR, J. These two appeals by special leave raise a common question of law, and that is, whether business losses incurred in the erstwhile State of Cochin could, under the Income tax Act of Travancore, be set off against the business profits made in the erstwhile State of Travancore. In Appeal No. 260/ 58 a further question arose whether in the case of 259 that assessee the year ending June 30, 1949, was the previous year for the assessment year 1950 51 with the result that it should be assessed under the Indian Income tax Act of 1922. But this question was not answered by the High Court which confined itself to answering the first question which was common to both the appeals. The appellant before us in both the appeals is the Commissioner of Income tax and the respondents are the two assessees, in one case a Bank and the other a private limited company. The main argument has been confined to the question of applicability of section 32(1) and the first proviso to that section of the Travancore Income tax Act (hereinafter called the Travancore Act). In C. A. No. 259/58 the assessee is a public limited company incorporated in the State of Cochin with branches in that State as well as in what was British India and in Travancore State. It filed its incometax return showing an income of Rs. 11,872 for the assessment year 1948 49, its accounting year being the previous calendar year. The Income tax Officer determined its assessable income to be Rs. 90,947 representing only the profit it made in Travancore State and under section 32(1) proviso (1) of the Travancore Act he refused a deduction of Rs. 79,275 shown as loss from branches situate outside the State of Travancore, in British India and other Indian States. The assessee 's appeal to the Income tax Commissioner was unsuccessful but the Appellate Tribunal held that the banking business of the assessee being one and indivisible for the purpose of determining the amount assessable to income tax it was entitled to deduct the losses incurred outside Travancore State from the profits accruing and arising in that State. At the instance of the Commissioner of Income tax the following question was referred to the High Court of Travancore Cochin: Is the aforesaid sum of Rs. 79,275 a loss of the assessee arising outside the Travancore State for purpose of the first proviso to section 32(1) of the Travancore Income tax Act ? " This question was slightly modified by the High Court 260 which after referring to several decided cases answered the question in favour of the assessee. In C. A. 260/58 the assessee is a private limited company with its registered office in the former Cochin State. It was carrying on business at its head office in Cochin State and it also carried on business in Travancore State. The assessment was made under the Travancore Act and relates to the previous year ending June 30, 1949, the assessment year being 1950 51. The assesse made a profit in Travancore State and incurred a loss in the State of Cochin and sought to deduct this loss from the profit of Travancore State thus showing a net profit of Rs. 2,643. This was not allowed by the Income tax Officer and on appeal this order was confirmed by the Appellate Assistant Commissioner. The Appellate Tribunal also did not accept the submissions of the assessee and upheld the order of assessment. On an application of the assessee the following question was referred to the High Court of Travancore Cochin: " Whether on the facts and in the circumstances of the case the loss of Rs. 27,709 arising in Cochin State could be set off against the profit of Rs. 38,998 arising in Travancore State ? " and was answered in favour of the assessee. The Commissioner has come up in appeal pursuant to special leave against both these judgments. It may be stated that the relevant sections of the Travancore Act which govern the two appeals are identically worded with those of the Indian Incometax Act of 1922 (to be called the Indian Act). The corresponding sections are as follows: Headings Sections in Section in Travancore Act. Indian Act. Application of the Act 4 4 Head of income charge able to income tax 9 6 Business 13 10 Exemptions of a gene ral nature 18 14 Set off of loss in com puting aggregate in come 32 24 261 It is only necessary to set out section 32(1) of the Travancore Act and the proviso which correspond to section 24(1) and proviso (i) of the Indian Act and which are necessary for the decision of the appeals before us: S.32(1) " Where any assessee sustains a loss of profits or gains in any year under any of the heads mentioned in Section 9 (Section 6) he shall be entitled to have the amount of loss set off against this income, profits or gains under any other head in that year: Provided that where the loss sustained is a loss of profits or gains which would but for the loss have accrued or arisen within British India or in an Indian State and would under the provisions of clause (e) of sub section (2) of Section 18 (Section 14(2)(c) ), have been exempted from tax, such loss shall not be set off except against profits or gains accruing or arising within British India or in an Indian State and exempt from tax under the said provisions ". (Sections in brackets are the corresponding sections of the Indian Act). So the only difference between the two sections is that in the proviso to section 24(1) of the Indian Act instead of the words "an Indian State" the words "British India or in an Indian State " have to be substituted. The question for decision is as to how this proviso is to be construed. Ordinarily the effect of an excepting or a qualifying proviso is to carve something out of the preceding enactment or to qualify something enacted therein which but for the proviso would be in it and such a proviso cannot be construed as enlarging the scope of an enactment when it can be fairly and properly construed without attributing to it that effect. Corporation of the City of Toronto vs Attorney General for Canada (1). But it has been held that a section framed as a proviso to a preceding section may sometimes contain matter which is in substance a fresh enactment adding and not merely qualifying that which goes before. Rhondda Urban Council vs Taff Vale Railway (2). It was argued on behalf of the Revenue that this (1) , 37. (2) , 258. 262 proviso falls in the second category and takes the present cases out of section 32(1) of the Travancore Act and imposes a liability to tax on the profits or gains arising in that State, disallowing a deduction of the losses in British India and in States other than Travancore State against profits made in Travancore State: Rhondda Urban Council vs Taff Vale Railway (1) and Harrison vs Ward (2). It may be mentioned that in the majority of cases decided in India the proviso to section 24(1) of the Indian Act has been construed in a manner contrary to the submissions made on behalf of the Revenue. In order to determine the true meaning of the words of the proviso it is necessary and convenient to refer to the scheme of the Indian Act which is admitted by the parties to be same as that of the Travancore Act. From 1922 to 1939 in order to be taxable income, profits and gains had to be received or had to accrue in British India. In 1939 the idea of 'total world income ' was introduced and the definition of 'total income ' was modified by the Indian Income tax (Amendment) Act (VII of 1939) which also made consequential changes in other sections of the Indian Act. Under section 2(15) of the Act total income ' was defined to mean the total amount of income, profits and gains computed in the manner laid down in that Act. The 'total world income ' was defined as including all income, profits and gains wherever accruing or arising except income to which the Act did not apply. Section 3 provided for the charge of income tax in respect of the total income of the previous year. Under section 4 the total income of any previous year of any person who was resident included all income, profits and gains from whatever source derived but (i) it must accrue or arise to him during the year in British India or (ii) accrue or arise to him without British India during such year. The third clause is not necessary for this appeal. Section 4(3) provided what income, profits or gains were not to be included in the total income of the person receiving them. Both under the Indian Act and under the Travancore Act (1) , 258. (2) [1922] 1 Ch 517. 263 there were six heads of income chargeable to income tax. In the Indian Act they were set out in section 6 as follows: section 6 " Save as otherwise provided by this Act the following heads of income, profits and gains shall be chargeable to income tax in the manner hereinafter appearing, namely: (iv) Profits and gains of business, profession or vocation. Then followed sections 7 to 12B laying down the method of computation of the income arising from each head. In 1941 during the war an exemption was given for the purpose of taxability to any income, profits or gains which accrued or arose within what was then called Indian States but which were not received or brought into British India. This was done by section 8 of the Indian Income tax (Amendment) Act, 1941 (XXIII of 1941) by which another clause (c) was added to section 14(2) which was as follows: " The tax shall not be payable by an assessee: (c)in respect of any income, profits or gains accruing or arising to him within (an Indian State) unless such income, profits or gains are received or deemed to be received in or are brought into the Indian State in the previous year by or on behalf of the assessee or are assessable under section 12B or section 42". Thus income, profits or gains arising under any of the heads under section 6 became exempted in circumstances above mentioned but the effect of this exemption was not to exclude such income of an assessee for all purposes as was the case under section 4(3). Such sums were to be taken,into account for the purpose of determining the rate under section 16 of the Indian Act. A further consequential change was made in, section 24(1) by 264 the addition of the first proviso and a similar addition was made in the Travancore Act to section 32(1) which has already been quoted and it is this proviso which is the subject matter of controversy between the parties. A review of the various sections and enactments shows that during 1922 1939 the tax was leviable on income, profits and gains arising or accruing to an assessee in British India. In 1939 the total income became taxable subject to exclusions in sub section 3 of section 4 and the chargeability of the 'total income ' was laid down in section 3. In 1941 income, profits or gains which a resident made in an Indian State and in the case of Travancore State income, profits or gains which a resident made in British India or other Indian States were exempted from payment of income tax unless received or brought into the respective territories, but this income, profits or gains had to be included for the purpose of calculating the rate. Now we come to section 24(1). This section was introduced in 1922 before which under the Indian Act of 1918 a loss under one head of income could not be set off against income under another head, the taxability of income arising from each head being separate. By the addition of this section the loss under one head of profits or gains was allowed to be set off against income, profits and gains under any other bead in any assessment year. There was also a provision in section 24(2) for carrying over the loss after such set off had been effected. Section 24(1) became the subject matter of controversy in the courts. The Privy Council in Arunachalam Chettiar vs Commissioner of Income tax(1) held that this section was meant for a set off of profits arising under different heads and not where profits and losses had to be adjusted if they arose under the same head. Sir George Rankin said at p. 241 " In their Lordships ' opinion, whether a firm is registered or unregistered, partnership does not obstruct or defeat the right of a partner to an adjustment on account of his share of loss in the firm, whether the set off be against other profits under the same (1) (1936) L.R. 63 I.A. 233 265 head of income within the meaning of section 6 of the Act or under a different head (in which case only need recourse be had to section 24, sub section 1) ". Thus the Privy Council emphasised that the object of section 24(1) was to allow a set off of profits against losses arising under different heads and Only in such cases could recourse be had to section 24(1). In cases where profits and losses arose under the same head they had to be adjusted against each other. This Court in Anglo French Textiles Co. Ltd. vs Commissioner of Incometax, Madras (1) again emphasised that distinction in the following words: " Next, a, set off under section 24(1) can only be claimed when the loss arises under one head and the profits against which it is sought to be set off arises under a different head. When the two arise under the same head, of course the loss can be deducted but that is done under section 10 and not under section 24(1) (Per Bose, J.) Indeed it is not disputed that when profit and loss arose under the same head in any place which was not an Indian State recourse had to be had to the provisions of sections 7 to 12B and not to any other section. But it was contended on behalf of the Revenue that the first proviso to section 24(1) of the Indian Act not only affected the generality of the main enactment but also introduced an addendum that where the profits of the business arose in what was British India in the case of the Indian Act or what was Travancore State in the case of the Travancore Act and the losses under the head business were sustained in an Indian State or in the latter case in any other Indian State or British India, these losses could not by virtue of the proviso be deducted from profits made in British India or Travancore State as the case may be. They could only be adjusted against profits arising in an Indian State or in the case of Travancore State in British India or another Indian State. Thus the proviso, it was contended, was a modification of the method of computation under section 10(2) of the Indian Act for (1)[1953] S.C.R. 448, 453. 34 266 determining profits and gains of the business of any resident. We should be averse to lend any countenance to such a mode of construing a proviso unless the language used expressly or by necessary intendment leads to that conclusion. The proper function of a proviso is that it qualifies the generality of the main enactment, by providing an exception and taking out as it were, from the main enactment, a portion which, but for the proviso would fall within the main enactment. Ordinarily it is foreign to the proper function of a proviso to read it as providing something by way of an addendum or dealing with a subject which is foreign to the main enactment. " It is a fundamental rule of construction that a proviso must be considered with relation to the principal matter to which it stands as proviso ". Therefore it is to be construed harmoniously with the main enactment (Per Das, C. J.) in Abdul Jabar Butt vs State of Jammu & Kashmir (1). Bhagwati, J., in Ram Narain Sons Ltd. vs Assistant Commissioner of Sales Tax (2) said: " It is a cardinal rule of interpretation that a proviso to a particular provision of a statute only embraces the field which is covered by the main provision. It carves out an exception to the main provision to which it has been enacted as a proviso and to no other ". Lord Macmillan in Madras & Southern Mahratta Railway Co. vs Bezwada Municipality (3) laid down the sphere of a proviso as follows : " The proper function of a proviso is to except and deal with a case which would otherwise fall within the general language of the main enactment, and its effect is confined to that case. Where, as in the present case, the language of the main enactment is clear and unambiguous, a proviso can have no repercussion on the interpretation of the main enactment, so as to exclude from it by implication what clearly falls within its express terms ". The territory of a proviso therefore is to carve out an (1) ; 59 (2) ; , 493. (3) (1944) L.R. 71 I.A. 113, 122. 267 exception to the main enactment and exclude something which otherwise would have been within the section. It has to operate in the same field and if the language of the main enactment is clear it cannot be used for the purpose of interpreting the main enactment or to exclude by implication what the enactment clearly says unless the words of the proviso are such that that is its necessary effect. (Vide also Corporation of The City of Toronto vs Attorney General for Canada) (1). In the proviso in dispute there are no positive words which would support an interpretation in favour of the disintegration of the head " business " and compel the application of the proviso to the same head, specially keeping in view the object of the main section, i.e. section 24(1) which was to set off loss of profits or gains under one head against income, profits or gains under any other head. It was then submitted that in the proviso the words used were " where the loss sustained is a loss of profits or gains " and therefore it necessarily applied to the head " business " in the two respective territories. But in the main enactment itself, i. e., section 24(1) of the Indian Act the words used are " a loss of profits or gains ". The mere fact that the word " income " is not used does not justify the construction. that the intention of the Legislature was to restrict the set off of profits and losses arising in Indian States only to business or to modify the mode of computation under section 10 of the Indian Act. That the use of these words does not circumscribe the proviso to business alone is shown by the difference in the language of the proviso to sub_s. (2) of section 24 of the Indian Act: section 24 (2). . . . . . . . . " provided that (a) where the loss sustained is a loss of profits and gains of a business or vocation to which the first proviso to sub section (1) is applicable, and the profits and gains of that business, profession or vocation are, under the provisions of clause (c) of sub section (2) of section 14, exempt from tax, such loss shall not be set (1)[1946] A.C. 32, 37. 268 off except against profits and gains accruing or arising in (an Indian State) from the same business, profession or vocation and exempt from tax under the said provisions ". That proviso shows that where the Legislature wanted to restrict the losses and profits or gains to business alone they specifically said so. It is significant that in sections 2(13) and (5) of the Indian Act of 1918 corresponding to sections 2(15) and 6 of the Indian Act of 1922 the word used was" income " which in the latter Act was expanded into " income, profits and gains ". The Privy Council said in the Commissioner of Income tax, vs Shaw Wallace and Co. (1) that ,the object of the Indian Act is to tax " income " a term which it does not define. It is expanded no doubt into " income, profits and gains " but the expansion is more a matter of words than of substance ". It was also so said in Commissioner of Income tax, Bengal vs Mercantile Bank of India Ltd. (2). See also London County Council vs Attorney General (3). Thus the mere use of the words loss of profits or gains to be, set off against profits and gains would not be sufficient to restrict the scope of the proviso to the profits and losses arising under the head business in the two territories, i. e., British India and the Indian States. On behalf of the Revenue an alternate argument was raised for which support was sought from two decisions of the Allahabad High Court in In Re: Mishrimal Gulabchand (4) and Raghunath Parshad vs Commissioner of Income tax (5). There it was held that section 10 of the Indian Act had to be read with section 14(2) (e) and if profits could not be added for the purposes of total income ' losses sustained also could not be deducted. Counsel for the Revenue did not go to this extent that because profits were exempted losses could not be deducted; his argument was that because before 1939 income was not chargeable unless it was received or accrued in British India therefore business in section 10 could only mean business in British India. But this (1)(1932) L. R. 59 I. A. 206, 212. (3)[1901] A.C. 26. (2)(1936) L.R. 63 I.A. 457. (4)[1950] (5) 269 argument does not take note of the definition of total income total world income ' and chargeability of total income under section 3 or the provisions of section 4 where in the case of a resident 'total income ' includes income, profits and gains accruing within or without I British India. Therefore to say that business in section 10 means business in British India or business the profits or gains of which are taxable in British India is to ignore the definitions and sections 3, 4 and 6. Section 10 of the Indian Act does not distinguish between business in British India and business in an Indian State or so divide business. But then it was said that as the profits or gains of business in an Indian State were exempted from payment of tax in British India business in section 10 must mean business in British India. That would be straining the language of section 10 and would necessitate addition of words in section 10 which are not there in the section. In the course of argument a number of cases of the, various High Courts were cited and criticised. We find it unnecessary to refer to them because we have indicated above what is the correct sphere of a proviso and what proviso (i) to section 24(1) means. In our view the question referred to the High Court which is common to the two appeals was rightly answered in favour of the assessee. As to the second question in Civil Appeal No. 260 of 1958 we do not propose to say anything. It will be open to the assessee in that appeal to take such steps in regard to that question as it may be advised. In the result the appeals fail and are dismissed with costs. Appeals dismissed.

Section 32(1) of the Travancore Income tax Act, which corresponds to section 24(1) of the Indian Income tax Act, 1922, provided : " Where any assessee sustains a loss of profits or gains in any year under any of the heads mentioned in Section 9 [section 6 of the Indian Act he shall be entitled to have the amount of loss set off against this income, profits or gains under any other head in that year : Provided that where the loss sustained is a loss of profits or gains which would but for the loss have accrued or arisen within British India or in an Indian State and would under the provisions of clause (c) of sub section (2) of Section 18 corresponding to section 14 Of the Indian Act] have been exempted from tax, such loss shall not be set off except against profits or gains accruing or arising within British India or in an Indian State and exempt from tax under the said provisions ". The assessees were companies having their head offices in the erstwhile State of Cochin with branches in the erstwhile State of Travancore and in other places outside the latter State. They made profits in Travancore State but incurred losses in Cochin State and other places, and for the purposes of assessment to income tax they sought to deduct this loss from the profits made in Travancore State. The Income tax Officer acting under the provisions of the Travancore Income tax Act, determined the assessable income representing only the profits made in Travancore State and under section 32(1), first proviso of the Travancore Income tax Act which corresponds to the first proviso to section 24(1) of the Indian Income tax Act, 1922 refused to allow a deduction of the losses incurred. The assessees claimed that the business 257 which they were carrying on was one and indivisible for the purpose of determining the amount assessable to income tax and that they were entitled to a deduction of the losses incurred outside Travancore State. The contention on behalf of the income tax authorities was (i) that under the first proviso to section 32(1) of the Travancore Income tax Act losses incurred in places out I side the State of Travancore cannot be set off against profits made in that State, (2) that though profits and losses in the State arising under the same head could be set off, the proviso, aforesaid, affected not only the generality of the main enactment but also introduced an addendum that where the profits of the business arose in the State and the losses under the head business were sustained outside that State, those losses could not by virtue of the proviso be deducted from profits made in the State,(3) that the proviso applied only to the bead " business in the two respective territories, as the words used therein are where the loss sustained is a loss of profits or gains " andthe word " income " is not mentioned therein, and (4) that the word " business " in section 13 of the Travancore Act corresponding to section 10 of the Indian Act, must mean business in Travancore State under section 13 Of that Act and " business in British India " under the Indian Act, because before 1939 income was not chargeable under the two Acts, unless it was received or accrued in Travancore State or British India, as the case may be, and profits and gains of business in territories outside Travancore or in an Indian State were exempted from payment of income tax in Travancore State or in British India, as the case may be. Held:(i) Under section 24(1) of the Indian Income tax Act, 1922 Is. 32(1) of the Travancore Income tax Act] a set off can be claimed only when the loss arises under one head and the income, profits and gains against which it is sought to be set off arises under a different head. In cases where profits and losses arise under the same head they have to be adjusted against each other under the provisions Of sections 7 to 12B of the Indian Act. Arunachalam Chettiar vs Commissioner of Income tax, (1936) L.R. 63 I. A. 233 and Anglo French Textiles Co., Ltd. vs Commissioner of Income tax, Madras, , relied on. (2)The territory of a proviso is to carve out an exception to the main enactment and exclude something which otherwise would have been within the section; it has to operate in the same field and if the language of the main enactment is clear it cannot be used for the purpose of interpreting the main enactment or to exclude by implication what the enactment clearly says unless the words of the proviso are such that that is its necessary effect. Abdul jabar Butt vs State of Jammu and Kashmir, ; , Ram Narain Sons Ltd. vs Assistant Commissioner of Sales ' ; , Madras & (1944) L.R. 71 I.A. 113 33 258 and Corporation of the City of Toronto vs Attorney General for Of Canada, , relied on. Consequently, section 24(1), first proviso, of the Indian Income tax Act, 1922 Is. 32(1), first proviso, of the Travancore Act] bars the right of set off only where a loss in the Indian States under one head is sought to be set off against profits in British India under any other head, and does not apply to profits and losses and computation thereof which fall under section 10 of the Indian Act, corresponding to section 13 of the Travancore Act. (3)The mere fact that the word " income " is not used in the proviso does not justify the construction that the intention of the Legislature was to restrict the right to a set off of profits and losses arising in Indian States only to business or to modify the mode of computation under section 10 of the Indian Income tax Act. (4)The word " business,, in section 10 of the Indian Income tax Act, 1922, is not confined to business in British India, in view of the definition of " total income " and " total world income " and chargeability of total income under section 3, Or the provisions Of section 4 where in the case of a resident " total income " includes income, profits and gains accruing within or without British India.

Appeal No. 1367 of 1980. From the Judgment and Order dated 19.7.1979 of the Rajasthan High Court in D.B. Civil Writ Petition No. 769 of 1979. Subhash Mallick and S.K. Jain for the Appellant. B.D. Sharma for the Respondents. The Judgment of the Court was delivered by YOGESHWAR DAYAL,J. This is an appeal against the judgment of the Rajasthan High Court dated 19th July, 1979 passed in D.B. Civil Writ Petition No. 681 of 1978 (Raghubir Singh vs The Board of Revenue for Rajasthan and others) and D.B. Civil Writ Petition No. 769 of 1979 (Surendrapal Singh vs The Board of Revenue for Rajasthan and others). These writ petitions were decided by the aforesaid common judgment. The first writ petition was filed by the father Raghubir Singh whereas the second writ petition was filed by his minor son Surendrapal Singh through his next friend Shri Jagjit Singh, maternal grand father of the minor. The relief claimed in both the petitions before the High Court was the same, namely for setting aside of the order dated 6th August, 1977 passed by the Board of Revenue for Rajasthan, Ajmer. The facts of the case briefly are that proceedings under Chapter III B of the Rajasthan Tenancy Act (Act No. 3 of 1955) (hereinafter referred to as 'the Act of 1955) were commenced for determining the ceiling area for Raghubir Singh. The Sub Divisional Officer, Hanumangarh, by his order dated 10th August, 1972, determined the ceiling area, but an appeal by Raghubir Singh, the Revenue Appellate Authority, set aside the order of the sub Divisional Officer on March 6, 1973 and remanded the case. The matter was taken to the Board of Revenue for Rajasthan by a revision application and the Board by its order dated 14th April, 1975 directed that the ceiling area for Raghubir Singh may be determined according to the old law i.e. Act of 1955 and not according to the new law i.e. Rajasthan Imposition of Ceiling on Agricultural Holding Act, 1973 (hereinafter referred to as 'the Act of 1973). In pursuance of the direction of the Board, the Sub Divisional Officer, Hanumangarh, by his order dated 5th May, 1976 held that Surendrapal Singh, (appellant herein) aged 12 years, was a minor son of Raghubir Singh and used to 725 study in Punjab and further held that the land in possession of Raghubir Singh was ancestral. The Sub Divisional Officer, then came to the conclusion that the father and the son constitute two separate units and each one of them was entitled to get 62 Bighas and 8 Biswas. It was thus held that Raghubir Singh and his son Surendrapal Singh are entitled to retain 124 Bighas and 16 Biswas only and the surplus land measuring, 4 Bighas and 6 Biswas may be resumed. Aggrieved by the order of the Sub Divisional Officer, Raghubir Singh filed appeal before the Revenue Appellate Authority, Bikaner, who by his order dated 6th September, 1976 dismissed the same and upheld the order of the Sub Divisional Officer. Dissatisfied with the order of the Revenue Appellate Authority, Raghubir Singh filed a revision application under Section 230 of the Act of 1955 before the Board of Revenue for Rajasthan. On behalf of raghubir Singh it was urged before the Board that the petitioner was in possession of 112 Bighas only and not 129 Bighas and 3 Biswas as held by the lower courts. He sought permission to adduce additional evidence in support of his contention. The application for adducing additional evidence was disallowed. However, the member of the Board came to the conclusion that Surendrapal Singh (appellant here in) was born to Raghubir Singh on 14th March, 1963 and was only 13 years of age when the ceiling proceedings were finalized by the Sub Divisional Officer on 5th May, 1976. He further held that the provisions of the old ceiling law applied to the case but the Sub Divisional Officer had committed an error of law in determining the ceiling area under the new law i.e. the Act of 1973. The Board went on to hold that there is no provision for separate units in Chapter III B of the Act of 1955. In the ultimate analysis the Member of the Board found that there was a gross and patent illegality in the order of the Sub Divisional Officer and, consequently, set aside the order of the Sub Divisional Officer dated 5th May, 1976 as well as the order of the Appellate Authority dated 6th September, 1976 and remanded the case to the Sub Divisional Officer, Hanumangarh, for fresh determination of the calling area for Raghubir Singh. Before the Division Bench of the High Court in the writ petitions it was urged on behalf of Raghubir Singh that no appeal having been filed by the State from the order the Sub Divisional Officer dated 5th May, 1976, the said order became final and the Board of Revenue had no jurisdiction to set aside that part of the Sub Divisional Officer 's order which had gone against the State and in his favour. It was submitted that the power of general superintendence and control over all revenue courts vested in the Board could not be exercised to the detriment of the 726 writ petitioners much less by way of suo motu exercise of powers. The High Court by the impugned judgment dated 19th July, 1979 upheld the order of the Board of Revenue for Rajasthan and dismissed the writ petitions. Surendrapal Singh, the erstwhile minor son of Raghubir Singh has come up to this Court by way of special leave which was granted and hence the present appeal. Mr. Subhagh Mal Jain learned senior counsel appearing on behalf of the appellant submitted that the State having not filed an appeal under section 225 of the Act of 1955 and or revision under Section 230 of the Act of 1955, the Board of the Revenue could not, while hearing the revision petition filed by Raghubir Singh, set aside the orders of Sub Divisional Officer and the revenue appellate authority under Section 221 of the Act of 1955. Section 221 of the Act of 1955 provides as under: "221.Subordination of revenue courts. The general superintendence and control over all revenue courts shall be vested in, an all such Courts shall be subordinate to the Board; and subject to such superintendence, control and subordination (a) x x x (omitted) (b) all Additional Collectors, Sub. Divisional Officer, Assistant Collectors and Tehsildars in a district shall be subordinate to the Collector thereof, (c)all Assistant Collectors, Tehsildars and Naib Tehsildars in a sub division shall be subordinate to the Sub Divisional Officer thereof, and (d) All Additional Tehsildars and Naib Tehsildars in a tehsil shall be subordinate to the Tehsildar thereof. " The contention of learned counsel for the appellant is that the section confers executive powers of superintendence and control on the Board and it does not vest any power of superintendence on the Board on judicial side. For this purpose he relied or the decision of the Division Bench of the Rajasthan High Court reported as Karan Singh vs Board of Revenue, Rajasthan. The Division 727 Bench in that case was concerned with the interpretation of Section 9 of the Land Revenue Act. Section 9 whereof provides as under: "9 Subject to the other provisions of this Act, the general superintendence and control over all revenue courts and over all revenue officers shall be vested in, and all such Courts and Officers shall be subordinate to, the Board. " In that case also the High Court took the view that it is not correct to say that Section 9 is limited to the executive control and superintendence of the Board over subordinate revenue courts and it does not apply to judicial proceedings. The contention on behalf of the appellant to that effect was negatived but on merits the High Court held that it was not appropriate for the Board to exercise the powers conferred by Section 9 of the land Revenue Act in view of the fact that the Board had appellate jurisdiction and it could not, therefore, make use of its powers of superintendence and control and the order of the Board could not be held proper with reference to Section 9 of the Land Revenue Act. This case has no application for interpretation of the present Section 221 of the Act of 1955. Section 221 of the Act of 1955 is not subject to the other provisions of the Act. It is clear from the language of Section 221 of the Act of 1955 that the Board of Revenue has general powers of superintendence and control over all revenue courts. It is both administrative as well as judicial powers. It is open to the Board to exercise its powers of superintendence on all its subordinate courts in order to regulate the functioning of ' the subordinate courts so as to keep them within their respective spheres of jurisdiction. If the subordinate court disregards any specific provision of law and does something illegal it is open to the Board of Revenue to interfere and set the matter right. A similar question arose before the Rajasthan High Court in Kana and others vs Board of Revenue. Rajasthan: ILR where the High Court had to construe the power of the Board of Revenue, Rajasthan, conferred on it by the Rajasthan Board of Revenue Ordinance (NO.XXII of 1949). There also there was similar provision like Section 9 of the Land Revenue Act and it was held that Section 12 of the said Ordinance must be held to give powers to the Board to revise judicial orders also passed by courts in appropriate cases. It was observed at page 63 of the report "of course, such powers would generally not be exercised where a party had remedy by way of appeal and revision, and did not avail of it. At the same time, the power is there, and it may be exercised sparingly in extraordinary case,, where interest of justice requires that the Board should exercise the power". Under Section 107 of the Government of India Act, 1955 there was provision of superintendence by High Court in these terms : 728 Each of the High Courts has superintendence over all the courts for the time being subject to its appellate jurisdiction. " These words have been consistently interpreted to mean that the High Court had power in appropriate cases to interfere with the judicial orders of the courts. Reference may in this connection be made to Parmessar Singh vs Kailaspati AIR 1916 Pat. 292 (F.B.). In the Government of India Act of 1935, there was provision under Section 224 for superintendence by the High Courts ', but subsection(2) made it clear that this superintendence would not be construed as giving to the High Court any jurisdiction to question any judgment of any inferior court which was not otherwise subject to appeal or revision. Section 221 of the Act of 1955 is similar to Section 107 of the Government of India Act, 1915 and there is no section like sub section (2) of Section 224 of the Government of India Act of 1935 in the Act of 1955. Thus there is no restriction on the powers of the Board to set aside the order of the Sub Divisional Officer provided it comes to the conclusion that interest of justice requires exercise of such powers. The Board noticed that there was no provision for separate unit in Chapter III B of tile Act of 1955 and the applicant Raghubir Singh and his son Surendrapal Singh constituted one unit and not two units and the case was remanded to Sub Divisional Officer, Hanumangarh, for de novo determination of the ceiling area for the appellant in law. The High Court also did not go into the merits of the controversy nor we have thought it advisable to into it and it would be for the Sub Divisional Officer, Hanumangarh to decide it in the light of the observations of the Board. It is clear from the judgment under appeal that the Board had by its order dated 14th April, 1975 directed that the ceiling, area may be determined according to old law i.e. Act of 1955 and it spite of it the Sub Divisional Officer committed the grave illegality on not merely ignoring the law but also ignoring the directions of the Board of Revenue itself. The appeal consequently fails and is dismissed with costs. U. R. Appeal dismissed.

Proceedings were commenced under Chapter III B of the Rajasthan Tenancy Act 1955 for determining the ceiling area for Raghubir Singh, the father of the appellant. In a revision application in the first round of litigation. The Board of Revenue directed that the ceiling area for Raghubir Singh may be determined according to the old law, i.e. Act of 1955, and not according to the Rajasthan Imposition of Ceiling on Agricultural Holdings Act, 1973. Thereafter, by his order dt. 5.5.76, the SDO held, inter alia, that tile father and the son, appellant, constituted two separate units and each of them was entitled to get 62 bighas and 8 biswas. Aggrieved by the SDO 's order, Raghubir Singh filed an appeal before Revenue Appellate Authority, which was dismissed. He then filed a revision application under S.230 of the Act of 1955 before the Board of Revenue for Rajasthan. He urged that he was in possession of 112 bighas only and sought permission to adduce additional evidence, which was disallowed. However, the Member of the Board held inter alia that the provisions of the old law applied to the case, but the SDO had committed an error of law in determining the ceiling area under the new Act of 1973. The Board further held that there is no provision for separate units in Chapter III B of the Act of 1955, and remanded the case to the SDO, Hanumangarh, for fresh determination of the Ceiling area for Raghubir Singh. Before the High Court, it was urged that the State having not appealed against the order of the SDO dated 5.5.76, it became final, and the Board of 723 Revenue had no jurisdiction to set aside that part of the SDO 's order which had gone against the State and in his favour. It was submitted that the power of general superintendence and control over all revenue courts which vested in the Board could not be exercised to the detriment of the writ petitioners much less by way of suo motu exercise of powers. The High Court dismissed the petitions. Before this court it was submitted that the State not having filed an appeal, or a revision, the Board of Revenue could not, while hearing the revision petition of Raghubir Singh, set aside the orders of the SDO and Revenue Appellate Authority under S.221 of the Act of 1955. Dismissing the appeal, this court, HELD:. .(1) S.221 is not subject to the other provisions of the Act. It is clear from the language of Section 221 of the Act 1955 that the Board of Revenue has general powers of superintendence and control over all revenue courts. It is both administrative as well as judicial powers. It is open to the Board to exercise its powers of superintendence on all its subordinate courts in order to regulate the functioning of the subordinate courts so as to keep them within their respective spheres of jurisdiction. If the subordinate court disregards any specific provision of law and does something illegal it is open to the Board of Revenue to interfere and set the matter right. (727 E) Karan Singh vs Board of revenue, Rajasthan and Permessar Singh vs Kailaspati AIR 1916 Pat. 292 (FB), distinguished. Kana vs Board of Revenue ILR , approved. (2) There is no restriction on the powers of the Board to set aside the order of the SDO provided it comes to the conclusion that interest of justice requires exercise of such powers. (728 D) (3) In not determining the ceiling area according to the Act of 1955, the SDO committed a grave illegality in not merely ignoring the law but also ignoring the directions of the Board of Revenue itself. (728 F) 724

Appeal No. 1695 of 1993. From the Judgment and Order dated 5.4.1991 of the Bombay High Court in S.C.A. Nos. 27 and 31 of 1988. G.L. Sanghi Dhruv Mehta, Guru Raikar, S.K. Mehta and Arvind Verma for the Appellants. BA Masodkar, Dr. R.B. Masodkar and KL. Taneja for the Respondents. The Judgment of Court was delivered by AHMADI, J. Special leave granted. The appellants are the legal representatives of the deceased plaintiff Inacio Martins who died pendente lite. He had on October 26, 1968 instituted a suit No. 157 of 1968 for a declaration and an injunction to restrain the defendants from dispossessing him from the property known as 'Palmar Oiteral do Predio Aivao ' comprising seven lots of coconut grove situated at Caranzalem belonging to defendant No. 2. The said suit was dismissed on Match 28, 1974 on the ground that the plaintiff was no more in possession of the suit property and, therefore, a suit for a mere declaration simpliciter could not lie. On the dismissal of the said suit the original plaintiff filed another suit No. 114/74 on May 6, 1974 for restoration of possession on the ground that he was the lawful tenant of the said property and since he had not been dispossessed,in accordance with law the defen dants who were mere trespassers were liable to be evicted. The plaintiffs case in the plaint was that he was the lessee in respect of seven lots on an annual rent of Rs. 3600 payable in advance in three instalments; that he had paid the rent upto the end of December, 1967 and the first installment of 1968 but the owner, defendant No. 2, in collusion with defendant No. 1 executed a deed of lease in favour of the latter effective from January 1, 1968 on the strength whereof defendant No. 1 claimed to have assumed possession of the property sometime in the second week of June, 1968 without his tenancy having been lawfully terminated. The plaintiff, therefore, contended that defendant No. 1 was a trespasser in the property and was liable to be evicted therefrom. He, therefore, sought possession of the property in respect of which he claimed to be a lessee. 1020 The defendants, besides contending that the suit was barred on the principle of res judicata and/or constructive res judicata as found in Order 2 Rule 2(3) of the Code of Civil Procedure, averred that on the expiry of the lease at the end of December, 1967 the lease stood terminated by efflux of time and defendant No. 2 was, therefore, entitled to let out the property to defendant No. 1 and hence the latter was in lawful possession of the said property The plaintiffs allegation that he was forcibly dispossessed was denied. The defendants, therefore, contended that the suit was not maintainable and deserved to be dismissed. The Trial Court upheld the plaintiffs contention that the property was demised to him and he was the lawful tenant thereof till his possession came to be disturbed sometime in June, 1968. The Trial Court also found that the plaintiff had paid a sum of Rs. 1200 to defendant No.2 through his employee Dattu Kenkro by way of advance rent for the year commencing from January 1, 1968. The Trial Court, therefore, held that the plaintiff was wrongly dispossessed by defendant No. 1 in collusion with defendant No.2 and decreed the suit for eviction on September 25, 1985. Against the said decree both the defendants preferred an appeal No. 82/85. The First Appellate Court concurred with the findings recorded by the Trial Court and dismissed the appeal on March 25, 1986. Feeling aggrieved by the order of dismissal of the appeal, the defendants preferred separate Second Appeals Nos. 27/88 and 31/88 which came to be allowed on April 5, 1991. Interfering with the concurrent findings recorded by the two courts below the High Court came to the conclusion that the courts below had applied the wrong test and had based their findings on the question of tenancy and dispossession on mere conjectures. It, therefore, held that the findings were perverse and it was open to the High Court in Second Appeal to interfere with the said findings. It also held that the suit was barred by res judicata as well as Order 2 Rule 2(3) of the Code of Civil Procedure. Lastly it noticed that during the pendency of the suit the Goa, Daman & Diu Agricultural Tenancy Act, 1964 (hereinafter called 'the Act ') was amended by Act 17 of 1976 dated October 14,1976 known as the Fifth Amendment which was brought into effect from April 20, 1976 by which the definition of 'agriculture ' was changed and the expressions 'garden ' and 'garden produce ' were defined by the insertion of sub sections (7A). & (7B) to suction 2 which rendered the Civil Court without jurisdiction. The High Court, therefore, held that the decree passed by the Civil Court was unsustainable. On these findings the High Court allowed the appeals and 1021 reversed the decree of the Trial Court with no order as to costs. It is against this order of the High Court that the present appeal by special leave is preferred. Before we deal with the impact of the Act as amended by Act 17 of 1976 we may first deal with the two technical grounds on which the High Court has dismissed the suit. The first ground on which the High Court dismissed the suit is that the suit was barred by the principle of res judicata in view of the dismissal of the former suit No. 157/68. That suit was for a declaration that the plaintiff was a lessee and for an injunction to restrain the defendants from interfering with his possession of the suit property. The foundation for that suit was that the plaintiff who claimed to be a lessee in respect of the demised property apprehended his forcible dispossession therefrom. With a view to preventing any such action on the part of the defendants he instituted the suit for an injunction to restrain them from so doing. That suit, however, came to be dismissed as the Trial Court came to the conclusion that the plaintiff was no more in possession of the property in respect of which he claimed to be a lessee. It was only thereafter that the plaintiff filed the suit for restoration of his possession. In the subsequent suit the plaintiff contended that he had been forcibly dispossessed sometime in the second week of June, 1968 contrary to law even though his tenancy was subsisting and he had paid the first installment of rent for the year 1968. He, therefore, contended that the lease stated to have been created in favour of defendant No. 1 by defendant No. 2 was a sham and bogus document set up with a view to supporting their illegal action in dispossessing him. The High Court, in the backdrop of these facts, came to the conclusion that the subject matter of the second suit was directly and substantially in issue in the previous suit between the same parties and hence regardless of the relief claimed the second suit was clearly barred by res judicata. This finding of the High Court is difficult to sustain. Section 11 of the Code of Civil Procedure provides that 'no court shall try any suit or issue in which the matter directly and substantially in issue in a former suit between the same parties, or between parties under whom they or any of them claim, litigating under the same title, in a court competent to try such subsequent suit or the suit in which such issue has been subsequently raised, and has been heard and finally decided by such court '. It is not the finding of the High Court that in the previous suit the question regarding the tenancy of the plaintiff was determined against the plaintiff. As the record stands the only ground on which the previous suit 1022 was dismissed was the technical ground that a suit for a mere declaration cannot lie without claiming possession once it is found that the plaintiff had lost possession. Injunction could not be granted to the plaintiff against dispossession as he had already been dispossessed. The court came to the conclusion that a mere declaration of his status as a tenant could not be granted unless the consequential relief for possession was prayed. It was for this technical reason that the suit was dismissed. It is, therefore, difficult to comprehend how the High Court came to the conclusion that the subject matter of the second suit was directly and substantially in issue in the previous suit. It would have been a different matter if in the previous suit the court had decided the question of status as lessee against the plaintiff, in which case, perhaps, it could be argued that the second suit based on the factum of tenancy was not maintainable. It is only when the subject matter of any suit is directly and substantially in issue in the previous suit that the subsequent suit would be barred by res judicata if the competent court trying it had decided the issue regarding tenancy against the plaintiff. The High Court has concluded against the plaintiff on this point in paragraph 31 which reads as under: Thus it is compelling to acknowledge that the subject matter of the second suit was directly and substantially in issue in the previous suit between the same parties. The facts of the case clearly reveal that the res invoked in both the suits is the same. The lite is also the same. Hence the relief by itself is neither material nor relevant for the direct adjudication of the real issue. The relief is only a consequence. Therefore the second suit is to be deemed as barred by res judicata. ." With respect it is difficult to accept this line of reasoning. As stated earlier, the first suit was dismissed on a technical ground that the suit for a mere declaration without seeking consequential relief of possession could not lie. In that suit the issue regarding the status of the plaintiff as a lessee was not settled once for all and hence that issue could not be stated to be barred by res judicata in the subsequent suit brought by the lessee for possession the demised property. We are, therefore, of the opinion that the High Court was wrong in holding that the second suit was barred by res judicata. 1023 The next contention which found favour with the High Court was based on the language of Order 2 Rule 2(3) of the Code of Civil Procedure. The submission regarding constructive res judicata was also based on this very provision. Now Order 2 concerns the framing of a suit. Rule 2 thereof requires that the plaintiff shall include the whole of his claim in the framing of the suit. Sub rule (1) of Rule 2, inter alia, provides that every suit shall include the whole of the claim which the plaintiff is entitled to make in respect of the cause of action. If he relinquishes any claim to bring the suit within the jurisdiction of any court he will not be entitled to claim that relief in any subsequent suit. However, sub rule (3) of Rule 2 provides that a person entitled to more than one relief in respect of the same cause of action may sue for all or any of such reliefs; but if he omits, except with the leave of the court, to sue for all such reliefs he shall not afterwards sue for any relief so omitted. It is well known that Order 2 Rule 2 CPC is based on the salutary principle that a defendant or defendants should not be twice vexed for the same cause by splitting the claim and the reliefs. To preclude the plaintiff from so doing it is provided that if he omits any part of the claim or fails to claim a remedy available to him in respect of that cause of action he will thereafter be precluded from so doing in any subsequent litigation that he may commence if he has not obtained the prior permission of the court. But the Rule does not preclude a second suit based on a distinct cause of action. It may not be out of place to clarify that the doctrine of res judicata differs from the rule embodied in Order 2 Rule 2, in that, the former places emphasis on the plaintiff 's duty to exhaust all available grounds in support (if his claim while the latter requires the plaintiff to claim all reliefs emanating from the same cause of action. The High Court is, therefore, clearly wrong in its view that the relief claimed is neither relevant nor material. Now, in the fact situation of the present case, as we have pointed out earlier, the first suit was for an injunction and not for possession of the demised property. The first suit was dismissed on the technical ground that since the plaintiff was not in de facto possession no injunction could be granted and a suit for a mere declaration of status without seeking the consequential relief for possession could not lie. Once it was found that the plaintiff was not in actual physical possession of the demised property, the suit had become infructuous. The cause of action for the former suit was not based on the allegation that the possession of the plaintiff was forcibly taken sometime in the second week of June, 1968. The allegation in the former suit was that the plaintiff was a lessee and his 1024 possession was threatened and, therefore, he sought the court 's assistance to protect his possession by a prohibitory injunction. When in the course of that suit it was found that the plaintiff had in fact been dispossessed, there was no question of granting an injunction and the only relief which the court could have granted was in regard to the declaration sought which the court held could not be granted in view of the provisions of Specific Relief Act. Therefore, the cause of action for the former suit was based on an apprehension that the defendants were likely to forcibly dispossess the plaintiff. The cause of action for that suit was not on the premise that he had in fact been illegally and forcibly dispossessed and needed the court 's assistance to be restored to possession. Therefore, the subsequent suit was based on a distinct cause of action not found in the former suit and hence we do not think that the High Court was right in concluding that the suit was barred by Order 2 Rule 2(3) of the Code of Civil Procedure. It may be that the subject matter of the suit was the very same property but the cause of action was distinct and so also the relief claimed in the subsequent. suit was not identical to the relief claimed in the previous suit. The High Court was, therefore, wrong in thinking that the difference in the reliefs claimed in the two suits was immaterial and irrelevant. In the previous suit the relief for possession was not claimed whereas in the second suit the relief was for restoration of possession. That makes all the difference. We are, therefore, of the opinion that the High Court was completely wrong in the view that it took based on the language of Order 2 Rule 2(3) of the Civil Procedure Code. The Act was enacted on 16th October, 1964 to provide for the regulation of the terms of tenancy with respect to agricultural lands in the Union Territory of Goa, Daman & Diu and for matters connected therewith. The definition of the various terms employed in the statute have been set out in section 2 thereof The expression 'agriculture ' is defined in sub section (1A) to include horticulture and raising of food crops, grass or garden produce, but not allied pursuits, meaning thereby rearing or maintaining plough bulls, breeding of livestock, dairy farming, poultry farming, grazing on grounds reserved for the purpose and such other pursuits connected with agriculture as may be prescribed. Sub sections (7A) and (7B) which came to be incorporated by the Fifth Amendment read as under : "7A. 'Garden ' means land used primarily for growing 1025 coconut trees, arecanut trees, cashewnut trees or mango trees; 7B. 'garden produce ' means any produce from a garden. " It will be seen from the aforesaid definitions that land used primarily for growing coconut trees falls within the expression 'garden ' and any produce therefrom would be covered by the expression 'garden produce ' Since garden produce is included within the definition of agriculture in sub section (1A) of section 2 it is clear that land used primarily for growing coconut could be described as agricultural land. Sub section (11) (i) defines land inter alia to mean land which is used for agriculture or which is capable of being so used but is left fallow. Section 2(23) defines a tenant to mean 'a person who on or after the date of commencement of this Act holds land on lease and cultivates it personally and includes a person who is deemed to be a tenant under this Act '. Section 7 posits that if any question arises whether any person is a tenant or should be deemed to be a tenant under the Act, the Mamlatdar shall after holding an enquiry decide such question. Section 8(1) stipulates that no tenancy of any land shall be terminated and no person holding as tenant shall be liable to be evicted therefrom save as provided under the Act. Sub section (2) of section 8 next provides that where any person as is referred to in section 4 (deemed tenant) has been evicted from the land on or after 1st July, 1962 such person shall be entitled to recover immediate possession of the land in the manner prescribed by or under the Act unless the landlord proves that the termination of tenancy was in the manner authorised by section 9. Even in cases of threatened wrongful possession section 8A says that any tenant in possession of any land or dwelling house who apprehends that he may be dispossessed contrary to the provisions of this Act may apply in the prescribed manner to the Mamlatdar for an order safeguarding his right to possession. Section 9 lays down the modes of termination of tenancy which are (a) by the tenant surrendering his right to the landlord in the manner provided in section 10; or (b) by the landlord terminating the tenancy on the grounds specified in section 11; or (c) under any other specific provision of the Act. Section 18 lays down the procedure for taking possession. It says that a tenant entitled to possession of any land under any of the provisions of the Act may apply in writing for such possession to the Mamlatdar. It will be seen from the aforesaid provisions that the forum created for determination of the question whether a person is a 1026 tenant or a deemed tenant under the Act is the Mamlatdar. Ever where a tenant apprehends that his possession is likely to be interfered with contrary to the provisions of the Act he can make an application in the prescribed manner to the Mamlatdar for safeguarding the, same. So also where a tenant is evicted illegally, section 8(2) permits him to approach the Mamlatdar for recovery of possession. Unless the tenancy is terminated in the manner provided by section 9, the law precludes the landowner from terminating the tenancy and obtaining possession of the land from the tenant. Section 58 bars the jurisdiction of courts. Sub section (2) thereof provides that save as otherwise provided in the Act no court shall have jurisdiction to settle, decide or deal with any question which is by or under this Act required to be settled, decided or dealt with by the Mamlatdar and no order passed by him under the Act shall be questioned in any civil or criminal court. It will thus be seen that the Act sets up an independent machinery and invests the Mamlatdar with jurisdiction to decide questions such as : (i) Whether any person is a tenant or should be deemed to be a tenant under the Act? (ii) Whether the possession of any tenant in regard to any land or dwelling house is threatened and if so, whether an order safeguarding the same is required? (iii) Whether the tenancy of any deemed tenant is legally terminated and if no, whether the tenant evicted from the land held by him as such is entitled to restoration of possession? The jurisdiction of the civil court is specifically barred by sub section (2) of Section 58 from settling, deciding or dealing with any question which is by or under the Act required to be settled, decided and dealt with by the Mamlatdar. There can, therefore, be no doubt that after the Fifth Amendment became effective in regard to land used primarily for growing coconut trees and garden produce, the jurisdiction of the civil court was ousted by virtue of section 58(2) of the Act. The suit in question was instituted on May 6, 1974 i.e. before the Fifth Amendment was brought into force. Thus the amendment came into force during the pendency of the suit. The question, therefore, is what is the effect of the Fifth Amendment on pending litigation? No provision is 1027 made in the Act in that behalf. The High Court concluded that since 'there is nothing in the language of sections 7 and 58 of the. Act which is primarily a welfare legislation to indicate that it should not be applied retrospectively there is no question that its applicability should be necessarily prospective. Proceeding further the High Court takes the view that even after the Fifth Amendment came into force the plaintiff had not applied to the Mamlatdar for possession of the land within the period allowed by Section 18 of the Act and had, therefore, allowed the first defendant to become a deemed purchaser of the suit property on the strength of his tenancy. Since the civil court had lost jurisdiction to decide the suit, the High Court dismissed it. We may now proceed to examine whether this view taken by the High Court is correct. From the above discussion it emerges that the Civil Court undoubtedly had jurisdiction under section 9 of the Code of Civil Procedure to try and grant eviction till the Fifth Amendment became effective. After that amendment came into force, the provisions of the Act became applicable to the lands in question which were primarily used for growing coconut trees and receiving produce therefrom. By virtue of section 7 any question whether a person is a tenant or a deemed tenant was required to be decided by the Mamlatdar and the jurisdiction of the Civil Court stood ousted by section 58(2) of the Act. The question is whether this subsequent change in the law deprived the Civil Court of jurisdiction which it undoubtedly possessed on the date of the institution of the suit. Three situations, therefore, develop in the context of the provisions of the Act as amended by the Fifth Amendment, namely, (i) the Civil Court retains jurisdiction or (ii) the Civil Court is precluded from deciding, even incidentally, questions failing within the ambit of section 7 of the Act or (iii) the Civil Court 's jurisdiction is wholly ousted. Since the Act is silent as to the fate of pending litigation after the Fifth Amendment the situation arising on the amendment of the Act must be decided on first principles. If a suit is filed to recover possession of agricultural land from a trespasser and no dispute arises, the adjudication whereof is required to be done by the special machinery set up under the Act, the Civil Court will continue to have jurisdiction. If, however, the defendant raises a dispute which is required to be resolved by the special machinery under the Act, a question will arise what procedure the Civil Court should adopt. There may arise a situation where the entire dispute pending before the Civil Court can be adjudicated by the special machinery only and not the Civil Court, what procedure the 1028 Civil Court follow in such a situation? In the case of the first mentioned situation there is no difficulty as the Civil Court will continue to have jurisdiction to settle and decide the dispute and grant appropriate relief The problem arises in the two other situations where the jurisdiction of the Civil Court is partly or wholly ousted. Take the case of suit where possession of agricultural land is sought on the plea that the defendant is a trespasser and the defendant contends that he is a tenant. The question of the defendant 's tenancy in respect of agricultural land would be within the exclusive jurisdiction of the Mamlatdar under section 7 read with section 58(2) of the Act. In such a situation what procedure should the Civil Court follow ? Now take a case where the entire dispute falls within the exclusive jurisdiction of the special machinery under the Act and had the litigation commenced after the Fifth Amendment was brought into force it could not have been instituted in a Civil Court. In that case what procedure should the Civil Court follow? These are the questions which arise for determination. Before we answer those questions we must decide on the impact of the Fifth Amendment on pending litigation. The question whether the Fifth Amendment is prospective or retrospective really recedes in the background if we examine the question from the angle whether the Civil Court can decide any question falling within the jurisdiction of the special forum under the Act in a pending litigation in the absence of an express provision in that behalf. If the question of tenancy in regard to agricultural land cannot be decided by the Civil Court under the Act and there is no express saving clause permitting the Civil Court to decide the same, it is obvious that any decision rendered by the Civil Court would be without jurisdiction. A similar situation did arise in the context of another statute. In Shah Yograj Kuverji Oil Mills and Ginning Factory vs Subhash Chandra Yograj Sinha, ; = ; the facts were that the landlord had filed a suit for eviction on April 25, 1957 in the regular court, i.e., the Court of the Joint Civil Judge (Junior Division), Erandol, which admittedly had jurisdiction to pass a decree for possession of the demised premises. However, during the pendency of the suit, a notification was issued under section 6 of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947, (hereinafter called 'the Rent Act ') applying Part II of the Act to areas where the property in question was situate. The tenants claimed protection of section 12 in Part 11 of the Rent Act which deprived the landlord of the right of possession under certain circumstance 1029 The question which arose for consideration was whether the tenants were entitled to the protection of section 12 in pending cases and if yes, its effect. Since section 12 of the Rent Act was held to be prospective, the question which arose for consideration was whether its protection could be extended to tenants in pending litigation. This court pointed out that the point of time when sub section (1) of Section 12 operates is when the court is called upon to pass a decree for eviction. Thus, said this Court the language of the sub section applies equally to suits pending when Part 11 comes into force and those to be filed subsequently. The contention of the landlord that the operation of section 12(1) is limited to suits filed after the Rent Act comes into force in a particular area was not accepted. Applying the same principle to the facts of the present case, we have no hesitation in concluding that the provisions of the Fifth Amendment would apply to pending suits also. However, the Act does not preclude the institution of a suit by a tenant for restoration of possession from a trespasser. If the defendant who is sued as a trespasser raises a plea of tenancy, a question arises whether his plea of tenancy can be decided by the Civil Court as incidental to the grant of relief for possession or is the Civil Court precluded from deciding the same in view of section 7 read section 58(2) of the Act. As pointed out earlier, section 7 in terms states that if any question arises whether any person is a tenant or should be deemed to be a tenant under the Act, the Mamlatdar shall decide such question. The jurisdiction is, therefore, vested in the Mamlatdar under section 7 of the Act and section 58(2) specifically bars the jurisdiction of all other courts to settle, decide or deal with any question which is by or under the Act required to be settled, decided or dealt with by the Mamlatdar. Section 8(2) has limited operation where a person referred to in section 4 has been evicted on or after 1st July, 1962. In that case he would be entitled to recover immediate possession of the land in the manner prescribed by or under the Act unless it is shown that his tenancy was terminated in the manner authorised by section 9. In the present case, the plaintiff came to court contending that even though his lease was not terminated as provided by section 9 of the Act, defendant No.1 had dispossessed him by an act of trespass. He, therefore, sought possession of the demised property from the trespasser, defendant No.1. He impleaded the owner of the land as defendant No.2 on the plea that she had colluded with defendant No.1. Defendant No.1 raised a contention in his written statement that he was lawfully inducted as a tenant in the lands in question 1030 by the owner, defendant No.2. In other words, he disputed the plaintiff 's contention that, he was a trespasser and pleaded tenancy. If his plea was found to be well founded, he would be entitled to retain possession but not otherwise. Therefore, the question which arose in the suit was whether defendant No.1 proved that he was a tenant in respect of the land in question. This question could not be gone into by the Civil Court in view of the clear language of section 7 read with section 58(2) of the Act. What procedure should the court follow in such situations? It would not stand to reason to non suit the plaintiff who had filed the suit in a competent court having jurisdiction to try the same merely because of the subsequent change in law. The proper course, therefore, would be one which was followed by the Bombay High Court in Bhimaji Shankar Kulkami vs Dundappa Vithappa Udapudi & Anr., ; = ; That was a case arising under the provisions of the Bombay Tenancy and Agricultural Lands Act, 1948. The lands in question were agricultural lands. Section 29(2) of that law provided that no landlord shall obtain possession of any land or dwelling house held by a tenant except under an order of the Mamlatdar on an application made in that behalf in the prescribed form. Section 70(b) next provided that for the purposes of the Act, one of the duties and functions to be performed by the Mamlatdar is to decide whether a person is a tenant or a protected tenant or a permanent tenant. Section 85(1) laid down that no Civil Court shall have jurisdiction to settle, decide or deal with any question which is required to be settled, decided or dealt with by the Mamlatdar under the statute. The law was silent as to how a dispute of this nature raised in a suit filed for eviction on the footing that the defendant is a trespasser should be dealt withby the Civil Court. This question squarely arose for consideration by the Bombay High Court in Dhondi Tukaram vs Hari Dadu AIR 1954 Bom 100 ILR wherein that court observed as under: "Therefore, we hold that in a suit filed against the defendant on the footing that he is a trespasser if he raises the plea that he is a tenant or a protected tenant, the Civil Court would have no jurisdiction to deal with that plea. . We would, however, like to add that in all such cases where the Civil Court cannot entertain the plea and accepts the objection that it has no jurisdiction to try it, it should not proceed to dismiss the suit straightaway. We think that the proper procedure to adopt in such cases 1031 would be to direct the party who raises such a plea to obtain a decision from the Mamlatdar within a reasonable time. If the decision of the Mamlatdar is in favour of the party raising the plea, the suit for possession would have to be dismissed, because it would not be open to the Civil Court to give any relief to the landlord by way of possession of the agricultural land. If, on the other hand, the Mamlatdar rejects the plea raised under the Tenancy Act, the Civil Court would be entitled to deal with the dispute on the footing that the defendant is a trespasser. " Pursuant to the court 's recommendation, the Bombay Legislature introduced section 85A which provided that if in any suit instituted in a Civil Court issues which are required to be settled, decided and dealt with by any authority patent to settle, decide and deal with the same arises, the Civil Court shall stay the suit and refer such issues to such competent authority for determination under the statute. Unfortunately even under the Act with which we are concerned the Legislature though aware of section 85A has not chosen to make any provision for dealing with such situations. We are, therefore, of the opinion that it would be just and fair that the issue whether defendant No.1 was a tenant in respect of the lands in question should be referred to the Mamlatdar for decision and after his decision is received by the Civil Court if the issue is held against defendant No.1, the Civil Court may consider passing of a decree in eviction but if on the other hand he is held to be tenant, the Civil Court may be required to dismiss the suit. One further situation which may arise under the provisions of the Act may be taken note of. The impact of the Fifth Amendment may give rise to a situation where the remedy lies entirely under the Act and may have to be taken in the manner prescribed by or under the Act. For example, where a person who is a deemed tenant under section 4 of the Act if evicted from the land on or after ' 1st July, 1962 his remedy under section 8(2) is to approach the authority under the Act for recovery of possession of the land of which he has been dispossessed. In such a situation the remedy may not be the one available in the case of a tenant other than a deemed tenant whose case is not governed by section 8(2) of the Act. But in the case of a deemed tenant who has been evicted from the land on or after 1st July, 1962 since a remedy has been provided under 1032 the Act, the Jurisdiction of the Civil Courts stands wholly barred by virtue of Section 58 (2) of the Act. In such a situation the Civil Court would not be competent to pass any order for restoration of possession to the deemed tenant. His remedy would, therefore, to be entirely under the Act. This is just by way of an illustration. If such a situation arises what procedure should the court follow in a pending suit which was instituted in a competent court having jurisdiction at the date of its institution. It would seem unfair to non suit the plaintiff altogether for no fault of his own. We think, in such a situation where the entire dispute falls outside the Civil Court 's jurisdiction on account of the change in law the proper course would be to follow in spirit the procedure outlined in Order 7 Rules 10 and 10A of the Code of Civil Procedure. Since the paper book in this appeal does not contain the original plaint and the written statement and counsel were unable to enlighten us on the actual nature of the pleadings we have tried to indicate the procedure to be followed by the Civil Court on illustrative fact situations. In the circumstances, we are left with no alternative but to remit the matter to the Trial Court with a direction to follow the course that may be found appropriate in the fact situation arising out of the pleadings in this case and the nature of the questions required to be determined for grant or refusal of relief claimed in the suit. We would like to make it clear that the hypothetical situations may or may not apply to the fact situation that may emanate of the pleadings in this case and it would be for the Trial Court to determine the course of action to be adopted in the light of the guidelines indicated hereinabove. In view of the foregoing discussion, we allow this appeal, set aside the order of the High Court which in either case lacked jurisdiction to decide the question regarding tenancy on merits and remit the matter to the Trial Court for further orders in the light of the observation hereinabove made. Having regard to the peculiar facts and circumstance, of the case, we make no order as to costs. R.P. Appeal allowed.

The plaintiff, predecessor in interest of the appellants, flied a suit for a declaration and an injunction to restrain the defendant respondents from dispossessing him from a certain property comprising of a coconut grove. The trial court dismissed the suit holding that the, plaintiff was no more in possession of the suit property, and, therefore, a suit for a mere declaration simplicitor could not lie. Consequently, the plaintiff flied another suit for restoration of possession. His case was that he was a tenant of the suit property, whereof defendant No. 2 was the owners ' and 1016 that he was forcibly dispossessed by defendant No. 1, in collusion with defendant No. 2, without his tenancy having been lawfully terminated. It was alleged that the defendants were trespassers and liable to be evicted. The defendants, besides raising the pleas of res judicata and/or constructive res judicata purported to be based on Order 2 Rule 2(3) of the Code of Civil Procedure, contended that defendant No. 1 was in lawful possession of the suit property as the same was let out to him by defendant No. 2 after the lease in favour of the plaintiff stood terminated by efflux of time, and the suit, as such, was not maintainable. The trial court decreed the suit holding that the suit property was demised to the plaintiff as he was the lawful tenant thereof, and defendant No. 1 in collusion with defendant No. 2 wrongfully dispossessed him. The appeal riled by the defendants was dismissed by the first appellate court. The second appeals filed by the defendants were allowed by the High Court holding that the suit was barred by res judicata as well as Order 2 Rule 2(3) C.P.C. The High Court also held that during the pendency of the suit as a result of the amendment of the Goa, Daman and Diu Agricultural Tenancy Act, 1964 by Act 17 of 1976, known as the Fifth Amendment, the definition of 'agriculture ' was changed and the suit property came to be covered within the expression 'agricultural land ' which rendered the civil court without jurisdiction and the decree passed by it unsustainable. Aggrieved, the heirs and legal representatives of the plaintiff, filed the appeal by special leave. Allowing the appeal, this Court, HELD: 1.1 A subsequent suit would be barred by res judicata only when the subject matter of the suit was directly and substantially in issue in the previous suit. [p. 1022 C] 1.2. The first suit was dismissed on a technical ground that the suit for a mere declaration without seeking consequential relief of possession could not lie. In that suit the issue regarding the status of the plaintiff as a lessee was not settled once for all and hence that issue could not be stated to be barred by res judicata in the subsequent suit brought by the lessee for possession of the demised property. The High Court was not right in holding 1017 that the second suit was barred by res judicata. 1022 F H] 2.1. Order 2 Rule 2 CPC is based on,the salutory principle that a defendant or defendants should not be twice vexed for the same cause by splitting the claim and the reliefs. It does not preclude a second suit based. on a distinct cause of action. [p. 1023 C E] 2.2. The doctrine of res judicata differs from the rule embodied In Order 2 Rule 2, in that, the former places emphasis on the plaintiff 's duty to exhaust all available grounds in support of his claim while the latter requires the plaintiff to claim all reliefs emanating from the same cause of action. [p. 1023 E] 2.3. The cause of action for the former suit was based on an apprehension that the defendants were likely to forcibly dispossess the plaintiff. The suit was for an injunction and not for possession of the demised property. It was not on the premise that the plaintiff had in fact been illegally and forcibly dispossessed and needed the court 's assistance to be restored to possession. Therefore, the subsequent suit was based on a distinct cause of action not found in the former suit. The High Court was not right in concluding that the suit was barred by Order 2 Role 2(3) of the Code of Civil Procedure, and that the difference in the reliefs claimed in the two suits was immaterial and irrelevant. In the previous suit, the relief for possession was not claimed whereas in the second suit the relief was for restoration of possession. That makes all the difference. [pp. 1023 F, 1024 B D] 3.1. The impact of the Fifth Amendment on pending litigation is that the question of tenancy in regard to agricultural land cannot be decided by the civil court under the Act and there being no express saying clause permitting the civil court to decide the same, any decision rendered by the civil court would be without jurisdiction. The change in law deprived the civil court of jurisdiction which it undoubtedly possessed on the date of the institution of the suit. Thus, the provisions of the Fifth Amendment would apply to pending suits also. [pp. 1027 D E; 1028 D E; 1029 C] Shah Bhojraj Kuverji Oil Mills and Ginning Factory vs Subhash Chandra Yograj Sinha; , , relied on. The Act does not preclude the institution of a suit by a tenant 1018 for restoration of possession from a trespasser. [p. 1029 C] 3.3. If a suit Is riled to recover possession of agricultural land from a trespasser and no dispute arises, the adjudication whereof is required to be done by the special machinery set up under the Act, the civil court will continue to have jurisdiction. [p. 1027 F G] 3A. If possession of agricultural land is sought on the plea that the defendant is a trespasser and the defendant contends that he is a tenant, the claim of tenancy by defendant cannot be gone into by the civil court in view of the clear language of S.7 read with section 58(2) of the Act In such a situation, it would not stand to reason to non suit the plaintiff who had flied the suit in a competent court having jurisdiction to try the same, merely because of the subsequent change in law. The proper course, therefore, would be that the issue whether the defendant was a tenant should be referred to the Mamlatdar for decision and, after his decision is received by the civil court, if the issue is held against the defendant, the civil court may consider passing of a. decree. for eviction but if, on the other hand, he is held to be a tenant, the civil court may be required to dismiss the suit [pp. 1029 F H; 1030 A B; 1031 D E] Bhimaji Shankar Kulkam vs Dundappa Vithappa Udapudi & Anr., ; =. ; and Dhondi Tukaram vs Hari Dadu, AIR 1954 Bom. 100 = ILR , relied on. The impact of Fifth Amendment may give rise to a situation where a deemed tenant under s.4 of the Act is evicted from the land on or after 1st July, 1962; his remedy under s.8(2) is to approach the authority under the Act for recovery of possession of the land of which he has been disposed, and jurisdiction of the civil court stands wholly barred by virtue of s.58(2) of the Act as it would not be competent to pass any order for restoration of possession to the deemed tenant. If such a situation arises in a pending suit which was instituted in a competent court having jurisdiction at the date of its institution, it would be unfair to non suit the plaintiff altogether for no fault of his own and the proper course would be to follow in spirit the procedure outlined in Order 7, Rules 10 and 10A, C.P.C. [pp. 1031 F H; 1032 A B] 4. The High Court lacked jurisdiction to decide the question regarding tenancy on merits. Its order is set aside and the matter is remitted to 1019 the trial court to determine the course of action to be adopted in accordance with the guideline indicated hereinabove. [p. 1032 D F]

iminal Appeal No. 46 of 1957. Appeal by special leave from the judgment and order dated the February 4, 1955, of the Bombay High Court in Criminal Appeal No. 1256 of 1954, arising out of the judgment and order dated June 19, 1954, of the Chief Presidency Magistrate, Bombay, in Case No. 176/S of 1953. Hardayal Hardy, for the appellants. H. J. Umrigar and B. H. Dhebar, for the respondent. April 21. The Judgment of the Court was delivered by KAPUR, J. This is an appeal by special leave against the judgment and order of the High Court of Bombay reversing the judgment of the Chief Presidency Magistrate, Bombay, and thus convicting accused Nos. 1 & 5 under section 31(1) read with section 33(1) of the (XIV of 1947) (hereinafter called the Act) and sentencing accused No. 1 to a fine of Rs. 250 and accused No. 5 to a fine of Rs. 50, 736 The appellants are the Andheri Marol Kurla Bus Service who was accused No. 1 (now appellant No. 1) and its Manager H. M. Khan who was accused No. 5 (now appellant No. 2). Some disputes arose between the appellant No. 1 and its workmen. On December 13, 1951, the Conciliation Officer wrote to the appellant No. I and enclosed the demands of the Union which were dated August 9, 1951. On December 31, 1951, the appellant No. I was asked to appear before the Conciliation Officer on January 9, 1952, and after getting one adjournment the appellant No. I appeared before the Conciliation Officer on January 17, 1952, and filed its Written Statement and raised various objections. The next date of hearing was January 31, 1952, and the proceedings went on till June 2, 1952, when the appellant No. 1 wrote to the Conciliation Officer saying that no useful purpose would be served by holding any further meetings. On May 9, 1952, the Union had also indicated to the Conciliation Officer that the negotiations had failed. On March 18, 1952, the appellant dismissed Louis Pereira, a bus conductor and proceedings were taken on a complaint by Assistant Commissioner of Labour under section 33 read with section 31 of the Act against 5 accused persons the two appellants and the partners of appellant No. 1. The Chief Presidency Magistrate acquitted all the accused including the appellants and held that as the conciliation proceedings had continued for a period of more than 14 days as from January 17, 1952, further proceedings for conciliation were illegal and therefore the accused persons could not be convicted under section 31(1)of the Act. The State took an appeal to the High Court and the judgment of acquittal was reversed and of the accused persons the two appellants were convicted and the others were acquitted. The two appellants have appealed by special leave. The question for decision is whether the conciliation proceedings could be said to be pending when Louis Pereira was dismissed. If the answer is in the affirmative then the appellants have been properly convicted and if not the conviction must be set aside. Section 31(1) makes the contravention of the provision 737 of section 33 of the Act an offence punishable with imprisonment for a period which may extend to six months or with fine or with both. Section 33(1) pro K. vides: section 33(1) " During the pendency of any conciliation proceedings before a conciliation officer or a Board or of any proceeding before a Labour Court or Tribunal or National Tribunal in respect of an industrial dispute, no employer shall: (a) in regard to any matter connected with the dispute, alter to the prejudice of the workmen concerned in such dispute, the conditions of service applicable to them immediately before the commencement of such proceedings; or (b) for any misconduct connected with the dispute, discharge or punish, whether by dismissal or otherwise, any workmen concerned in such dispute, save with the express permission in writing of the authority before which the proceeding is pending ". Therefore the question reduces itself to the meaning of the words " pendency of any conciliation proceedings before a conciliation officer ". The argument raised on behalf of the appellant is that the object of conciliation is to get a settlement made with expedition and therefore under section 12 the Conciliation Officer was bound to make his report within 14 days of the commencement of the conciliation proceedings or within such shorter period fixed by the appropriate Government. From this it was submitted that as 14 days had expired before March 18, 1952, the dismissal could not be said to be one within the words " pendency of conciliation proceedings ". The Act provides for commencement and conclusion of conciliation proceedings under section 20 but the first sub section of section 20 deals with what are called utility services and sub section 2 of that section provides as to when the conciliation proceedings conclude. That sub section is as follows: section 20(1). . . . . . . . . (2) A conciliation proceeding shall be deemed to have concluded 93 738 (a) where a settlement is arrived at, when a memorandum of the settlement is signed by the par ties to the dispute; (b) where no settlement is arrived at, when the report of the conciliation officer is received by the appropriate Government or when the report of the Board is published under s, 17, as the case may be; or (c) when a reference is made to a Court, Labour Court, Tribunal or National Tribunal under section 10 during the pendency of conciliation proceedings ". The provisions of sub section 2 apply to all conciliation proceedings whether in regard to utility services or otherwise. All conciliation proceedings under this sub section shall be deemed to have concluded in the case where no settlement is reached, when the report of the Conciliation Officer is received by the appropriate Government. The conciliation proceedings therefore do not end when the report under section 12( 6) is made by the Conciliation Officer but when that report is received by the appropriate Government. It was contended that the conciliation proceedings should be held to terminate when the Conciliation Officer is required under section 12(6) of the Act to submit his report but the provisions of the Act above quoted do not support this contention as the termination of the conciliation proceedings is deemed to take place when the report is received by the appropriate Government. This is how section 20(2)(b) was interpreted in Workers of the Industry Colliery, Dhanbad vs Management of the Industry Colliery (1). It was next contended that on this interpretation the conciliation proceedings could be prolonged much beyond what was contemplated by the Act and the termination would depend upon how soon a report is received by the appropriate Government. It is true that section 12(6) of the Act contemplates the submission of the report by the Conciliation Officer within 14 days but that does not affect the pendency of the conciliation proceedings and if for some reason the Conciliation Officer delays the submission of his report his action (1) ; 739 may be reprehensible but that will not affect the interpretation to be put on section 20(2)(b) of the Act. Section 12 lays down the duties of the Conciliation_ officer. He is required to bring about settlement between the parties and must begin his investigation without delay and if no settlement is arrived at he is to submit his report to the appropriate Government. No doubt section 12 contemplates that the report should be made and the proceedings closed within a fortnight and if proceedings are not closed but are carried on, as they were in the present case, or if the Conciliation Officer does not make his report within 14 days he may be guilty of a breach of duty but in law the proceedings do not automatically come to an end after 14 days but only terminate as provided in section 20(2)(b) of the Act. Colliery Mazdoor Congress, Asansol vs New Beerbhoom Coal Co. Ltd (1). As the conciliation proceedings were pending at the time when Louis Pereira was dismissed the appellants were rightly convicted under section 31(1) read with section 33 of the Act. The appeal is therefore dismissed. Appeal dismissed.

Conciliation proceedings were started in January. 1952 with respect to some disputes between appellant 1 and its workmen. On May 9, 1952, the Union and on June 2, 1952, the appellant 1 indicated to the Conciliation Officer that the negotiations had failed. In the meantime on March ~I8, 1952, the appellant 1 dismissed (1) I.L.R. 1947 All. 735 one of its workmen. The two appellants and three others were prosecuted under section 31 Of the , for a breach of section 33 for dismissing a workman during the pendency of the conciliation proceedings. The appellants contended that since section 12(6) required the report of the conciliation proceedings to be submitted within 14 days of the commencement thereof, the proceedings had terminated on the expiry of the 14 days and the dismissal was, therefore, not during the pendency of the conciliation proceedings. Held that, in cases where no settlement was arrived at the conciliation proceedings terminated when the report of the Conciliation Officer was received by the appropriate Government and not on the expiry of 14 days from the commencement of the proceedings. The commencement and termination of conciliation proceedings were determined by section 20 and not by section 12(6). The dismissal of the workman was during the pendency of the conciliation proceedings and the appellants were guilty under section 31(1) of the Act. Workers of the Industry Colliery, Dhanbad vs Management Of the Industry Colliery, ; ; Colliery Mazdoor Congress, Asansol vs New Beerbhoom Coal Co. Ltd., , applied.

N: Criminal Appeal No. 8 of 1951. Appeal from an Order of the High Court of Bombay (Bavdekar and Chainani JJ.) dated 20th February, 1950, in Criminal Appeal No. 106 of 1950 arising out of an order dated 9th January, 1950, of the Presidency Magistrate, 19th Court, Esplanade, Bombay, in Case No. 10879/P of 1949. The facts are stated in the judgment. Iswarlal C. Dalai and R.B. Dalai, for the appellant. C.K. Daphtary, Solicitor General for India (G. N. Joshi, with him) for the Republic of India (respondent No. 1).Jindra Lal for the respondent No. 2. 1952. February 1. The Judgment of the Court was deliv ered by CHANDRASEKHARA AIYAR J. The facts out of which this Crimi nal Appeal has arisen are not long. The appellant, W.H. King, who is carrying on a business in Bombay under the name and style of Associated Commercial Enterprises, was the tenant of a flat on the second floor of a building called "Ganga Vihar", Marine Drive, Bombay, which belongs to a lady named Durgeshwari Devi. The tenancy was a monthly one, the rent being Rs. 215. It is said that the appellant wanted to go to the United Kingdom for treatment of his failing eye sight and he got into touch with the complainant Mulchand Kodumal Bhatia, who is the second respondent in this appeal, through one Sayed for the purpose of making necessary ar rangements about the flat occupied by him in view of his intended departure. The prosecution case is that the accused demanded a sum of Rs. 30,000 which was later on reduced to Rs. 29,500 as consideration for putting the complainant in vacant possession of the flat and an additional amount of Rs. 2,000 for the furniture, and that the complainant agreed to pay these sums. The complainant actually paid the accused two sums of 420 Rs. 500 each on 7th November, 1948, and 17th November, 1948. He, however, got into touch with the police on 1 12 1948, and in conjunction with the latter, a trap was laid for the appellant. It was arranged that the complainant should bring with him Rs. 1,000, being the balance due in respect of the furniture and that the police would give him Rs. 29,500 to be paid to the appellant. The complainant and a Sub Inspec tor, posing as the complainant 's brother, went to the appel lant on 4 12 1948, and paid him the two sums of money; and the keys of the flat and the motor garage were handed over to the complainant. As the appellant and his wife were leaving the flat, the man, who masqueraded as the complain ant 's brother, threw off his disguise and disclosed his identity. The police party, who were down below ready for the raid, held up the car of the appellant and recovered the sum of Rs. 30,500 from the rear seat of the car and also some papers, a typed draft of a partnership agreement be tween the complainant and the appellant and an application form for permission to occupy the building as caretaker. From the complainant were recovered the bunch of keys and the documents that were handed over to him by the appellant, namely, the letter handing vacant possession (Exhibit D). the receipt for Rs. 2,000 for the articles of furniture (Exhibit E), a letter to the Bombay Gas Company for transfer of the gas connection to the name of the complainant (Exhib it F), and the letter to the Bombay Electric Supply and Transport Committee for transfer of the telephone connec tions and the deposit of Rs. 27 (Exhibit G). The appellant was charged under section 18(1) of the Bombay Rents, Hotel and Lodging House Rates Control Act, LVII of 1947, for receiving a pugree of Rs. 29,500 and he was further charged under section 19(2) of the said Act for receiving the said sum as a condition for the relin quishment of his tenancy. His wife, who was the second accused in the case, was charged with aiding and abetting her husband in the commission of the two offences. 421 The defence of the appellant was that he was in search of a partner to carry on his business during his intended absence, who was also to act as caretaker of his flat anal that it was in this connection and with this object in view that he entered into negotiations with the complain ant. The sum of Rs. 29 500 was not pugree but represented capital for 0 12 0 share in the business and as the com plainant was also to be a caretaker of the flat, the sum of Rs. 2,000 was paid and received as a guarantee against disposal and damage of the furniture and it was agreed to be paid back on the appellant 's return to India. The wife of the appellant denied any aiding and abetting. The Presidency Magistrate, who tried the case, disbe lieved the defence on the facts, holding that what was received by the accused was by way of pugree. As section 18 (1) of the Act was not applicable he convicted him under section 19(2) of the Act and sentenced him, in view of his old age and blindness, to one day 's simple imprisonment and a fine of Rs. 30,000. The wife was acquitted, the evidence being insufficient to prove any abetment. The appellant preferred an appeal to the High Court of Bombay but it was summarily dismissed on 20 2 1950. He asked for a certificate under article 134(1)(c) of the Constitution but this was rejected on 10 4 1950. Thereaf ter he applied for special leave to appeal to this Court and it was granted on 3 10 1950. A short legal argument was advanced on behalf of the appellant based on the language of section 19 (1) of the Act and this is the only point which requires our consideration. The section which consists of two parts is in these terms:" "(1) It shall not be lawful for the tenant or any person acting or purporting to act on behalf of the tenant to claim or receive any sum or any consideration as a condi tion for the relinquishment of his tenancy of any premises; 422 (2) Any tenant or person who in contravention of the provisions of sub section (1) receives any sum or considera tion shall, on conviction, be punished with imprisonment for a term which may extend to 6 months and shall also be pun ished with fine which shall not be less than the sum or the value of the consideration received by him. " It was urged that the offence arises only on receipt of any sum or any consideration as a condition of the relin quishment by a tenant of his tenancy and that in the present case there was no such relinquishment. Exhibit D, which is the most material document, under which the appellant handed over vacant possession of the flat to the complainant, constitutes or evidences an assignment of the tenancy and not a relinquishment. It says : "I, W.H. King, hereby hand over vacant possession of my flat No. 3 situated on 2nd floor and garage No. 4 on the ground floor of Ganga Vihar Building on Plot No. 55 situated on Marine Drive Road to Mr. Mulchand Kodumal Bhatia from this day onward and that I have no claim whatsoever over this flat and Mr. Mulchand Kodumal Bhatia will pay the rent directly to the landlord. " The argument raised on behalf of the appellant appears to us to be sound and has to be accepted. The learned Solic itor General urged that 'the word "relinquishment" was not a term of art and was used in the section not in any strict technical sense but in its comprehensive meaning as giving up of possession of the premises; and he pointed out that if it was intended by the legislature that "relinquish ment" should have the limited meaning sought to be placed upon it on behalf of the appellant, the word "surrender" used in the Transfer of Property Act would have been more appropriate. Sections 15 and 18 of the Act were referred to in this connection but in our opinion they lend no assist ance to the argument of the learned counsel. Any sublet ting, assignment or transfer in any other manner of his interest by the tenant is made unlawful under 423 section 15. Section 18 deals with the grant, renewal or continuance of a lease of any premises or the giving of his consent by the landlord to the transfer of a lease by sub lease or otherwise, and it provides that the landlord, who receives any fine, premium, or other like sum or deposit, or any consideration for the grant, renewal or continuance or the accord of consent oh would be guilty of an offence and liable to the punishment therein specified. It would thus be seen that an assignment of the lease or transfer in any other manner by a tenant is not made an offence; the statute merely says that it is not a lawful transaction. It is the landlord 's consent to the transfer of a lease by sub lease or otherwise on receipt of consideration that has been made an offence. Then follows section 19 which speaks of the relinquishment of his tenancy of any premises by a tenant. If, by the expression, an assignment such as we have in the present case was meant, appropriate words could have been used, such as the transfer by a tenant of his interest, which we find in section 108, sub clause (i), of the Trans fer of Property Act. The distinction between an assignment on the one hand and relinquishment or surrender on the other is too plain to be ignored. In the case of an assignment, the assignor contin ues to be liable to the landlord for the performance of his obligations under the tenancy and this liability is contrac tual, while the assignee becomes liable by reason of privity of estate. The consent of the landlord to an assignment is not necessary, in the absence of a contract or local usage to the contrary. But in the case of relinquishment, it cannot be a unilateral transaction; it can only be in favour of the lessor by mutual agreement between them. The relin quishment of possession must be to the lessor or one who holds his interest. In fact, a surrender or relinquishment terminates the lessee 's rights and lets in the lessor. It is no doubt true that the word "relinquishment" does not occur in the Transfer of Property Act but it is found in many of the Tenancy Acts in various provinces where there are Sec tions which deal with the 55 424 relinquishment of their holdings by tenants in favour of the landlord by notice given to him in writing. The section in question, it should be further noted, does not speak of relinquishment or giving up of possession,in general terms. The words are "the relinquishment of his tenancy of any premises". The relinquishment of a tenancy is equivalent to surrender by the lessee or tenant of his rights as such. Whether abandonment of a tenancy would come within the meaning of relinquishment is a question that does not arise in this appeal, because in the face of Exhibit D, there is no abandonment in the sense that the tenant disappeared from the scene altogether saying nothing and making no arrange ments about his interest and possession under the lease. As the statute creates an offence and imposes a penalty of fine and imprisonment, the words of the section must be strictly construed in favour of the subject. We are not concerned so much with what might possibly have been intend ed as with what has been actually said in and by the language employed. As in our view, there has been no "relinquishment" within the meaning of section 19, sub clause (1), the conviction under sub clause (2) cannot be sustained. It is set aside and the fine of Rs. 30,000 will be refunded if it has al ready been paid. The other parts of the order of the learned Presidency Magistrate, as regards the disposal of Rs. 1,000 paid by the complainant to the appellant and the sum of Rs. 29,500 brought in by the police, will, however, stand. Conviction sit aside. Agent for respondent No. 1: P.A. Mehta. Agent for respondent No. 2: Ganpat Rai.

Sub section (1) of sec. 19 of the Bombay Rents, Hotel and Lodging House Rates Control Act, LVI I of 1947, provided that "it shall not be lawful for the tenant or any person acting or purporting to act on behalf of the tenant to claim or receive any sum or any consideration as a condition for the relinquishment of his tenancy of any premises"; and sub sec. (2) provided that any tenant or person who in contravention of the provisions of sub sec. (1) receives any sum or consideration shall on conviction be punished with imprisonment and also with fine. A. who was a tenant of a flat, handed over vacant posses sion the flat to B on receiving "pugree", under a document which recited that A shall have no claim whatever over the flat and that B shall pay the rent directly to the landlord. A was convicted of an offence under sec. 19 (2). Held, that there was no "relinquishment" of his tenancy by A, within the meaning of sec. 19 (1) and the conviction could not be sustained. There is a clear distinction between an assignment of a tenancy on the one hand and a relinquishment or surrender on the other. In the case of an assignment, the assignor con tinues to be liable to the landlord for the performance of his obligations under the tenancy and this liability is contractual, while the assignee becomes liable by reason of privity of estate. The consent of the landlord to an as signment is not necessary, in the absence of a contract or local usage to the contrary. But in the case of relinquish ment it cannot be a unilateral transaction; it can only be in favour of the lessor by mutual agreement between them. Relinquishment of possession must be to the lessor or one who holds his interest; and surrender or relinquishment terminates the lessee 's rights and lets in the lessor. As sec. 19 of Bombay Act LVII of 1947 creates an offence and imposes a penalty of fine and imprisonment, the words of the section must be strictly construed in favour of the subject. The Court is not concerned so much with what might possibly have been intended as with what has been actually said in and by the language employed in the statute. Judgment of the Bombay High Court reversed.

: Civil Appeals Nos 188 to 190 of 1958. Appeals from the judgment and order dated November 20, 1957, of the Andhra Pradesh High Court, in Writ Petitions Nos. 1 of 1956, 19 and 470 of 1957. A. V. Viswanatha Sastri, V. Vedantachari and K. Sundararajan, for the appellant. H. N. Sanyal, Additional Solicitor General of India, D. Venkatappiah Sastri and T. M. Sen for respondent No. 1. K. R. Choudhuri, for respondent No. 2. 1959. August 14. The Judgment of the Court was delivered by DAs C. J. These three appeals are directed against the judgment and order pronounced by a Bench of the Andhra Pradesh High Court on November 20, 1957, whereby three writ petitions, namely, No. 1 of 1956, No. 19 of 1957 and No. 470 of 1957, which had been filed by the appellant and were heard together, were dismissed with costs. These appeals have been filed with certificates granted by the High Court of Andhra Pradesh . The circumstances under which the three writ petitions came to be filed by the appellant may now be narrated. It is alleged that on January 10, 1942, an agreement was entered into between the Rajah of Venkatagiri and one Sri Balumuri Nageswara Rao whereby the Rajah agreed to give annual leases in respect of certain slate quarries within his estate for five years in succession commencing from February 1942 if the Rajah was satisfied with the work carried on by the lessee during the preceding year. It was 551 further stipulated that if the leases were given continuously for five years, then the lessee would be entitled at the end of the fifth year to obtain a lease from the Rajah for a period of 20 years commencing from the termination of the fifth year. On the expiry of the fifth year, however, the Rajah granted another lease to the said Balumuri Nageswara Rao for a short period commencing from February 1, 1947, and ending on November 30, 1947. On December 10, 1947 the said Balumuri Negeswara Rao is said to have assigned his right, title and interest under the said agreement dated January 10, 1942, to the appelent of the sons of the Rajah. The Rajah on the same day granted a lease for twenty years to the appellant. On September 7, 1949 the Venkatagiri estate was notified under section 3 of the Madras Estate (Abolition and Conversion into Ryotwari) Act 1948 (Madras Act XXVI of 1948), hereinafter referred to as the abolition Act. On the same date the appellant applied to the Collector for confirmation of the lease 'granted by the Rajah to him. Nothing appears to have happened until February 12, 1952, when a notice was issued from the office of the Board of Revenue (Andhra) calling upon the appellant to show cause within two months from the date of receipt of. that notice as to why the lease should not be terminated without any compensation under the second proviso to section 20(1) of the Abolition Act. The appellant showed cause which apparently did not satisfy the said authorities. Instructions appear to have been issued to the manager of the Venkatagiri estate requiring him to take over possession of the slate quarries which were then being worked by the appellant immediately after the expiry of two months ' notice issued to him. The appellant promptly filed a writ petition, No. 287 of 1952 in the Madras High Court praying for the issue of a writ in the nature of a writ of mandamus directing the Madras State to forbear from terminating the leasehold right of the petitioner in the slate quarries and from interfering with his possession and working of the slate quarries and other ancillary reliefs. The writ petition having come up for hearing before 555 Umamaheswaram, J:., the learned Judge on July 18, 1955, made an order directing the Government to hold, an enquiry under section 20 of the Abolition Act and decide whether the lease had been granted prior or subsequent to July 1, 1945. The order required the Government to hold the enquiry and pass the appropriate orders within three months from the date of that order. The Board of Revenue caused an enquiry to made by the Director of Settlements who, after taking evidence, oral and documentary, made his report to the Board of Revenue. The Board of Revenue submitted a report to the Government on October 20, 1955, and the Government after considering the Board 's report instructed the latter to dispose of the case on merits. Thereupon the Board of Revenue passed an order on December 27, 1955, declaring that the lease to the appellant had been granted subsequent to July 1, 1945, and that, as the lease was for a period exceeding one year, it was not enforceable against the Government, according to the second proviso to section 20 (1) of the Abolition Act. On that finding the Board of Revenue declined to ratify the lease and terminated it under the powers delegated to it under the Rules framed under the Abolition Act. The Board of Revenue also directed the Collector to take possession of the slate quarries from the appellant. The appellant promptly filed writ petition No. 1 of 1956 praying for the issue of a writ of mandamus directing the State of Andhra Pradesh to forbear from terminating his leasehold right in the slate quarries. He filed another petition, being writ petition No. 19 of 1957, for the issue of a writ of certiorari to quash the order made by the Board of Revenue on December 27, 1955. In the meantime on September 21, 1955, the appellant had applied to the Board of Revenue, Andhra for renewal of the lease under r. 47 of the Mineral Concession Rules, 1949. That application was dismissed on May 23, 1957. The appellant thereupon filed a writ petition No. 476 of 1957 for quashing the last mentioned order passed by the Board of Revenue or, in the alternative, for the issue of a writ of mandamus 556 directing the State of Andhra Pradesh to issue a fresh lease in accordance with r. 47 of the Mineral Concession Rules, 1949. All these writ petitions were heard together and were disposed of by a common judgment against which these appeals have been filed. The principal question canvassed before us is that the termination of the appellant 's lease by the order dated December 27, 1955, was bad as it did not give three months ' notice to the appellant or provide for any compensation as required by section 20 of the Abolition Act. The answer to the question depends on a true construction of that section which runs thus: "20. (1) Saving of rights of certain lessees and others. In cases not governed by sections 18 and 19, where before the notified date, a landholder has created any right in any land (whether by way of lease or otherwise) including rights in any forest, mines or minerals, quarries, fisheries or ferries, the transaction shall be deemed to be valid; and all rights and obligations arising thereunder, on or after the notified date, shall be enforceable by or against the Government: Provided that the transaction was not void or illegal under any law in force at the time: Provided further that any such right created on or after the 1st day of July 1,945 shall not be enforceable against the Government, unless it was created for a period not exceeding one year : Provided also that where such right was created for a period exceeding one year, unless it relates to the private land of the landholder within the meaning of section 3, clause (10), of the Estates Land Act, the Government may, if, in their opinion, it is in the public interest to do so, by notice given to the person concerned, terminate the right with effect from such date as may be specified in the notice, not being earlier than three months from the date thereof. (2) The person, whose right has been terminated by the Government under the foregoing proviso, shall be entitled to compensation from the Government which shall be determined by the Board of 557 Revenue in such manner as may be prescribed, having regard to the value of the right and the unexpired portion of the period for which the right was created. The decision of the Board of Revenue shall be final and not be liable to be questioned in any Court of law. The long title and the preamble to the Abolition Act indicate, it is urged, that the object of the Act is to provide for the acquisition of the rights of landholders and that the policy of the Act is not to interfere with the rights of other persons in the estate. This assumption, however, is not borne out by the substantive provisions of the Act itself. Section 3 sets forth the consequences which ensue on the notification of an estate and it is clear that on an estate being notified the entire estate is to stand transferred to the Government and all rights and interests created in or over the estate before the notified date by the principal or any other landholder must, as against the Government cease and determine. We are next reminded that the Abolition Act was enacted when section 299 of the Government of India Act, 1935, was in force. Under that section no property could be acquired save for a public purpose and save by authority of a law which provides for compensation. The Abolition Act was enacted by the Madras Legislature in exercise of the legislative power con ferred on it by the Government of India Act, 1935. According to learned counsel for the appellant, the Court must assume that the Madras legislature acted properly and within the limits of powers conferred on it. The Court must, therefore, interpret the provisions of the Abolition Act on the footing that it is a valid piece of legislation and that its provisions do not offend section 299 of the Government of India Act, 1935. The Abolition Act is a law for the compulsory acquisition of property and, therefore, the court must put that interpretation on the relevant sections which will result in the payment of compensation to the person who is deprived of his property. It may be conceded 71 558 that normally this is the correct approach to the problem, but the argument loses much of its force. When we advert to the provisions of article 31(6) and 31 B of the Constitution of India read with the Ninth Schedule thereto. Those provisions proceed on the assumption that certain laws passed under the Government of India Act, 1935, did offend section 299 of that Act and expressly save those Acts. The Abolition Act is one of the Acts included in the Ninth Schedule and is protected by article 31B. In the circumstances, the court must interpret the Abolition Act as it finds it by giving the ordinary and natural meaning to the words used by the Madras legislature and uninfluenced by any pre conceived notion as to validity of the Abolition Act. provision for payment of compensation for the determination of rights created before the notified date is provided in sub section (2) of section 20 of the Abolition Act. Under that sub section a person can claim compensation only when his right is terminated by the Government under "the foregoing proviso". The words "foregoing proviso", it is conceded, refer to the third proviso to sub section The endeavour of learned counsel for the appellant, therefore, is to induce us to hold that the termination of the appellant 's leasehold rights which were created on or after July 1, 1945, could only be done under the third proviso, for other wise the provisions of sub section (2) which provide for compensation will not be attracted. Action taken by the Government under the third proviso to sub section (1) can be supported only if the conditions said down in that proviso can be shown to have been complied with, namely, that the Government had formed the opinion that it was in the public interest to terminate such lease and that three months ' notice had been given before such termination. The argument is that the second proviso is merely declaratory and the third proviso supplies the machinery for giving effect to the provisions of the second proviso. According to the argument the third proviso is not an independent proviso but is a sort of proviso to the second proviso. In other words, the third proviso, according to learned counsel 559 for the appellant, merely enables the Government to exercise the right conferred on it by the second proviso and therefore, the Government, if it intends to avail itself of the right under the second proviso, must comply with the conditions laid down in the third proviso. It is said that the words " such right " in the third proviso relate to the rights mentioned in the second proviso, that is to say, rights created on or after July 1, 1945. The scheme of section 20 of the Abolition Act is said to be to provide, firstly that rights created by way of lease or otherwise by the landholder prior to the notified date should be deemed to be valid and all rights and obligations arising thereunder on or after the notified date should be enforceable by or against the Government. We start with this broad proposition. Then we come to the provisos. We may omit the first proviso, for it has no application to the facts of this case. The implications of the second proviso, learned counsel for the appellant points out, are two fold, namely, (a) that all rights created before the notified date but after July 1, 1945, for a period not exceeding one year would be valid and enforceable both by and against the Government by the operation of the body of sub section (1) itself and (b) that rights created before the notified date but after July 1, 1945, for a period exceeding one year would also be valid and enforceable by the Government against the person in whose favour such right had been created by reason of section 20(1). Then we have the express provision of the second proviso, namely, that rights created before the notified date but after July 1, 1945, for a period exceeding one year would not be enforceable against the Government. In other words, the true meaning of the second proviso is said to be that rights created after July 1, 1945, are only voidable at the instance of the Government and that being the position, the Government must do some overt act to terminate the transaction. The machinery for such a termination, it is urged, is to be found in the third proviso and the conclusion is pressed upon us that such termination can be brought about only on the fulfilment of the conditions laid down in the third proviso. The final step in the argument is 560 that the person Whose rights are terminated under the third proviso which is the " foregoing proviso " referred to in sub section (2) must, therefore, be entitled to compensation under sub section We are unable to accept this line of argument as correct. The provision of section 20 of the Abolition Act has been considered and construed by a Bench of the Madras High Court. We may, with advantage, quote here a part of the views expressed by Venkatarama Ayyar, J., in delivering the judgment of that Bench in A.M.S.S. V.M. & Co. vs The state of Madras (1). " The argument of the petitioners is that the words " such rights " in the third proviso have reference to the rights created after the 1st July, 1945, mentioned in the previous proviso and on that construction, the lease in favour of the petitioners could be terminated only in accordance with that proviso by giving three months ' notice. But this is to read the third proviso as a proviso not to the section, but to the second proviso and there is no warrant in law for such a construction. The words " such rights refer in the second proviso only to the right dealt with in the body of the section, and those words occurring in the third proviso, should also bear the same interpretation. That the third proviso does not govern the second proviso is also clear if the scope of the two provisos is examined. Under the second proviso, leases for a period exceeding one year and created after 1st July, 1945, are not enforceable against the Government. That is to say, the Government can elect to disaffirm them and they become, on such disaffirmance, void. If the third proviso also applies to such leases, as the petitioners contend, then the lease can be terminated only if the Government is satisfied that it is in the public interest that it should be terminated and that further, in such cases, the lessee will also be entitled to compensation under section 20(2). In other words, while under the second proviso the Government can terminate the lease at its option and unconditionally, under proviso (iii) that can be done only if it is in (1) I.L.R. ,1195. 561 public interest and, in that event, on payment of compensation, and this repugnancy can be avoided,., only by construing them as referring to different subjects. Then again, there is in proviso (iii) an exception with reference to rights created over private lands; there is nothing corresponding to it in the second proviso and that also shows that the scope of the two provisos is different. The true effect of the section can be stated in three proposi tions: (i) Rights validly created prior to 1st July, 1945, will be valid; (ii) such rights, however, may be determined under the third proviso if it is in the public interest to do so and in such cases, compensation will be payable under section 20(2); and (iii) rights created after 1st July, 1945, if they are for a period exceeding one year, are liable to be avoided under the second proviso. In this view, we are of opinion that the notice, dated 13th March 1951, falls under the second proviso and is valid. " It is pointed out that the attention of the Madras High Court was not drawn to the rule framed by the Governor of Madras in exercise of powers conferred on him by section 67 (1) and (2) of the Abolition Act. That rule runs as follows: " Rule In the case of any right in any land created by a landholder on or after the 1st day of July 1945 for a period exceeding one year and falling under the second proviso to section 20(1) of the said Act, the authority to decide whether the right should be terminated or allowed to continue shall be the Board of Revenue. Any order passed by the Board of Revenue under this rule shall be subject to revision by the Government. " We do not think that the rule in any way impairs the correctness of the Madras decision. It will be noticed that rule only indicates the authority who is to decide whether the right falling under the second proviso should be terminated or allowed to continue. It 'does not purport to lay down the manner in which such termination is to be brought about. In other words, that rule does not, in terms, attract the 562 operation of the third proviso at all. Even if that rule has the effect contended for, it cannot, in our view, change the meaning of section 20 which we gather on a true construction thereof. In our view the scheme of the Act is to render ineffective all rights created after July 1, 1945, for a period exceeding one year. In one view of the matter it may well be taken as meaning that the creation of rights after July 1, 1945 is, by the force of the second proviso itself, void as against the Government without any further necessity for any overt act to be done by the Government to avoid the same. In that sense the second proviso would be a self contained proviso and the aid of the third proviso would be wholly uncalled for. But assuming that the effect of the second proviso is to make the rights created after July 1, 1945, only voidable and not void, all that follows is that the Government must do something to avoid them. There is no warrant for saying that the avoidance must be under the terms of the third proviso. If the third proviso at all applied to rights created after July 1, 1945, then the second proviso would be otiose and need not have been enacted at all. In our opinion the third proviso deals with the termination of rights created before July 1, 1945. The second proviso makes rights created after July 1, 1945, unenforceable as against the Government. The reason for conferment of such an unconditional right on the Government is well known, for it was on that crucial date that the party which came into power later declared its intention to abolish all zemindaries and intermediary interest in land. The second proviso was enacted to nullify the creation of rights in anticipation of the impending legislation and hence it was made unconditional. If any condition was intended to be super imposed on the right of the Government to terminate the rights created after July 1, 1945, one would have expected those conditions to be mentioned in the second proviso itself. In out opinion, there is no substance in the principal point urged by learned counsel appearing for the appellant before us. It was somewhat faintly argued by learned counsel for the appellant that the Government should have 563 allowed the appellant 's application for the renewal of his lease under r. 47 of the Mineral Concession Rules of 1949. The argument is wholly untenable. That ' rule provides that a mining lease granted by a private person shall be subject to certain conditions therein specified. The first condition thus laid down is that the term of the lease should be renewed at the option of the lessee for one period not exceeding the duration of the original lease. The effect of this rule is, as it were, to insert statutorily some new terms in the lease itself. In other words, this rule does not do anything more than add some terms to the lease. When, however, the lease is determined under the second proviso, these terms must also fall with it. No other point has been urged before us and for reasons stated above, we think that these appeals should be dismissed with costs and we order accordingly. Appeals dismissed.

The principal question for determination in these appeals, arising out of writ petitions filed in the High Court, related to the validity of an order passed by the Board of Revenue (Andhra) terminating the appellant 's lease in respect of certain state quarries situated in the Venkatagiri Estate, which had been notified under section 3 of the Madras Estate (Abolition and Conversion into Ryotwari) Act, 1948 (Mad. XXVI Of I948), under the second proviso to section 20(1) of the Act, on the finding that the said lease was granted subsequent to July I, 1945, and was for a period exceeding one year, without giving the appellant three months ' notice under the third proviso to that section or providing for compensation under sub section (2) thereof. The appellant had also claimed renewal of. , the lease under r. 47 Of the Mineral Concession Rules, 1949, which was rejected by the Board as well as by the High Court. The contention on behalf of the appellant, in substance, was that the words "such right" in the third proviso to section 20(1) referred to the right mentioned in the second proviso, namely, the right created on or after July 1, 1945, and thus made applicable to it the provision of sub section (2)of the section, and before such right could be terminated the provisions of the third proviso relating to notice and sub section (2) as to compensation had to be complied with. Held, that the contention raised on behalf of the appellant was without substance and must be negatived. The scheme of the Act was to render all rights created after July 1, 1945, and for a period exceeding one year, ineffective and section 20, properly construed, made it amply clear that its second proviso was a self contained provision that rendered such rights void against the Government and, even if they were voidable and not void, the aid of the third proviso was wholly uncalled for. The third proviso must be held to refer solely to termination of rights created before July i, 1945. A. M. section section V. M. & Co. vs The State of Madras, I.L.R. , referred to. 553 The rule framed by the Madras Governor in exercise of the powers conferred on him by section 67(6) and (2) of the Act could not attract the operation of the third proviso nor could it change the true meaning Of section 20 Of the Act. Held, further, that r. 47 Of the Mineral Concession Rules, 1949, which could at best insert a few terms in the lease, could not apply to a case, such as the present one, where the lease itself stood determined under the second proviso Of section 20 of the Act and its terms fell with it.